37. Other non-current and current provisions

Demolition obligations

The demolition obligations relate to HHLA’s Container, Logistics and Real Estate segments and are discounted at a rate of 2.0 % p.a. (previous year: 1.5 % p.a.). The effect of the discount rate change is represented under additions. In the reporting year, an anticipated price increase of 2.0 % was used to calculate the provisions shown. This rate is derived from the German construction cost index (previous year: 2.0 %). The outflow of these resources is expected in the period 2025–2045.

Restructuring provisions

The restructuring provisions relate to reorganising the Logistics segment and organisational restructuring in the Container segment. Based on the current degree of implementation, HHLA conducted a new assessment of the restructuring provision as of 31 December 2021 for the organisational restructuring in the Container segment. As a result of this new assessment, the provision decreased by around € 1 million compared with the original assumptions regarding implementation. The securities holdings acquired in connection with the restructuring provision are classified as plan assets under IAS 19 (revised 2011). They were thus netted out against the obligations contained in the provisions. The corresponding figure of € 1,721 thousand (previous year: € 0 thousand) therefore reduces the provisions reported, see Note 26. A discount rate of 0.1 % to - 0.1 % p.a. (previous year: - 0.1 % to - 0.2 % p.a.) was used for the calculation. The outflow of funds will take place between 2022 and 2031.

Bonuses and single payments

Provisions for bonuses and one-off payments largely consist of provisions for Executive Board members and other senior staff. The outflow of funds for the current part will become payable in the 2022 financial year. At one subsidiary, the management is granted stock appreciation rights. The management participates in the long-term development of the company on a percentage basis within a range of 0.5 % to 1.0 % if a certain threshold value is exceeded. The threshold value is the enterprise value at the time of the commitment. The stock appreciation rights are granted by means of cash settlement. HHLA assumes a term until 2030. The payment is non-forfeitable insofar as the contractual provisions are complied with. An option pricing model (binomial model) is used to value the stock appreciation rights. To determine the fair value of these stock appreciation rights, the company's performance and the threshold value are used, taking into account an expected volatility and a risk-free interest rate corresponding to the remaining term of the stock appreciation rights. Expected dividends were not taken into account when determining the fair value. The provision to be recognised on the basis of the currency of the stock appreciation rights was determined on the basis of the proportionate service rendered. The amount is included in the long-term provisions for bonuses and single payments.

Insurance excesses

This obligation relates to provisions largely created by the Group’s parent company to allow for potential cases of damage or loss which go beyond the existing insurance cover. The funds will become payable in the 2022 financial year.

Anniversaries

The provisions for anniversaries relate to Group employees’ contractual entitlement to anniversary gratuities. The amount recognised is determined by an actuarial opinion. A discount rate of 0.80 % p.a. (previous year: 0.20 % p.a.) was used for the calculation. The outflow of these resources is expected to take place in the period 2022–2061.

Legal fees and litigation expenses

As of the balance sheet date and as in the previous year, the obligations reported consisted mainly of provisions for legal risks associated with pending proceedings. The outflow of these resources is expected in the 2022 financial year.

Phased early retirement

Provisions for phased early retirement consist of HHLA’s obligations from the entitlements accrued during the beneficiaries’ working period, plus a supplementary amount added pro rata temporis.

The securities holdings acquired in connection with phased early retirement contracts are classified as plan assets under IAS 19 (revised 2011). They were therefore offset against the phased early retirement obligations included in the provisions. The corresponding figure of € 116 thousand (previous year: € 143 thousand) therefore reduces the provisions reported, see Note 26. In addition to this, pledged bank balances serve to cover the obligations in existence as of the balance sheet date. The amount of the provision was determined using a discount rate of - 0.1 % p.a. (previous year: - 0.2 % p.a.). The outflow of these resources is expected in the period 2022–2026.

Other

Other provisions relate largely to obligations arising from individual contractual agreements with members of staff. The securities holdings acquired in connection with other provisions are classified as plan assets under IAS 19 (revised 2011). They were thus netted out against the obligations contained in other provisions. The corresponding figure of € 662 thousand (previous year: € 0 thousand) therefore reduces the provisions reported, see Note 26. The main outflow of funds will take place between 2022 and 2028.