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 2022 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 2021.

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 2021. When calculating the income tax expense during the year, the currently applicable tax rate is used in principle for domestic companies. For certain domestic companies, a tax rate is determined in order to calculate the income tax expense. This involves extrapolating the interim earnings before tax (EBT) of these companies for the calendar year and then applying Hamburg’s tax rate of 32.28 %. The effective tax rate of the entire Group for the interim reporting period ending 30 June 2022 was 31.4 % (30 June 2021: 31.8 %).

Based on the current implementation status, HHLA has reassessed the restructuring provision as of 30 June 2022 for the organisational restructuring in the Container segment. As a result of this reassessment, the provision decreased by around € 3 million compared with the original assumptions regarding implementation. In addition, the provision decreased by approximately another € 7 million due to changes to the applicable discount rate as of 30 June 2022 in the amount of 2.0 to 2.5 % (as of 31 December 2021: in the amount of 0.1 to - 0.1 % p.a.).

The company started applying the following new standards on 1 January 2022:

• Amendments to IFRS 3, IAS 16, IAS 37 and Annual Improvements 2018–2020

No effects on the Interim Consolidated Financial Statements arose from the application of these new provisions.

The following amendments to standards can be applied on a voluntary basis for the financial year under review. They have not been applied by HHLA:

• IFRS 17 Insurance Contracts including Amendments to IFRS 17
• Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates
• Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies

Impairment of assets

As of the measurement date of 31 December 2021, a recoverable amount for the cash-generating unit HHLA PLT Italy S.r.l., Trieste, Italy (CGU PLT) was calculated as part of the annual testing of goodwill. This amount was approximately € 3.1 million higher than the carrying amount for valuation purposes. As the recoverable amount was close to the carrying amount, the management considered it possible as of the measurement date of 31 December 2021 that there could be a change in material assumptions which would lead to the carrying amount exceeding the recoverable amount. A change that would have led to parity between the recoverable amount and the carrying amount would have been an increase of 0.15 pp in the discount rate.

As of the measurement date of 30 June 2022, an increase in the discount rate from 7.0 to 8.0 % was observed. The management thus regarded this increase as indicative of the need to conduct an impairment test for the CGU PLT. The estimate of cash flows in the detailed planning period was updated based on new information. With an unchanged growth factor of 1.0 %, the recoverable amount as of 30 June 2022 was still approximately € 0.9 million higher than the carrying amount for valuation purposes. As the recoverable amount is close to the carrying amount for valuation purposes, even a marginal change in the valuation parameters would lead to parity between the recoverable amount and the carrying amount for valuation purposes.

Due to the Russia-Ukraine war, the management conducted an impairment test of the assets of SC Container Terminal Odessa in Odessa, Ukraine. For this, the management developed scenarios based on the original planning. The scenarios are based on the assumption of the continued existence of the container terminal. For both scenarios, it is assumed that seaborne container handling will not resume in 2022. For the subsequent years, one scenario envisages a medium-term recovery and a return to the original volumes planned before the Russia-Ukraine war. The other scenario envisages a recovery in the short term. Both scenarios describe the upper and lower points of possible developments based on current information and were therefore taken as equally probable for the impairment test. The weighted cash flows were discounted at a rate of 10.9 %, while a growth factor of 1.0 % was applied. Based on the impairment test, the recoverable amount is approximately € 8 million higher than the carrying amount for valuation purposes. An increase in the discount rate of around 1.2 percentage points would lead to parity between the recoverable amount and the carrying amount for valuation purposes.

For the CGU Bionic, the recoverable amount was calculated as the fair value of the intangible assets and property, plant and equipment as of 30 June 2022. This resulted in an impairment of around € 4 million.

As there were no indications for an impairment of the other CGUs, the Executive Board did not update the other impairment calculations.

3.3 Changes in the group of consolidated companies

As of 31 March 2022, the companies CL EUROPORT s.r.o., based in Plzen, Czech Republic, and CL EUROPORT Sp. z o.o., based in Malaszewicze, Poland, which were acquired in January 2022, were included in HHLA’s group of consolidated companies. Further information about the acquisition of the companies can be found under Note 4.

Likewise, as of 31 March and 30 June 2022, respectively, the following companies which were newly established in the 2021 financial year were included in HHLA’s group of consolidated companies: METRANS Szeged Kft., based in Budapest, Hungary, and allocated to the Intermodal segment, as well as HHLA Next GmbH, based in Hamburg, and omoqo GmbH, based in Hamburg, both of which were allocated to the Logistics segment.

All of the companies mentioned are fully consolidated.

No other changes in the group of consolidated companies took place during the reporting period.