Notes to the Separate Financial Statements for HHLA Prepared in Line with the German Commercial Code (HGB)

Unlike the Consolidated Financial Statements, the Annual Financial Statements for Hamburger Hafen und Logistik Aktiengesellschaft (HHLA) are not prepared in accordance with International Financial Reporting Standards (IFRS). Instead, they are based on the regulations contained in the German Commercial Code (HGB).

Company Overview

Structure and Commercial Activities

Hamburger Hafen und Logistik AG (HHLA) is a leading European port logistics group. HHLA is the parent company of the HHLA Group and runs the Group as a strategic management holding company. Its operations are carried out by the 30 domestic and nine foreign subsidiaries which make up the consolidated group.

HHLA is a legally independent company and was split into two divisions – the A division and the S division – as part of the initial public offering on 2 November 2007.

The A division represents the Port Logistics subgroup. The Class A shares, which are listed on the stock exchange, entitle shareholders merely to participate in the result and net assets of these commercial operations. The performance and financial result of the Real Estate subgroup are attributed to the S division. Class S shares are not traded on the stock exchange and are held solely by the Free and Hanseatic City of Hamburg (FHH). In the unlikely and unprecedented event of the Real Estate subgroup reporting a loss, this would be indirectly transferred to the Free and Hanseatic City of Hamburg in line with a separate agreement to assume losses.

The following changes were made to the company structure in the 2015 financial year.

Effective 1 January 2015, HHLA transferred assets, mainly warehouse blocks and other buildings, and associated financing to HHLA 2. Speicherstadt Immobilien GmbH & Co. KG, Hamburg. In return HHLA 2. Speicherstadt Immobilien GmbH & Co. KG granted HHLA an increase in the limited partnership share as of the same date. The amount for which HHLA is liable, however, remains unaffected by this increase in the limited partnership contribution.

In addition, effective 1 January 2015, various buildings and other facilities belonging to HHLA were sold to UNIKAI Lagerei- und Speditionsgesellschaft mbH. All contracts relating to the goods sold were also transferred, excluding the space rental contract.

Effective 1 August, a functional management structure was introduced at the holding company for the Container segment. As a result, tasks previously assigned to HHCT Container Terminals GmbH, such as Container Sales and Container Operations, including the associated assets and contracts, are now assigned to HHLA.

Employees

HHLA had a total of 1,237 employees as of 31 December 2015 (previous year: 1,206). Of this number, 363 received wages (previous year: 398), 783 received a salary (previous year: 702) and 91 were apprentices (previous year: 106). Of the 1,237 staff members, 621 were assigned to companies within the HHLA Group in the reporting year.

Economic Environment

Industry and macroeconomic developments are largely in line with those at the HHLA Group.

Earnings Position

The revenue recorded by Hamburger Hafen und Logistik AG (HHLA) resulted mainly from the charging of personnel expenses for holding company staff assigned to the spun-off Container and Logistics units and from billing administrative services for IT systems which are pooled with HHLA. Revenue totalled € 121.2 million in the reporting year (previous year: € 135.8 million). This € 14.6 million decline is largely the result of the transfer of assets and associated rental contracts to HHLA 2. Speicherstadt Immobilien GmbH & Co. KG, Hamburg.

Other income and expenses improved by € 14.1 million year on year. This was largely due to the transfer of property, plant and equipment. However, increase in pension provisions compared to the previous year had a negative impact.

The year-on-year decrease in the financial result resulted mainly from changes in provisions due to interest rate fluctuations.

The change in income from equity investments was mainly due to the performance of the Container segment. The net profits of HHLA’s affiliates and equity investments recognised in profit or loss declined by € 29.1 million to € 81.7 million (previous year: € 110.8 million).

The € 21.4 million decrease in income taxes resulted mainly from a significant reduction in the financial result and income from equity investments.

The company’s annual net profit amounted to € 29.1 million in the reporting period (previous year: € 50.0 million). The A division accounted for € 22.5 million of this amount (previous year: € 42.4 million) and the S division for € 6.6 million (previous year: € 7.6 million).

The differences between forecast and actual figures were mainly due to those circumstances listed in the section on the Group’s earnings position, see Course of Business and Economic Situation

Assets

Balance Sheet Analysis

The carrying values of intangible assets and property, plant and equipment amounted to € 10.6 million at the end of the reporting period (previous year: € 107.0 million). Capital expenditure totalled € 4.2 million in the reporting period (previous year: € 25.0 million). Capital expenditure focused mainly on expanding the IT landscape. Additions were opposed by a disposal of assets amounting to € 96.6 million, which mostly resulted from the transfer or sale of assets.

Financial assets primarily rose due to the increase in limited liability capital in HHLA 2. Speicherstadt Immobilien GmbH & Co. KG, Hamburg. In total, financial assets rose by € 70.0 million to € 387.4 million.

Hamburger Hafen und Logistik AG uses the projected unit credit method to value entitlements associated with existing pension obligations. Future obligations are projected based on past service and possible future service prior to the insured event occurring. Anticipated future pension and pay increases are also taken into account. The average market interest rate of 3.89 % stipulated by the Deutsche Bundesbank was applied for the reporting year (previous year: 4.58 %).

In accordance with Section 253 (2) sentence 2 of the German Commercial Code (HGB), a remaining term of 15 years is used as basis. Pension provisions amounted to € 313.1 million at the at the end of the reporting period (previous year: € 293.5 million).

Financial Position

Cash flow from operating activities totalled € 54.4 million in the reporting year (previous year: € 34.2 million). It was dominated by income from equity investments. Cash flow in the reporting year was sufficient to fund capital expenditure.

In connection with existing cash pooling agreements, financial funds comprised receivables from subsidiaries in the amount of € 191.2 million (previous year: € 118.8 million), cash and cash equivalents in the form of bank balances totalling € 164.2 million (previous year: € 226.5 million) – of which € 70.0 million (previous year: € 90.0 million) was short-term bank deposits – and clearing receivables of € 43.9 million (previous year: € 23.4 million) from HGV Hamburger Gesellschaft für Vermögens- und Beteiligungsmanagement mbH, Hamburg (HGV).

The S division of Hamburger Hafen und Logistik AG (HHLA) participates in the cash clearing system operated by HGV. The A division also utilises the option of investing surplus liquidity with HGV whenever this is advantageous for HHLA.

As expected, the financial position remained stable in the reporting period.

Risk and Opportunity Report

Business developments at Hamburger Hafen und Logistik AG are mostly subject to the same risks and opportunities as those of the HHLA Group. Hamburger Hafen und Logistik AG shares in the risks of its subsidiaries and equity investments in line with its respective shareholding.

As the parent company of the HHLA Group, Hamburger Hafen und Logistik AG is incorporated into the Group-wide risk and opportunity management system. The Risk and Opportunity Report contained in the Combined Management Report provides a description of the internal control system as required by Section 289 (5) of the German Commercial Code (HGB). see Risk and Opportunity Report

Events after the Balance Sheet Date

Events after the balance sheet date are broadly the same as those listed for the HHLA Group. see Events after the Balance Sheet Date

Business Forecast

Outlook

Due to its close ties with the affiliated companies and its weight within the Group, the expectations for Hamburger Hafen und Logistik AG are reflected in the business forecast for the Group as a whole. It is anticipated that the statements made for the HHLA Group regarding market and revenue developments will largely be mirrored by the revenue of Hamburger Hafen und Logistik AG. Furthermore, the income from equity investments is expected to make a substantial contribution towards Hamburger Hafen und Logistik AG’s earnings. Any changes to regulations under commercial law regarding interest rates for calculating the present value of pension provisions would lead to a significant reduction in interest expenses in 2016 compared to the previous year. If the legal situation does not change, further high burdens from interest rate-related changes to provisions can be expected. see Business Forecast

Expected Earnings Position in 2016

Based on the expected developments, HHLA anticipates net income for the year on a par with the previous year.

Expected Financial Position in 2016

Hamburger Hafen und Logistik AG expects its financial position to remain stable.

Dividend

As in the previous year, HHLA’s appropriation of profits is oriented towards the development of earnings in the financial year ended. The distributable profit and stable financial position provide the foundation for a continuation of the company’s consistent dividend policy.