Report of the Supervisory Board

Prof. Dr. Rüdiger Grube

Chairman of the Supervisory Board

Dear shareholders,

In the 2022 financial year, the Supervisory Board dutifully fulfilled the responsibilities entrusted to it by law, the company’s articles of association and rules of procedure, and the German Corporate Governance Code (GCGC) with the necessary diligence. Having continuously monitored the Executive Board’s management of business and provided advice on the company’s strategic development and on key individual measures, we concluded that the management of the company and its internal control and risk management system is lawful, proper and appropriate.

Cooperation with the Executive Board

The Supervisory Board was involved in all decisions of major significance for the company. The Executive Board provided us with regular, prompt and comprehensive information on all major developments, especially regarding the situation of the company and the Group, corporate planning, fundamental issues of company policy and strategy, investment plans and personnel. All measures for which the approval of the Supervisory Board or one of its committees was required according to law, the articles of association or the Executive Board’s rules of procedure were submitted on time. After conducting their own examination and discussions with the Executive Board, the Supervisory Board or its committees approved all such measures. As Chairman of the Supervisory Board, I was also in regular contact with the Executive Board, and particularly the Chief Executive Officer, between meetings. I was informed about planning and strategy, the current business situation, significant transactions, the risk position, risk management and compliance.

The work of the Supervisory Board

The Supervisory Board held four routine meetings and four special meetings in the 2022 financial year. At the routine meetings, we regularly look at the current revenue, earnings and liquidity trend as well as the current business situation of the company and the individual segments, including the risk position, risk management and compliance. During the meetings, the Executive Board informed the Supervisory Board about the economic, financial and strategic position of the company and the Group as well as the company’s strategy and significant developments and events. Issues relating to IT security and sustainability, particularly with regard to the monitoring of environmental and social sustainability measures in strategic alignment and corporate planning, are also regularly discussed. During the reporting period, regular topics of discussion included the war in Ukraine and its impact, disruption to global supply chains and high inflation. The other focal points of the meetings during the reporting period can be summarised as follows:

The financial statements meeting held on 22 March 2022 focused as scheduled on the auditing and approval of HHLA’s Annual Financial Statements, including the individual divisional financial statements for the A and S divisions, the Consolidated Financial Statements (including subgroup financial statements), the combined management report of HHLA and the Group, the Supervisory Board report, the reports on transactions with related parties and on the relationship between the A and S divisions and the separate non-financial report and remuneration report, each for the 2021 financial year, as well as the agenda for the 2022 Annual General Meeting, including the Executive Board’s proposal on the appropriation of profit and the candidates proposed for the election of the auditor for the 2022 financial year. Representatives of the auditor were present at the meeting. They reported on the main results of their audit and were available to answer questions. In this meeting, we also discussed in detail the outbreak of the war in Ukraine and its impact on HHLA, particularly our container terminal in Odessa. In this context, we also approved the provision of aid for our employees and their relatives, as well as the general population, in the amount of up to € 1 million.

In our second routine meeting on 24 May 2022, we primarily focused on finding a successor to the Chief Financial Officer as well as discussing preparations for the upcoming Annual General Meeting and various other current topics.

The special meeting on 16 June 2022 was used to discuss the reconstitution of the Supervisory Board following the scheduled Supervisory Board re-elections by the Annual General Meeting. In another special meeting on 4 August 2022, we also appointed the employee representatives to the committees as their appointments had not been finalised at the time of the Annual General Meeting.

At the routine meeting on 29 August 2022, in addition to discussing the latest business developments, we considered in particular the handling situation at the Hamburg terminals in the context of supply chain disruptions and the situation in Ukraine, as well as our container terminal in Odessa. At this meeting, we also approved the granting of two procurations and dealt with the status of the stake held by COSCO SHIPPING Ports Limited (CSPL) in the Container Terminal Tollerort (CTT). We also appointed a successor to the Chief Financial Officer.

The focus of this year’s strategy meeting on 26 September 2022 was on the topics of sustainability and IT, in addition to general strategy-related challenges and the progress made in restructuring the Container segment. We also appointed Tanja Dreilich as the new Member of the Executive Board of HHLA during this meeting.

In another special meeting on 26 October 2022, following the approval subject to certain conditions from the German Federal Ministry for Economic Affairs and Climate Action, we once again discussed the status of the stake held by COSCO SHIPPING Ports Limited (CSPL) in the Container Terminal Tollerort (CTT). In particular, we discussed the impact of the decision by the German Federal Ministry for Economic Affairs and Climate Action.

At our final regular meeting on 12 December 2022, we dealt as scheduled with the budget for 2023, the medium-term planning for 2024 to 2027 for the Group and the two subgroups, the findings of the risk and opportunity inventory, and the declaration of compliance with the GCGC. As a result of various updates to the GCGC, we made adjustments to the Supervisory Board’s rules of procedure, the requirement profile for the Supervisory Board and the diversity concept for the Executive Board. Other topics included the approval of a suitable scope for internal guarantees along with Executive Board and Supervisory Board issues.

As a general rule, regular meetings are attended by all members of the Supervisory Board and the Executive Board. However, the Supervisory Board also meets regularly without the Executive Board, particularly when Executive Board matters or internal Supervisory Board topics are to be discussed. The auditor’s reports also give the Supervisory Board the opportunity to discuss topics with the auditor without the Executive Board being present.

No conflicts of interest regarding members of the Executive Board or the Supervisory Board arose in the reporting period. Prior to taking up a Supervisory Board mandate with the Eurogate Group – a major competitor of HHLA – Supervisory Board member Maya Schwiegers­hausen-Güth stepped down from the HHLA Supervisory Board on 30 September 2022. The Supervisory Board does not include any former members of the company’s Executive Board.

Committee work

The Supervisory Board has set up a total of six committees: the Finance Committee, the Audit Committee, the Real Estate Committee, the Personnel Committee, the Nomination Committee and the Arbitration Committee. Following any committee work, the chairs report to the Supervisory Board about the committees’ activities. With the exception of the Nomination Committee, all of the committees include an equal number of shareholder and employee representatives. Corporate governance

The Finance Committee held four meetings during the 2022 financial year. At each regular meeting, the committee deals with the Group’s financial performance and its general financial and earnings position. Furthermore, as in the December meeting, it is also concerned with the preliminary review of the budget for the coming year and relevant medium-term planning. The Finance Committee is also responsible for the preliminary review of major financing, investment and participation plans. Major topics during the reporting period were various investment projects, the impact of the war in Ukraine, supply chain disruption and inflation on HHLA’s net assets, financial and earnings position and creating a framework for internal guarantees connected with applications for funding by Group companies.

The Audit Committee held five meetings in the reporting period. Its work regularly focuses on monitoring accounting and overseeing the accounting process and the audit. This includes the effectiveness of the internal control system, the risk management system, the internal audit system and compliance, along with the compliance management system. The committee monitors the selection of the auditor, as well as the auditor’s qualifications, efficiency and independent status as well as the quality of the audit. It also discusses with the auditor the assessment of the audit risk as well as the audit strategy, schedule and results. The Chair of the Audit Committee regularly discusses the audit’s progress with the auditor and reports to the Audit Committee. Furthermore, the Audit Committee deals with reliability of any additional services provided by the auditor (non-audit services). To assist with this, the Audit Committee has adopted a catalogue listing approved non-audit services by type and scope. Finally, the Audit Committee decides on the external review of non-financial statements and reports. Key issues during the reporting period included, as scheduled, the discussion and audit of HHLA’s Annual Report, Consolidated Financial Statements and the combined management report for the 2021 financial year, the 2022 six-monthly financial report and the interim reports for the first and third quarters of 2022, the work performed by Internal Audit, the determination of key issues for the audit of the Annual Report and Consolidated Financial Statements for the 2022 financial year and, in this context, discussion of the audit risk, strategy and planning with the auditor, the findings of the 2022 risk and opportunity inventory, the plans for the audit and the preparation of the declaration of compliance with the GCGC. The Audit Committee also considered the company’s asset and liquidity situation during the reporting period with regard to the effects of the Covid-19 pandemic, the war in Ukraine, inflation and the increase in energy costs. Moreover, HHLA’s compliance officer regularly attends the meetings of the Audit Committee, where he speaks about his role and keeps the committee abreast of current developments. Other participants, such as representatives of the auditor or Internal Audit, attend meetings as necessary. The Audit Committee regularly consults with the auditor, with or without the presence of the Executive Board. The Chair of the committee is also regularly in touch with the auditor and the Chief Financial Officer between meetings.

The Real Estate Committee held two meetings in the reporting period. It focused on the general development of business and the discussion and audit of HHLA’s Annual Financial Statements including the separate financial statements of the S division, the Consolidated Financial Statements and the combined management report for the 2021 financial year (March meeting). The committee also dealt with the budget for the 2023 financial year and medium-term planning for 2024 to 2027 (December meeting). In each case, its deliberations related to the Real Estate subgroup (S division). These meetings also allowed the Real Estate Committee to discuss various project developments, necessary renovations to the quay walls and the Real Estate subgroup’s climate protection strategy.

The Personnel Committee held twelve meetings in the reporting period. These meetings focused on finding a successor to the Chief Financial Officer with regard to the departure of Dr. Roland Lappin on 31 January 2023. The Personnel Committee also discussed long-term succession planning for the Executive Board.

The Nomination Committee convened once in the 2022 financial year to prepare for the election of new shareholder representatives to the Supervisory Board at the Annual General Meeting in June 2022.

As in previous years, there was no cause for the Arbitration Committee to meet during the reporting period.

Meeting participants

The Supervisory Board and its committees generally hold in-person meetings, although there is the option of participating virtually in order to enable as many people as possible to take part. In exceptional cases – particularly where the agenda contains few or only minor items – meetings can be held purely virtually (generally as a video conference). During the reporting period, this applied to two Supervisory Board meetings (on 4 August and 26 October 2022), eight Personnel Committee meetings (on 31 January, 12, 19 and 28 February, 5 and 9 March, 21 April and 2 May 2022) and the Nomination Committee meeting on 21 March 2022. Several participants joined meetings by phone in individual cases; no meetings were held purely as telephone conferences during the reporting period. Average attendance at Supervisory Board meetings and committee meetings was approximately 90 % during the reporting period. Individual participation rates are documented in the table below.

Corporate governance

The declaration of compliance with the GCGC in accordance with Section 161 AktG was prepared together with the Executive Board at the Audit Committee meeting on 11 November 2022 and adopted by the Supervisory Board at its meeting on 12 December 2022. The current declaration of compliance and further information about corporate governance can be found in the management report declaration on corporate governance. The current declaration and the declarations relating to previous years can also be viewed on HHLA’s website at www.hhla.de/corporategovernance.

Training and professional development

HHLA supports the members of the Supervisory Board upon their appointment and in subsequent training and professional development. When taking up a post, candidates are generally trained in the work of the Supervisory Board, its tasks and the rights and obligations of its members. If required, further inductions or training sessions are provided to cover HHLA’s business activities or other relevant topics. In the course of its work, the Supervisory Board is kept informed of relevant topics such as new legal requirements or accounting standards. In the reporting period, key topics included onboarding and further training for the entire Supervisory Board on the theme of sustainability (including sustainability reporting and auditing), namely, the relevant sustainability requirements currently in force or in the pipeline, and the implementation thereof.

Audit of financial statements

In line with the Audit Committee’s recommendation and the Supervisory Board’s nomination, the Annual General Meeting on 16 June 2022 elected PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Hamburg (PwC) to conduct the audit of the Annual and Consolidated Financial Statements for the 2022 financial year. In line with the legal requirements and the recommendations of the GCGC – especially those relating to the auditor’s independence – the Audit Committee then assigned the audit and defined its focus areas. The auditor carried out an audit of HHLA’s Annual Financial Statements for the 2022 financial year as provided by the Executive Board, including the divisional financial statements for the A division (Port Logistics subgroup) and the S division (Real Estate subgroup) presented as part of the notes, in line with the provisions of the German Commercial Code (HGB), the Consolidated Financial Statements for the 2022 financial year including the subgroup financial statements for the A and S divisions in accordance with the International Financial Reporting Standards (IFRS) that apply in the European Union and the additional requirements of German commercial law pursuant to Section 315e HGB, and the combined management report for HHLA and the Group for the 2022 financial year. The auditor issued an unqualified opinion with respect to each of the foregoing.

The auditor also audited the report prepared by the Executive Board of HHLA on company transactions with related parties for the 2022 financial year in line with Section 312 AktG, delivered a written report on the audit findings and, having no objections to make, gave the report the following unqualified opinion:

“On the basis of our audit and in our professional opinion we confirm that (1) the factual statements in the report are correct, (2) the consideration paid by the company for the transactions mentioned in the report was not inappropriately high, and (3) the measures detailed in the report give us no grounds to reach a substantially different opinion to that of the Executive Board.”

The auditor also audited the report prepared by the Executive Board in line with Article 4 (5) of the articles of association applied analogously to Section 312 AktG on the relationship between the A and the S divisions for the 2022 financial year, delivered a written report on the audit findings and, having no objections to make, gave the report the following unqualified opinion:

“On the basis of our audit and in our professional opinion we confirm that (1) the factual statements in the report are correct, (2) the consideration paid by the company for the transactions mentioned in the report was not inappropriately high.”

The auditor also reviewed the combined separate non-financial statement in line with Sec­tion 315c and Section 289c to e HGB to achieve a limited degree of certainty, reported the review findings and issued an unqualified opinion. Finally, the auditor subjected the remuneration report for the 2022 financial year to a material audit exceeding the requirements of Section 162 (3) AktG, reported the review findings and issued an unqualified opinion.

Each of the above-mentioned financial statements and reports along with the corresponding audit reports was made available to all members of the Supervisory Board as soon as it had been produced and checked. The documents were subsequently discussed in detail at the meetings of the Audit and Real Estate Committees on 17 March 2023 and at the Supervisory Board’s financial statements meeting held on 21 March 2023. Representatives of the auditor took part in the meetings, where they reported on the scope, focal points and key findings of the audit and were available to answer questions. They paid particular attention to the key audit matters described in the auditor's report along with the audit procedures used and the conclusions regarding the accounting-related internal control and risk management system. Finally, they reported on the nature and extent of the other services provided by the auditor.

As part of the preliminary review, the Audit and Real Estate Committees closely examined the course of the audit, the auditor’s reports and the findings. Once they had completed their examination, they recommended that the Supervisory Board as a whole approve the financial statements and reports. Following a detailed plenary examination of the auditor’s reports and findings and the findings of the committees’ preliminary review, and based on our own review, we approved the findings of the audit. Following our review, we had no objections to make to the Annual Financial Statements including the divisional financial statements, the Consolidated Financial Statements including the subgroup financial statements, and the combined management report for the 2022 financial year. Accordingly, we approved the Annual Financial Statements, the Consolidated Financial Statements and the combined management report at our meeting on 21 March 2023. HHLA’s Annual Financial Statements for the 2022 financial year have therefore been adopted. Following our review, we had no objections to make to the Executive Board’s statements on related parties and on the relationship between the A and S divisions or to the combined separate non-financial statement.

The Executive Board’s proposal for appropriation of the distributable profit was analysed and discussed with the Executive Board at the meetings of the Audit Committee (for the A division) and the Real Estate Committee (for the S division) on 17 March 2023 and at the Supervisory Board’s meeting on 21 March 2023. Following our own review, which paid particularly close attention to earning trends, financial planning and shareholders’ interests, both we and the Executive Board will propose to the Annual General Meeting that a dividend of € 0.75 per dividend-entitled class A share and € 2.20 per dividend-entitled class S share be distributed from distributable profit for the 2022 financial year.

Personnel changes

Scheduled Supervisory Board re-elections took place in the 2022 financial year. The existing members were re-elected by the shareholder representatives for an additional term of office. In terms of the re-election of employee representatives, previous members Thomas Lütje, Thomas Mendrzik, Norbert Paulsen and Sonja Petersen stepped down. In their place, the workforce elected Alexander Grant, Holger Heinzel, Stefan Koop and Franziska Reisener as new members of the Supervisory Board. Prior to taking up a Supervisory Board mandate with the Eurogate Group – a major competitor of HHLA – Maya Schwiegershausen-Güth, who had been re-elected by the workforce for an additional term of office, stepped down from the HHLA Supervisory Board on 30 September 2022. Susana Pereira Ventura was appointed in her place by order of the Hamburg Local Court.

There were no changes to the Executive Board in the reporting period. As announced in 2022, Dr. Roland Lappin stepped down from the Executive Board on 31 January 2023. The Supervisory Board initiated the necessary steps for finding a successor during the reporting period. Following preparations by the Personnel Committee, Tanja Dreilich was appointed to the Executive Board effective 1 January 2023 for an initial period of three years. She took over the role of Chief Financial Officer from Dr. Roland Lappin as of 1 February 2023.

On behalf of the whole Supervisory Board, we would like to thank our departing Supervisory Board members for their valued contributions. We would particularly like to single out Dr. Roland Lappin and thank him for his many years of dedicated service.

Finally, on behalf of the Supervisory Board, I would like to take the opportunity to thank the members of the Executive Board and workforce for their hard work in the 2022 financial year, and our shareholders and business partners for the trust they have placed in us.

Hamburg, 21 March 2023

The Supervisory Board

Prof. Rüdiger Grube
Chairman of the Supervisory Board