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 2020 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 2019.
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 2019.
Due to the anticipated impact of the coronavirus pandemic, the existing expected loss ratio for the 91–180-day range was increased by 30 % for the measurement of the credit risk for trade receivables in accordance with IFRS 9. The impact on the Consolidated Financial Statements is immaterial.
The consideration transferred on 31 July 2019 during the acquisition of shares in Bionic Production GmbH, Lüneburg (Bionic), also included a contingent consideration measured at fair value. This liability from the contingent consideration was derecognised as a result of a new agreement with the seller on 30 June 2020. The derecognition of the liability led to income of € 4,327 thousand being included in the result. Since the facts of the case are in the economic context of the development described below and the resulting impairment charge, the income was allocated to the HHLA-Group's operating result (EBIT) by way of recognition in the item "Other operating income" in the same way as the impairment loss.
Due to the worldwide effects of the corona pandemic and delays in some projects, the Executive Board of HHLA AG, Hamburg, has recalculated the recoverable amount of the Bionic cash-generating unit (CGU) as at 30 June 2020. An impairment loss of €4,037 thousand was recognized for Bionic, so that the carrying amount of Bionic's goodwill was reduced to €4,982 thousand. This is allocated to the Logistics segment.
The recoverable amount was determined using fair value less costs to sell. The valuation is considered level 3 of the fair value hierarchy due to the unobservable input factors used in the valuation.
Unobservable input factor |
|
Values assigned to the key assumption as of 30 June 2020 (31 December 2019) |
|
Approach to determining the assumption |
|---|---|---|---|---|
Disposal costs |
|
€ 319 thousand |
|
Estimated on the basis of the company's experience with the sale of assets |
Cash flow forecast period |
|
9 years (10 years) |
|
9-year forecast approved by the Executive Board of HHLA AG, prepared by the management |
Capitalisation interest rate |
|
9.12 % (11.65 %) |
|
Illustrates the specific risks |
Long term growth rate |
|
1 % (1 %) |
|
Denotes the weighted average growth rate used to extrapolate cash flows beyond the forecast period |
As there were no indications of impairment of the other CGUs, the Management Board has not updated the other impairment calculations.
The company started applying the following new standards on 1 January 2020:
- Amendments to References to the Conceptual Framework in IFRS standards
- Amendments to IAS 1 and IAS 8 Definition of Materiality
- Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform
- Amendments to IFRS 3 Definition of a Business
No effects on the Consolidated Financial Statements arose from the application of these new provisions.
The following new amendments to standards can be applied on a voluntary basis for the financial year under review:
No amendments to standards had been voluntarily adopted as of the balance sheet date.
3.3 Changes in the group of consolidated companies
No changes in the group of consolidated companies took place during the reporting period.