5. Effects of New Accounting Standards

Amendments to IAS 1 Disclosure Initiative

The standard published in December 2014 clarifies how to exercise discretion in the presentation of financial statements. The amendments apply to reporting periods beginning on or after 1 January 2016 and have been enacted in European law with Commission Regulation (EU) 2015/2406. These amendments do not have a material effect on HHLA’s Consolidated Financial Statements

Amendments to IAS 16 and IAS 38
Clarification of Acceptable Methods of Depreciation and Amortisation

The IASB approved amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets on 12 May 2014. The amendments provide guidance on which methods of depreciation and amortisation can be used for property, plant and equipment and intangible assets. Commission Regulation (EU) 2015/2231 provides for application in financial years beginning on or after 1 January 2016. These clarifications have no impact on HHLA’s Consolidated Financial Statements.

Amendments to IAS 19
Defined Benefit Plans: Employee Contributions

The amendments published in November 2013 clarify a number of requirements laid out in IAS 19. The company will continue to deduct contributions paid by employees themselves or third parties for benefit plans offered by the company from the service cost in the future. This only applies if there is no link between the amount of the contributions and the employee’s years of service. The amendments can be applied to financial years beginning on or after 1 July 2014. According to Commission Regulation (EU) 2015/29 from 17 December 2014, the amendments must be applied to financial years beginning on or after 1 February 2015. This clarification has no impact on HHLA’s Consolidated Financial Statements.

Amendments to IFRS 11
Accounting for Acquisitions of Interests in Joint Operations

In May 2014, the IASB approved amendments to IFRS 11 Joint Arrangements. The amendments include clarification of how the acquisition of interests in a joint business arrangement should be reported in the balance sheet. These amendments should be taken into account for financial years beginning on or after 1 January 2016. The amendment was enacted in EU law with Commission Regulation (EC) 2015/2173 dated 24 November 2015. It had no impact on HHLA’s Consolidated Financial Statements.

Improvements to
IFRS 2010–2012 Cycle

The annual round of improvements published in December 2013 affects the following standards: IFRS 2 Share-based Payment, IFRS 3 Business Combinations, IFRS 8 Operating Segments, IFRS 13 Fair Value Measurement, IAS 16 Property, Plant and Equipment, IAS 24 Related Party Disclosures and IAS 38 Intangible Assets. The amendments take effect for financial years that begin on or after 1 July 2014. Commission Regulation (EU) 2015/28 stipulates that IFRS 2, 3 and 8 as well as IAS 24 must be applied to financial years beginning on or after 1 February 2015. The amendments did not have any effect on HHLA’s Consolidated Financial Statements.

Improvements to
IFRS 2012–2014 Cycle

The IASB published the 2012–2014 round of improvements on 25 September 2014, which affects to the following standards: IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, IFRS 7 Financial Instruments: Disclosures, IAS 19 Employee Benefits and IAS 34 Interim Financial Reporting. The amendments apply to reporting years which begin on or after 1 January 2016. They were adopted by the EU in Commission Regulation (EU) 2015/2343, with provides for mandatory application in financial years beginning on or after 1 January 2016. These improvements do not have any impact on HHLA’s Consolidated Financial Statements.

IFRS 9
Financial Instruments

IFRS 9 Financial Instruments was finalised by the IASB in July 2014. This standard aims to simplify the requirements for reporting financial instruments in the balance sheet. It was enacted in EU law with Commission Regulation (EU) 2016/2067. Adoption is expected to be mandatory for financial years which begin on or after 1 January 2018. Early adoption is permitted. The HHLA Group cannot yet conclusively determine the effects of the initial application of the standard.

IFRS 15
Revenue from Contracts with Customers

The IASB adopted the standard IFRS 15 Revenue from Contracts with Customers in May 2014. This stipulates the amount and timing of revenue reporting and what information must be disclosed. It replaces the existing guidelines on revenue recognition, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. The EU enacted this standard in its legislation with Commission Regulation (EU) 2016/1905 dated 22 September 2016. Adoption is mandatory for financial years which begin on or after 1 January 2018. As a general rule, initial application is retrospective, although various simplification options are available; early adoption is permitted. Based on the current status of the project, the HHLA Group does not expect any material changes in revenue from contracts with customers compared to the previous application of IAS 18.

Amendments to IAS 7 Disclosure Initiative

In January 2016, the IASB published amendments to IAS 7 Statement of Cash Flows, which aim to provide better information about borrowing. These amendments should be taken into account for financial years which begin on or after 1 January 2017. Early adoption is permitted, once the amendments have been endorsed by the EU. The impact on HHLA’s Consolidated Financial Statements is currently being examined.

Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses

The IASB published amendments to IAS 12 in January 2016. The amendments clarify how deferred tax assets for unrealised losses should be recognised in relation to debt instruments measured at fair value. If changes in market interest rates lead to write-downs to market value, this in turn leads to the formation of temporary differences, even though the losses are not realised. These amendments should be taken into account for financial years which begin on or after 1 January 2017. It is possible to adopt them early following the EU’s endorsement. They are not expected to have any impact on HHLA’s Consolidated Financial Statements.

Amendments to IAS 40 Transfers of Investment Property

The IASB published amendments to IAS 40 Investment Property on 8 December 2016. The amendments clarify transfers of investment property to or from the portfolio in the case of a change of use. They are expected to be applicable for financial years which begin on or after 1 January 2018. Earlier adoption is permitted, provided they are first enacted in EU legislation. HHLA is examining their effect on the Consolidated Financial Statements.

Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions

The IASB published amendments to IFRS 2 Share-based Payment in June 2016. These amendments apply to financial years beginning on or after 1 January 2018. Early adoption is permitted. The impact on HHLA’s Consolidated Financial Statements is currently being examined.

Amendments to IFRS 10 and IAS 28
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The IASB approved amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures in September 2014. These clarify how unrealised gains from transactions between an investor and a joint venture or an associate should be reported. The EFRAG announced in February 2015 that the process of endorsing these amendments had been suspended for the time being because inconsistencies had been identified between the amended standard and the existing IAS 28. The effective date – previously 1 January 2016 – has been postponed indefinitely until the inconsistencies have been resolved.

Amendments to IFRS 15
Clarifications

The final amendments to IFRS 15 were published by the IASB on 12 April 2016. For the most part, the amendments to this standard are clarifications and additional simplifications for the transition to IFRS 15. The effective date is 1 January 2018.

IFRS 16
Leases

The IASB published IFRS 16 Leases in January 2016. This standard supersedes the previously valid IAS 17 Leases and introduces significant accounting changes for lessees. As a general rule, all leases must now be recognised using the right of use approach. Under IFRS 16, lessors will continue to classify leases as operating or finance in line with IAS 17. The new rules aim to help improve the transparency of financial reporting and break down existing information imbalances. The effective date is 1 January 2019. Earlier adoption is permitted if IFRS 15 Revenue from Contracts with Customers is already applied. The HHLA Group cannot yet conclusively describe the effects of the initial application of the standard. Based on its obligations from operating leases where it is a lessee – see Note 45 – the Group expects the balance sheet total to increase significantly compared with the existing accounting, as there is a fundamental requirement to report operating leases in the balance sheet. Other than this, the conditions will remain unchanged. The increase in the balance sheet total will be prompted by capitalising the right of use of the asset on the liabilities side via the recognition of a corresponding liability. The income statement will be affected by splitting the leasing expenses into principal and interest.

Improvements zu
IFRS 2014 – 2016 Cycle

The 2014–2016 annual round of improvements to IFRS was published by the IASB on 8 December 2016. Three standards are affected. The amendments to IFRS 12 Investment Entities clarify that the regulations contained in the standard also apply to interests covered by IFRS 5. The effective date for these amendments is 1 January 2017.

Temporary provisions were deleted from IFRS 1 First-time Adoption of International Financial Reporting Standards. The amendment to IAS 28 Investments in Associates and Joint Ventures clarifies that a different valuation option can be used for each interest in a joint venture or an associated company. IFRS 1 and IAS 28 become applicable on 1 January 2018.

HHLA will examine their effect on the Consolidated Financial Statements.

IFRIC 22 Foreign Currency Transactions and Advance Consideration

On 8 December 2016, the IASB published its interpretation IFRIC 22 clarifying at what point in time the exchange rate should be established for translating foreign currency transactions containing incoming or outgoing payments on account. IFRIC 22 is applicable as of 1 January 2018. Early adoption is permitted. The impact on HHLA’s Consolidated Financial Statements is being examined.

Amendments to IAS 16 and IAS 41

Agriculture:
Bearer Plants

Amendments to IAS 27

Equity Method in Separate Financial Statements

Amendments to IFRS 4

Insurance Contracts

Amendments to IFRS 10, IFRS 12 and IAS 28

Investment Entities:
Applying the Consolidation Exception

IFRS 14

Regulatory Deferral Accounts