3. Consolidation, accounting and valuation principles

3.1 Basis for preparation of the Financial Statements

The Condensed Interim Consolidated Financial Statements for the period from 1 January to 30 June 2018 were prepared in compliance with the rules of IAS 34 Interim Financial Reporting.

The IFRS requirements that apply in the European Union have been met in full.

The Condensed Interim Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements as of 31 December 2017.

3.2 Principal accounting and valuation methods

The accounting and valuation methods used for the preparation of the Condensed Interim Consolidated Financial Statements correspond to the methods used in the preparation of the Consolidated Financial Statements as of 31 December 2017.

During the reporting period, a renewal of the economic useful lives of assets in the asset class “Technical equipment and machinery” was made. This adjustment do not have a material impact on the Group’s earnings, net assets and financial position. The range of useful lives outlined in the Consolidated Financial Statements as of 31 December 2017 remains valid.

The company started applying the following new standards on 1 January 2018:

• Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions
• IFRS 9 Financial Instruments
• IFRS 15 Revenue from Contracts with Customers
• Amendments to IFRS 15 Clarifications
• Improvements to IFRS 2014–2016 Cycle IFRS 1 First-time Adoption and IAS 28 Investments in Associates and Joint Ventures
• Amendments to IAS 40 Transfers of Investment Property
• IFRIC 22 Foreign Currency Transactions and Advance Consideration

IFRS 9 amends the reporting standards for the classification and measurement of financial assets, impairments of financial assets and the reporting of hedging relationships. In accordance with the transition guidance of IFRS 9, HHLA did not adjust the prior-year figures and recognised the transition effects on a cumulative basis in revenue reserves as of 1 January 2018.

The following table shows the reconciliation of financial assets from IAS 39 to IFRS 9:

The following Balance Sheet table shows the impacts of the amended IFRS 9 financial reporting standard on the opening Balance Sheet values, as well as the measurement categories pursuant to IAS 39 and IFRS 9:

There are no effects on the opening Balance Sheet values as of 1 January 2018 as a result of first-time application of IFRS 15. Comparative figures from the prior-year period have not been restated. With its first-time application, revenue from customer-specific ancillary transport services is no longer recognised with the corresponding expenses in the income statement, a change from the prior-year period. This approach resulted in a reduction of € 576 thousand in revenue and cost of materials in the first half of the reporting year. Without the offsetting described in the reporting year, revenue would amount to € 633,613 thousand (previous year: € 622,832 thousand) and cost of materials would amount to € 179,295 thousand (previous year: € 184,607 thousand). Furthermore, there were no differences between the revenue recognised pursuant to IFRS 15 and the revenue recognised pursuant to IAS 18 and IAS 11. The effects on the Group’s earnings, net assets and financial position are immaterial overall.

No effects on the Consolidated Financial Statements arise from the application of any other standards.

The following new standard may be applied voluntarily for this financial year. It has not been adopted by HHLA:

• IFRS 16 Leases

Adoption of IFRS 16 is mandatory for financial years that begin on or after 1 January 2019. The HHLA Group has opted for the modified retrospective approach during the transition to the new standard. Application of the modified retrospective approach does not require any adjustment of the comparative figures from prior-year periods. Therefore, any changeover effects as of 1 January 2019 must be recognised as adjustments to revenue reserves. As part of the modified retrospective approach, an incremental borrowing rate as of 1 January 2019 will be used to calculate the lease liability.

In respect of many of the contracts, HHLA will recognise the usage rights for leased assets in the amount of the corresponding lease liabilities at first-time application, meaning that no equity effects will arise at this time. Due to their material importance, rental agreements for space at the Port of Hamburg, which were previously recognised as operating leases, will be recognised at their carrying amounts, as though IFRS 16 had applied since the start of the lease. As a result, changeover effects are expected as of 1 January 2019 and will be shown as adjustments to revenue reserves. HHLA has initiated a Group-wide project for the purpose of implementing the new leasing standard. The statements made in the Consolidated Financial Statements as of 31 December 2017 concerning the effects arising from the first-time application of the standard remain valid.

3.3 Changes in the group of consolidated companies

As of 30 June 2018, Transiidikeskuse AS is included in HHLA’s Consolidated Financial Statements for the first time. Disclosures on the acquisition of 100 % of shares in terminal operator Transiidikeskuse AS, headquartered in Tallinn, Estonia, can be found under Note 4.

With submission of the application for its removal from the commercial register on 25 May 2018, the company HCC Hanseatic Cruise Centers GmbH i. L., Hamburg, was deconsolidated as of 30 June 2018 and is therefore no longer included in HHLA’s group of consolidated companies as of the end of the reporting period.