Report of the Supervisory Board

Prof. Dr. Rüdiger Grube

Chairman of the Supervisory Board

Dear shareholders,

Financial year 2023 was a challenging year. The ongoing war in Ukraine, geopolitical tensions, inflation and rising interest rates dampened consumer and industrial demand and hindered the global economic recovery in the aftermath of the pandemic – and the impact of these effects was felt clearly by HHLA. A further key event in the past financial year was the agreement between the City of Hamburg and MSC Mediterranean Shipping Company S.A., Switzerland (MSC), that saw MSC acquire a stake of up to 49.9 % in HHLA after submitting a voluntary public takeover bid for the HHLA shares via Port of Hamburg Beteiligungsgesellschaft SE.

These and other events shaped the work of the Supervisory Board during the reporting period. Against this backdrop, 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, in particular 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 by law, the articles of association or the Executive Board’s code of practice were submitted on time. After conducting their own review 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 ordinary meetings and seven special meetings in the 2023 financial year. At the ordinary 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. In addition, the Management Board regularly reported to us during the reporting period on the effects of the ongoing war in Ukraine on our terminal in Odessa.

The other focal points of the meetings during the reporting period can be summarised as follows:

The financial statements meeting held on 21 March 2023 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, the separate non-financial report and remuneration report, each for the 2022 financial year, as well as the format and agenda for the 2023 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 2023 financial year. Representatives of the auditor attended the meeting, reported on the main results of their audit and were available to answer questions. At this meeting, we also discussed the stake held by COSCO SHIPPING Ports Limited (CSP) in Container Terminal Tollerort (CTT) and the further expansion of our terminal in Trieste.

The first special meeting on 27 April 2023 was also used to discuss the stake held by CSP in CTT, in particular the status of its approval under foreign trade law. This approval was granted following the meeting on 10 May 2023 so that the transaction could be completed.

At our second ordinary meeting on 24 May 2023, we primarily focused on preparations for the upcoming Annual General Meeting and various other current topics, including the various geopolitical crises and sluggish economic growth. Other topics included Executive Board and Supervisory Board matters, including preparations for the self-assessment of the Supervisory Board, which was carried out in the following months.

The special meeting on 7 June 2023 dealt mainly with the premature departure of Tanja Dreilich from the Executive Board. The result was that Tanja Dreilich and HHLA came to an amicable understanding that she would leave the company as of the end of 2023 and would step down from her position as member of the Executive Board with effect from 30 June 2023 in order to take on new professional challenges.

At a further special meeting on 30 June 2023, we primarily discussed the matter of finding a successor for the position of Chief Financial Officer, as well as the self-assessment of the Supervisory Board’s work.

Significant topics covered during the ordinary meeting on 30 August 2023 were a discussion of the current business development, particularly the effects on HHLA of sluggish economic growth and the various geopolitical tensions, as well as the status of the implementation of the efficiency programme in the Container segment.

The progress made in implementing the Container segment’s efficiency programme was also a focal point of our strategy meeting on 5 September 2023. A further area of focus was HHLA’s sustainability strategy, which we discussed in detail. Finally, we also revisited the topic of finding a successor to the Chief Financial Officer during this meeting.

The special meetings on 13 September 2023 and 27 September 2023 dealt with MSC’s intention to acquire a stake of up to 49.9 % in HHLA – which remains (indirectly) majority-owned by the City of Hamburg with a stake of at least 50.1 % – and to this end to submit a voluntary public takeover offer for the HHLA shares via its subsidiary Port of Hamburg Beteiligungsgesellschaft SE. At the meeting on 27 September 2023, we decided to establish an equally representated Takeover Committee. The reason for setting up this Takeover Committee was that MSC’s and the City of Hamburg’s intention for MSC to acquire a stake in HHLA would likely lead to potential conflicts of interest for Supervisory Board members employed by the City of Hamburg or Hamburger Gesellschaft für Vermögens- und Beteiligungsmanagement mbH (HGV) – namely, Dr. Isabella Niklas, Andreas Rieckhof and Dr. Sibylle Roggencamp. In order to ensure an impartial and independent assessment of the takeover bid and its consequences, we decided that the Takeover Committee composed of independent members would advise and make final decisions on all matters pertaining to the takeover bid, in place of the Supervisory Board. This related in particular to the preparation and adoption of the reasoned opinion on the takeover bid to be submitted by the Executive Board and Supervisory Board, as well as the approval to conclude a binding preliminary contract for a Business Combination Agreement between HHLA, the bidder and its sole shareholder at the time, SAS Shipping Agencies Services Sàrl (SAS), as well as HGV, that sets out the common understanding of key areas regarding the long-term preservation of HHLA and its business model and that contains key commitments to HHLA. The Take­over Committee comprises three independent representatives of the shareholders, Prof. Dr. Rüdiger Grube, Dr. Norbert Kloppenburg and Prof. Dr. Burkhard Schwenker, and three representatives of the employees, Berthold Bose, Holger Heinzel and Stefan Koop.

At our final ordinary meeting on 14 December 2023, we dealt with the budget for 2024, the medium-term planning for the period from 2025 to 2028, the findings of the risk and opportunity inventory, and the declaration of compliance with the GCGC. Other topics included, in particular, the adoption of a framework for guarantees in connection with subsidies, approval for the granting of a power of attorney, a discussion of the Group’s funding situation and an investment project, as well as Executive Board and Supervisory Board matters.

At the last special meeting on 29 December 2023, we dealt with Executive Board matters and specifically the imminent inauguration of Annette Walter as Chief Financial Officer and the extension of Angela Titzrath’s term of office for a further five years.

Ordinary meetings are attended by all members of the Supervisory Board and, as a rule, also by the members of the Executive Board. However, the Supervisory Board also meets routinely 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 arose during the reporting period. As mentioned above, the Supervisory Board set up a Takeover Committee to deal with issues arising from the intention of MSC and the City of Hamburg for MSC to acquire a stake in HHLA and the resulting potential conflicts of interests. 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 standing committees: the Finance Committee, the Audit Committee, the Real Estate Committee, the Personnel Committee, the Nomination Committee and the Arbitration Committee. Furthermore, as mentioned above, the Supervisory Board set up an additional committee – the Takeover Committee – in September 2023 in order to handle MSC’s intention to acquire a stake in HHLA.

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 declaration

The Finance Committee held four meetings during the 2023 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 the 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 further expansion of our terminal in Trieste, Group financing measures and creating a framework for guarantees connected with applications for subsidies by Group companies.

The Audit Committee held four 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 the 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 2022 financial year, the half-year financial report and interim statements for the 2023 financial year, the work performed by Internal Audit, the determination of key audit issues for the 2023 financial year and, in this context, discussion of the audit risk, strategy and planning with the auditor, the findings of the 2023 risk and opportunity inventory, the annual report and audit plans of Internal Audit, and the preparation of the declaration of compliance with the GCGC. During the reporting period, the Audit Committee also discussed the company’s financial and liquidity position, as well as the external audit of HHLA’s risk and opportunity management system in accordance with the IDW PS 981 standard. HHLA’s Compliance Officer also regularly attends the Audit Committee’s meetings and reports on his activities as well as current developments. Other persons, 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 Audit Committee is also in regular contact 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 2022 financial year (March meeting). The committee also dealt with the budget for the 2024 financial year and medium-term planning for 2025 to 2028 (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.

The Personnel Committee held ten meetings in the reporting period. These meetings focused on finding a successor to the Chief Financial Officer with regard to the departure of Tanja Dreilich, as well as on extending Angela Titzrath’s term of office.

The Takeover Committee met a total of 13 times and primarily discussed the preparation and adoption of the reasoned opinion to be submitted by the Executive Board and Supervisory Board in accordance with Section 27 of the German Securities and Takeover Act (WpÜG), as well as the negotiations and approval to conclude a binding preliminary contract for a business combination agreement between HHLA, the bidder, SAS and HGV.

The Nomination Committee and Arbitration Committee did not hold any meetings 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 in the case of special meetings held at short notice or where the agenda contains few items – meetings can be held purely virtually (generally as a video conference). During the reporting period, this applied to three Supervisory Board meetings (30 June, 27 September and 29 December), five Personnel Committee meetings (23 January, 30 May, 28 June, 14 July and 29 December), and four Takeover Committee meetings (10 and 19 October, as well as 6 and 24 November). Several participants joined the meetings by phone in individual cases; no meetings were held purely as telephone conferences during the reporting period. The average attendance at the meetings of the Supervisory Board and its committees in the reporting period was approximately 95 %. Individual participation rates are documented in the table below.

Corporate governance

The declaration of compliance with the GCGC in accordance with Section 161 of the German Stock Corporation Act (Aktiengesetz: AktG) was prepared together with the Executive Board at the Audit Committee meeting on 13 November 2023 and adopted by the Supervisory Board at its meeting on 14 December 2023. The current declaration of compliance and further information about corporate governance can be found in the declaration on corporate governance in the management report. 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 their subsequent training and further 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 regularly informed of relevant topics, such as new legal requirements or accoun­ting standards. In the reporting period, one area of focus was the topic of sustainability, including the relevant regulatory requirements and their implementation within the HHLA Group.

Audit of financial statements

In line with the Audit Committee’s recommendation and the Supervisory Board’s nomination, the Annual General Meeting on 15 June 2023 elected PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, Hamburg (PwC) to conduct the audit of the annual and consolidated financial statements for the 2023 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 commissioned the audit and defined its focus areas. The auditor carried out an audit of HHLA’s annual financial statements for the 2023 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 2023 financial year including the sub­group financial statements for the A and S divisions, also presented as part of the notes, 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 2023 financial year. The auditor issued an unqualified opinion with respect to each of the foregoing.

The auditors also audited the report prepared by the HHLA Executive Board on company transactions with related parties for the 2023 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 S divisions for the 2023 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 289e HGB to obtain limited assurance, reported the review findings and issued an unqualified opinion. Finally, the auditor subjected the remuneration report for the 2023 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 were made available to all members of the Supervisory Board as soon as they had been produced and checked. The documents were subsequently discussed in detail at the meetings of the Audit and Real Estate Committees on 15 March 2024 and at the Supervisory Board’s financial statements meeting held on 20 March 2024. 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. Based on the final results of 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 2023 financial year. Accordingly, we approved the annual financial statements, the consolidated financial statements and the combined management report at our meeting on 20 March 2024. HHLA’s annual financial statements for the 2023 financial year have therefore been adopted. Based on the final results of our review, we also 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 2024 and at the Supervisory Board’s meeting on 20 March 2024. 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 € 0.08 per dividend-entitled class A share and € 2.20 per dividend-entitled class S share be distributed from distributable profit for the 2023 financial year.

Personnel changes

In December 2023, the Supervisory Board members Dr. Isabella Niklas and Susanna Pereira Ventura both announced that they would be stepping down from the Supervisory Board at the next possible date. In their place, with the approval of the Supervisory Board and the Nomination Committee and by order of the Hamburg Local Court on 19 February 2024, Bettina Lentz, State Secretary of the Hamburg Ministry of Finance, and Maren Ulbrich, Trade Union Secretary at the ver.di Federal Administration, were appointed members of the Supervisory Board.

Tanja Dreilich stepped down from her position as member of the Executive Board with effect from 30 June 2023 and left the company as of the end of the year in order to take on new professional challenges. The Supervisory Board initiated the necessary steps to find a successor during the reporting period and – following preparations by the Personnel Committee – appointed Annette Walter as Chief Financial Officer with effect from 1 January 2024 for an initial period of three years. Moreover, we extended Angela Titzrath’s mandate by a further five years until 30 September 2029 – also following preparations by the Personnel Committee.

Finally, on behalf of the Supervisory Board, I would like to take the opportunity to very cordial thank the members of the Executive Board and workforce for their hard work in the 2023 financial year. I would also like to thank our shareholders and business partners for the trust they have placed in us.

Hamburg, 20 March 2024

The Supervisory Board

Prof. Dr. Rüdiger Grube
Chairman of the Supervisory Board