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 AG) 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 Aktiengesellschaft (HHLA AG) is a leading European port logistics group. It is the parent company of the HHLA Group and runs the Group as a strategic management holding company. Its operating business is conducted by 35 domestic and 23 foreign subsidiaries and associated firms. During the 2021 financial year, HHLA extended its group of consolidated companies in order to expand its intermodal network, its digital and process automation activities and through the acquisition of an additional container terminal. No other significant legal or organisational changes were made.

HHLA AG is a legally independent company that 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.

Employees

HHLA AG had a total of 1,027 employees as of 31 December 2021 (previous year: 1,043). Of this number, 234 received wages (previous year: 253), 721 received a salary (previous year: 721) and 72 were apprentices (previous year: 69). Of the 1,027 staff members, 389 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 generated by HHLA AG resulted mainly from the charging of personnel expenses for holding company staff assigned to the spun-off Container and Logistics segments and from billing administrative services for IT systems which are pooled with HHLA AG. Revenue totalled € 143.1 million in the reporting period (previous year: € 133.5 million). The rise of € 9.6 million mainly resulted from services billed to subsidiaries of HHLA AG.

Other income and expenses improved earnings by an additional € 10.0 million compared with the previous year. This was largely due to increased expenses in the previous year as part of restructuring measures in the Container segment.

The slight year-on-year improvement in the financial result was primarily due to higher interest revenue resulting from Group clearing with subsidiaries.

The development of income from equity investments was primarily due to the performance of the Intermodal segment and increased expenses for restructuring measures in the Container segment during the previous year. The net profits of HHLA AG’s subsidiaries and equity investments recognised in profit or loss rose year-on-year by € 62.6 million to € 157.5 million (previous year: € 94.9 million).

The € 31.4 million increase in income taxes stemmed mainly from the rise in net profit before tax.

The company’s annual net profit amounted to € 62.0 million in the reporting period (previous year: € 10.9 million). The A division accounted for € 53.8 million of this net profit (previous year: € 4.9 million) and the S division for € 8.2 million (previous year: € 6.0 million).

The forecast for the development of annual net profit materialised as expected.

Assets

The carrying amounts of intangible assets and property, plant and equipment totalled € 31.5 million at the end of the reporting period (previous year: € 32.5 million). Capital expenditure amounted to € 5.3 million in the reporting period (previous year: € 4.9 million). Capital expenditure focused mainly on expanding the IT landscape.

The increase in financial assets of € 18.7 million to € 460.4 million was due to the above-mentioned expansion of the consolidated group, the issuance of loans and opposing value adjustments.

Equity increased by € 41.1 million compared to year-end 2020. This increase is mainly attributable to the net profit for the year of € 62.0 million. The distribution of a cash dividend of € 20.8 million had an opposing effect.

HHLA 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. An average market interest rate for the past ten years of 1.87 % set by Deutsche Bundesbank was applied for the reporting year (previous year: 2.30 %).

In accordance with Section 253 (2) sentence 2 HGB, a remaining term of 15 years is used as a basis for provisions. Pension provisions amounted to € 342.7 million at the end of the reporting period (previous year: € 334.8 million).

Financial position

Cash flow from operating activities totalled € 18.0 million in the reporting period (previous year: € 67.0 million). It was dominated by the operating result and the income received from equity investments. Capital expenditure was funded by using cash flow from operating activities and by taking out loans.

In connection with existing cash pooling agreements, financial funds comprised receivables from subsidiaries of € 260.9 million (previous year: € 291.9 million), cash and cash equivalents in the form of bank balances totalling € 103.3 million (previous year: € 92.8 million) – of which € 65.0 million (previous year: € 40.0 million) was short-term bank deposits – and clearing receivables of € 82.5 million (previous year: € 82.0 million) due from HGV Hamburger Gesellschaft für Vermögens- und Beteiligungsmanagement mbH, Hamburg (HGV). The S division of HHLA AG 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 AG.

Risk and opportunity report

Business developments at HHLA AG are mostly subject to the same risks and opportunities as those of the HHLA Group. HHLA 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, HHLA 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) HGB. Risk and opportunity report

Business forecast

Outlook

Due to its close ties with the affiliated companies and its weight within the Group, the expectations for HHLA 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 HHLA AG. In addition, HHLA AG's result next year will be determined by a book profit from the expected completion of a share sale. Due to the termination of a profit and loss transfer agreement as a result of changes in tax law, the profit in question will not be recognised in 2022, which means that HHLA AG's investment result will be lower than in the previous year. After 2022, the profits will be recognised in a deferred period. Business forecast

Expected earnings position in 2022

On the basis of the expected earnings position of the HHLA Group, as outlined in the business forecast for the Group, and the previous comments, HHLA AG anticipates its annual profit for the year to be on a par with the previous year overall. Due to the uncertain environment described in the Group’s business forecast, a reliable outlook for HHLA AG is also still not possible.

Expected financial position in 2022

Based on the liquidity management measures outlined in the business forecast for the Group, HHLA AG expects its financial position to remain stable.

Dividend

As in the previous year, HHLA AG’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 communicated dividend policy.