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HAMBURGER HAFEN- UND LAGERHAUS-AKTIENGESELLSCHAFTANNUAL REPORT 2004

++RZ_GB 2_EN_Imageteil Teil1 01.11.2005 13:42 Uhr Seite 1


HHLA GROUP KEY FIGURES 2004 2003 Change

%

REVENUES mill. € 715.6 637.5 12.3 %

NET INCOME/LOSS FOR THE YEAR

– before taxes on income mill. € 49.9 9.3 436.6 %

– after taxes on income mill. € 35.2 -12.1 pos.

– after minority interests mill. € 32.4 -8.5 pos.

CASH FLOW according to DVFA/SG mill. € 113.3 58.9 92.4 %

CAPITAL SPENDING

(of which PPE and intangible assets) mill. € 117.9 106.4 10.8 %

TOTAL ASSETS mill. € 802.8 792.7 1.3 %

NUMBER OF EMPLOYEES 31 Dec. 3,334 3,364 -0.9 %

EQUITY RATIO % 11.4 7.8 46.1 %

ROCE % 12.01 5.75 108.9 %


OPERATING UNITS

DIVISIONS

HOLDING COMPANY


5THE GROUP AT A GLANCE


6

CONTENTS08 INTRODUCTION

Klaus-Dieter Peters

Chairman of the

Executive Board

12 THE HHLA GROUP 2004

44 EMPLOYEES18 HHLA DIVISIONS

18 HHLA Container division

26 HHLA Intermodal division

32 HHLA Logistics division

38 HHLA Real Estate division


52 INTENDED STRUCTURE OF THEHHLA GROUP

54 GROUP MANAGEMENT REPORT

66 CONSOLIDATED FINANCIAL STATEMENTS

66 Consolidated

balance sheet

68 Consolidated

income statement

69 Notes to the

consolidated finan-

cial statements

85 Auditors’ report

86 REPORT OF THE SUPERVISORY BOARD

88 Glossary of

financial terms

89 Chronology 2004

90 Publishing

information

7CONTENTS


8

The HHLA Executive Board (from left to right): Gerd Drossel, Intermodal division, Container sales; Dr Roland Lappin, Finance,

Real Estate division, Group Controlling; Klaus-Dieter Peters, Chairman of the Executive Board, Logistics division; Dr Stefan Behn,

Container division, Intermodal operations; Rolf Fritsch, Human Resources.


9INTRODUCTION

Benefiting from the continued, dynamic growth of international transport, HHLA

met and exceeded its ambitious targets in 2004 and outperformed the growth of

world trade. With a growth rate of 16.7 per cent, the world’s container traffic

volume unexpectedly reached record levels, thanks to strong contributions from

the high-growth regions of the Far East and the Baltic.

IMPROVED SALES AND EARNINGS

HHLA took full advantage of this window of opportunity and significantly expand-

ed its operations during the year under review. By doing so, we consolidated and

improved our market position in Germany and in Europe. A particularly important

achievement was the 17.1 per cent increase in HHLA container terminal through-

put to 4.6 million TEUs. HHLA companies in the rail transportation sector were

also able to achieve similar growth rates. In 2004, they transported over 1 million

TEUs to the European hinterland for the first time - 16.0 per cent more than in the

previous year.

The marked increase in business generated by all four HHLA Group divisions

led to a sustained improvement in all key sales and earnings figures. Sales

revenue increased by 12.3 per cent to EUR 715.6 million.

Earnings improved even more impressively in 2004. Cash flow rose by more than

90 per cent, from EUR 58.9 to EUR 113.3 million, while earnings before taxes (EBT)

jumped from EUR 9.3 to EUR 49.9 million. With consolidated after-tax profits of

EUR 32.4 million, we surpassed our own expectations by a wide margin.

INTRODUCTION


10

COURSE SET FOR GROWTH

We systematically continued our growth and modernisation strategy during the

2004 financial year. With our focus on the core business divisions of Containers,

Intermodal, Logistics and Real Estate, we have established a strong position in

four growth markets. During the year under review, all divisions generated profits

and turned in an improved performance compared with the previous year.

To meet the strong growth in demand, we accelerated our container terminal

expansion programme and launched the largest investment programme in the

history of HHLA. Over the next few years, we will invest more than one billion

euros in doubling the capacity and increasing the productivity of our three Ham-

burg container terminals, as well as in expanding our intermodal traffic and

growing our logistics activities.

To create long-term planning security for these investments, the proposed changes

to the EU’s regulatory framework (Port Package II) urgently require revision. The

rapid expansion of the public transport infrastructure is another factor essential

for success. The Senate of Hamburg has set an important strategic course with

its special port investment programme. In June 2005, the German government

allocated EUR 20 million for improvements to the Lower Elbe navigation channel.

This gave a clear signal that led us to implement our most important infrastructure

project without delay.

COPING WITH ECOLOGICAL ACCOUNTABILITY

Our investment in the expansion of the Hamburg multimodal logistics hub and in

its hinterland transport routes has made an important contribution to the future

of a European freight infrastructure built on the principles of sustainability. Our

expansion programme will ensure that the international trade in goods between

Central and Eastern Europe, as well as overseas, will follow a route that maxi-

mises benefits for transportation, the economy and the environment. The route

via the Port of Hamburg generally reduces inland transport distances by between

200 to 400 kilometres compared with routes via other directly competing ports.

This contributes to reductions in primary energy consumption and climate-rele-

vant traffic emissions, while at the same time reducing pressure on the inland

transport infrastructure. The conservation of resources features strongly in our

terminal expansion programme. With our high-tech terminals, productivity per

square metre will take a quantum leap forward compared with conventional con-

tainer terminals. Indeed, we will be doubling our handling capacity without any

notable increase in the operational area of the terminals.


11INTRODUCTION

AN ENTHUSIASTIC WORKFORCE

Once again, the enthusiasm of HHLA employees was a highlight of the past finan-

cial year. They faced numerous challenges in 2004, largely as a consequence of

the increased flow of goods passing through Hamburg and the continuation of

our modernisation and expansion programme. These challenges could never

have been met without high levels of commitment, flexibility and innovation on

the part of our employees. The Executive Board would therefore like to express

its heartfelt thanks to the entire workforce.

READY FOR THE FUTURE

The continuing integration of the global economy will lend renewed impetus to

the maritime economy. Although we expect this year’s growth trajectory to be

slightly less spectacular than that of the previous year, we nevertheless expect

to increase sales and earnings substantially. Events in the first few months of

2005 support this view.

With its know-how, strategic positioning and ambitious expansion programme,

HHLA is well prepared to further strengthen its profitability, actively exploit oppor-

tunities for growth and meet both current and future customer demands. We

remain confident in our ability to continue to develop our market position.

Klaus-Dieter Peters

Chairman of the Executive Board

Hamburger Hafen- und Lagerhaus-Aktiengesellschaft


Container movement at Altenwerder



14

Hamburg has benefited

increasingly from its loca-

tion at the heart of import-

ant traffic routes

GROWTH OPPORTUNITIESACTIVELY PURSUEDIN 2004, HHLA PROFITED FROM THE DYNAMIC GROWTH OF INTERNATIONAL

GOODS TRADE. WE TOOK FULL ADVANTAGE OF THE OPPORTUNITIES OPEN

TO US TO IMPROVE OUR SALES AND EARNINGS. WITH OUR FOCUS ON FOUR

CORE BUSINESS DIVISIONS AND THE START OF THE LARGEST INVESTMENT

PROGRAMME IN OUR HISTORY, WE SET A STRATEGIC COURSE FOR CON-

TINUED CORPORATE GROWTH.

AT THE INTERSECTION OF GROWING MARKETS

Although the gross domestic product of the Hamburg metropolitan area fell by

0.6 per cent in 2003, there was a slight recovery (1.5 per cent growth) during the

2004 financial year that mirrored the recovery in Germany as a whole. However,

this level of growth was clearly inadequate to support a sustained upswing.

The world economy, by contrast, experienced an increase of 4.9 per cent, a rate

of growth that had not been seen for over 30 years. In Europe, the Baltic area

(including Russia) experienced an above-average improvement in economic

performance.

The continuing globalisation of the transportation chain led to an exceptional rise

in world trade. The increase was approximately 9 per cent in 2004. The world

maritime trade, and the container business in particular, exhibited yet greater

dynamic growth. Between 1999 and 2004, global container traffic volumes grew

by over 50 per cent–from 235 million TEUs (20-foot standard containers) to 370

million TEUs.

The growth of the Port of Hamburg outstripped the world average during this

period. With an annual growth rate of 14 per cent, its throughput increased by 90

per cent, from 3.7 to 7.0 million TEUs. It also outperformed directly competing

North Range ports (Antwerp, Rotterdam, Bremerhaven) and increased its mar-

ket share to 28.2 per cent in 2004 (1999: 23.5 per cent).

Since the fall of the Iron Curtain, Hamburg has benefited increasingly from its

location at the heart of important traffic routes. Its position as a river port located

110 kilometres from the North Sea and close to the Baltic, together with an excel-

lent intermodal network of hinterland transport routes, makes Hamburg a natural

link between world markets and the up-and-coming states of the former Eastern

bloc. Today, the Port of Hamburg has become the most important intermediary

between the markets of Eastern and Central Europe and those of the Far East.


15THE HHLA GROUP 2004

HHLA offers a complete

network from overseas

ports to links with hinter-

land customers

HHLA focuses on four

divisions of business

VERTICAL INTEGRATION ALONG THE TRANSPORT CHAIN

During the 2004 financial year, HHLA actively profited from these underlying con-

ditions. We increased our sales and earnings substantially, while maintaining, and

even expanding, the Group’s position in its markets. Unlike most of our competi-

tors in container handling, HHLA has not adopted a horizontal growth strategy. All

HHLA divisions focus on vertical integration along the transport chain. Efficient

container terminals, high-performance transport systems and innovative logistics

services form a complete network from overseas ports to our customers in the

country’s interior. Our geographical focus remains on Hamburg. From here, we link

the economies of Central and Eastern Europe, Scandinavia, the Baltic with the

markets of the world.

The HHLA strategy is to strengthen all key links in the transport chain connect-

ing Europe with overseas and this results in numerous synergies between the

HHLA divisions. For example, good hinterland transport routes are becoming

an increasingly important criterion for shipping companies selecting a port.

Conversely, as freight volumes grow, so does our ability to consolidate the

freight streams to and from the hinterland. This also contributes to the inter-

modal strategy of HHLA with its railway subsidiaries and Baltic feeder services,

because the larger the volumes, the greater the benefits of rail and maritime

transport.

FOCUS ON FOUR GROWTH MARKETS

HHLA continued its policy of streamlining its group structure during the 2004

financial year and consolidated its operational divisions from seven to the

present four. In view of the changes to the portfolio, the Group reorganised its

subsidiaries and affiliates and dissolved the Foreign Port Handling division with

its minority holdings in South American container terminals.

In addition to HHLA’s three Hamburg container terminals, which captured two

thirds of the market at the Port of Hamburg with a throughput of 4.6 million TEUs

in 2004, the Container division offers a wide variety of container-related ser-

vices, including repair and maintenance, a contract packaging service, and a

centre for empty containers.

The Intermodal division pools the hinterland activities of HHLA by rail and road

and across the Baltic. Via its rail holdings Polzug, Metrans and Transfracht–each

one a market leader in its catchment area–HHLA provides rail access to the en-

tire European hinterland. The HHLA subsidiary Container- und Transport-Dienst

GmbH (CTD) organises container transport by road. HHLA has access to an

intermodal land bridge to the Baltic via the Lübeck-based combisped Group

and its container terminal in Lübeck-Siems.


16

The varied activities of the Logistics division strengthen the status of the Port

of Hamburg as a universal port. All HHLA subsidiaries and affiliated companies,

such as HHLA Rhenus Logistics GmbH or Unikai Lagerei- und Speditionsgesell-

schaft mbH, are leading players in their market segments. With its globally active

consulting subsidiary, HPC Hamburg Port Consulting, HHLA owns one of the

leading consulting companies in the field of port logistics. With its Frucht- und

Kühl-Zentrum GmbH subsidiary, HHLA is the market leader in fruit handling in

Germany. The Group also owns the fruit company Ulrich Stein GmbH, which is

market leader in hinterland transport from the Port of Hamburg. HHLA is also

involved in the largest German transhipment terminal for ore and coal via its

Hansaport Hafenbetriebsgesellschaft mbH.

The Real Estate division owns property in Hamburg’s historic Speicherstadt, in

the so-called “string of pearls” on the northern bank of the Elbe, together with an

extensive and diversified portfolio of office, commercial and logistics properties

at attractive locations in and around the Port of Hamburg.

LARGEST INVESTMENT PROGRAMME IN THE HISTORY OF HHLA

If they are to take advantage of the steady increase in demand for goods trans-

portation services, companies involved in global logistics need to grow their

capacities according to market demands and improve the performance of every link

in the transport chain. As some market players seriously underestimated the growth

in transport volumes in recent years, there have been worldwide bottle-necks in

certain areas where long-term planning is critical – transport infrastructure and

container terminals in particular.

Ports on the American west coast and the Northern European seaports, which

failed to foresee the growth in trade with China, are increasingly suffering from

capacity constraints. HHLA’s forward-looking investment strategy, which was

responsible for the expansion of capacity and efficiency improvements in the cor-

porate divisions, together with the Group’s strategy for optimising the complete

port interface, was decisive in ensuring that the Port of Hamburg maintained its

reputation for dependability and on-time delivery during the year under review.

To maintain its competitive advantage, HHLA reacted to the rates of growth,

which were considerably higher than forecast, by bringing forward its expansion

programme. HHLA will invest over one billion euros over the next few years to

double the handling capacity of its three Hamburg container terminals, to expand

its intermodal and logistics activities and to consolidate its technological lead-

ership position. We will increase our total container-handling capacity in Ham-

burg in stages, from today’s 5.2 million TEUs to more than 10 million TEUs early

next decade.

HHLA plans to invest over

one billion euros over the

next few years


17THE HHLA GROUP 2004

The capacity of the HHLA Container Terminal Altenwerder, originally built in

2001 to handle 1.9 million TEUs, will grow to 2.4 million TEUs by mid-2005, and

will ultimately be expanded to handle a throughput of 3.0 million TEUs.

A key focus of the expansion programme is doubling the capacity of the HHLA

Container Terminal Burchardkai, which in 2004 was operating close to its limit

at 2.6 million TEUs per annum. It will cost approximately EUR 600 million to extend

Burchardkai in stages, raising its capacity to 5.2 million TEUs by the year 2012.

Finally, the capacity of the Container Terminal Tollerort will be extended in

several steps from its current 0.8 million TEUs to 2.0 million TEUs.

During the year under review, capital expenditure rose by approximately 11 per

cent to EUR 117.9 million. The majority of this investment was made in the HHLA

container terminals, with EUR 43.5 million being spent on the HHLA Container

Terminal Altenwerder.


Night shift at Burchardkai



THANKS TO ITS TIMELY INVESTMENT IN ADDITIONAL CAPACITY AND IN THE

LATEST TERMINAL TECHNOLOGY, HHLA HAS BEEN ABLE TO STRENGTHEN ITS

MARKET LEADERSHIP POSITION AND AT THE SAME TIME ENABLED THE PORT OF

HAMBURG TO IMPROVE ITS COMPETITIVE POSITION. THE HHLA CONTAINER

DIVISION ENJOYED ABOVE-AVERAGE GROWTH AND MADE A DECISIVE CONTRI-

BUTION TO THE SUCCESS OF THE HHLA GROUP.

GATEWAY TO THEWORLD WIDE OPEN

20


21HHLA CONTAINER DIVISION

TREND TOWARDS CONTAINERS CONTINUES UNABATED

The Port of Hamburg benefited again last year from the undiminished upward

trend in global container transport. Hamburg’s growth of 14.1 per cent to 7.0 mil-

lion TEUs was above the average of 13.1 per cent enjoyed by the North Range

ports. Hamburg retained its position as the world’s ninth biggest port and the

second biggest in Europe after Rotterdam (8.2 million TEUs).

The gains in market share achieved by the Port of Hamburg are a result of steady

above-average growth in what are now its two most important routes. Between 2002

and 2004, container-handling volumes from trade with the Far East grew by 70 per

cent, and with the Baltic area by 65 per cent. With a market share of over 40 per cent

in both cases, the Port of Hamburg leads the field amongst the North Range ports.

According to a study carried out by the London consulting firm Drewry, the unex-

pectedly strong growth of worldwide container traffic, particularly to and from the

Growth of global

container traffic again

exceeds forecasts


CONTAINER HANDLING VOLUME TEU 1000 2004 TEU 1000 2003 Increase %

HHLA Container Terminal Burchardkai 2,558 2,337 9.5

HHLA Container Terminal Altenwerder 1,266 874 44.9

HHLA Container Terminal Tollerort 725 660 9.8

Others 47 55 –

HHLA container terminals 4,596 3,926 17.1

Port of Hamburg, total 7,003 6,138 14.1

HHLA market share 65.6 64.0 –

22

The HHLA Container

division increased its

sales by approximately

20 per cent

Far East, has meant that ports are now the limiting factor in intercontinental

traffic. Affected by this development are the western ports in Europe and North

America, the Mediterranean hubs, and ports in West Africa and Brazil. Hamburg,

by contrast, as the Drewry study highlights, has been able to meet the increased

demand thanks to the timely expansion of its terminal capacities.

HHLA CONTAINER DIVISION EXPANDS RAPIDLY

HHLA was already busy creating additional handling capacity when it opened the

HHLA Container Terminal Altenwerder in 2002. Without these capacities, we

would not have been able to take advantage of the growth opportunities of the

past two years. While throughput at the HHLA Container Terminal Burchardkai

grew in 2004 by 9.5 per cent to approximately 2.6 million TEUs (its maximum cap-

acity), and throughput at the HHLA Container Terminal Tollerort increased by 9.8

per cent to over 0.7 million TEUs (close to maximum capacity), throughput at the

container terminal Altenwerder leaped by 45 per cent to 1.3 million TEUs, thereby

making an exceptional contribution to the strong sales and earnings performance

of the HHLA Container division.

In addition to the three container terminals, the HHLA Container division owns

HCCR Hamburger Container- und Chassis-Reparatur-Gesellschaft mbH, LZU

Leercontainer Zentrum Unikai GmbH and Kombi-Transeuropa Terminal Hamburg

(KTH), which are direct neighbours of the container terminal Altenwerder. Thanks

to a 19.4 per cent increase in sales to EUR 388.1 million (previous year: EUR 325.1

million), the HHLA Container division was responsible for 54 per cent of the HHLA

Group’s total revenues, compared with 51 per cent the previous year.



HHLA will double the cap-

acity of its Hamburg con-

tainer terminals to 10 mill.

TEUs by the beginning of

the next decade

CAPACITY EXPANSION TAKES CENTRE STAGE

By the time the ISPS codes (International Ship and Port Facility Security)–the

international security concept for port facilities and ships–came into effect on

1 July 2004, all HHLA facilities had been certified. HHLA’s security measures were

implemented, and a much higher security standard was achieved, without im-

pairing ongoing operations. In addition to the successful management of the in-

creased throughput, issues of key importance in 2004 were the ongoing develop-

ment of operational processes at the terminals and service areas, and expediting

the construction of additional capacity at all three HHLA container terminals.

HHLA CONTAINER TERMINAL TOLLERORT

Handling procedures were modernised with the introduction of a radio data trans-

mission system and new software for production, planning and control. A new

site for container storage became operational in the last quarter of 2004, increas-

ing the capacity of the terminal from 0.7 to 0.8 million TEUs.

Over the next few years, the capacity of the HHLA Container Terminal Tollerort

will be increased to a total of 2.0 million TEUs as a result of the larger yard area,

bigger gantry cranes, the optimisation of the van carrier fleet, deeper berths and

the construction of a new berth facility. Following the installation of two large new

container gantry cranes in 2005, the TCT will be able to handle two Post-Panmax

container ships (> 5,000 TEUs) simultaneously.


HHLA CONTAINER TERMINAL ALTENWERDER

With the introduction of additional berths, storage blocks and gantry cranes,

the capacity of the HHLA Container Terminal Altenwerder will rise to 2.4 million

TEUs by the summer 2005. Further expansion to 3.0 million TEUs is planned. At

the Container Terminal Altenwerder, today’s biggest container vessels are being

processed in record time. The terminal has gained a reputation as the most

modern and one of the most efficient terminals in the world: yet it has not

reached its full potential. We are currently working with the Technical University

of Berlin to optimise our monitoring software. A project that promises to deliver

further improvements in productivity.

HHLA CONTAINER TERMINAL BURCHARDKAI

On 29 November 2004, a new era began for Hamburg’s oldest and largest con-

tainer terminal. The start of building work on the new railway station at the HHLA

Container Terminal Burchardkai marked the beginning of the biggest investment

programme in HHLA history. More than EUR 600 million will be invested in the

Container Terminal Burchardkai to increase its capacity from the present 2.6 to 5.2

million TEUs by the year 2012. Carrying out the work during active operations will

be a challenge for the terminal. However, intelligent yard management and the

staggered commissioning of new terminal components (higher capacity storage,

replacement of 3-stack with 4-stack van carriers, new cranes, new berths) will

allow the terminal’s capacity to be increased while the expansion is under way. The

Container Terminal Burchardkai will be adopting some of the key components of

the Altenwerder terminal design, including in particular an enhanced version of the

Altenwerder block yard system. This system will also allow the HHLA Container

Terminal Burchardkai to substantially increase its productivity levels.

24



The Institute of Shipping

Economics and Logistics

considers the Port of

Hamburg to be on a

stable growth trajectory

PREPARED FOR FURTHER GROWTH

Forecasts by the Bremen Institute of Shipping Economics and Logistics (ISL)

published in November 2004 indicate that the Port of Hamburg will follow a stable

growth trajectory over the next ten years. According to the institute’s report, at an

average annual growth rate of 9.4 per cent, container handling will grow from

today’s 7 million TEUs to 18 million TEUs by 2015–an increase of over 250 per

cent. The forecast is based on the Senate of Hamburg’s current port investment

programme, which has set aside EUR 746 million to develop the port’s infra-

structure to meet anticipated demand up to 2009.

HHLA is collaborating closely with its customers in the development of its con-

tainer terminal expansion programme. Since ships continue to grow in size and

container vessels account for an increasing share of maritime traffic, it is quite

realistic to expect throughput at the HHLA container terminals to grow in line with

the ISL forecast, particularly as the terminals will be offering additional services.

The HHLA Container division is forecasting growth of approximately 12 per cent

for the 2005 financial year.

With its programme for expansion on existing sites, HHLA will be able to react

rapidly to the actual demand trend. A combination of improved productivity per

unit area and greater handling efficiency will deliver an important competitive

advantage to HHLA.


Rail cargo handling at Altenwerder



28

HHLA RAIL, ROAD AND MARITIME HINTERLAND TRANSPORT SYSTEMS ARE OF

SPECIAL IMPORTANCE TO THE OPERATIVE CAPABILITY OF GERMAN SEAPORTS.

A MAJOR GROWTH SPURT HAS ONCE AGAIN DEMONSTRATED THEIR EFFECTIVENESS.

HHLA INTERMODAL STRENGTHENS HAMBURG’S POSITION


29HHLA INTERMODAL DIVISION

STRONG GROWTH IN PERFORMANCE AND SALES

Sales by the HHLA Intermodal division surged 13.1 per cent in 2004 to EUR 209

million. This growth is attributable largely to the substantial 16 per cent increase

in freight transported by HHLA’s rail holdings. For the first time, they transported

more than one million TEUs from German ports to the hinterland. The rail com-

panies Polzug, Metrans und Transfracht maintained or strengthened their market

leadership positions in their catchment areas. During the year under review, the

HHLA subsidiary Container- und Transport-Dienst GmbH (CTD), which spe-

cialises in road transport, also improved its market position in terms of transport

performance, sales volume and earnings. HHLA’s Lübeck-based subsidiary

combisped, on the other hand, reported further start-up losses.

The overall success of the HHLA Intermodal division was achieved in a complex

market beset with difficulties. As a result of the EU expansion to the east, rail

transport’s competitive position in the new EU member states has deteriorated

as truck waiting times at the border crossings have shortened. Rail transport ser-

vices to Eastern Europe face much stronger competition from road transport and


30

The quality of a port’s

links to the hinterland

is a crucial factor

in a port’s ability to

attract business

feeder ships. At the same time, the arrival of a large number of new rail operators

has increased competitive pressures within the rail industry.

PORT QUALITY AND HINTERLAND SYSTEMS

The quality of a port’s links to the hinterland is a crucial factor in a port’s ability to

attract business. HHLA has therefore systematically strengthened and expanded

its intermodal network in recent years. The goal is to provide the best mode of

transport for every shipment to the hinterland as part of a high-quality total trans-

port service. Here, the HHLA intermodal companies adopt a customer-neutral

approach. Positive synergies with our Container and Logistics divisions arise

from the mutual “win-win” situation. Success in one area of business inevitably

leads to increased volumes and to sales in the other areas.

The rail holdings in the HHLA Intermodal division offer a wide range of reliable,

high-quality rail services throughout the Central and Eastern European hinterland

of the Port of Hamburg.

Transfracht, with its quality products AlbatrossExpress and Austria Container

Express, has the largest network of seaport-linked container rail routes in the Ger-

man-speaking countries of Europe.

Countries serviced by Metrans include the Czech Republic, the Slovak Re-

public, Hungary and Slovenia. With its own domestic terminals and its own

wagons and handling equipment, Metrans offers a high degree of vertical inte-

gration and has enjoyed outstanding growth for many years.

Polzug links the German seaports to its main market in Poland as well as with

the Baltic states, Russia, Ukraine, Georgia, Azerbaijan and central Asia. Thanks

to a highly integrated range of products and services (including customs clear-

ance and door-to-door road transport) and its close proximity to its customers,

Polzug has maintained its position in a difficult market.

The combisped Group represents HHLA’s Baltic strategy. With its contain-

er terminal in Lübeck-Siems, a freight forwarding company specialising in

CONTAINER TRANSPORTATION TEU 1000 2004 TEU 1000 2003 Increase %

Transfracht 745 655 13.7

Metrans 193 146 32.1

Polzug 67 66 2.1

HHLA rail investment holdings 1,005 867 16.0


31HHLA INTERMODAL DIVISION

Rail transport gains a

share of the hinterland

traffic market

container transport, and feeder services in the Baltic (from Lübeck to Hamina

and St Petersburg), the combisped Group offers the shortest and fastest routes

linking the Baltic with overseas markets.

CTD Container- und Transport-Dienst GmbH provides road-freight forwarding

services to the local Port of Hamburg region and benefits from the high volume

of freight to and from the local area. Indeed, thirty per cent of goods passing

through the port are produced, processed or used in the Hamburg metropolitan

area. CTD also offers long-distance, heavy-lift and specialised transport services

of all kinds.

FIRM PLANS FOR FUTURE GROWTH

Dynamic growth in international trade is leading to stable growth in the demand

for onward transport services to and from the ports. At the same time, competi-

tion is becoming more intense. The HHLA Intermodal division, with its strong rail

subsidiaries and its innovative Baltic strategy, is well positioned in its market.

Last year, rail transport succeeded in regaining hinterland traffic market share. In

addition, the Port of Hamburg, thanks to its exceptional growth, has been able

to achieve the critical volumes required to allow the development of attractive

direct links to the hinterland.

Transfracht and Metrans expect further growth in sales and earnings in the next

few years. Polzug, still constrained by bottlenecks in the rail infrastructure be-

tween Germany and Poland which will not be eliminated until 2007, plans to take

advantage of the growth in transport to Poland and Eastern Europe. The future

looks good for HHLA’s Baltic strategy of providing a direct rail link between the

Port of Hamburg and the HHLA container terminal in Lübeck via a land bridge,

with increased handling and transport volumes in the first months of 2005 and

the addition of regular block train rail links.


Modern logistics at the overseas centre



34

SUCCESS ACROSS THE BOARD


35HHLA LOGISTICS DIVISION

LEADING ROLE IN PROMISING MARKETS

The HHLA Logistics division offers a wide range of services at the universal

Port of Hamburg. It is HHLA’s ambition to gain market leadership, or at least

a leading position on submarkets. One of HHLA Logistics’ particular strengths

is its combination of freight-handling expertise and in-depth auxiliary logistics

services. This allows the division to take advantage of the opportunities in dif-

ferent markets and thereby generate growth in revenues and earnings. To

strengthen its market position, HHLA has forged strategic partnerships in the

fields of contract and fruit logistics. In the 2004 financial year, HHLA continued

to optimise its logistics portfolio and focussed its activities on the following

five key areas:

HHLA’S LOGISTICS DIVISION HAS ENJOYED A STRING OF SUCCESSES.

CONTRACT LOGISTICS COMPANY HHLA RHENUS WAS ABLE TO POSITION ITSELF

SUCCESS-FULLY IN THE MARKET. RORO SPECIALIST UNIKAI, HANSAPORT BULK

TERMINAL, ULRICH STEIN FRUIT TRANSPORT COMPANY AND HPC HAMBURG

PORT CONSULTING ACHIEVED STRONG INCREASES IN SALES.


36

Warehousing and contract logistics: HHLA Rhenus Logistics is well known

for its modern contract logistics and its dynamic growth in a market that has

profited both from the eastward expansion of the EU and from the dynamic growth

in world trade.

Fruit handling and cold chain logistics: Via its two subsidiary companies,

HHLA is the market leader in Germany in the handling of sensitive cold storage

products (such as bananas) and in the associated hinterland transport of these

products using the latest control systems.

RoRo and cruise vessels: Unikai is the competence centre for vehicle logis-

tics in the Port of Hamburg. Unikai also operates a container-packing centre for

vehicles and forestry products. At the Hamburg Cruise Centre, Unikai handles the

complete logistical process for cruise ships and passengers.

Bulk handling: Hansaport is the leading bulk-handling terminal for coal and

ore in Germany. It maintains a sophisticated logistics system.

Consulting: Hamburg Port Consulting advises HHLA and external customers

on the entire logistics chain including hinterland transport, sea freight and air

freight.

With an 8.6 per cent increase in sales to EUR 87.4 million and a marked im-

provement in earnings, the HHLA Logistics division made an important con-

tribution to the success of the Group.

SOME OF THE YEAR’S HIGHLIGHTS

Successful launch of HHLA Rhenus. HHLA Rhenus Logistics GmbH, which was

established with our strategic partner Rhenus AG on 1 November 2003, enjoyed

an extremely successful year in 2004. HHLA Rhenus increased its sales by 35 per

cent and substantially expanded its advanced contract logistics business. In

August 2004, the company increased its total warehousing space by 50,000 to

180,000 square metres when it opened a second site on behalf of a prestigious

major customer. Plans are currently being drawn up for the construction of a new,

modern logistics centre, which will provide approximately 80,000 square metres

of space adjacent to the HHLA Container Terminal Altenwerder and the KTH

Kombi-Transeuropa Terminal Hamburg GmbH.

Strong partner to the fruit-handling sector. HHLA gained a strong strategic

partner on 1 July 2004, when Belgian New Fruit Wharf (BNFW), a subsidiary of

the Belgian Sea-Invest Group, acquired a 49 per cent stake in HHLA subsid-

iaries Frucht- und Kühl-Zentrum GmbH and Ulrich Stein GmbH. The shared

goal is to strengthen the operation’s existing market leadership position in the

European market. In 2004, HHLA Frucht- und Kühl-Zentrum GmbH was the first

fruit-handling company on the North Sea coast to gain International Food

Standard certification.

HHLA Logistics com-

bines handling know-how

with in-depth auxiliary

logistics services


37HHLA LOGISTICS DIVISION

Growth in handling vol-

umes and the eastward

expansion of the EU

have created favourable

market conditions

Unikai on a roll. The unexpectedly high 20 per cent growth in vehicle shipments

(from 122,000 to 146,000 units) was an influential factor in Unikai’s excellent

earnings for the year under review. A particular highlight was the visit of the

cruise ship Queen Mary 2 to the new Hamburg Cruise Centre terminal in July

2004. Unikai dealt successfully with the terminal handling arrangements

despite tight security and the arrival of over 150,000 onlookers.

Bulk goes from strength to strength. Despite some impairment of day-to-day

operations as a result of the expansion of the coal storage areas (which will

increase the capacity of the Hansaport terminal from 12 to 15 million tonnes in

2005), the terminal managed to handle just under 12 million tonnes. Hansaport

once again reported very good sales and earnings.

Success through technology transfer. Based on the Group’s container-hand-

ling know-how, HPC Hamburg Port Consulting GmbH acquired the contract to

supervise the building of 100 gantry cranes, 26 of which were delivered to inter-

national terminal operators. The sustained global container boom helped HPC

to triple its sales for technological consulting services.

GOOD PROSPECTS FOR LOGISTICS SERVICES

Given the background of stable growth in transport volumes at the Port of Ham-

burg, the prospects for the various logistics activities of the HHLA Logistics

division are good. In the future, HHLA Rhenus Logistics will benefit not only

from the general growth in freight handling at the Port of Hamburg but also

from the eastward expansion of the EU, which has already created additional

demand for logistics centres east of the Rhine.

As far as HHLA’s fruit-handling activities are concerned, the synergies from the

new alliance with Belgian New Fruit Wharf will have a positive effect on the fruit-

handling operation and its associated logistics services over the next few years

and will help the business to grow and diversify more vigorously. There is also

good potential for growth at Unikai and at the successful Hansaport bulk ter-

minal, which will benefit from additional storage capacity with effect from 2005.

The current expansion of ports and port handling facilities throughout the world

provides good opportunities for the further development of HPC. The key areas

of operational planning and management consulting, IT applications, technical

construction supervision and terminal planning offer opportunities for growth

throughout the logistics chain.


Drive through the “Speicherstadt”



40

IN 2004, HHLA CONTINUED TO INCREASE THE OCCUPANCY RATE AND THE TAKE-UP

OF FLOOR SPACE IN ITS PROPERTIES IN THE SPEICHERSTADT, ON THE NORTHERN

BANK OF THE RIVER ELBE AND ITS LOGISTICS PROPERTIES AT THE PORT OF HAMBURG.

SUCCESSFULDESPITE MARKET TREND


41HHLA REAL ESTATE DIVISION

DIVERSE MARKET CONDITIONS

Despite a clear upturn in the take-up of floor space, the market for office prop-

erty in Hamburg remained subdued. At the end of 2004, there were approxi-

mately 1.1 million square metres of vacant office space, or 8.7 per cent of the total

available office space of 12.9 million square metres. The average rent per square

metre fell to EUR 12.03.

Logistics properties have proved to be a great deal more resilient. Municipal stat-

istics confirm that demand exceeded supply during the year under review for the

2.7 million square metres of available logistics space at the Port of Hamburg.

The continued growth in goods throughput has made itself felt quite clearly here.


42

Increased sales and

improved earnings

performance

The Hamburg Port

Authority will be moving

to the Speicherstadt

HHLA REAL ESTATE WELL POSITIONED

With sales up by 7.1 per cent to EUR 26.9 million, the Real Estate division grew

significantly during the 2004 financial year despite the negative market trend. The

division reported improved occupancy rates and higher-quality operating results

in all operational areas. The occupancy rate increased. With the three oper-

ational areas of Speicherstadt, Elbufer and Logistics, the HHLA Real Estate div-

ision is represented in a variety of sectors of the Hamburg property market.

The unique quarter of the historical Speicherstadt is an exposed urban area

covering 300,000 square metres. Following the removal of the customs fence, the

Speicherstadt lies now easily accessible between the town centre of Hamburg

and the urban development project HafenCity. HHLA Real Estate’s 65,000 square

metres of property on the northern bank of the Elbe are located in a first-class

urban district between Övelgönne and the St. Pauli fish market, an area known

as the “string of pearls” of the Elbe. The HHLA Real Estate Logistics unit oper-

ates some 800,000 square metres of space in the Port of Hamburg, approxi-

mately 380,000 square metres of which are distribution depots.

KEY ACTIVITIES DURING THE FINANCIAL YEAR

Structural changes in the Speicherstadt were driven forward by important rental

and development successes. The demand-led approach of our development

strategy was endorsed by two major projects.

We redeveloped Block S to satisfy the needs of a large media company look-

ing for new German headquarters.

We also attracted the Hamburg Port Authority to the Speicherstadt. In the au-

tumn of 2006, the authority will move approximately 600 employees into a modern,

20,000 square metre office in Block P, which is currently being redeveloped. A key

factor in the decision of both of these companies was the conversion concepts to

adapt the buildings to their new functions, developed in consultation with the

tenants, and the special flair of the historic Speicherstadt.

HHLA’s Real Estate Elbe Banks business unit also had a good year. The HHLA

subsidiary Fischmarkt Hamburg-Altona GmbH (FMH) again achieved an occu-

pancy rate well above the market average. The ongoing development of the

fishing port into an attractive centre for trade and industry continued.

HHLA’s Real Estate Logistics business unit rented out the entire 50,000 square

metre Dradenau logistics centre.


43HHLA REAL ESTATE DIVISION

STRUCTURAL CHANGE AND INNOVATION

The future of the HHLA Real Estate division remains bright. We will maintain our

strategy of integrated long-term growth by meeting customer needs through

direct dialogue with customers. We will also maintain the particular qualities of

our property locations while at the same time maximising their potential by intro-

ducing new, premium services.

For HHLA Real Estate, this means consistent continuation of our successful pro-

ject development, which may also involve completely new types of development

in the Speicherstadt in the future. As well as providing storage space for com-

panies trading in carpets, textiles and tea, the Speicherstadt houses commercial

offices, the headquarters of HHLA, museums and cultural and commercial

warehouses. There is still room for continued, judicious development of this

historic complex to create a cultured blend of traditional port and modern urban

landscape.

There is potential for further expansion of the logistics offices of the HHLA Real

Estate division in the Port of Hamburg. Plans are currently being drawn up for the

expansion of the Dradenau logistics centre. Preparations are also under way to

provide a replacement office for the overseas centre, which will be affected in the

medium term by the “Sprung über die Elbe” (Leap across the Elbe) urban devel-

opment project.


Change of shifts at Burchardkai



46

KNOWLEDGE, HEALTH AND MOTIVATION ARE NOT ONLY IMPORTANT FACTORS FOR

CREATING EMPLOYEE SATISFACTION; THEY CONSTITUTE A BASIC REQUIREMENT

FOR THE LONG-TERM SUCCESS OF A COMPANY. HHLA’S HUMAN RESOURCES

POLICY IS DESIGNED TO BE FORWARD-LOOKING. THE GROUP IS SETTING STAND-

ARDS FOR PROACTIVE PERSONNEL MANAGEMENT WITH HIGH INVESTMENT IN

TRAINING AND PROFESSIONAL DEVELOPMENT AND CONTINUED MODERNISATION

OF ITS REMUNERATION SYSTEMS.

A HUMAN RESOURCESPOLICY WITH LONG-TERM GOALS


47EMPLOYEES

GROWTH AT HHLA CREATES JOBS

While the number of people engaged in gainful employment fell by 1.5 per cent in

Hamburg last year, the growth of the HHLA Group resulted in a marked rise in the

size of our workforce. Adjusted for changes in the portfolio, primarily as a result of

the disposal of our South American investment, the number of employees rose

by 5.2 per cent, or 165, to a total of 3,334 as at 31 December 2004. During the

year under review, new staff were hired primarily at the HHLA container terminals,

in logistics and in the rail subsidiaries. The Hamburg-based operations were

responsible for approximately 75 per cent of the growth in the workforce.

The actual importance of HHLA to the Hamburg labour market is much greater

than this. Last year, HHLA employed a further 800 people at HHLA facilities at

the Port of Hamburg, the majority at the container terminals or in logistics. The

employment of external workers is typical of port environments and includes, for

example, workers from the Gesamthafenbetriebs-Gesellschaft mbH Hamburg

(GHBG), the common manpower pool of the Hamburg docklands, and workers

from the dock companies.

HHLA’s EUR 800 million investment programme aimed at expanding its con-

tainer-handling capacities will create a considerable number of new jobs in

Hamburg over the next few years, including approximately 1,000 at the three con-

tainer terminals and a further 2,000 in ancillary jobs.

New jobs at HHLA con-

tainer terminals, logistics

and rail subsidiaries


HHLA creates new

traineeships

48

CHALLENGING THE YOUNGER GENERATION

HHLA competes for the best young talents on the basis of a long-term strategy

that remains independent of cyclical labour market fluctuations. As a result, we

are able to recruit the quality of junior staff we need even during times when the

numbers of school leavers and university graduates are falling. The Group be-

lieves strongly in employing its trainees and apprentices after they completed their

training and maintains regular contact with students at job fairs.

Over the past ten years, we have steadily increased the number of job openings

for trainees and apprentices. Last year alone, we increased the number of

traineeships by 20 per cent to 105 in total. Our trainee policy is backed by a variety

of internal and external training facilities and by professional training pro-

grammes. These facilities include:

The HHLA Training Institute is an in-house establishment where we train

first-time employees for jobs in the port industry. It offers a wide range of training

and development programmes for employees of HHLA and other Hamburg-based

companies. Last year we taught nearly 1,200 employees on 424 training courses.

As well as providing advanced professional training in administration, we also

trained operators of large items of equipment such as drivers for gantry cranes and

van carriers.

As part of its university marketing activities, HHLA sponsors the international

logistics unit founded in 2003 at the Technical University Hamburg-Harburg, the

HSL Hamburg School of Logistics. Our sponsorship is for a five-year period.

HHLA is sponsoring the logistics management course, since standards are be-

coming increasingly tough for junior logistics staff with their sights on top man-

agement. A one-year, full-time postgraduate course culminating in a Master of

Business Administration (MBA) has been running since October 2004. In addition

to German students, the HSL educates young people from other European coun-

tries, particularly from the new Eastern European states.


49EMPLOYEES

As a sponsor of the Hamburg Ausbildungszentrum e.V. (Hamburg Training

Centre), HHLA provides the institution with considerable funds. The HAZ pro-

vides a full-time education for students who are unable to find employment with

a private enterprise via the job centres.

A general training agreement for gantry crane drivers was concluded in a joint

project with companies from the Port of Hamburg. The FZH Fortbildungs-Zen-

trum Hafen Hamburg e. V. has signed an agreement with a simulator manufac-

turer for a container gantry crane simulator, which all trainees are allowed to use.

It is expected that approximately 90 employees from the terminal operations will

be trained here. Thanks to the continued growth in container traffic volumes,

there is a strong demand for gantry crane drivers. Training these drivers on the

simulator is an ideal option, since gantry crane capacity is normally at a premium.

HHLA also actively encourages the professional development of junior man-

agement in parallel with the training of its more senior managers. The HHLA

Trainee Programme has been developed to provide formal training for new gradu-

ates. The 15-month programme covers corporate, professional and industry-

specific skills in project management, rhetoric and communication. It provides

an alternative to direct entry, with good opportunities for advancement.

One of the key tasks of personnel development is the professional training

of managers. HHLA is currently creating a management pool to facilitate the pro-

motion of its own employees to key positions in the short to medium term. The

management pool tackles strategically significant projects, which develop the

managers’ knowledge, technical skills, familiarity with procedures and inter-

personal skills. In addition to these specific development measures, HHLA also

encourages work groups, which foster the exchange of experience and

information on non-technical issues, including, for example, meetings and round

table discussions with external guest speakers on topics reaching beyond port

business.


50

MODERNISATION OF THE REMUNERATION SYSTEMS

In the past financial year, HHLA carried out many measures designed to create a

comprehensive personnel management system. Notably, we introduced a

modern remuneration system with variable salary components at all management

levels. The variable salary components are linked via personal performance

agreements to individual targets and to the success of the company. Senior

managers may receive profit-sharing, the size of which relates to how specific

targets are met. This performance target agreement system was implemented

throughout the Group during the 2004 financial year.

The recent history of the German social security system leads us to believe that

pension levels in Germany will continue to decline and that the pension age will

be raised. Paying into a private pension plan is key to making up the expected

shortfall in pension income from the state. The parties to the collective wages

and salary agreement have agreed that contributions will be paid for an initial

two-year period to build up a private pension fund to support, in particular, those

employees whose company pension entitlement is expected to be low.

In addition, we laid the foundation for the introduction of interest-bearing and tax-

deductible lifetime working accounts during the year under review. Employees

will be able to directly influence their date of retirement by building up and with-

drawing time credits from their accounts.


HHLA gains award for

its excellent health and

safety system

51EMPLOYEES

HEALTH AND SAFETY

A large percentage of HHLA services involve heavy loads, hazardous goods and

large items of equipment, all being moved at high speed 360 days a year, 24 hours

a day. Measures to ensure the safety of personnel and visitors must therefore be

strictly enforced, particularly in areas where heavy equipment is being operated

in all weathers. Health and safety are key components of our corporate goals.

The HHLA container terminals are amongst the safest in the world.

In October 2004, the high standard of the safety systems at both the HHLA

Holding and the HHLA Container Terminal Burchardkai were recognised by

Hamburg’s Senator for Health, Jörg Dräger. At the award ceremony, the senator

pointed out that HHLA viewed health and safety as “an investment in the com-

pany’s future”. Out of 2,200 companies inspected by the Hamburg department

of health and safety since 1998, only five percent have qualified for this award.

In February 2004, SCA Service Center Altenwerder GmbH gained the highest

category health and safety commendation for its excellent health and safety

system. For its approach to health management, HHLA Container Terminal Tol-

lerort was runner-up in 2003 in the nationwide competition “Healthy workers –

Healthy company”.


52

HHLA HAMBURGER HAFEN- UND LAGERHAUS-AKTIENGESELLSCHAFT

CONTAINER INTERMODAL

HHLA Container Terminals GmbH 100 % HHLA Intermodal GmbH 100 %

CTB GmbH 100 %

SCB GmbH (100 %)

CTA Besitz-GmbH (74.9 %)

TCT GmbH (100 %)

TCT Besitz-GmbH (100 %)

HCCR GmbH (100 %)

POLZUG Polska sp.zo.o. (33.3 %)

POLZUG GmbH (33.3 %)

Transfracht GmbH (50 %)

CTD GmbH (100 %)

combisped GmbH (100 %)

CTL Container Terminal Lübeck GmbH (100 %)

LZU GmbH (65 %)

UNIKAI Hafenbetrieb GmbH (100 %)

CuxPort GmbH (25.1 %)

Cuxcargo GmbH & Co. KG 50 %

Cuxcargo Verwaltungs-GmbH 50 %

DHU GmbH 23.1 % (17.3 %)

CENTRAL DEPARTMENTSCORPORATE COMMUNICATIONFINANCECORPORATE CONTROLLINGHUMAN RESOURCES MANAGEMENTINFORMATION SYSTEMSPROCUREMENT/MATERIALS MANAGEMENT

METRANS Deutschland GmbH (50.1 %)

METRANS Danube a.s. (50.1 %)

METRANS Danubia Kft. (50.1 %)

METRANS a.s. (50.1 %)

SCA GmbH (74.9 %) KTH GmbH (37.5 %)

CTA GmbH (74.9 %)

++RZ_GB 4_EN_Lagebericht 01.11.2005 12:39 Uhr Seite 52

53INTENDED STRUCTURE OF THE HHLA GROUP (CURRENT AS AT 31 MARCH 2005)

Frucht GmbH 51 %

Stein GmbH 51 %

UNIKAI L&S GmbH 100 %

ARS-UNIKAI GmbH (50 %)

Hansaport GmbH 49 %

HHLA Rhenus Logistics GmbH 51 %

GHL 1 GmbH 100 %

GHL 2 GmbH 100 %

GHL Block D GmbH 100 %

GHL Bei St. Annen GmbH 100 %

GHL Block T GmbH 100 %

FMH GmbH 100 %

OTHER COMPANIES NOT ASSIGNED TO A SPECIFIC DIVISION

HHLA-Personal-Service GmbH 100 %

PHH Personaldienstleistung Hafen Hamburg GmbH 10.6 %

„CAP SAN DIEGO“ Betriebsgesellschaft mbH 33.3 %

Hansa-Hungaria Investitionsgesellschaft mbH (Shelf company) 100 %

Egon Wenk Umschlag- und Logistikgesell. mbH (Shelf company) (100 %)

HHLA Intermodal Verwaltung GmbH (Shelf company) 100 %

HHLA International GmbH (Shelf company) 100 %

PERCENTAGE OF SHARES HELD

All figures represent the calculated share held by HHLA (AG). Figures

in parentheses = indirect shareholding, figures without parentheses =

direct shareholding.

HHLA Rhenus Logistics Altenwerder GmbH 49 %

LOGISTICS REAL ESTATE

STAFF UNITSLEGAL INSURANCEINTERNAL AUDITINGWORK SAFETY

Uniconsult GmbH (100 %)

HPTI GmbH (100 %)

HPC UKRAINA Ltd. (100 %)

HPC GmbH 100 %


54

THE HHLA GROUP KEY FIGURES 2004 2003 Change

%

Total operating revenues mill. € 745.5 655.3 13.8 %

Revenues mill. € 715.6 637.5 12.3 %

EBITDA mill. € 145.9 90.9 60.5 %

EBIT mill. € 69.2 25.7 169.3 %

EBT after minority interest mill. € 47.0 12.9 264.3 %


– before taxes on income mill. € 49.9 9.3 436.6 %

– after taxes on income mill. € 35.2 -12.1 pos.

– after minority interests mill. € 32.4 -8.5 pos.

CASH FLOW according to DVFA/SG mill. € 113.3 58.9 92.4 %

CAPITAL SPENDING

(of which PPE and intangible assets) mill. € 117.9 106.4 10.8 %

STRUCTURE OF ASSETS

Non-current assets mill. € 615.4 591.3 4.1 %

Current assets mill. € 165.5 170.3 -2.8 %

thereof cash and cash equivalents at the end of the period mill. € 33.3 51.6 -35.5 %

Total assets mill. € 802.8 792.7 1.3 %

SHAREHOLDERS’ EQUITY AND LIABILITIES

Capital and reserves mill. € 91.3 61.5 48.5 %

of which issued capital mill. € 53.3 53.3 0.0 %

Provisions mill. € 307.8 291.5 5.6 %

of which pension provisions mill. € 230.3 215.6 6.8 %

Liabilities to banks mill. € 336.8 346.7 -2.9 %

Other liabilities mill. € 63.2 89.4 -29.3 %

Shareholders' equity and liabilities mill. € 802.8 792.7 1.3 %

Employees 31 Dec. 3,334 3,364 -0.9 %

Equity ratio % 11.4 7.8 46.1 %

ROCE ASSET-BASED CALCULATION

EBIT mill. € 69.2 25.7 169.3 %

Elimination of the interest share of average pension provisions mill. € 11.1 10.6 4.7 %

EBIT, adjusted mill. € 80.3 36.3 121.2 %

Average operating assets mill. € 668.5 632.0 5.8 %

HHLA ROCE based on adjusted EBIT % 12.01 5.75 108.9 %

GROUP MANAGEMENT REPORT


55GROUP MANAGEMENT REPORT

Global growth uneven

Hamburg connects

growth markets

ECONOMIC ENVIRONMENT

The overall development of the world economy in 2004 was clearly positive. The

International Monetary Fund estimates worldwide production to increase by 5 per

cent the strongest growth seen since the 1970s. As in the previous year, the main

impetus for growth in 2004 came from the USA and China. In Latin America, too,

there was strong real economic growth, assisted by the global demand for raw

materials. The economic picture was also favourable in 2004 for EU countries

outside the euro zone. Indeed, the new EU member countries are some of the

highest growth regions in the world.

In contrast, countries in the euro zone achieved only moderate economic growth,

thanks largely to demand from the world’s growth regions. Although GDP growth

in Germany improved to 1.6 per cent after the stagnation in 2003, it once again

lagged behind international growth rates. Burdened by a continuing weakness in

domestic demand, a strong growth in exports provided a spark for the economy.

This was largely due to demand from the Far East. This economic recovery was

also felt in Hamburg, where the GDP grew by 1.5 per cent in 2004 after a decline

of 0.6 per cent in 2003.

The local economy in Hamburg was primarily driven by foreign trade. Hamburg

benefits especially from its excellent location between the two high-growth re-

gions in the Far East and the Baltic economies including the new EU accession

countries. This is reflected primarily in the development of the container busi-

ness, which dominates global goods handling today. Its position as a multimodal

logistics hub for overseas trade with Scandinavian, Baltic and Central European

economies enabled the Port of Hamburg to once again increase its container

handling market share in 2004.

With 7 million TEU and a market share in the Hamburg-Antwerp range (Antwerp,

Rotterdam, Bremerhaven and Hamburg) currently standing at 28.3 per cent

(1999: 23.5%), Hamburg is the leading European container port after Rotterdam.

51.7 per cent of the containers handled in Hamburg were involved in trade with

Asia. Trade with European partners accounted for 33.9 per cent, with the remainder

divided between North and South America, Africa and Australia. In 2004, the largest

trading partners in terms of container volume were China (24.3%), Singapore

(7.7%) and Finland (7.3%). Trade with China (+25.2%), the USA (+23.7%) and

Poland (+34.7%) demonstrated exceptional growth.


56

Enhanced organisational

structure

Highly satisfactory

development of sales

FINANCIAL POSITION AND BUSINESS PERFORMANCE

Following the restructuring of HHLA into a strategic management holding com-

pany during the previous year and the establishment of the intermediate holding

companies HHLA Container Terminals GmbH and HHLA Intermodal GmbH, the

process of streamlining and modernising the Group structure continued in 2004.

The business activities previously carried out by seven divisions were consoli-

dated into four (Container, Intermodal, Logistics and Real Estate), and further

enhanced through the streamlining of the portfolio (disposals and acquisitions).

These measures were aimed at improving the management of the Group, increas-

ing transparency and making our business easier for outsiders to understand.

These organisational changes had no legal ramifications, particularly with regard

to co-determination. The most significant changes came about from the consoli-

dation of the former Special Cargo Handling, Consulting and Logistics divisions

into the new Logistics division. Streamlining our portfolio also resulted in the dis-

solution of our international Port Handling division.

BUSINESS DEVELOPMENT

The HHLA Group made excellent progress in the 2004 financial year. Total oper-

ating revenues reached EUR 745.5 million. Sales revenue in the financial year

amounted to EUR 715.6 million. Adjusted for changes in the portfolio, total oper-

ating revenues rose by 17.7 per cent compared with the previous year.

The dynamic performance of the Container division played a decisive role here.

Container business rose by 19.4 per cent to EUR 388.1 million (previous year:

EUR 325.1 million); the division’s share of total sales revenue grew from 51.0 per

cent to 54.2 per cent.

This increase in sales reflects the strong 17.1 per cent year-on-year growth in

container handling–from 3.9 million TEU to 4.6 million TEU. With a 65.6 per cent

share (previous year: 63.9%) of the port’s entire container-handling business, the

HHLA Group is the most important group of companies in the Port of Hamburg.

The HHLA Container Terminal Altenwerder, which was still in its start-up phase in

the previous year, made a particularly useful contribution to this growth. Thanks to

steady optimisation of its already highly automated systems, the Altenwerder ter-

minal achieved outstanding productivity performance.

The Intermodal division, which comprises all hinterland container transport oper-

ations of HHLA, also turned in an outstanding performance in 2004, with sales

up 13.1 per cent to EUR 209.0 million.



While the cargo volume of the rail transportation operators (Metrans, Polzug,

Transfracht) exceeded 1 million TEU for the first time (this equals growth of 16%),

the performance of the Lübeck container terminal with regard to cargo transport to

the Baltic region did not meet our expectations, both in terms of volume and sales.

The Logistics division benefited from the dynamic growth of the Port of Ham-

burg in 2004. After factoring in changes to the portfolio from the deconsolidation

of companies, sales increased by 8.6 per cent to EUR 87.4 million. HHLA Rhenus

Logistics, the contract logistics service provider, boosted sales by more than 23 per

cent in 2004. UNIKAI Lagerei und Spedition, which specialises in vehicle logistics,

achieved sales growth of 17 per cent, due in large part to a 20 per cent increase

in vehicle cargo.

The position of the Real Estate division improved compared with the previous

year. Despite continuing high vacancy rates in Hamburg’s commercial and office

property market, the division bucked the market trend by letting more office

space. Year-on-year sales revenue rose by 7.1 per cent to EUR 26.9 million (previous

year: EUR 25.1 million). Rental properties in the Speicherstadt area of Hamburg

proved to be particularly successful. HHLA managed to attract a large media

company to the Speicherstadt district and signed a long-term lease with the

future Hamburg Port Authority (HPA). HPA will move into Speicherblock P, which

is currently being redeveloped and transformed into a modern office building.

DEVELOPMENT OF EARNINGS

POSITIVE DEVELOPMENT OF EARNINGS THROUGHOUT

The consolidated operating earnings (EBIT) came in at EUR 69.2 million in the

2004 financial year, up EUR 43.5 million compared to the previous year. This means

that we surpassed our earnings target, a result to which all divisions contributed.

The Container division recorded the biggest increase in earnings in absolute terms.

Relatively speaking, the Logistics division showed the highest growth in earnings.

The start-up costs of the Lübeck container terminal once again had a negative

impact on the Group’s EBIT.

SELECTED EARNINGS FIGURES 2004 2003 Change %

EBIT mill. € 69.2 25.7 169.3

EBIT (adjusted) mill. € 80.3 36.3 121.2

EBT mill. € 49.9 9.3 436.6


– before minority interest mill. € 35.2 -12.1 pos.

– after minority interest mill. € 32.4 -8.5 pos.


58

The consolidated EBIT also includes expenses for company pension schemes

uncustomary for ports (additions to pension reserves and current company pen-

sion payments) in the amount of EUR 33.5 million (previous year: EUR 25.4 million).

The implied interest share in these expenses was EUR 11.1 million. The EBIT must

be adjusted for this interest share in order to arrive at undistorted profitability

figures. The adjusted EBIT of the Group amounted to EUR 80.3 million (previous

year: EUR 36.3 million).

The consolidated net income also reflects the positive development of earnings.

Net income of the HHLA Group (after minority interests) was EUR 32.4 million (pre-

vious year: EUR -8.5 million). The key, value-oriented measurable of the HHLA Group

is Return on Capital Employed (ROCE).

The HHLA Group defines ROCE as follows:

The numerator comprises earnings before taxes, before interest result, before

interest expense attributable to pension reserves and before minority interests.

The denominator is made up of items on the asset side. It comprises net fixed

assets (intangible assets plus property, plant and equipment plus start-up ex-

penses) and net current assets (inventories plus trade receivables less trade

payables).

Total ROCE for the 2004 financial year was 12.01 per cent (previous year: 5.75%).

Earnings before taxes and interest, before minority interests

Average operating assetsROCE =


ASSET AND CAPITAL STRUCTURE

INCREASE IN EQUITY RATIO

The consolidated assets as at the balance sheet date amounted to EUR 802.8

million, which is EUR 10.1 million (+1.3%) more than in the previous year.

Non-current increased from EUR 591.3 million to EUR 615.4 million, up 4.1 per

cent. This increase does not fully reflect the continued, high capital expenditures

of the Group because deconsolidation effects in connection with the streamlining

of HHLA’s portfolio (e.g. disposal of investments in South America) had an off-

setting effect. Adjusted for these effects, fixed assets rose by 10.1 per cent.

The strong improvement in earnings in 2004 led to an increase in equity of EUR

29.8 million (+48.5%) to EUR 91.3 million. The equity ratio thus increased to

11.4 per cent (previous year: 7.8 %). Pension reserves at the balance sheet date

amounted to EUR 230.3 million (previous year: EUR 215.6 million). The addition

of EUR 14.7 million equals the maximum amount realisable for tax purposes.


BALANCE SHEET DEVELOPMENT OF THE HHLA GROUP in EUR mill.

ASSETS SHAREHOLDERS’ EQUITY AND LIABILITYTOTAL ASSETS 802.8 792.7 802.8 792.7

91.3 61.5

230.3 215.6

615.4 591.3

336.8 346.7

165.5 170.3

144.4 168.9

21.9 31.1

2004 2003 2004 2003

Current assets

Other assets

Non-current

Equity

Pension reserves

Liabilities to banks

Other liabilities


60

Complete capital

expenditure package

CAPITAL SPENDING AND FINANCING

HHLA invested a total EUR 117.9 million in property, plant and equipment and in

intangible assets including goodwill.

Investments of EUR 111.8 million were almost entirely for property, plant and

equipment, with the largest portion going to the three container terminals. EUR

43.5 million was invested to continue the expansion of the HHLA Container Ter-

minal Altenwerder last year. Investment in the terminal included additional hand-

ling equipment and software for terminal logistics and control.

Expansion of the HHLA Container Terminal Burchardkai began in autumn 2004.

This capital expenditure programme is aimed at doubling handling capacity by

the year 2012. HHLA plans to invest a total of EUR 600 million in this project. The

first phase of construction involves building a new terminal rail station.

The cash flow (according to DFVA/SG) in the reporting period was almost suffi-

cient to finance the capital spending. HHLA did not have to take up significant

loans. Due to deconsolidation effects, the Group’s liabilities to banks decreased

slightly to EUR 336.8 million (previous year: EUR 346.7 million).

CAPITAL SPENDING BY DIVISION

in EUR mill. Container Intermodal Logistics Real Estate Holding Total

Intangible assets 0.2 5.0 0.3 - 0.5 6.0

Property, plant and equipment 91.0 4.0 6.6 9.7 0.5 111.8

Financial assets - - - - 0.1 0.1

Non-current 91.2 9.0 6.9 9.7 1.1 117.9

SELECTED FINANCIAL FIGURES 2004 2003 Change %

EBITDA mill. € 145.9 90.9 60.5

Cash flow (according to DVFA/SG) mill. € 113.3 58.9 92.4

Capital spending mill. € 117.9 106.4 10.8



Development of an IT

terminal control system

RESEARCH AND DEVELOPMENT

In 2004, research and development work at HHLA focused on the ongoing devel-

opment of the control system for the HHLA Container Terminal Altenwerder. The

project “Development and implementation of a terminal logistics and control

system for the automatic handling system HHLA Container Terminal Altenwer-

der”, funded by the Federal Ministry for Education and Research, achieved the

following goals during 2004:

Development of a storage strategy to allow greater than 95 per cent capacity

utilisation

Development of a dynamic routing algorithm for the AGV management system

(control of driverless transport systems) offering up to 60 percent better performance

Development of a graphical control station with full visualisation of all automatic

transport processes at the HHLA Container Terminal Altenwerder.


62

RISK REPORT

THE RISK MANAGEMENT SYSTEM

The requirements of the German Corporate Control and Transparency Act (Kon-

TraG) and the recommendations of the German Accounting Standard DRS 5 have

been implemented in a Group guideline which is binding for all companies in

which HHLA holds a majority share. The risk management system defined in this

guideline is intended to recognise risks early on which could jeopardise the ex-

istence of the HHLA Group. The executive management is directly responsible

for the early recognition, control and communication of risks and for initiating risk

minimisation measures. The Executive Board of HHLA Holding or the supervisory

bodies of the respective Group company are responsible for controlling the risk

management system.

MACROECONOMIC RISKS

The world economy enjoyed another upturn in 2004. Nevertheless, strong

demand for raw materials, especially from China, led to significant increases in

the price of crude oil, which could negatively impact the demand for both cap-

ital and consumer goods and thus depress global trading activity. The continued

weakness of the US dollar together with the current strength of the euro has led

to additional uncertainty that could shift trading patterns in a way that is difficult

to predict. Despite the strong demand for capital goods in the USA and the Far

East, this uncertainty is also having a negative effect on the labour markets of the

industrialised countries of Europe.

The world’s stock markets have remained stable for over a year. If one takes this

as a risk indicator, this suggests that the global economy is not currently at risk.

COUNTRY-SPECIFIC AND EXCHANGE RISKS

The vast majority of services offered by the HHLA Group are provided in Ham-

burg. The Intermodal division is the only one to provide cross-border services.

These services are invoiced in euros or based on the euro. Currency or transfer

risks are negligible.

FINANCIAL RISKS

The central tasks of HHLA include the optimisation of the Group’s financing and

limiting its financial risks. The Group Treasury department supervises all material

financial transactions and actively manages the credit portfolio and the interest

rate risks. Liquidity is controlled and monitored through a Group-wide cash clear-

ing system. Interest rate risks are hedged with interest rate derivatives. Based

on the information available today, there are no financial risks.



PENSION PROVISIONS

In its commercial balance sheet, HHLA has recognised entitlements under the

company pension scheme to the extent permissible by tax law. State pensions

follow the development of salaries. If state pensions are not adjusted corres-

pondingly or if they even decrease in the next years, the gap to be covered by

HHLA’s pension plan will widen. This could make additional transfers to pen-

sion reserves necessary.

SAFETY RISKS

In 2004, the HHLA container terminals and other transhipment facilities com-

plied with the requirements of the ISPS Code (International Ship and Port Fa-

cility Security). The risk assessment that forms the basis of our risk defence

plan has revealed all discernible areas of weakness and contributed to a reduc-

tion in safety risks. Risk is also minimised by the fact that nearly all ships that

enter HHLA terminals are ISPS certified.

In view of the many dangers involved in loading and transporting goods, indus-

trial safety is extremely important to HHLA. We systematically detect and cor-

rect any potential weaknesses in our occupational safety systems. In 2004, the

Burchardkai container terminal gained an award for its exemplary occupational

safety system.

PERSONNEL RISKS

Training and professional development play a decisive role in the HHLA Group

when competing for qualified personnel. This is why HHLA pursues a coherent

personnel development policy–from the training of first-time employees, to the

HHLA training institute, to our involvement in further education establishments

such as the Hamburg School of Logistics. Our careful selection and support of

employees has meant that we have so far been able to take on all of our trainees

after they completed their training. We have avoided redundancies and have

achieved a low employee turnover rate. There are no discernible personnel risks.

OVERALL RISK

To the best of our knowledge there is no threat to the continued existence of the

HHLA Group.


64

OUTLOOK

At the end of the 2004 financial year, the growth economies of the world which

are relevant for the future development of the HHLA Group were in good shape.

China, the main trading partner of the Port of Hamburg, continued to demonstrate

the highest rate of growth, but the economies of the USA and the Baltic coun-

tries also maintained their growth trajectory. According to the International

Monetary Fund, this trend will continue in the current year and in 2006.

The rise in the oil price presents a risk to the global economy. The price of oil

reached its highest ever level in the first quarter of 2005, caused in part by strong

demand for raw materials from the world’s growth regions, particularly from

China. The weakness of the dollar makes for further uncertainty. In view of the

high liquidity in the world economy, as reflected by rising share prices and stable

interest rates, inflationary tendencies have so far been absent. The economic

outlook is favourable, especially for those countries that are HHLA customers

for sea and rail freight services.

As part of our investment portfolio-streamlining programme, we sold our Argen-

tinian terminal and logistics holdings. Following approval by the German Federal

Cartel Office, Belgian New Fruit Wharf completed the acquisition of a strategic

interest in HHLA Frucht- und Kühl-Zentrum GmbH. HHLA retains 51 per cent of the

shares. Apart from the above, no developments of particular interest occurred

after the conclusion of the 2004 financial year.

In view of the expected further increase in trade with its partner countries, HHLA

anticipates double-digit growth rates annually over the medium term as well.

Therefore, HHLA pushes ahead with its plans to expand the container terminal

capacities. Its goal is to increase the capacity of the three container terminals

from the current level of just over 5 million TEU to more than 10 million TEU by

2012. This will require total investments of about EUR 800 million.

The expansion of the HHLA Burchardkai container terminal, which began in the

past financial year during regular operations, will continue as planned. This

expansion will also support the further development of the Intermodal division.

Outlook favourable

thanks to involvement

with global growth

markets

Important events after the

end of the financial year

Sales and earnings

expected to increase



A prerequisite for the success of our expansion programme is the speedy com-

pletion of important infrastructure projects that affect the Port of Hamburg,

such as:

Improvements to the Lower Elbe navigation channel to accommodate larger

vessels and an increased volume of container ship traffic

Upgrading the road infrastructure in the extended port area in order to provide

efficient delivery and collection of containers at the terminals

Expansion and modernisation of the Port of Hamburg’s railway system to

accommodate the growing volume of container rail traffic

Electrification and extension of the Hamburg to Lübeck rail line to deal with the

growing volume of container traffic at the Baltic ports

In addition, the changes proposed by the EU to the regulatory framework (Port

Package II) urgently require revision in order to ensure planning reliability in

connection with the capital expenditure programme of the HHLA Group at the

Port of Hamburg. Given the overall positive starting position of each of our four

divisions, we expect to report good sales and earnings once again in 2005.

Hamburg, 29 April 2005

HAMBURGER HAFEN- UND LAGERHAUS-AKTIENGESELLSCHAFT

Peters Dr Behn Drossel Fritsch Dr Lappin


ASSETS EUR EUR EUR thou.

A. EXPENDITURE FOR STARTING UP BUSINESS ACTIVITIES 14,484,443.57 22,655

B. NON-CURRENT

I. INTANGIBLE ASSETS

1. Licences, industrial property rights and similar rights and assets, as well as licences in such rights and values 13,254,849.83 37,408

2. Goodwill 14,152,779.42 21,108 3. Advance payments 111,580.76 62

27,519,210.01 58,578

II. PROPERTY, PLANT AND EQUIPMENT

1. Land, similar rights and buildingsincluding buildings on third-party land 247,090,613.62 242,374

2. Technical plant and machinery 196,294,475.95 169,380 3. Other plant, operational and office equipment 65,525,270.10 53,4504. Advance payments made and construction in progress 63,923,198.47 63,611

572,833,558.14 528,815

III. FINANCIAL ASSETS

1. Investments in affiliated companies 1,094,849.64 1,8392. Participating interests 13,903,135.40 2,050 3. Securities 46,191.70 204. Other loans 0.00 1

15,044,176.74 3,910615,396,944.89 591,303

C. CURRENT ASSETS

I. INVENTORIES

1. Raw materials and supplies 9,548,354.61 7,982 2. Work in progress 4,468,433.42 1,6423. Finished products and goods 547,328.09 570

14,564,116.12 10,194

II. RECEIVABLES AND OTHER ASSETS

1. Trade receivables 83,889,064.70 80,097 2. Receivables due from the Free and Hanseatic City of Hamburg 281,986.35 1443. Receivables due from HGV Hamburger Gesellschaft für

Vermögens- und Beteiligungsverwaltung mbH 25,664,158.40 49,0954. Receivables from affiliated companies 23,488.47 2,5785. Receivables from companies in which

participating interests are held 797.96 06. Other assets 31,864,079.12 17,942

thereof with a remaining term of morethan one year: EUR 36,900.88 (2003: EUR thou. 60)

141,723,575.00 149,856

III. SECURITIES

Other securities 295,430.40 2,296

IV. CASH IN HAND, BANK BALANCES

AND CHEQUES 8,873,851.47 7,956165,456,972.99 170,302

D. PREPAID EXPENSES AND DEFERRED CHARGES

1. Discount 29,278.45 53 2. Other prepaid expenses and deferred charges 569,643.73 347

598,922.18 400

E. DEFERRED TAX ASSETS 6,907,661.99 8,031

802,844,945.62 792,691

66

31. Dec. 2003

++RZ_GB 5_EN_Jahresabschluss 01.11.2005 12:38 Uhr Seite 66

67CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2004

SHAREHOLDERS’ EQUITY AND LIABILITIES EUR EUR EUR thou.

A. SHAREHOLDERS’ EQUITY

I. SUBSCRIBED CAPITAL 53,300,000.00 53,277II. CAPITAL RESERVE 178,362.89 178III. EQUITY CHANGE DUE TO CURRENCY TRANSLATION 795,222.65 -6,923IV. CONSOLIDATED RETAINED EARNINGS/ACCUMULATED DEFICIT 21,112,219.98 -665V. MINORITY INTEREST 15,956,956.02 15,671

91,342,761.54 61,538

B. SPECIAL ITEM FOR INVESTMENT GRANTS 988,924.69 992

C. PROVISIONS

1. Provisions for pensions and similar obligations 230,291,371.00 215,5612. Tax provisions 9,069,201.92 12,4943. Other provisions 68,478,298.39 63,458

307,838,871.31 291,513

D. LIABILITIES

1. Liabilities to banks 336,796,929.13 346,7312. Advance payments received 3,890,349.41 1,1633. Trade payables 33,994,111.70 43,3724. Liabilities due to the Free

and Hanseatic City of Hamburg 378,216.49 7655. Liabilities due to affiliated companies 1,249,239.62 2,8986. Liabilities due to companies in which

the participating interests are held 292,043.42 3457. Other liabilities 23,380,803.61 40,811

thereof taxes: EUR 5,399,461.99 (2003: EUR thou. 19,962)thereof social security:EUR 3,065,491.30 (2003: EUR thou. 3,039)

399,981,693.38 436,085

E. DEFERRED INCOME 2,692,694.70 2,563

31 Dec. 2003

802,844,945.62 792,691


68

CONSOLIDATED INCOME STATEMENT FOR 2004 EUR EUR EUR thou.

1. REVENUES 715,620,858.46 637,484

2. INCREASE (2003: DECREASE) IN WORK IN PROGRESS 2,290,873.14 -1,105

3. OTHER OWN WORK CAPITALISED 3,615,269.82 3,895

4. OTHER OPERATING INCOME 29,852,064.37 17,810

751,379,065.79 658,0845. COST OF MATERIALS

a) Cost of raw materials, suppliesand purchased goods 59,762,081.99 40,204

b) Cost of purchased services 239,816,260.45 226,267

299,578,342.44 266,471

6. PERSONNEL EXPENSESa) Wages and salaries 155,396,665.61 153,679b) Social security, pension and other benefits 64,753,091.48 56,054

thereof relating to pensions: EUR 33,456,939.50 (2003: EUR thou. 25,387)

220,149,757.09 209,733

7. DEPRECIATION AND AMORTISATIONON INTANGIBLE FIXED ASSETS AND ON PROPERTY,PLANT AND EQUIPMENT AS WELL AS ONCAPITALISED START-UP EXPENSES 76,773,019.13 65,176thereof on goodwill from capital consolidation:EUR 9,216,768.72 (2003: EUR thou. 2,507)

8. OTHER OPERATING EXPENSES 84,940,510.67 90,121

69,937,436.46 26,583

9. INCOME FROM EQUITY INVESTMENTS 80,322.29 302thereof from affiliated companies: EUR 74,322.29 (2003: EUR thou. 282)

10. INCOME FROM OTHER LONG-TERM SECURITIES AND LOANS 0.00 1

11. OTHER INTEREST AND SIMILAR INCOME 2,675,982.43 2,575thereof from affiliated companies: EUR 874,172.54 (2003: EUR thou. 839)

12. WRITE-DOWNS ON FINANCIAL ASSETSAND MARKETABLE SECURITIES 1,218,848.01 80

13. ABSORPTION OF LOSSES 702,890.09 490

14. PROFIT TRANSFERRED BASED ONPROFIT TRANSFER AGREEMENT 1,174,497.20 0

15. INTEREST AND SIMILAR EXPENSES 18,935,873.82 18,670thereof to affiliated companies:EUR 149,133.91 (2003: EUR thou. 116)

-19,275,804.40 -16,362

16. RESULT FROM ORDINARY OPERATIONS 50,661,632.06 10,221

17. TAXES ON INCOME 14,627,917.51 21,396

18. OTHER TAXES 784,763.16 945

19. NET INCOME (2003: NET LOSS)FOR THE YEAR BEFORE MINORITY INTERESTS 35,248,951.39 -12,120

20. MINORITY INTERESTS 2,869,853.58 -3,576

21. CONSOLIDATED NET INCOME (2003: NET LOSS) FOR THE YEAR 32,379,097.81 -8,544

2003

CONSOLIDATED INCOME STATEMENT FOR 2004


69NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE 2004 FINANCIAL YEAR

NOTES

1. GENERAL INFORMATION

Given that the financial statements of HHLA (hereinafter referred to as Parent

Company) are included in the consolidated financial statements of HGV Ham-

burger Gesellschaft für Vermögens- und Beteiligungsverwaltung mbH (Hamburg

Local Court, HRB No. 16106), HHLA has been exempt pursuant to § 291 German

Commercial Code (HGB) from preparing consolidated financial statements since

1996. As the subsidiaries have become considerably more significant for the

evaluation of the HHLA Group since then, HHLA has been voluntarily preparing

consolidated financial statements since 2002. The consolidated financial state-

ments of the HHLA Group were drawn up in accordance with the requirements

of the HGB and the German Stock Corporation Act (AktG).

2. SCOPE OF CONSOLIDATION

The entire shareholdings including a list of fully and partially consolidated as well

as associated companies are shown after the balance sheet and income state-

ment. HHLA International GmbH as well as Unikai Lüneburg, Unikai Woerth and

Unikai Ottmarsheim, whose shares were sold at the beginning of the 2004 financial

year, were no longer included in the scope of consolidation in 2004. Furthermore,

GHL 3 was merged into Fischmarkt Hamburg-Altona GmbH. TPSV S.A., whose

shares except for a remaining 5 per cent share were sold in December 2004, and

Exolgan S.A., whose shares were sold at the beginning of 2005, were also not

included in the scope of consolidation in 2004 because the information required

for inclusion in the consolidated financial statements was no longer available.

Taking into account the changes in the scope of consolidation, the previous year’s

sales revenue would be reduced by EUR 29.7 million, total assets would be re-

duced by EUR 40.5 million, and the consolidated annual result would be reduced

by EUR 3.6 million.

3. PRINCIPLES OF CONSOLIDATION

Subsidiaries in which HHLA holds a share in excess of 50 per cent are fully con-

solidated. Companies, in which HHLA holds a share between 25.0 per cent and

50.0 per cent are partially consolidated if such companies are controlled both by

HHLA and by companies not included in the consolidated financial statements.

A total of 13 companies whose impact on the net worth, financial position and

result of operations is only of minor significance were not included in the scope

of consolidation. For all companies which were included in the consolidated


70

financial statements according to the provisions regarding full and partial consoli-

dation, capital consolidation was carried out retroactively as of the acquisition or

foundation date based on the book value method at the time of initial consolida-

tion on 1 January 2001. Goodwill is amortised from the date of acquisition over

an expected useful life of 15 years using the straight-line method. Depreciation

related to financial years prior to 2001 was recognised in the consolidated retained

earnings brought forward as at 1 January 2001. All receivables, liabilities, ex-

penses and income, as well as interim results between the consolidated companies

have been eliminated. If required, provisions are made for deferred taxes in

connection with consolidation transactions affecting earnings.

4. ACCOUNTING AND VALUATION METHODS

The accounting and valuation methods of the fully consolidated companies were

unified as follows for the consolidated financial statements from 1 January 2001.

No adjustments were made in connection with partially consolidated and asso-

ciated companies due to the minor significance of such adjustments.

EXPENDITURE FOR STARTING UP BUSINESS ACTIVITIES

The following start-up expenses were recognised for HHLA Container-Terminal

Altenwerder GmbH according to § 269 HGB: planning and development of the

terminal concept; selection of property, plant and equipment to be acquired as

well as the necessary software; rent for the land in Altenwerder; development of

the company’s organisation and processes; and recruitment and training of per-

sonnel. These start-up expenses are being depreciated over a period of four

years following the conclusion of start-up measures in July 2002. Start-up ex-

penses which were debited by third parties were capitalised without affecting

the profit and loss account.

INTANGIBLE ASSETS

Intangible assets essentially comprise

Software and other rights which are mainly amortised over a useful life of three

to seven years

Goodwill which is amortised from the date of acquisition over an expected

useful life of 15 years.

FIXED ASSETS

Fixed assets are carried at cost. The production cost of internally produced items

of property, plant and equipment include pro rata overhead as well as construc-

tion interest, if applicable. Intangible assets and buildings on third-party land are

always depreciated using the straight-line method and on a pro-rata temporis



basis. Goodwill from capital consolidation is amortised based on its expected

useful life over a period of 15 years using the straight-line method. For the pur-

pose of unified valuation in the consolidated financial statements, the depreci-

ation of movable fixed assets was switched from the declining balance method

to the straight-line method from 1 January 2001, if required. Depreciation is based

on the applicable tax guiding rates. The company uses simplification rules as per-

mitted by tax law. Low-value assets are fully depreciated and reported as dis-

posals in the year of their acquisition. In the 2004 financial year, the company

took non-scheduled of EUR thou. 6,846 (2003: EUR thou. 0) on goodwill. Regarding

property, plant and equipment, non-scheduled write-downs in the amount of EUR

thou. 348 (2003: EUR thou. 46) were necessary. Financial assets are carried at

the lower of acquisition cost or fair value.

CURRENT ASSETS

Inventories are carried at average cost taking into account the lower-of-cost-

or-market principle. Lower carrying amounts of earlier balance sheet dates

remained the same. Receivables and other assets are carried at the lower of

nominal or present value. Doubtful accounts are carried at their probable value.

Adequate general allowances are made to account for the general credit risk.

Deferred tax assets of EUR thou. 6,908 (2003: EUR thou. 8,031) result from the

adjustment of the accounting and valuation methods used in the financial state-

ments of the consolidated companies to the unified methods and from the elimin-

ation of intercompany profits. According to the income statement, the effect of

the deferred tax assets is EUR thou. 1,153. Of this amount, EUR thou. 67 relate

to consolidated tax depreciation and EUR thou. 1,627 to differences in depre-

ciation amounts resulting from the elimination of intercompany profits of prior

years between the various individual financial statements and consolidated finan-

cial statements. Deferred tax assets, which were capitalised for the first time in

the reporting period, had an offsetting effect on the different depreciation

periods for software and start-up expenses (EUR thou. 547). The deferred taxes

result exclusively from time differences. The Group-wide tax rate is 41 per cent,

unchanged from the previous year, as deferred tax liabilities are essentially

related to domestic companies.

PROVISIONS

Pension provisions were calculated pursuant to § 6 a German Income Tax Act

(EStG) based on actuarial computations as at the balance sheet date using an

interest rate of 6 per cent and the 1998 Mortality Tables of Dr Klaus Heubeck.

Other provisions of the Group were formed to the extent required based on rea-

sonable commercial judgement.


72

LIABILITIES

Liabilities are stated at their repayment amount.

5. CURRENCY TRANSLATION

The financial statements of foreign consolidated companies using currencies

other than the euro are translated into euros based on the existing financial

relationships with the subsidiaries and the resulting effects of exchange rate

changes.

The balance sheet items are translated at average rates as at the balance sheet

date; income statement items are translated at average annual exchange rates.

Any exchange differences compared to the previous year as a result of translating

balance sheet items are shown directly as changes of equity or minority interest,

as are differences resulting from the application of different exchange rates in the

balance sheet and the income statement. Foreign currency receivables as well

as foreign currency bank and cash balances are carried at the euro selling rate

prevailing on the day they are incurred. Foreign currency liabilities are carried at

the euro buying rate prevailing on the payment date. The amounts are adjusted

on the balance sheet date based on the lower-of-cost-or-market principle.

6. NOTES TO THE BALANCE SHEET AND THE INCOME STATEMENT

FIXED ASSETS

The statement of changes in fixed assets and the Group’s shareholdings are

shown after the profit and loss account. Changes resulting from initial consoli-

dations or deconsolidations due to changes in the scope of consolidation and

currency differences are listed in separate columns in the statement of changes

in fixed assets.

CONSOLIDATED SHAREHOLDERS’ EQUITY

The consolidated statement of changes in equity is presented after the income

statement. The Group’s consolidated retained earnings as at the end of the 2004

financial year were EUR thou. 21,112. The consolidated retained earnings of

HHLA AG as at 31 December 2004 were EUR thou. 45,541. Of this amount, EUR

thou. 8,000 are distributed in 2005. Other comprehensive income from currency

translation results from exchange differences in connection with the translation

of subsidiaries which do not use the euro. These exchange differences led to an

increase in the consolidated equity in 2004.



The other income of EUR thou. -39 included in the consolidated retained earnings

for 2004 is due to the fact that, as a result of the decision regarding the appro-

priation of profits, for some companies the HHLA share in the distributed profit

for 2003 was different from the pro-rata share stated in the consolidated finan-

cial statements for 2003.

SPECIAL ITEM FOR INVESTMENT SUBSIDIES

The investment subsidies provided to one subsidiary for the purpose of im-

proving the regional economic infrastructure and to promote combined transport

are written off against earnings over the average useful life of the assets for which

the grants are used.

PROVISIONS

Other provisions mainly include provisions for severance payments under redun-

dancy payment schemes; payments for partial retirement; contributions to

employers’ liability insurance associations; long-service payments and other

personnel expenses; demolition obligations; customer refunds; and outstanding

invoices.

LIABILITIES

The statement of changes in liabilities is presented after the income statement.

A total of EUR 18,532,959.33 (2003: EUR 21,913,762.84) in liabilities to banks is

collateralised by land charges and by security assignments of container cranes

and other handling equipment.

DERIVATIVE FINANCIAL INSTRUMENTS PURSUANT TO § 285 NO. 18 a HGB

As part of the Group’s clearing system, the company has entered into interest

rate swaps to secure variable interest rate loans in the amount of EUR 35.4 mil-

lion as at the balance sheet date. The market value as at 31 December 2004 was

negative at EUR 2.9 million. For valuation purposes, interest rate swaps are

combined with variable interest rate loans to form valuation units. As a result, the

company avoided expenses for contingent losses resulting from the swaps.

CONTINGENT LIABILITIES 2004 2003

Guarantees EUR thou. 0 5,067

Sureties EUR thou. 16,977 17,679

Letters of comfort EUR thou. 167,226 168,472

EUR thou. 184,203 191,218


74

INCOME AND EXPENSES NOT RELATED TO THE ACCOUNTING PERIOD

Income and expenses not related to the accounting period boosted the Group’s

annual result by approximately EUR 17.9 million (2003: EUR -4.1 million). This figure

is primarily the result of the balance of income and losses from the sale of fixed

assets and from the reversal of provisions.

OTHER FINANCIAL OBLIGATIONS EUR thou.

Due in 2005 46,999

Due between 2006 and 2009 96,832

Due in 2010 or later 463,105

REVENUES

BY DIVISION 2004 2003

Container EUR thou. 388,064 325,054

Intermodal EUR thou. 209,020 184,851

Real Estate EUR thou. 26,877 25,126

Logistics EUR thou. 87,407 80,778

Holding EUR thou. 4,253 5,894

International Port Handling EUR thou. 0 15,781

EUR thou. 715,621 637,484

BY REGION

Germany EUR thou. 619,801 549,556 Europe (without Germany) EUR thou. 92,570 70,586 Outside Europe EUR thou. 3,250 17,342

EUR thou. 715,621 637,484

7. NUMBER OF EMPLOYEES (ANNUAL AVERAGE) 2004 2003

a) Fully consolidated companies

Wage earners 1,506 1,706

Salaried employees 1,417 1,160

Trainees and apprentices 68 76

2,991 2,942

b) Partially consolidated companies

Wage earners 124 161

Salaried employees 75 163

Trainees and apprentices 0 1

199 325


75

8. MEMBERS OF THE BOARDS

SUPERVISORY BOARD

Dr Peter von Foerster, Chairman

Lawyer

Fred Timm, Deputy Chairman

Chairman of the HHLA Works Council

Günther Casjens

Member of the Executive Board of Hapag-Lloyd AG,

Hamburg (until 1 March 2004)

Harald Erven

Deputy Chairman of the HHLA Works Council

Jörn Ingelmann

Executive Public Works Director, Hamburg public works and transport department

Dr Johannes Ludewig

Executive Director, Community of European Railway and

Infrastructure Companies (CER) (from 1 June 2004)

Dr Rainer Klemmt-Nissen

Senate Director, Hamburg Finance Ministry

Manfred Reuter

Senate Director, Hamburg Ministry for Economics and Labour

(until 5 April 2005)

Wolfgang Rose

Regional Secretary, ver.di union, Hamburg

Uwe Schröder

Director, Seaports department, ver.di union, Hamburg

Walter Stork

Chairman of the Executive Board, NAVIS Schiffahrts- und

Speditions-Aktiengesellschaft, Hamburg

Manfred Wilkens

Member of the HHLA Works Council

Wolfgang Weskamp

Employee, HHLA container division

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE 2004 FINANCIAL YEAR


76 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR

THE 2004 FINANCIAL YEAR

EXECUTIVE BOARD

Klaus-Dieter Peters, Chairman

Forwarding manager, Hamburg

Dr Stefan Behn

Economist, Hamburg

Gerd Drossel

Forwarding manager, Hamburg

Rolf Fritsch

Economist/political scientist, Drochtersen

Dr Roland Lappin

Industrial engineer, Hamburg

9. TOTAL REMUNERATION OF THE SUPERVISORY BOARD AND EXECUTIVE BOARDS

Members of the Supervisory Board were paid attendance fees totalling EUR

thou. 4. Total compensation of the members of the Executive Board amounted to

EUR thou. 2,206. Former members of the Executive Board and their surviving

dependants were paid EUR thou. 570. Pension reserves include an amount of

EUR thou. 6,716 for this group of persons.

Hamburg, 29 April 2005


The Executive Board

Peters Dr Behn Drossel Fritsch Dr Lappin


77SHAREHOLDINGS OF HHLA BY DIVISION AS AT 31 DECEMBER 2004

NAME AND REGISTERED OFFICE OF COMPANY Percentage of Equity Result for the

shares held financial year

directly indirectly in in

% % EUR thou. Year EUR thou.

HOLDING COMPANY

HHLA-Personal-Service-GmbH, Hamburg 1) 100.0 25 2004 0

HHLA Intermodal Verwaltung GmbH, Hamburg 1) 100.0 25 2003 0

HHIG Hansa-Hungaria Investitions-

gesellschaft mbH, Hamburg 3) 50.0 51 2004 39

„CAP SAN DIEGO“ Betriebsgesellschaft mbH, Hamburg 3) 4) 33.3 - -

PHH Personaldienstleistung Hafen

Hamburg GmbH, Hamburg 4) 10.6 - -

HHLA do Brasil Ltda., Santos /Brazil 3) 4) 100.0 - -

HHLA International GmbH, Hamburg 3) 100.0 107 2004 1

Terminal Pacifico Sur Valparaiso S.A., Valparaiso/Chile 4) 5.0 - -

EXOLGAN S.A., Buenos Aires/Argentina 4) 14.9 - -

EXOLOGISTICA S.A., Buenos Aires/Argentina 4) 15.0 - -

Egon Wenk Umschlag- und Logistik-

gesellschaft mbH, Hamburg 1) 100.0 36 2004 11

1) Fully consolidated companies

2) Partially consolidated companies

3) Due to their minor significance, these companies are not consolidated/carried as associated companies based on

the equity method but shown as participating interests

4) HHLA availed itself of the exemption rule under § 313, para. 3 German Commercial Code in connection with these companies


78





CONTAINER

HHLA Container Terminals GmbH, Hamburg 1) 100.0 91,410 2004 0

HCCR Hamburger Container- und Chassis-

Reparatur-Gesellschaft mbH, Hamburg 1) 100.0 1,909 2004 0

LZU Leercontainer Zentrum Unikai GmbH, Hamburg 1) 4) 65.0 - -

TCT Tollerort Container-Terminal GmbH, Hamburg 1) 100.0 9,384 2004 8,215

TCT Besitzgesellschaft mbH, Hamburg 1) 100.0 -41 2004 -91

UNIKAI Hafenbetrieb GmbH, Hamburg 1) 100.0 13,271 2004 0

HHLA Container-Terminal Altenwerder GmbH, Hamburg 1) 4) 74.9 - -

SCA Service Center Altenwerder GmbH, Hamburg 1) 74.9 600 2004 0

Kombi-Transeuropa Terminal Hamburg GmbH, Hamburg 2) 37.5 52 2004 2

HHLA CTA Besitzgesellschaft mbH, Hamburg 1) 74.9 5,234 2003 0

CuxPort GmbH, Cuxhaven 2) 4) 25.1 - -

HHLA Container Terminal Burchardkai GmbH, Hamburg 1) 4) 100.0 - -

Service Center Burchardkai GmbH, Hamburg 1) 100.0 26 2004 0

DHU Gesellschaft Datenverarbeitung Hamburger

Umschlagsbetriebe mbH, Hamburg 3) 23.1 17.3 770 2003 84

Cuxcargo Hafenbetrieb GmbH & Co. KG, Cuxhaven 3) 4) 50.0 - -

Cuxcargo Hafenbetrieb Verwaltungs-

GmbH, Cuxhaven 3) 4) 50.0 - -

INTERMODAL

HHLA Intermodal GmbH, Hamburg

(formerly HHLA Intermodal GmbH & Co. KG) 1) 100.0 29,039 2004 0

CTD Container- und Transport-

Dienst GmbH, Hamburg 1) 100.0 256 2004 0

combispeed Fachspedition für

Containerverkehre GmbH, Lübeck 1) 100.0 12,600 2004 0

combifeeder GmbH, Lübeck 1) 4) 100.0 - -

combisped Hanseatische Spedition GmbH, Hamburg 1) 4) 100.0 - -

NORDSPED Gröning & Co. GmbH, Lübeck 3) 4) 100.0 - -

CTL Container Terminal Lübeck GmbH, Lübeck 1) 4) 100.0 - -

Scan Container-Verkehre GmbH, Lübeck 3) 4) 100.0 - -

METRANS Aktiengesellschaft, Prag ue/Czech Republic 1) 4) 50.1 - -

METRANS Danube a.s., Danube /Slovak Republic 3) 4) 50.1 - -

METRANS (Deutschland) GmbH, Hamburg 3) 4) 50.1 - -

METRANS Danubia Kft., Gyor/Hungary 3) 4) 50.1 - -


79SHAREHOLDINGS OF HHLA BY DIVISION AS AT 31 DECEMBR 2004





Transfracht Internationale Gesellschaft für

kombinierten Güterverkehr mbH, Frankfurt/Main 2) 50.0 6,465 2003 965

POLZUG GmbH, Hamburg 2) 33.3 3,399 2003 742

Polzug Polska sp.zo.o., Warsaw, Poland 2) 33.3 1,696 2003 317

LOGISTICS

HHLA Frucht- und Kühl-

Zentrum GmbH, Hamburg 1) 4) 100.0 - -

Ulrich Stein GmbH, Hamburg 1) 4) 51.0 - -

UNIKAI Lagerei- und Speditions-

gesellschaft mbH, Hamburg 1) 4) 100.0 - -

ARS-UNIKAI GmbH, Hamburg 2) 4) 50.0 - -

Hansaport Hafenbetriebsgesellschaft mit

beschränkter Haftung, Hamburg 2) 4) 49.0 - -

HPC Hamburg Port Consulting GmbH, Hamburg 1) 100.0 1,023 2004 0

Uniconsult Universal Transport Consulting GmbH, Hamburg 1) 100.0 26 2004 0

HPTI Hamburg Port Training Institute GmbH, Hamburg 1) 100.0 102 2004 0

HPC UKRAINA Ltd., Odessa/Ukraine 3) 4) 100.0 - -

HHLA Rhenus Logistics GmbH, Hamburg 1) 4) 100.0 - -

HHLA Rhenus Logistics Altenwerder GmbH, Hamburg

(formerly Projektgesellschaft Altenwerder West GmbH) 2) 4) 49.0 - -

REAL ESTATE

Fischmarkt Hamburg-Altona GmbH, Hamburg 1) 100.0 2,505 2004 0

GHL Erste Gesellschaft für Hafen- und

Lagereiimmobilien-Verwaltung mbH, Hamburg 1) 100.0 2,556 2004 0

GHL Zweite Gesellschaft für Hafen- und

Lagereiimmobilien-Verwaltung mbH, Hamburg 1) 100.0 26 2004 0

GHL Gesellschaft für Hafen- und

Lagereiimmobilien-Verwaltung Block D mbH, Hamburg 1) 100.0 8,184 2004 0

GHL Gesellschaft für Hafen- und

Lagereiimmobilien-Verwaltung

Bei St. Annen mbH, Hamburg 1) 4) 100.0 - -

GHL Gesellschaft für Hafen-

und Lagereiimmobilien-Verwaltung

Block T mbH, Hamburg 1) 100.0 1,327 2004 0


80

ACQUISITION AND PRODUCTION COST

Change of Reclassi- Currency

1 Jan. 2004 scope of cons. Additions Disposals fications differences 31 Dec. 2004

EUR EUR EUR EUR EUR EUR EUR

A. START-UP EXPENSES 35,882,286.55 0.00 1,485,749.50 0.00 0.00 0.00 37,368,036.05

B. NON-CURRENT ASSETS

I. INTANGIBLE ASSETS

1. Licences, industrial

property rights and similar rights

and assets, as well as licences

in such rights and values 60,873,589.13 -23,962,075.04 1,085,292.36 2,048,432.75 27,500.00 16,930.66 35,992,804.36

2. Goodwill 43,043,080.23 0.00 4,847,382.15 4,612,277.65 0.00 0.00 43,278,184.73

of which single-entity accounts 1,895,701.05 0.00 0.00 0.00 0.00 0.00 1,895,701.05

and from capital consolidation 41,147,379.18 0.00 4,847,382.15 4,612,277.65 0.00 0.00 41,382,483.68

3. Advance payments 61,901.19 0.00 74,574.75 0.00 -27,500.00 2,604.82 111,580.76

103,978,570.55 -23,962,075.04 6,007,249.26 6,660,710.40 0.00 19,535.48 79,382,569.85

II. PROPERTY, PLANT

AND EQUIPMENT

1. Land, similar rights

and buildings including

buildings on third-party land 497,753,127.20 -7,748,215.72 8,710,142.26 13,855,705.55 21,528,976.73 570,210.40 506,958,535.32

2. Technical plant and machinery 375,464,098.63 -7,375,176.86 15,188,515.17 11,193,551.15 36,182,098.51 384,324.98 408,650,309.28

3. Other plant,

operational and office equipment 162,042,244.76 -1,864,026.01 26,065,897.35 14,800,576.60 3,151,192.13 141,683.00 174,736,414.63

4. Advance payments made

and construction in progress 63,610,694.02 -286,272.89 61,873,106.11 462,344.74 -60,862,267.37 50,283.34 63,923,198.47

1,098,870,164.61 -17,273,691.48 111,837,660.89 40,312,178.04 0.00 1,146.501.72 1,154,268,457.70

III. FINANCIAL ASSETS

1. Investments in affiliated

companies 1,839,480.83 100,000.00 51,129.59 1,298,483.18 255,645.94 147,076.46 1,094,849.64

2. Participating interests 2,089,753.25 24,562,876.32 2,452.11 11,252,742.16 -255,645.94 0.00 15,146,693.58

3. Loans to investees

in which participating

interests are held 40,000.00 0.00 15,000.00 0.00 0.00 0.00 55,000.00

4. Investment securities 20,277.67 0.00 25,914.03 0.00 0.00 0.00 46,191.70

5. Other loans 541.82 -541.82 0.00 0.00 0,.00 0.00 0.00

3,990,053.57 24,662,334.50 94,495.73 12,551,225.34 0.00 147,076.46 16,342,734.92

1,206,838,788.73 -16,573,432.02 117,939,405.88 59,524,113.78 0.00 1,313,113.66 1,249,993,762.47


ACCUMULATED DEPRECIATION NET BOOK VALUES

Change of Reclassi- Currency

1 Jan. 2004 scope of cons. Additions Disposals fications differences 31 Dec. 2004 31 Dec. 2003 31 Dec. 2004

EUR EUR EUR EUR EUR EUR EUR EUR EUR

13,227,296.80 0.00 9,656,295.68 0.00 0.00 0.00 22,883,592.48 22,654,989.75 14,484,443.57

23,465,705.61 -4,812,173.53 6,097,667.42 2,028,225.13 0.00 14,980.16 22,737,954.53 37,407,883.52 13,254,849.83

21,935,303.00 0.00 9,343,211.72 2,153,109.41 0.00 0,00 29,125,405.31 21,107,777.23 14,152,779.42

758,408.05 0.00 126,443.00 0.00 0.00 0,00 884,851.05 1,137,293.00 1,010,850.00

21,176,894.95 0.00 9,216,768.72 2,153,109.41 0.00 0,00 28,240,554.26 19,970,484.23 13,141,929.42

0.00 0.00 0.00 0.00 0.00 0,00 0.00 61,901.19 111,580.76

45,401,008.61 -4,812,173.53 15,440,879.14 4,181,334.54 0.00 14,980.16 51,863,359.84 58,577,561.94 27,519,210.01

255,379,067.22 -1,706,254.34 15,775,446.12 9,666,116.58 -1,688.79 87,468.07 259,867,921.70 242,374,059.98 247,090,613.62

206,084,140.06 -2,889,817.30 19,974,522.83 11,063,520.57 33,067.26 217,441.05 212,355,833.33 169,379,958.57 196,294,475.95

108,592,145.36 -1,116,455.25 15,925,875.36 14,256,906.77 -31,378.47 97,864.30 109,211,144.53 53,450,099.40 65,525,270.10

0.00 0.00 0.00 0.00 0.00 0.00 0.00 63,610,694.02 63,923,198.47

570,055,352.64 -5,712,526.89 51,675,844.31 34,986,543.92 0.00 402,773.42 581,434,899.56 528,814,811.97 572,833,558.14

0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,839,480.83 1,094,849.64

39,710.17 0.00 1,203,848.01 0.00 0.00 0.00 1,243,558.18 2,050,043.08 13,903,135.40

40,000.00 0.00 15,000.00 0.00 0.00 0.00 55,000.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 20,277.67 46,191.70

0.00 0.00 0.00 0.00 0.00 0.00 0.00 541.82 0.00

79,710.17 0.00 1,218,848.01 0.00 0.00 0.00 1,298,558.18 3,910,343.40 15,044,176.74

615,536,071.42 -10,524,700.42 68,335,571.46 39,167,878.46 0.00 417,753.58 634,596,817.58 591,302,717.31 615,396,944.89

81STATEMENT OF CHANGES IN START-UP EXPENSES AND NON-CURRENT ASSETS


82

PARENT COMPANY

Subscribed Capital Consolidated Cumulative other Shareholders’

capital reserve retained consolidated result equity

earnings

Ordinary Adjustments Other

shares from neutral

currency trans-

conversion actions EUR

AS AT 31 DEC. 2003 53,276,614.02 178,362.89 -664,833.15 -6,922,982.56 45,867,161.20

Reclassifications 23,385.98 0.00 -23,385.98 0.00

Purchase/redemption of

own shares 0.00 0.00 0.00 0.00

Dividend payments 0.00 0.00 -3,500,000.00 -3,500,000.00

Changes in the

scope of consolidation 0.00 0.00 0.00 0.00

Other changes 0.00 0.00 6,904.70 6,904.70

Consolidated annual

profit/loss 0.00 0.00 25,332,955.63 7,046,142.18 32,379,097.81

Other consolidated profit/loss 0.00 0.00 -39,421.22 672,063.03 632,641.81

Total consolidated annual loss - - - - - 33,011,739.62

AS AT 31 DEC. 2004 53,300,000.00 178,362.89 21,112,219.98 795,222.65 75,385,805.52


83CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

MINORITY SHAREHOLDERS

Minority Cumulative other Shareholders’ Consolidated

interests consolidated result equity shareholders’ equity

Adjustments Other

from neutral

currency trans-

conversion actions EUR

15,459,382.37 211,375.04 15,670,757.41 61,537,918.61

0.00 0.00 0.00

0.00 0.00 0.00

-2,382,028.83 -2,382,028.83 -5,882,028.83

0.00 0.00 0.00

-804,180.05 -804,180.05 -797,275.35

2,869,853.58 2,869,853.58 35,248,951.39

39,421.22 563,132.69 602,553.91 1,235,195.72

- - - 3,472,407.49 36,484,147.11

15,182,448.29 774,507.73 15,956,956.02 91,342,761.54


84 STATEMENT OF CHANGES IN LIABILITIES

With a term of More than

Total Up to 1 year 1 to 5 years 5 years

LIABILITIES (previous year in parentheses) EUR EUR EUR EUR

Liabilities to banks 336,796,929.13 26,541,206.26 103,135,084.98 207,120,637.89

(346,731,087.20) (20,520,238.75) (94,978,193.83) (231,232,654.62)

Advance payments received 3,890,349.41 3,890,349.41 0.00 0.00

(1,163,025.21) (1,163,025.21) (0.00) (0.00)

Trade payables 33,994,111.70 33,645,968.18 348,143.52 0.00

(43,372,344.59) (39,244,244.74) (4,128,099.85) (0.00)

Liabilities due to the Free and Hanseatic

City of Hamburg 378,216.49 378,216.49 0.00 0.00

(765,099.11) (765,099.11) (0.00) (0.00)

Liabilities due to

affiliated companies 1,249,239.62 1,249,239.62 0.00 0.00

(2,898,000.14) (2,898,000.14) (0.00) (0.00)

Liabilities to

investees 292,043.42 292,043.42 0.00 0.00

(345,367.43) (345,367.43) (0.00) (0.00)

Other liabilities

Other liabilities, taxes 5,399,461.99 5,145,982.71 0.00 253,479.28

(19,961,759.35) (19,761,666.62) (0.00) (200,092.73)

Other liabilities related

to social security 3,065,491.30 3,065,491.30 0.00 0.00

(3,039,204.09) (3,039,204.09) (0.00) (0.00)

Other liabilities 14,915,850.32 12,801,147.38 775,727.16 1,338,975.78

(17,809,710.68) (12,445,917.46) (909,872.44) (4,453,920.78)

23,380,803.61 21,012,621.39 775,727.16 1,592,455.06

(40,810,674.12) (35,246,788.17) (909,872.44) (4,654,013.51)

399,981,693.38 87,009,644.77 104,258,955.66 208,713,092.95

(436,085,597.80) (100,182,763.55) (100,016,166.12) (235,886,668.13)


85AUDITORS’ REPORT

AUDITORS’ REPORT

We have audited the consolidated financial statements and the Group manage-

ment report of Hamburger Hafen- und Lagerhaus-Aktiengesellschaft Hamburg,

for the financial year from 1 January to 31 December 2004. The report of the con-

solidated financial statements and the Group management report according to

German commercial regulations is the responsibility of the company’s management.

Our responsibility is to express an opinion, based on our audit, on the consolidated

financial statements and on the Group management report.

We conducted our audit of the consolidated financial statements in accordance

with § 317 German Commercial Code (HGB) and the generally accepted German

standards for the audit of financial statements promulgated by the Institut der

Wirtschaftsprüfer (IDW). These standards require that we plan and perform the

audit to obtain reasonable assurance that inaccuracies and violations with a

material impact on the presentation of the Group’s assets, financial position and

results of operations conveyed by the consolidated financial statements with due

regard to generally accepted accounting principles and by the Group manage-

ment report are identified. In the determination of audit procedures, knowledge

of the business activities and the economic and legal environment of the Group

and evaluations of possible misstatements are taken into account. The effec-

tiveness of the accounting-related internal control system and the evidence sup-

porting the disclosures in the consolidated annual financial statements and the

Group management report are examined primarily on a test basis within the frame-

work of the audit. The audit includes assessing the financial statements of the

companies included in consolidation, the definition of the scope of consolidation,

the accounting and consolidation principles used and significant estimates made

by the legal representatives, as well as evaluating the overall presentation of the

consolidated financial statements and the Group management report. We believe

that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, the consolidated financial statements give a true and fair view of the

Group’s assets, financial position and results of operations of the Group in accord-

ance with German generally accepted accounting principles of proper accounting.

In our opinion, the Group management report accurately reflects the position of the

Group overall and correctly depicts the risks related to its future development.

Hamburg, 19 May 2005

Ernst & Young

Deutsche Allgemeine Treuhand AG

Wirtschaftsprüfungsgesellschaft

M. Tabel, Auditor Th. Götze , Auditor

The auditors’ report refers to the audited German consolidated financial state-

ments and to the audited German Group management report.


86

REPORT OF THE SUPERVISORY BOARD

The Supervisory Board carried out its duties as set out by law and by the com-

pany’s articles of association and continually monitored and advised the company’s

management.

In a total of four meetings, the Executive Board provided comprehensive and

regular information regarding its intended business policies, the company’s

profitability, the course of business and the situation of HHLA including its sub-

sidiaries, and regarding matters of fundamental financial, personnel or other

significance. Between meetings, the Executive Board informed all members of

the Supervisory Board both verbally and in writing and in a timely manner of all

developments which could impact the results of operations, net worth, financial

position and risk situation of the company.

In the context of further developing HHLA into a strategic management holding

company, the Supervisory Board primarily discussed the following matters:

Focus of its business on four divisions

Container division

Intermodal division

Logistics division

Real Estate division

Portfolio development

Shareholding of SeaInvest in HHLA Frucht- und Kühl-Zentrum GmbH

and Ulrich Stein GmbH

Disposal of overseas investments

Acquisition of the remaining combisped shares

Disposal of terminal investments on the Rhine

Result of the negotiations on the company agreement on tariffs

Personnel matters

WORK OF COMMITTEES

The Finance Committee thoroughly reviewed, before each regular Supervisory

Board meeting especially, the quarterly reporting of the HHLA Group. During the

individual meetings, the Executive Board explained to the members of the

Finance Committee material deviations of the course of business from plans. The

Finance Committee thoroughly reviewed the annual financial statements, the

management report, the consolidated financial statements, the Group manage-

ment report and the Executive Board’s proposal regarding the appropriation of

profits for 2004. Representatives from Ernst & Young Deutsche Allgemeine

Treuhand AG Wirtschaftsprüfungsgesellschaft, the auditors elected by the

Annual General Meeting, attended this annual accounts meeting and provided

detailed information on the results of their audit.


87REPORT OF THE SUPERVISORY BOARD

ANNUAL FINANCIAL STATEMENTS 2004

Ernst & Young Deutsche Allgemeine Treuhand AG Wirtschaftsprüfungsgesellschaft

audited the annual financial statements, the management report, the consolidated

financial statements and the Group management report and issued unqualified

audit reports. The Supervisory Board agrees with the result of the audit and does

not raise any objections. The annual financial statements and the consolidated

financial statements are therefore adopted and final.

THE SUPERVISORY BOARD EXPRESSES ITS APPRECIATION

The Supervisory Board would like to thank the Executive Board, the Works Coun-

cil and all employees for their work in the 2004 financial year.

Hamburg, June 2005

Dr Peter von Foerster

Chairman


88 GLOSSARY OF FINANCIAL TERMS

1 Sales revenues Revenue generated from selling, letting or leasing and from services provided by

the corporation, less sales deductions and turnover tax (§ 277 para. 1 HGB)

2 Total operating revenues Sales revenue + Other operating income

3 Total output Total operating revenues +/- Changes in inventory + Own work capitalised

4 EBITDA Earnings before income tax, interest result, extraordinary items and depreciation/

amortisation

5 EBIT Earnings before income tax, interest result and extraordinary items

6 Adjusted EBIT EBIT + implied interest share (5% p.a.) included in the expenses for company

pension schemes

7 EBT Earnings before income tax

8 DVFA/SG Deutsche Vereinigung für Finanzanalyse und Anlageberatung e.V. (DVFA) (Ger-

man Association for Financial Analysis and Asset Management) and Schmalen-

bach-Gesellschaft, Deutsche Gesellschaft für Betriebswirtschaft (SG) (Schma-

lenbach Association, German Association for Business Administration)

9 Cash flow according to DVFA/SG Published annual result adjusted for depreciation/amortisation, write-ups,

increase in long-term provisions and income from the disposal of assets. The

adjusted earnings are also called “earnings according to DVFA/SG”

10 Equity ratio Equity as a percentage of total assets

11 ROCE Return on capital employed. Adjusted EBIT/ø operating assets

12 ø operating assets ø start-up and expansion expenses + ø (non-current assets - financial assets) +

ø inventories + ø trade receivables - ø trade payables


89CHRONOLOGY 2004

CHRONOLOGY2004

JANUARY

HHLA acquires the remaining shares to become

sole owner of the Lübeck-based combisped Group.

FEBRUARY

The risk defence plans for the HHLA Container

Terminals Burchardkai and Altenwerder are

officially approved.

JULY

Belgian New Fruit Wharf (BNFW) becomes a

strategic partner in HHLA’s fruit-handling and

transport subsidiaries.

AUGUST

Four Super Post-Panmax gantry cranes

arrive to assist with the extension to the

HHLA Container Terminal Altenwerder.

APRIL

HHLA Container Terminal Altenwerder sets a

new record by unloading 8,409 TEUs from a

single container ship.

SEPTEMBER

HHLA Frucht- und Kühl-Zentrum GmbH is

the first fruit-handling company in the North

Range to gain International Food Standard

certification.

OCTOBER

Hamburg Senator for Health Jörg Dräger PhD

presents an award to HHLA for its health and

safety system.

JUNE

The Hamburg HHLA terminals become certified

under the ISPS code ahead of schedule.

MARCH

Hamburger Freihafen-Lagerhaus-Gesellschaft

(HFLG) the direct forerunner of Hamburger

Hafen- und Lagerhaus-Aktiengesellschaft (HHLA)

was established 120 years ago.

MAY

With the acquisition of ten new environmentally

friendly van carriers, the HHLA Container Terminal

Tollerort participates in the Hamburg Environmental

Protection Agency’s resource protection project.

NOVEMBER

Hamburg Senator for economic affairs Uldall,

German Railways chairman Mehdorn and HHLA

Chairman Peters give the go-ahead for the expan-

sion of the HHLA Burchardkai container terminal.

DECEMBER

HHLA subsidiary HPTI trains a group of high-

ranking Tibetan traffic experts in logistics and

transport planning.


90

PUBLISHING INFORMATION

Hamburger Hafen- und Lagerhaus-Aktiengesellschaft, Bei St. Annen 1, 20457 Hamburg, Germany, Telephone: +49 (0)40 30881, Fax: +49 (0)40 30883355,

www.hhla.de. Concept and design: Nordpol+ Hamburg, Agentur für Kommunikation. Structural concept: CAT Consultants GmbH & Co. Photography: Sven Glage.

Printing: Weimardruck. Lithography: Laudert Innovative Medientechnik.




Bei St. Annen 1, 20457 Hamburg, Germany, Telephone: +49 (0)40 30881, Fax: +49 (0)40 30883355, www.hhla.de, [email protected]

++RZ_GB_Beilage_EN 01.11.2005 12:47 Uhr Seite 8

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