annual report 2008 - hammonia schiffsholding ag · annual report 2008 at home on the ... contact...

Annual Report 2008At home on the waterways of the world

HCI HAMMONIA SHIPPING AG

Key figures

Key financial indicators

EUR 000’s 2008 2007 Change

Vessel operating result 32,471.1 863.4 31,607.7

Result from shipping operations 30,483.0 9,412.0 21,071.0

Earnings before interest and taxes (EBIT) 16,843.7 4,088.8 12,754.9

Consolidated net income for the year 9,477.6 4,484.9 4,992.7

Cash flow from operating activities 24,988.6 1,974.1 23,014.5

Cash flow from investing activities -314,900.9 -100,113.4 -214,787.5

Ship portfolio Date Capacity Ship acquired in TEU Build year

MS “SAXONIA” 03/12/2007 3,108 2003

MS “WESTPHALIA” 03/12/2007 3,108 2003

MS “HAMMONIA POMERENIA” 29/11/2007 2,546 2007

MS “HAMMONIA FIONIA” 29/04/2008 7,800 1996

MS “HAMMONIA DANIA” 06/05/2008 7,800 1996

MS “HAMMONIA HAFNIA” 16/05/2008 7,800 1996

MS “HAMMONIA HOLSATIA” 21/05/2008 2,546 2008

MS “HAMMONIA TEUTONICA” 06/06/2008 2,546 2008

MS “HAMMONIA MASSILIA” 20/10/2008 2,546 2008

MS “HAMMONIA ROMA” 05/01/2009 2,546 2009

MS “HAMMONIA BAVARIA” 05/01/2009 2,546 2009

Contents

2 Foreword

6 The Company

8 Business Aims and Strategy

9 Business Model

10 The Share

12 Management Report

30 Consolidated Financial Statements

80 Statutory Declaration

81 Auditors’ Report

82 Annual Financel Statements

88 Corporate Governance

90 Corporate Governance Report

94 Report of the Supervisory Board

96 Financial Calendar, Contact Details

1


The business concept of HCI HAMMONIA SHIPPING AG is focused on the acquisition, operation and

sale of merchant ships. Its emphasis is placed on up-to-date container ship tonnage. With the proceeds

from the IPO in November 2007, HCI HAMMONIA SHIPPING AG purchased eleven container ships

altogether. As a management holding company in the legal form of a listed corporation, HCI HAMMONIA

SHIPPING AG holds interests in shipping companies in the legal form of limited partnerships with a limited

liability company as general partner (GmbH & Co. KG), the owners of the respective vessels. The shipping

companies are managed by HCI HAMMONIA SHIPPING AG together with HAMMONIA Reederei

GmbH & Co. KG. HAMMONIA Reederei GmbH & Co. KG attends to all responsibilities in connection

with the actual operation of all ships. The shipping companies provide the ships’ charterers with fully

equipped, operational and manned vessels.

According to the business model of HCI HAMMONIA SHIPPING AG, the ships are chartered out to liner

trade companies with high credit ratings for long terms and/or proceeds are pooled with those of other

ships of the same size in order to safeguard revenues against fluctuating charter rates and the risk of a

ship’s discontinued operation. The pools are managed by the renowned shipping company Peter Döhle

Schiffahrts-KG.

The expansion of the fleet of HCI HAMMONIA SHIPPING AG announced in the context of the company’s

IPO has been completed for the time being with the delivery of the last ships under construction at the

beginning of January 2009. By the plow-back of the shipping companies’ free cash flow and the already

authorized capital increase of EUR 68.2 million, HCI HAMMONIA SHIPPING AG keeps the option for a

further expansion of the fleet in the future.

Due to the structure of HCI HAMMONIA SHIPPING AG, the specific advantages linked to the legal form

of the GmbH & Co. KG of the shipping companies (e.g. tonnage tax) are maintained. At the same time,

HCI HAMMONIA SHIPPING AG taps the capital market as a funding source for the future corporate

growth. By the stock exchange listing, new investor groups without any previous access to an invest-

ment in shipping companies can be addressed. Not least, the investment period is made more flexible

by the shares’ tradability on each trading day.

» Ship investment in the form of a listed stock corporation: An asset

investment with attractive prospects. «

22

Dr. Karsten LiebingMember of the Management Board

Jens BurgemeisterMember of the Management Board

3

Foreword

Foreword

Dear shareholders and business associates,

your company, HCI HAMMONIA SHIPPING AG, has held its ground in a difficult market envi-ronment.

Despite the significantly deteriorated global economic conditions in the course of the year2008 with a considerable impact on the charter markets already, the company managed toachieve all the essential goals announced in its stock exchange prospectus in the year 2007.This is even more pleasing as 2008 represents the first full business year and almost all of thescheduled investments were realized in the course of this year. Thus a solid foundation for thefurther development of the company has been provided.

In the course of the year 2008 four new ships of the 2,500 TEU class were taken over onschedule. The two remaining ships of this size under binding purchase agreements weretaken over at the beginning of January 2009 a little behind schedule. Furthermore, three used7,800 TEU container ships were acquired in the first half-year 2008. Thus the fleet of HCIHAMMONIA SHIPPING AG currently comprises eleven up-to-date container ships in service.

The intended concept of operation, providing for the long-time charter of up-to-date ship ton-nage to charterers of high credit ratings or the inclusion of ships in pool arrangements, has beenimplemented for all ships of HCI HAMMONIA SHIPPING AG. Upon purchase, the 7,800 TEUships were chartered out to the largest shipping company of the world, A.P. Moeller-Maersk,under binding contracts for minimum terms of ten years. The two container ships of thePanamax class and the six vessels of the sub-Panamax class are operated in correspondingpool arrangements. The income contributed by these pools developed significantly betteruntil the beginning of 2008, in line with the charter market, than anticipated in the businessscenario of the stock exchange prospectus. Since mid-2008, the charter rates for new sign-ings have been on the decline throughout the market, considerably in part. Due to the con-cept of operation (pool memberships on the one hand, long-term charters on the other hand),however, this decrease had yet no material effect on the shipping companies’ profitability inthe past fiscal year.

At EUR 46.7 million, revenue for fiscal year 2008 was ahead of the initial corporate planning.The vessel operating costs were virtually maintained at the level announced at the IPO despiteconsiderable cost increases with regard to personnel, lubricants, and insurance premiums.Scheduled off-hire periods were undercut by roughly 55 %. On the whole, a group net incomeof EUR 9.5 million according to IFRS was achieved for the year. Thus the group net incomeexceeds the expectations forecasted at the IPO.

In the short term, the development of container shipping is influenced by the global trade,now in decline after the fast growth of the past years, and the cargo volumes, also in declineas a result. The current weakness of the global trade is also reflected by the strongly decliningdevelopment of charter rates in the container market. As a stabilization of economic activitiesand a recovery of confidence will take time despite the extensive economic stimulus pack-ages, we have to anticipate that the economic crisis may last longer still than 12 months.

4

The development of results of HCI HAMMONIA SHIPPING AG will be supported decisively bysteady cash flows from time charter agreements and pool arrangements in the next 12 to 18months. Revenues from time charters contribute more than a third of the group’s total revenues.Revenues from the 2,500 and 3,100 TEU pool arrangements follow the market trend with acertain delay. After arranged time charters have expired, the pooled ships are also charteredout anew subject to prevailing market conditions. The development of the revenues of thepool arrangements is harmonized by a great number of separate charter agreements with dif-ferent contract terms as opposed to the current development on the spot charter market. Inindividual cases, however, charter agreements involving pool vessels are renegotiated in orderto give short-term relief to liner shipping companies and thus safeguard the continuation of therespective business relationship. Usually a temporary reduction of the charter rate is compen-sated for by a corresponding term extension above market level. As a result of the market slow-down, the pool at year end 2008 has arrived at about the level described in the stock exchangeprospectus after having exceeded it significantly in the years 2007 and 2008. Pool membershipassures that all shipping companies will receive income even though short-term losses ofoperation occur for single ships in this difficult market situation. Fleet capacity available in2009 has been in creased to eleven vessels. At the same time, the pool vessels’ charter rev-enues per ship are reduced due to the deteriorated market situation. However, we assumethat charter revenues of the fleet as a whole may turn out up to 50% higher than in the previousyear due to the increase in capacity. Our calculation is based on the forecasts announced inJanuary 2009 by Maersk Broker, one of the world’s largest container ship brokers, for ships ofthe 2,500 and 3,100 TEU classes. These forecasts, incidentally, anticipate the market’s recov-ery only for the second half of the year 2010. Therefore even another reduction of new busi-ness involving the pool ships by 10% should not lead to a sustained deterioration of the com-pany’s economic situation. Thus we consider HCI HAMMONIA SHIPPING AG altogether wellpositioned in order to meet the challenges of the current crisis.

For the medium and long term we anticipate further growth. Particularly the national economiesin Asia and Latin America will provide for a strong stimulus with their additional requirementsonce the global economy starts its recovery. A stimulation of the demand for carriage capacitycan be anticipated only between the end of 2009 and mid-2010, even on the basis of theassumption of an early normalization of the lending policies of the internationally operatingbanks. With regard to the container shipping industry, it can be assumed that charter rateswill recover as soon as the units not utilized and the new capacity brought to the market with-in the next years will be in demand once more.

Apart form the revenue risks and their prevention described above, the company’s risk positionis characterized by few individual risks. In contrast to other globally listed shipping businesses,the company did not enter into purchase agreements about unchartered new vessels or vesselsnot financed on a long-term basis. Insofar there are no financing risks concerning new ships.

The 4,250 TEU units mentioned in the stock exchange prospectus as scheduled ships have so farnot been acquired. As this type of ship is still considered promising, though, the ManagementBoard continues to keep track of the market. The current crisis may bring about an attractive offerof such vessels at favorable conditions, maybe in connection with purchase options, making itpossible to collect disproportionately high benefits from a market recovery. The sound profitabilityand liquidity of HCI HAMMONIA SHIPPING AG enables the company to consider such options.

The start of operating business activities has turned out better than planned. ManagementBoard and Supervisory Board share the intention to propose to the Annual General Meetingthe payment of an appropriate dividend for the past fiscal year.

Jens BurgemeisterMember of theManagement Board

Dr. Karsten LiebingMember of theManagement Board

5

Foreword

The sound capitalization and the solid free cash flow open up many options for HCI HAMMONIA SHIPPING AG in times of slack markets as the group currently has no obligations to shipyards from ship orders.

Thus HCI HAMMONIA SHIPPING AG follows the right course, despite difficult general condi-tions at present, to reach the targeted continuous growth of business and to achieve a solidreturn on the raised equity.

Hamburg, March 12, 2009

Prospectus/actual comparison AG ships Jan. 1 – Dec. 31, 2008

Difference Prospectus Actual * actual vs. 1/1 – 12/31/2008 1/1 – 12/31/2008 prospectus

EUR 000’s EUR 000’s Exchange rate Exchange rate USD 1.30 per euro USD 1.4706 per euro

Charter revenues 39,472 46,712 +18 %

Operating costs & other expenses -14,605 -19,639

Other operating income 0 3,410

EBITDA 24,867 30,483 +23 %

Depreciation and amortization 9,382 13,639

EBIT 15,485 16,844 +9 %

Interest income -7,154 -7,188

Income taxes 396 178

Net income 7,935 9,478 +19 %

Earnings per share 58 EUR 69 EUR +19 %

Off-hire periods 45 days 33.75 days** - 25 %

* Stated actuals are based on actually acquired ships and actual dates of delivery as compared to the business scenario published in the stock

exchange prospectus.

** Besides the planned off-hire periods the unplanned off-hire periods amounted to only about 3 days for the complete fleet.

6

Management Report Consolidated Financial StatementsThe Company Annual Financial Statements Corporate Governance

copyThe Panama Canal – an enormous shortcut for ships: The

passage through the Panama Canal takes about a day. The

alternative is a voyage around Cape Horn of several weeks.

Roughly five percent of all goods traded worldwide are shipped

through the Panama Canal. Most of the traffic connects the

East Coast of the United States with China. Every year more

than 14,000 ships pass through the Panama Canal.

The Company: Right on course

8


Business Aims and Strategy

Attractive return on our shareholders’ investment

HCI HAMMONIA SHIPPING AG aims at generating an attractive and sustainable return for our share-

holders. Upon completion of the investment stage, corporate planning provides for the creation of value

enhancement potential for the share. With the build-up of a fleet of up-to-date seagoing vessels and its

operation with qualified personnel, HCI HAMMONIA SHIPPING AG is on the right course to positioning

itself as a reliable supplier of high-quality transport capacity on the shipping markets. Additional return

opportunities are provided by the focused utilization of cyclical market fluctuations with regard to the

purchase and sale of vessels.

Focus on the container shipping industry

HCI HAMMONIA SHIPPING AG focuses its ship investments on the segment container shipping. The

key reasons for the disproportionate growth of the global trade, roughly 98 % of which is handled by

means of seagoing vessels, are the increasing international division of labor in the course of liberalization

and the decentralization of manufacturing processes. Container shipping is the one industry to benefit

the most from the rising volume of the movement of goods. On the demand side, goods are gaining in

importance for whose transport containers are ideally suited. On the supply side, the considerable

expansion of the container ship fleet and the faster loading and unloading of container ships are crucial

factors as shorter periods of lay days spent in the ports are thus made possible.

Comparable to the development in international aviation, structures come into being in maritime trade

that involve large container ports of transshipment (so-called hubs), being supplied with a growing por-

tion of containers by feeders (feeder traffic). Cargo is then reorganized and sent up to other hubs or the

actual ports of destination (hub & spoke concept). The driving forces behind this structure and the rising

share of transshipment are the cost advantages of larger container vessels in intercontinental trade as

well as the increasing degree of containerization even in smaller ports.

These general growth drivers of maritime trade are not suspended by economic fluctuations – such as

the current severe economic slowdown – but cushioned temporarily at most.

Professional management

The success of business operations is influenced essentially by the access to attractive investment tar-

gets. This is assured among other aspects by the business relationships forged over many years by the

Management Board and the operator, HAMMONIA Reederei GmbH & Co. KG, the industry know-how

of the service company, HCI Hanseatische Schiffsconsult GmbH, and the good access to the charter

markets of Peter Döhle Schiffahrts-KG, managing the charter of the ships and serving as pool manager

at the same time.

The financing of the fleet of HCI HAMMONIA SHIPPING AG shows a solid capital structure of 30 % equity

and 70 % borrowed capital. The equity was generated by the cash inflow from the capital increase with-

in the framework of the IPO of HCI HAMMONIA SHIPPING AG. Borrowed capital has been provided for

the long term by ship-financing banking institutions. About two thirds of the borrowed capital are subject

to medium-term interest rate hedging.

9

Market opportunities

The growing world population, the increasing globalization and international division of labor as well as

the transformation of previous developing and emerging nations into industrial nations have resulted in

a steady increase of global trade volumes in the past years. The average annual growth rate of the global

container trade was almost 10 % for the period from 1982 through 2008.

Business structure, ship portfolio and management

With the delivery of the last two new ships in January 2009, the investment stage of HCI HAMMONIA

SHIPPING AG is completed for the time being. The acceptance of the ships coincided with the respec-

tive proportionate external financing, realized at very favorable conditions in the current interest environ-

ment. Thus the targeted capital structure has been achieved.

Business Model

Business Aims and Strategy / Business Model

North America

Latin America

Europe

Asia

Africa

South Asia/Oceania

Europe – Far East

transpacifictranspacific

transatlantic

AsiaLatin America

32,500

22,20022,200

6,200

3,2004,700

2,800

2,800

700

3,000

3,500

2,800

North-South traffic East-West traffic

Container movement in international maritime trade 2007Figures in 1,000 TEU with regard to full containers

Source: Figures provided by Institut für Seeverkehr und Logistik, Bremen; our illustration

10


The ship portfolio currently comprises eleven container ships of the classes Sub-Panamax, Panamax,

and Post-Panamax with a total capacity of 44,892 TEU. The six ships of the Sub-Panamax class are

used on the Far East routes. The Panamax ships WESTPHALIA and SAXONIA also service the Far East

routes whereas the three Post-Panamax ships run on the transpacific routes.

The ships are operated exclusively by HAMMONIA Reederei GmbH & Co. KG. Ship operation includes

all business and legal transactions, from the ships’ supply with lubricants, spare parts, consumables,

and equipment to manning and maintenance up to the payment transactions and the closing of neces-

sary insurance contracts. Special emphasis is placed on the conservation of the ships’ value by apply-

ing high quality requirements to all measures of maintenance and repair. A good technical state of the

vessels above average means increased desirability on the charter and second-hand markets. The

shipping trade is a cyclical business with partly high volatility on the charter market as well as the sale

and purchase markets. In order to attain as steady revenues from chartering out the ships as possible,

the volatility of the charter markets is counterbalanced by long-term charters and pool arrangements.

The volatility of the sale and purchase markets, however, is intended to be used for the targeted gene -

ration of proceeds from the sale and purchase of ships.

Capital borrowed from banks

Paid-in equity

Investors

HCI HAMMONIA

SHIPPING AG

Equity provided by institutional investors, e.g. insurance companies, banks, HAMMONIA Reederei

3,100 TEU

MS “SAXONIA”MS “WESTPHALIA”

PD 3,100 poolaltogether 18 ships

7,800 TEU

MS “HAMMONIA FIONIA”MS “HAMMONIA HAFNIA”MS “HAMMONIA DANIA”

2,500 TEU

MS “HAMMONIA POMERENIA”MS “HAMMONIA BAVARIA”

MS “HAMMONIA ROMA”MS “HAMMONIA TEUTONICA”MS “HAMMONIA HOLSATIA”MS “HAMMONIA MASSILIA”

10-year time charter with Maersk

PD 2,500 poolaltogether 50 ships

Investments

Operation

Structure of HCI HAMMONIA SHIPPING AG

The Share

Despite the extraordinary market environment, the price of the stock of HCI HAMMONIA SHIPPING AG

solidly asserted itself over the first full fiscal year in comparison with the general stock market trend. As

of December 31, 2008 the stock was quoted roughly 11 % below the price of the beginning of the year;

the DAX lost close to 40 % in the period of comparison, the ShipInx index even lost more than 55 %.

Thus the stock dissociated itself to some degree from the turbulences of the financial and stock markets

caused by the financial crisis.

11

Business Model / The Share

The 52-week low of the year 2008 was reached at EUR 950.00 on December 22, 2008, the 52-week

high of EUR 1,205.00 was reached on July 24, 2008 for the first time. This performance confirms our

appraisal that the stock of HCI HAMMONIA SHIPPING AG is an attractive and value preserving invest-

ment. Due to the low correlation between the shipping markets and the classic stock and bond mar-

kets, the stock of HCI HAMMONIA SHIPPING AG is well suited for portfolio diversification.

Due to the large denomination of stocks and the predominant placement with institutional investors with

long-term investment horizons, the stock of HCI HAMMONIA SHIPPING AG has shown a low level of liquidity

in stock exchange trading so far. Approximately 18 % of the shares of HCI HAMMONIA SHIPPING AG

are held by savings banks, Raiffeisen cooperative banks and Volksbank cooperative banks, about 27 %

are held by insurance companies, some 32 % are held by other banking institutes, 10 % are held by

HAMMONIA Reederei, and roughly 12 % are held by other investors, for the most part institutional ones.

The marginal free float of stocks held by minor shareholders comes to less than 1%.

HCI HAMMONIA SHIPPING AG does not hold its own shares.

German SIN (WKN) / ISIN A0MPF5 / DE000A0MPF55

Ticker symbol / Reuters / Bloomberg HHX.HAM / HHX.DE / HHX:GR

Stock category No-par value ordinary bearer shares

Number of stocks 136,414 shares

Designated sponsors HSH Nordbank AG, Nord/LB

Stock price: 52-week high 2008 EUR 1,205.00

52-week low 2008 EUR 950.00

Closing price 2008 EUR 960.00

Market capitalization (28 Dec 2008) EUR 130.96 million

Jan 08

HCI HAMMONIA SHIPPING

Feb 08 Mar 08 Apr 08 May 08 Jul 08 Sep 08 Nov 08 Dec 08Jun 08 Aug 08 Oct 08

110

100

90

80

70

60

50

30

40

DAX Index SHIPINX Index

Relative stock price development of HCI HAMMONIA SHIPPING AG compared to DAX and SHIPINX** The ShipInx index represents the performance of the 30 largest listed stocks in maritime trade.

12

Seattle: The economic center of the American Northwest is of

great significance as a business location of future-oriented

industries. The city accommodates the corporate headquarters

of several globally operating companies. The aerospace industry

and information technology are among the highlighted industries.

The port of Seattle is an important hub for the trade with Asia,

Alaska, and Hawaii.

Management Report: Our fleet on its long journey


14


Group Management Report 2008 of HCI HAMMONIA SHIPPING AG

1. Key basic and business conditions

1.1. General notes

As a listed shipping holding company in Germany, HCI HAMMONIA SHIPPING AG has the legal form of a

stock corporation.

It is quoted on the regulated market of the Hanseatische Wertpapierbörse Hamburg (Hamburg Stock

Exchange) and on the unofficial regulated markets of the other German stock exchanges.

As the controlling group company and managing holding, HCI HAMMONIA SHIPPING AG manages the

respective subsidiaries’ individual ship investments.

As of December 31, 2008, HCI HAMMONIA SHIPPING AG has direct interests in altogether twelve com-

panies, with the following compulsory contributions of capital according to the respective articles of part-

nership:

■ MS “SAXONIA” Schiffahrts GmbH & Co. KG (EUR 10,226k)

■ MS “WESTPHALIA” Schiffahrts GmbH & Co. KG (EUR 10,226k)

■ MS “HAMMONIA POMERENIA” Schiffahrts GmbH & Co. KG (EUR 11,126k)

■ MS “HAMMONIA HOLSATIA” Schiffahrts GmbH & Co. KG (EUR 11,176k)

■ MS “HAMMONIA MASSILIA” Schiffahrts GmbH & Co. KG (EUR 11,326k)

■ MS “HAMMONIA TEUTONICA” Schiffahrts GmbH & Co. KG (EUR 11,226k)

■ MS “HAMMONIA BAVARIA” Schiffahrts GmbH & Co. KG (EUR 11,726k)

■ MS “HAMMONIA ROMA” Schiffahrts GmbH & Co. KG (EUR 11,326k)

■ MS “HAMMONIA FIONIA” Schiffahrts GmbH & Co. KG (EUR 17,000k)

■ MS “HAMMONIA DANIA” Schiffahrts GmbH & Co. KG (EUR 17,000k)

■ MS “HAMMONIA HAFNIA” Schiffahrts GmbH & Co. KG (EUR 17,000k)

■ Verwaltung HCI HAMMONIA Schiffahrts GmbH (EUR 25k)

The above-mentioned investments and HCI HAMMONIA SHIPPING AG itself represent the entire group

of companies included in the consolidated financial statements. The companies set up in the legal form

of ”GmbH & Co. KG“ (limited partnership with a limited liability company as general partner) as so-called

single-ship limited partnerships are the civil-law owners and operators of the respective ships.

Verwaltung HCI HAMMONIA Schiffahrts GmbH serves as the limited partnerships’ personally liable

partner (general partner).

The group generates revenues from the operation of these ships. As of December 31, 2008 nine sea -

going vessels were in service altogether.

1.2. Business development

After the start of business operations in the fourth quarter 2007, HCI HAMMONIA SHIPPING AG

showed a positive business development over the entire year 2008. The year-round operation of the

Management Report

ships already delivered in the year 2007 contributed to this performance as well as the further expan-

sion of the fleet that largely proceeded according to schedule.

In addition to the three seagoing vessels already in service since November or rather December 2007

(SAXONIA, WESTPHALIA, HAMMONIA POMERENIA), HCI HAMMONIA SHIPPING AG acquired three

used 7,800 TEU container ships of the Post-Panamax class in April 2008 from shipping company A.P.

Moeller-Maersk A/S, Copenhagen, thus expanding the portfolio of HCI HAMMONIA SHIPPING AG

and diversifying it with regard to the ship classes in operation. These ships are up-to-date full container

ships built in 1996 at A.P. Moeller’s own shipyard in Odense, Denmark, with a length of 318.24 m, a width

of 42.80 m, and a draught of 14.52 m. The inspectors of the contractual ship managing company,

HAMMONIA Reederei GmbH & Co. KG, were able to assure themselves of the good technical condition

of the roughly twelve-year-old ships on location in Singapore and Shanghai and during docking in Dubai.

At the beginning of April 2008, both the acquisition of the three ships and the conclusion of a 10-year time

charter with A.P. Moeller-Maersk A/S were agreed on. The takeover of the first ship, MS “HAMMONIA

FIONIA”, took place on April 29, 2008 as scheduled. In May 2008 the other two seagoing vessels, MS

“HAMMONIA DANIA” and MS “HAMMONIA HAFNIA”, were received, overhauled successfully in the

dry dock in Dubai under supervision of the inspection division of HAMMONIA Reederei GmbH & Co.

KG, and supplied with new classification documents by Germanischer Lloyd. Docking costs stayed

within the scheduled budget and docking periods were undercut by one and two days, respectively.

According to recent calculations and technical evaluations of HAMMONIA Reederei as well as based

on experience gathered during the operation of the ships, the actual container load capacity is higher

than communicated by the previous owner. The nominal capacity currently comes to at least 7,800 TEU.

This capacity provides the basis for the terms of chartering out these ships after the expiration of the

Maersk charter, determining the ships’ residual value at that point in time.

External financing of the acquisition of the three Maersk vessels was provided by an internationally

operating consortium made up of five banking institutions.

Furthermore, the newly built 2,546 TEU container vessels of the Sub-Panamax class, MS “HAMMONIA

TEUTONICA” and “MS HAMMONIA HOLSATIA”, were delivered and commissioned on schedule in the

second quarter 2008. In the fourth quarter 2008 another identically constructed new ship was deliv-

ered on schedule, the MS “HAMMONIA MASSILIA”.

The three 2,546 TEU ships delivered in the course of the year have been operated since commission-

ing in a 2,500 TEU pool managed by Peter Döhle Schiffahrts-KG.

As of December 31, 2008 the fleet of HCI HAMMONIA SHIPPING AG consisted of altogether nine

ships in service.

Another two ordered new ships have been delivered subsequent to the balance sheet date in January

2009. Thus the investment program aspired to for the time being has been realized within the sched-

uled time frame so that the company operates its scheduled fleet to the full extent for the first time in

fiscal year 2009.

15

16


2. Market development

Global economic development

After the fast growth of the global economy over the last years, the economic growth slowed down con-

siderably in the course of the year 2008. Significantly rising prices of raw materials, energy and food as

well as the negative effects of the international financial crisis had an increasingly curbing impact on

economic activities. In the U.S.A., negative asset effects from sagging real estate and stock prices and

a strong increase of the unemployment rate resulted in a severe collapse of economic growth, but also

the economy clearly lost its momentum in Europe, Asia and the four BRIC countries in the course of the

year. Particularly the dynamically growing economy of China will not see the crisis pass by without leav-

ing its mark. Exports have already turned out much lower than in previous years, and the global eco-

nomic growth rate of 9.0 % was in the single digits for the first time in five years. The growth rate of the

global economic performance went down to 3.4 % in the year 2008 after 5.2 % in the year 2007.

The IMF predicts that the global economy will continue to lose its drive in 2009 and that recessive trends

can no longer be averted in the developed national economies. The Chinese economy is anticipated to

grow by only 6.7 %. Following five years of two-digit growth, this is the lowest rate in 19 years. On the

whole, a slowdown of the global economic growth to 0.5 % is expected for the year 2009. According to

the IMF, a gradual recovery of the global economy can be expected to show by the end of the year 2009,

anticipating a 3.0 % increase in the global economic performance for the year 2010.

Global trade, of major relevance to the shipping industry, is expected to grow or drop, respectively, by

4.1 % and -2.8 % in the years 2008 and 2009 after 7.2 % in the year 2007, according to estimates of

the IMF (January 2009). In the years 2010 to 2013, however, global trade is anticipated to regain its

average performance of the past years. For 2010 a growth of 3.2 % is forecasted.

Charter rates

The charter rates for new container ship contracts fell correspondingly in the course of the year 2008,

considerably in part, and this downward trend accelerated particularly during the second half of the

year. The cutbacks in charter rates were quite different in the separate ship classes. In individual seg-

ments they amounted to 60 % and more over the whole year.

Average development of charter rates 2005 – 2008 and development over the last 3 months 2008

Charter rates 2005 2006 2007 2008 2008 2008 2008in USD per day Ø Jahr Ø Jahr Ø Jahr Ø Jahr Oct Nov Dec

2,500 TEU charter rates 33,083 21,958 24,729 20,313 11,000 10,000 8,000

3,500 TEU charter rates 38,427 26,583 29,958 26,125 17,500 15,500 11,000

Source: Clarkson Research Services Limited 2009

17

Management Report

The high growth rates of the past years resulted in a large number of orders for newly built ships. Ships

originating from those orders will be built and delivered until the year 2012. Therefore currently a rising

supply of hold is met by decreasing demand. As a consequence charter rates are under pressure.

A majority of market experts agrees that rising hold volumes can only be expected by the time the pre-

financing of goods provided by the international banking institutions, currently handled very restrictively,

works to the full extent again and consumer demand increases once again in the U.S.A. and in Europe.

The banks’ reluctance regarding trade financing has the current effect that goods are not ordered or,

to some extent, that they are not even produced and thus not shipped.

As a consequence of the uncertainty on the commodity markets, there is less demand for transport

capacity. Due to the decreasing demand for transport capacity, expiring charter agreements are either

not extended at all or at shorter terms and significant discounts. As a result, container ships of all size

segments can enter new contracts of operation only under difficult conditions. However, it must be

taken into consideration here that older tonnage is replaced by younger tonnage.

Apart from excess capacities, the strongly decreased charter rates can also be traced back to the sig-

nificant decrease in ocean freight rates for the transport of containers particularly on the main routes

(e.g. Asia-Europe). Reasons for the declining volume of transport from Asia over the past months are

among other factors the lower demand in the U.S.A. and in Europe and the reduced industrial produc-

tion in China.

Years

0

100

200

300

400

500

TEU million

2005200420032002200120001999199819971996 2006 2007 2008

North America Europe China incl. Hong Kong Other Asian countries Other countries

Worldwide container trade by region 1996 - 2008Source: Data based on Clarkson Research Services Ltd. “Container Intelligence Monthly 01/2009”,

London, and various earlier issues; Dipl.-Wirtsch.-Ing. Michael Niefünd, Elsfleth.

18


In contrast to previous months, charter agreements are now mostly made for short periods between

one and six months, subject to the respective ship class. The markets also showed less activity con-

cerning the conclusion of new charter agreements. This downward trend on the charter markets had

the partial effect that some shipping companies could no longer operate some ships so that the vessels

had to be put out of commission or that daily charter rates had to be accepted that were close to oper-

ating costs.

The influence of such weaker and shorter-lived charter agreements on the cash flow of the fleet of

HCI HAMMONIA SHIPPING AG is cushioned because of the ships’ operation in pool agreements or

rather their long-term charter agreements for the time being. By the pooling of various ships of the same

or comparable classes, the present development of charter rates can be moderated with regard to pool

revenues for the short term. Even for 2009 the effects of the current charter market weakness are

expected to remain limited due to the large number of charter agreements concluded already. If the

cycle of a weak market keeps up longer, though, this will have a significant effect on the pool rates in

2010 at the latest. In the opposite case, a recovery of the shipping markets can be expected as soon

as the development of demand begins to take a positive course in the above-mentioned national

economies, supported by the various federal economic stimulus packages, among other things.

3. Financial position and results from operations of the group (according to IFRS)

A comparison with the prior-year period is possible only to a highly limited extent as HCI HAMMONIA SHIPPING

AG took up its business operations only in November 2007, starting initially with three seagoing vessels. Further-

more, the fleet was being expanded during fiscal year 2008 and the ships commissioned in the year 2008 only

contributed to revenues of HCI HAMMONIA SHIPPING AG over different time periods (p.r.t. contributions).

3.1. Profit and loss

Subsequent to commissioning the first three seagoing vessels in November and December 2007, profit

and loss of the year 2008 is essentially characterized by time charter revenues of the 7,800 TEU ships

acquired in the first half-year 2008 and revenues from the pool operation of the other 2,546 TEU con-

tainer ships delivered in the course of the year.

The group achieved revenues of roughly EUR 46.7 million in fiscal year 2008 altogether.

In this reporting period revenues were generated by the seagoing vessels MS “WESTPHALIA” and MS

“SAXONIA” (pool revenues from the 3,100 TEU pool), MS “HAMMONIA POMERENIA”, MS “HAMMONIA

TEUTONICA”, MS “HAMMONIA HOLSATIA”, and MS “HAMMONIA MASSILIA” (pool revenues from the

2,500 TEU pool), and MS “HAMMONIA DANIA”, MS “HAMMONIA HAFNIA”, and MS “HAMMONIA

FIONIA” (time charter A.P. Moeller-Maersk). By the acquisition of the three 7,800 TEU ships and the

resulting fixed proceeds from the 10-year time charter agreed on with Maersk, targeted revenues were

exceeded by roughly 18 %. The share of the 7,800 TEU ships in total revenues is a little more than a

third, representing an essential contribution to the group’s total revenue. In the future this contribution

will stabilize the group’s cash flow against the backdrop of decreasing charter and pool rates.

19

Management Report

Furthermore, the group generated other operating income of EUR 3.4 million as a result of exchange

rate gains to the amount of EUR 2.3 million – realized at about EUR 1 million – and reimbursements of

costs to the amount of EUR 0.8 million.

The company’s expenses primarily include running vessel operating costs and personnel expense for

seamen, interest paid on ship mortgage loans, and p.r.t. depreciation of the seagoing vessels put into

service in the previous year or in the reporting period.

Detailed expenses are as follows:

Exceeding the vessel operating costs and the total expenses compared to the figures anticipated in

2007 in the prospectus is essentially a result of the acquisition of the three 7,800 TEU container ships.

Taking out ship mortgage loans in the reporting period led to an interest expense of roughly EUR 8.6

million, facing an interest income of EUR 1.4 million from fixed-term deposits and similar transactions.

The new 2,500 TEU ships are depreciated under the straight-line method over total useful lives of 25

years. The seagoing vessels MS “SAXONIA” and MS “WESTPHALIA”, bought as used ships, are depre-

ciated over remaining useful lives of 21 years. The three used 7,800 TEU ships (MS “HAMMONIA FIONIA”,

MS “HAMMONIA HAFNIA”, and MS “HAMMONIA DANIA”) bought in the second quarter 2008 are

depreciated under the straight-line method in consideration of remaining useful lives of 19 years.

Earnings before interest and taxes (EBIT) altogether amount to roughly EUR 16.8 million in the reporting

period. Including taxes of EUR 0.2 million and an interest result of EUR 7.2 million, the resulting group

net income for the period from January 1 to December 31, 2008 comes to roughly EUR 9.5 million. The

actual group net income is thus 19 % higher than the amount anticipated in the stock exchange

prospectus.

3.2. Financial position

Financial management aims at safeguarding the group’s optimum capital structure and as efficient an

appropriation of available cash as possible. In the area of conflict between the so-called leverage effect

Expenses 1/1– 31/12/2008 1/1– 31/12/2008EUR 000’s Prospectus Actual

Exchange rate USD 1,30 per euro USD 1,4706 per euro

Vessel operating costs (incl. expenses for external seamen) 11,410 14,241

Other costs 3,195 5,398

Interest expense 7,325 8,594

Amortization and depreciation of intangible assetsand property, plant and equipment (seagoing vessels) 9,382 13,639

Income taxes 396 178

Total 31,708 42,050

20


on the one hand and the lending limits of the ship-financing banking institutions on the other hand, an

optimum capital structure has taken shape that provides for an approximate relation of 30 % equity and

70 % borrowed capital at the time of investment (time of the ship’s delivery). Funds are appropriated at

the level of the individual single-ship limited partnerships. Please refer to the risk report (6) for the man-

agement of the risk of changes in exchange rates and interest rates.

As stated in the consolidated cash flow statement, the group achieved a cash flow from operating activ-

ities of EUR 25.0 million in the reporting period January 1 to December 31, 2008. At respective cash

flows from investing activities of EUR -314.9 million from financing activities of EUR 261.4 million and

considering currency-related changes in value of EUR 0.6 million as well as cash and cash equivalents

at the beginning of the period of EUR 48.5 million, cash and cash equivalents amount to EUR 20.6 mil-

lion altogether. It must be taken into consideration that these funds partly include equity required for the

acquisition of two ships as of the beginning of the year 2009.

In the reporting period external capital was borrowed in the shape of ship mortgage loans for the seago-

ing vessels in service to the amount of roughly 70 % of the seagoing vessels’ purchase costs while the

remaining 30 % were financed with equity of HCI HAMMONIA SHIPPING AG. Altogether external capi-

tal of USD 421.1 million was borrowed in the reporting period (USD 380.0 million of loans with fixed

terms and fixed redemption and USD 41.1 million of loans with variable redemption).

Redemption payments of USD 9.7 million on the fixed-interest loans and of USD 7.3 million on the vari-

able-interest loans were made in the reporting period. As of balance sheet date December 31, 2008,

the account balances of the ship mortgage loans amount to altogether USD 370.3 million and USD

33.8 million, respectively. In addition, there are corresponding loan commitments for the seagoing ves-

sels not yet delivered, so that the entire credit limit comes to roughly USD 473 million.

3.3. Assets and liabilities

Assets essentially include intangible assets capitalized in the previous year and developed accordingly

(EUR 1.8 million) and assets in the shape of the nine seagoing vessels in service (approx. EUR 440 mil-

lion). Another material item is cash and cash equivalents of EUR 20.6 million.

Due to the deteriorated market prospects, the assets in the shape of seagoing vessels were subjected to

an internal evaluation on the basis of a discounted cash flow procedure for the determination of recover-

ability. This review has shown that the capitalized values based on the anticipated pool revenues and the

charter rates from time charter agreements cover the entered book values or rather the ship assets.

The most substantial item recognized in equity and liabilities is the equity of EUR 153.2 million, compris-

ing subscribed capital (EUR 136.4 million), capital reserve (EUR 9.8 million), retained earnings (EUR 14.0

million), and accumulated other comprehensive income (EUR -6.9 million). The latter item results from the

provision for currency translation (EUR 9.1 million) and the proportionate change in the time value of

derivative instruments for hedging the cash flow (EUR -16.0 million).

Non-current liabilities essentially include the non-current portion of the ship mortgage loans taken out for

the nine seagoing vessels in service to the amount of EUR 267.4 million and obligations from derivative

21

financial instruments. Current liabilities essentially result from the current portion of the ship mortgage

loans to the amount of EUR 23.3 million.

The group’s financial position and results from operations appear altogether in good order.

4. Non-financial performance indicators

Since the ships were taken over by the respective subsidiaries, the technical operation of the ships has

been trouble-free.

In the year 2008 the following off-hire periods accumulated:

By the permanent care for and maintenance of the ships of HCI HAMMONIA SHIPPING AG, the high

level of the sea personnel’s professional training and qualifications, and the continuous supervision and

support provided by the inspectors of the operator, HAMMONIA Reederei GmbH & Co. KG, the fleet’s

scheduled off-hire periods were undercut by roughly 41 days or 55 %.

5. Subsequent events

In January 2009 the final two new ships of HCI HAMMONIA SHIPPING AG, MS “HAMMONIA ROMA”

and MS “HAMMONIA BAVARIA” were delivered and commissioned.

Apart from this event, no material events occurred between the end of the year 2008 and the date of

reporting that could have an impact on the consolidated financial statements.

Management Report

Off-hire period in Off-hire period in Ship days – Schedule days – Actual Commentary

MS “SAXONIA” 15 11.65 Scheduled docking

MS “WESTPHALIA” 5 0.81 Reflagging, main engine malfunction

MS “HAMMONIA POMERENIA” 5 0.02 Main engine malfunction

MS “HAMMONIA HOLSATIA” 5 1.46 Main engine malfunction

MS “HAMMONIA TEUTONICA” 5 0.33 Main engine malfunction

MS “HAMMONIA MASSILIA” 5 0 --

MS “HAMMONIA ROMA” 0 0 Delivery in January 2009

MS “HAMMONIA BAVARIA” 0 0 Delivery in January 2009

MS “HAMMONIA DANIA” 15 10.23 Scheduled docking

MS “HAMMONIA HAFNIA” 15 9.23 Scheduled docking

MS “HAMMONIA FIONIA” 5 0 --

Entire fleet 75 33.73

22


6. Risk report

The Management Board of HCI HAMMONIA SHIPPING AG considers a systematic and efficient risk

management a task subject to continuous development. The group has a well-structured, DP-based

risk management system. The integral components of this system are systematic risk identification

and risk assessment as well as measures for the prevention, minimization, and control of risks. Special

emphasis is placed on the early detection of risks that could jeopardize the company’s continued exis-

tence. Material risks result from the operation of ships, financing activities, and the legal form as well as

the listing on the stock exchange.

The management of the risks linked to ship operation and financing is the responsibility of HAMMONIA

Reederei GmbH & Co. KG, the company that operates all ships of HCI HAMMONIA SHIPPING AG.

Risk monitoring as well as legal support covering corporations and capital markets law is provided by

the Management Board and, in particular, by HCI Hanseatische Schiffsconsult GmbH.

The following main risk groups are identified in the context of the risk management system:

Market risks

The group generates income from the operation of ships, essentially resulting in the following individual

risks:

Revenues from chartering out the ships do not cover the ship operating costs or the debt service or

they do not provide for an adequate rate of return on the invested capital

The group’s 2,500 TEU and 3,100 TEU container ships are included in pool arrangements based on

vessel size, minimizing the risk of discontinued operation or operation at inadequate charter rates and

providing a balance between market peaks and market lows. Peter Döhle Schiffahrts-KG, one of Ger-

many’s best-known and most reputable privately owned ship operating companies and brokers, man-

ages the pool arrangements.

The three 7,800 TEU container ships, HAMMONIA FIONIA, HAMMONIA DANIA and HAMMONIA HAF-

NIA, have been chartered for a minimum term of 10 years by the world’s largest shipping company, A.P.

Moeller-Maersk, providing for a long-term stabilization of the profit position.

The ships’ charterers become insolvent

The group operates its 2,500 TEU and 3,100 TEU container ships in size-specific pool arrangements,

reducing the individual charterer’s insolvency risk.

Exchange rate risk

All revenues from the ships’ operation are generated exclusively in USD while parts of the vessel operat-

ing costs and future dividends to be paid incur in EUR. For this reason, HCI HAMMONIA SHIPPING AG

runs an active interest and currency management to reduce the risks of exchange rate and interest rate

changes. The ships’ financing is currency congruent to the largest extent; remaining exchange rate

risks are hedged to the extent that corresponding payment transactions are already established.

23

Management Report

The ships are badly damaged, sink or cause third-party damages during operation

For the typical risks from the operation of seagoing vessels, serious damage, sinking, or third-party

damages, adequate insurance coverage is provided by the operator.

Risk of interest rate change

Borrowed capital is used for the ships’ financing. The risk of interest rate changes is partly limited by the

conclusion of derivative interest rate hedging transactions. The risk of interest rate changes remains for

the portion of external financing that is not hedged by long-term fixed interest rates or the conclusion of

derivative interest rate hedging transactions.

Company-related risks

Apart from the above-mentioned risks specific to the operation of ships, the group is exposed to com-

pany-related risks as well. Deciding factors for the group’s success are the quality of management and

key service providers as well as the company’s standing with investors, business partners, and market

analysts. In this context, the group has secured the Management Board members’ involvement by their

long-term appointment. Key operational and administrative functions are supplied by qualified and

experienced service providers on the basis of long-term service agreements. In addition, innovative

financing concepts are prepared, timely and comprehensive shareholder information is provided, and

changed conditions are responded to quickly.

There are no risks from ordering speculative new constructions as all ships of the HCI HAMMONIA

SHIPPING Group can produce a concept of operation – either revenues from pool operation or long-

term time charter agreements concluded with liner shipping companies of high credit ratings. Further-

more, the fleet’s financing is secured by long-term loans extended by banking institutions established in

the field of ship financing. Thus the group is not directly affected by the financial market crisis with

regard to its financing activities.

Exposure to risks that could jeopardize the company’s continued existence such as over-indebtedness

or insolvency or to other risks with an extraordinary or substantial effect on the profit situation and

results from operations does not apply.

7. Opportunities for future development

Opportunities for future development arise especially from the expected development of demand for

ship tonnage in the context of the predicted increasing globalization, the fluctuations of charter rates

and prices for new and second-hand ships, and from the fact that HCI HAMMONIA SHIPPING AG has

up-to-date ships that meet the customers’ high requirements particularly with regard to prevailing safety

standards.

In such a weak market cycle, opportunities may arise for HCI HAMMONIA SHIPPING AG to acquire

additional tonnage at favorable conditions in order to secure a disproportionately high participation in

the market’s recovery in the years 2010 – 2015. This is made possible by the sound profitability and

liquidity of HCI HAMMONIA SHIPPING AG.

24


If the exchange rate of the USD continues to gain on the EUR, this development will probably lead to an

improvement of financial position and results from operations of the HCI HAMMONIA SHIPPING Group.

8. Outlook

The development of the year 2009 and possibly of the year 2010 as well will probably continue to bear

the mark of the banking and economic crisis. Due to consumer restraint and reduced investment activity,

a decrease in demand for transport capacity must be expected. So far the economic stimulus pack-

ages launched by the governments of the large economies of Europe, Asia and the U.S.A. have shown

no effect. However, based on experience it can be said that such measures take one to two quarters

until effects on the real economy start to show. Overcoming the crisis of the global financial system is

also of crucial importance towards the normalization of trade financing.

The effect of the present quality of charter agreements, recently being concluded for shorter terms and

at significantly lower rates, on the cash flow of the fleet of HCI HAMMONIA SHIPPING AG is highly

cushioned for the time being, due to the conservative concept of operation of the ships either in pool

arrangements or under long-term time charters.

The pool arrangements in which the 2,500 TEU and 3,100 TEU ships of HCI HAMMONIA SHIPPING AG

are operated are well diversified by the number of ships included in the respective pools and by charter

agreements with different liner shipping companies.

Our calculation for the development of charter rates is based on a forecast for ships of the 2,500 and

3,100 TEU classes published in January by Maersk Broker, one of the world’s largest container ship

brokers. This forecast anticipates a recovery of the market in the second half of the year 2010.

Currently 50 ships are included in the 2,500 TEU pool, chartered out to 16 different charterers. The

average remaining term of the pool’s charter agreements is roughly 1.5 years and thus provides a sound

basis for cushioning the collapse of present charter rates in the short term.

The 3,100 TEU pool currently comprises 18 ships, chartered out to six different charterers. The average

remaining term of the charter agreements is roughly 1 year. As part of the charter rates are aligned with

the “Hamburg Index” for container time charter rates (HAX), a precise forecast is difficult to make.

For the new contracts due in the year 2009 involving ships of the 2,500 TEU pool, charter rates of USD

8,900.00 on average are expected, based on the recent Maersk forecast from January 2009; charter

rates of USD 13,100.00 are expected for the 3,100 TEU pool vessels.

The revenue level of the pool ships is at present significantly above the charter rates realizable on the

market. In combination with the steady charter revenues of the three 7,800 TEU ships, making a contri-

bution of a little over a third of the total charter revenues, a relatively stable revenue level from charter

proceeds can be expected for the year 2009.

In fiscal year 2009 HCI HAMMONIA SHIPPING AG is able to charter out the whole fleet for the first time.

This capacity increase will have a positive effect on the group revenue. If the weak state of the charter

25

Management Report

markets keeps up, pool results may decrease in the medium term because of less favorable conditions

for new business and renegotiations of individual charter agreements. In the current market cycle, char-

ter rates realizable for new business come to approximately half of the original planning. Insofar as new

contracts must be closed at this level, it will have a corresponding negative effect on group revenue.

However, due to the time charters within the framework of pool arrangements, this effect will be cush-

ioned.

The company’s fleet capacity available as of 2009 has been increased to eleven ships. At the same

time, the charter revenues of the pool ships generated per vessel are reduced due to the deteriorated

market situation. However, we assume that the whole fleet’s charter revenues could be up to 50% higher

than in the previous year. This anticipation of revenues is based on an average exchange rate of 1.35

USD/EUR.

With regard to the development of costs, a slight decrease compared to the year 2008 can be expected

due to falling vessel operating costs (for lubricants, among other items). Costs of the fleet in the year

2009 are estimated at roughly EUR 24 million altogether.

Amortization and depreciation of intangible assets and property, plant and equipment will rise to roughly

EUR 23 million in the year 2009 because of the year-round depreciation of the ships acquired in the

course of the year 2008 and the completion of the fleet in January 2009. Due to the fleet expansion and

conservative calculations, we anticipate an increased interest expense of roughly EUR 17 million.

Instead of to the difficult market environment and the continued market weakness becoming apparent

in the first quarter 2009, we expect a positive group result for the year that, however, will probably turn

out below the prior-year result.

We also expect to generate a cash surplus in 2009 once again. In addition to bank deposite, overdrafts

of EUR 9 million are available as of the end of 2008 for safeguarding liquidity. The group’s liquidity can

therefore be regarded as secured.

Against the backdrop of the anticipated economic recovery, an increase in charter rates can be expect-

ed for the year 2010. The effects on the result 2010 can hardly be calculated; yet they will probably be

not very significant as a considerable market recovery can only be expected for the second half-year

2010.

Due to the conservative concept of operation and the secured external financing, we consider the

HCI HAMMONIA SHIPPING Group well prepared for currently difficult times.

9. Basics of the remuneration system

According to the articles of incorporation, each member of the Supervisory Board receives a fixed annu-

al compensation of EUR 5,000.00. The chairman of the Supervisory Board receives one and a half

times of that amount.

The Management Board members do not receive any remuneration.

26


10. Financial position and results from operations of the holding com-pany HCI HAMMONIA SHIPPING AG

A comparison with the prior-year period is possible only to a very limited extent as HCI HAMMONIA SHIPPING

AG only took up operations at the end of November 2007 and fiscal year 2007 was highly influenced by

transaction costs in connection with raising equity and the IPO.

10.1. Profit and loss

Profit and loss of the parent company are essentially determined by revenues from investments and

interest income. Revenues from investments in the single-ship limited partnerships and the general

partner GmbH are as follows:

In addition to revenues from investments to the amount of EUR 10,769k, the parent generated rev-

enues of EUR 123k, other interest income of EUR 1,163k, other operating income of EUR 21k, and for-

eign exchange income of EUR 97k. Altogether an income of EUR 12,173k was generated.

Expenses incurred to the amount of altogether EUR 3,453k in the reporting period. These are essentially

made up of foreign exchange losses (EUR 1,350k), audit fees, tax consultancy and other consultancy

fees (EUR 461k), and administrative expenses (EUR 1,504k).

The net income for the reporting period thus amounts to EUR 8,719k altogether. In consideration of loss

carry-forward of EUR 3,830k from the previous year, essentially a result of the transaction costs linked

to the IPO, and allocations of EUR 5k to the statutory reserve, retained earnings come to EUR 4,884k

altogether.

10.2. Financial position

Cash accrued in the course of the IPO came to EUR 146.1 million after flotation costs, placed to the

amount of EUR 137.1 million in eleven investments in single-ship limited partnerships. Of the eleven

holdings, three companies acquired and operated a ship each back in fiscal year 2007, six companies

followed in fiscal year 2008, and two in 2009.

Investments in single-ship limited partnerships

EUR 000’s Revenues from investments

WESTPHALIA 2,283

SAXONIA 2,084

HAMMONIA POMERENIA 2,212

HAMMONIA FIONIA 793

HAMMONIA DANIA 523

HAMMONIA HAFNIA 728

HAMMONIA HOLSATIA 863

HAMMONIA TEUTONICA 817

HAMMONIA MASSILIA 275

HAMMONIA ROMA 191

HAMMONIA BAVARIA 0

Total 10,769

27

Management Report

In the reporting period January 1 to December 31, 2008 the parent company states a cash flow from

operating activities of EUR -2.8 million, due to the fact that income from investments stated in the result

for the year only has to be recognized in the following year as affecting liquidity and that no advance

payments have been made to partners during the period, among other factors. Considering a cash flow

from investing activities of EUR -37.1 million and cash and cash equivalents of EUR 46.8 million at the

beginning of the period, cash and cash equivalents come to altogether EUR 6.9 million.

10.3. Assets and liabilities

The parent company’s assets and liabilities according to HGB are as follows:

The parent’s balance sheet according to HGB states equity of EUR 154,939k as of the balance sheet

date, made up of the subscribed capital of EUR 136,414k, the capital reserve of EUR 13,636k, the

statutory reserve of EUR 5k, and retained earnings of EUR 4,884k. The increase over the previous year

results from retained earnings.

There are trade payables to the amount of EUR 39k with remaining terms of up to one year and provi-

sions of EUR 200k.

Fixed assets as stated in the financial statements according to HGB include financial assets to the

amount of EUR 137,110k, representing the investments in the single-ship subsidiaries, and intangible

assets of EUR 9k. The working capital essentially comprises receivables and other assets, of which

EUR 10,992k are accounted for by receivables from affiliated companies, and cash in banks.

Changes in fixed assets result primarily from the new investments in the three single-ship subsidiaries

that acquired the 7,800 TEU ships in the year 2008.

The parent’s financial position and results from operations appear in good order altogether.

EUR 000’s 12/31/2008 12/31/2007

Assets

Fixed assets 137,119 99,988

Receivables and other assets 11,151 660

bank deposits 6,884 46,793

Accruals and deferrals 24 0

155,178 147,441

Equity and liabilities

Equity 154,939 146,220

Provisions 200 224

Liabilities 39 997

155,178 147,441

28


11. Report according to Sections 289 (4), 315 (4) HGB

The share capital comes to EUR 136,414,000.00 and is divided into 136,414 no-par value ordinary

bearer shares with a proportional amount of the share capital of EUR 1,000 per share. Each share rep-

resents one vote in the General Meeting. All shares issued represent the same rights.

The sale or transfer of shares is not restricted. There are no restrictions with regard to voting rights.

By shareholders’ resolution passed at the Annual General Meeting of June 11, 2008, the creation of

authorized capital to the amount of EUR 68.2 million was decided. The Management Board will decide

the time of realization of a capital increase together with the Supervisory Board.

The shareholders also confirmed Supervisory Board members Andreas Uibeleisen and Michael Hum-

mel as successors of Kai-Kristian Meyer and Christian Kuppig, who had both retired from the board on

schedule in April 2008.

Direct or indirect interests in the capital exceeding 10 % of the voting rights as of December 31, 2008

are held by HSH Nordbank AG, Martensdamm 6, Kiel (19.75 %). HAMMONIA Reederei GmbH & Co. KG,

Elbchaussee 370, Hamburg, holds an interest of 9.86%. Peter Döhle Schiffahrts-KG, Elbchaussee 370,

Hamburg, with indirect holdings of 3.33 % through a subsidiary, has an interest of 32 % in HAMMONIA

Reederei, and the interest of HAMMONIA Reederei is attributed to Peter Döhle Schiffahrts-KG. There-

fore Peter Döhle Schiffahrts KG exceeds the threshold of 10 % of the voting rights (13.19 %).

Privileged shares granting voting right control have not been issued.

Employees who do not exercise voting right control directly do not hold interests in the share capital.

According to Section 84 AktG the Supervisory Board is responsible for appointing and recalling mem-

bers of the Management Board. The articles of incorporation of HCI HAMMONIA SHIPPING AG do not

provide for diverging regulations.

Amendments to the articles of incorporation generally require a three-quarter majority of the capital rep-

resented at passing the resolution according to Section 179 AktG. Law permits the articles of incorpo-

ration to provide for a different majority of the represented capital – in case of proposed changes to the

nature and purpose of the business it must be a larger majority. In this regard, the general provision of

Section 11 (2) of the articles of incorporation reads as follows: “The resolutions of the General Meeting

are passed, insofar as there are no conflicting compulsory statutory provisions, with the simple majority

of the votes cast or, if the law provides for a majority of the capital in addition to the majority of votes,

with the simple majority of the share capital represented at passing the resolution.” For certain subject

matters, the law provides for larger majorities of the capital and/or additional conditions in compulsory

regulations. Amendments to the articles of incorporation that only concern their wording may be made

by the Supervisory Board according to Section 14 of the articles of incorporation.

29

Management Report



The Management Board was authorized by shareholders’ resolution passed at the Annual General

Meeting of June 11, 2008 to increase the company’s share capital, with the Supervisory Board’s con-

sent, by up to EUR 68,207,000.- until June 10, 2013 through the one-time or repeated offer of no-par

value bearer shares against cash contribution (authorized capital).

There is no other authorized capital. There is no conditional capital. An authorization for the acquisition

of the company’s own shares (buyback) has so far not been decided by the General Meeting.

There are no material agreements on the condition of a change of control as a result of a takeover bid,

subject to mandatory reporting according to Section 289 (4) no. 8 HGB.

There are no compensation agreements entered into by the company with members of the Manage-

ment Board or employees for the case of a takeover bid.

Hamburg, March 12, 2009

30

copy

Consolidated Financial Statements: Visible economic success

The Suez Canal, completed in 1869, is 163 kilometers long and

connects the Red Sea with the Mediterranean. Thus it represents a

significant shortcut for the shipping route between Europe and Asia.

As it can be passed in one direction only due to its width, the passage

of 11 to 16 hours is arranged in convoys. The Great Bitter Lake in the

middle of the Suez Canal is used as a waiting area where vessel con-

voys can pass each other. The canal records 15,000 ship passages

each year, carrying about 14 % of the global freight.


32


EUR Note 2008 2007

Revenues 25 46,711,657.64 1,592,402.05

Vessel operating costs 26 -14,240,593.50 -728,969.10

Vessel operating result 32,471,064.14 863,432.95

Personnel expenses 27 0.00 -146.38

Other operating income 28 3,410,732.08 9,468,119.36

Other operating expenses 29 -5,398,791.85 -919,380.24

Result from shipping operations 30,483,004.37 9,412,025.69

Depreciation, amortisation and impairment of property, plant and equipment and intangible assets 30 -13,639,297.41 -5,323,235.51

Earnings before interest and taxes (EBIT) 16,843,706.96 4,088,790.18

Interest income 31 1,406,785.89 473,591.47

Interest expenses 32 -8,594,299.28 -55,542.33

Earnings before taxes (EBT) 9,656,193.57 4,506,839.32

Income taxes 33 -178,639.52 -21,979.86

Consolidated net income/net loss for the year 9,477,554.05 4,484,859.46

Earnings per share (basic) (EUR) 34 69.48 260.31

Earnings per share (diluted) (EUR) 34 69.48 260.31

Consolidated income statement

33

Consolidated income statement / Consolidated balance sheet

Consolidated balance sheet

Assets

EUR Note 31 Dec 2008 31 Dec 2007

Non-current assets 441,644,106.84 106,239,030.45

Intangible assets 5 1,770,320.49 9,227,256.81

Property, plant and equipment 6 439,862,288.42 96,684,874.08

Other financial assets 7 11,497.93 326,899.56

Current assets 25,432,424.14 49,461,086.86

Inventories 8 1,668,788.95 333,500.27

Trade receivables 9 2,310,961.26 80,818.61

Receivables from related parties 10 50,000.00 2,546.77

Income tax receivables 11 62,223.97 57,837.18

Other assets 12 697,521.02 503,938.97

Other financial assets 683.05 27,639.86

Other miscellaneous assets 696,837.97 476,299.11

Cash and cash equivalents 13 20,642,928.94 48,482,445.06

Total assets 467,076,530.98 155,700,117.31

Equity and liabilities

EUR Note 31 Dec 2008 31 Dec 2007

Equity 14 153,216,377.76 151,132,877.89

Subscribed capital 136,414,000.00 136,414,000.00

Capital reserve 9,771,884.55 9,771,884.55

Retained earnings 13,958,794.51 4,481,240.46

Accumulated other equity -6,928,301.30 465,752.88

Non-current liabilities 287,749,135.97 2,381,536.31

Current financial liabilities 15 267,438,420.28 0.00

Liabilities from financial derivatives 16 16,654,134.86 582,269.57

Minority interests 17 2,640,389.52 783,075.43

Other liabilities 18 1,016,191.31 1,016,191.31

Current liabilities 26,111,017.25 2,185,703.11

Current financial liabilities 19 23,340,278.12 82,288.05

Trade payables 20 1,541,154.70 618,469.91

Payables to related parties 21 781,986.55 1,452,543.43

Income tax liabilities 22 199,935.89 19,324.97

Other liabilities 23 124,431.41 13,076.75

Liabilities from financial derivatives 24 123,230.58 0.00

Total equity and liabilities 467,076,530.98 155,700,117.31

34


EUR Note 2008 2007

Consolidated net income for the year 9,477,554.05 4,484,859.46

Depreciation, amortisation and impairment of intangibleassets and property, plant and equipment 13,639,297.41 443,822.20

Impairment of goodwill 0.00 4,879,413.31

Tax expense 178,639.52 21,979.86

Elimination of net interest income 7,187,513.39 -418,049.14

Other non-cash income and expenses 693,818.14 -9,268,561.40

Decrease/increase in working capital -1,660,513.35 1,445,128.54

Increase in inventories -1,312,877.51 -333,500.27

Decrease/Increase in trade receivables -2,224,711.65 -80,592.02

Decrease/Increase in receivables from related parties -47,453.23 -2,546.77

Decrease/Increase in other assets -193,582.05 -468,876.48

Decrease/Increase in trade payables 1.102,861.28 553,615.72

Decrease/Increase in payables to related parties -713,106.26 1,442,543.43

Increase in other liabilities 1,728,356.07 334,484.93

Taxes paid -4,386.79 -60,439.16

Interest paid -5,925,932.11 -7,892.53

Interest received 1,402,604.82 453,844.14

Cash flow from operating activities 37 24,988,595.08 1,974,105.28

Payments to acquire intangible assets and property,plant and equipment -314,900,865.42 -95,654,345.71

Net cash outflow from the acquisitionof subsidiaries 0.00 -4,459,059.98

Cash flow from investing activities 37 -314,900,865.42 -100,113,405.69

Proceeds from the issue of equity instruments 0.00 146,135,884.55

Proceeds from additions to loans 274,785,982.02 0.00

Transaction costs for loans -1,790,556.80 -30,295.89

Repayments of loans -11,584,414.60 0.00

Cash flow from financing activities 37 261,411,010.62 146,105,588.66

Net change in cash and cash equivalents -28,501,259.72 47,966,288.25

Cash and cash equivalents at beginning of period 48,482,445.06 49,968.35

Effects of exchange rate changes on cash and cash equivalents 661,743.60 466,188.46

Cash and cash equivalents at end of period 36 20,642,928.94 48,482,445.06

Consolidated cash flow statement

35

Consolidated cash flow statement / Consolidated statement of changes in equity

Consolidated statement of changes in equity

Change in the fair Foreign value of currency derivatives trans- Accumu- of cash lation lated Other con- Subscribed Capital Retained flow adjust- other solidatedEUR capital reserve earnings hedges ment equity equity

Balance at31 Dec 2006 50,000.00 0.00 -3,619.00 0.00 0.00 0.00 46,381.00

Consolidated net income for the year 0.00 0.00 4,484,859.46 0.00 0.00 0.00 4,484,859.46

Proportional change in the fair value ofderivatives of cash flow hedges 0.00 0.00 0.00 -435.58 0.00 -435.58 -435.58

Changes in foreign currency translation adjustment 0.00 0.00 0.00 0.00 466,188.46 466,188.46 466,188.46

Income and expenses recognised directly in equity 0.00 0.00 0.00 -435.58 466,188.46 465,752.88 465,752.88

Total recognised income and expense 0.00 0.00 4,484,859.46 -435.58 466,188.46 465,752.88 4,950,612.34

Capital increase 136,364,000.00 13,636,400.00 0.00 0.00 0.00 0.00 150,000,400.00

Offset of issue costs 0.00 -3,864,515.45 0.00 0.00 0.00 0.00 -3,864,515.45

Balance at31 Dec 2007 136,414,000.00 9,771,884.55 4,481,240.46 -435.58 466,188.46 465,752.88 151,132,877.89

Consolidated net income for the year 0.00 0.00 9,477,554.05 0.00 0.00 0.00 9,477,554.05

Proportional change in the fair value ofderivatives of cash flow hedges 0.00 0.00 0.00 -16,071,865.30 0.00 -16,071,865.30 -16,071,865.30

Changes in foreign currency translation adjustment 0.00 0.00 0.00 0.00 8,677,811.12 8,677,811.12 8,677,811.12

Changes fromfirst-time consolidations 0.00 0.00 0.00 0.00 0.00 0.00

Income and expenses recognised directly in equity 0.00 0.00 0.00 -16,071,865.30 8,677,811.12 -7,394,054.18 -7,394,054.18

Total recognised income and expense 0.00 0.00 9,477,554.05 -16,071,865.30 8,677,811.12 -7,394,054.18 2,083,499.87

Balance at31 Dec 2008 136,414,000.00 9,771,884.55 13,958,794.51 -16,072,300.88 9,143,999.58 -6,928,301.30 153,216,377.76

36


Consolidated statement of changes in non-current assetsDevelopment of intangible assets

Consolidated statement of changes in non-current assetsDevelopment of property, plant and equipment

EUR Historical cost

Additions from Exchange business Reclassifi-2007 1 Jan 2007 differences Additions combinations cations Disposals 31 Dec 2007

Acquiredintangibleassets 0.00 0.00 14,600.00 10,697,705.73 -1,484,237.81 0.00 9,228,067.92

Goodwill 0.00 0.00 0.00 4,879,413.31 0.00 0.00 4,879,413.31

Total 0.00 0.00 14,600.00 15,577,119.04 -1,484,237.81 0.00 14,107,481.23

EUR Historical cost

Additions from Exchange business Reclassifi-2008 1 Jan 2008 differences Additions combinations cations Disposals 31 Dec 2008

Acquiredintangibleassets 9,228,067.92 0.00 0.00 0.00 -7,452,069.64 0.00 1,775,998.28

Goodwill 4,879,413.31 0.00 0.00 0.00 0.00 0.00 4,879,413.31

Total 14,107,481.23 0.00 0.00 0.00 -7,452,069.64 0.00 6,655,411.59

EUR Historical cost

Additions from Exchange business Reclassifi- 2007 1 Jan 2007 differences Additions combinations cations Disposals 31 Dec 2007

Advancepayments 0.00 0.00 1,111.97 0.00 0.00 0.00 1,111.97

Seagoing vessels 0.00 0.00 95,638,633.74 3,901.65 1,484,237.81 0.00 97,126,773.20

Total 0.00 0.00 95,639,745.71 3,901.65 1,484,237.81 0.00 97,127,885.17

EUR Historical cost

Additions from Exchange business Reclassifi- 2008 1 Jan 2008 differences Additions combinations cations Disposals 31 Dec 2008

Advancepayments 1,111.97 0.00 22,416,075.68 0.00 -1,111.97 0.00 22,416,075.68

Seagoing vessels 97,126,773.20 5,525,621.12 322,010,381.90 0.00 7,453,181.61 0.00 432,115,957.83

Total 97,127,885.17 5,525,621.12 344,426,457.58 0.00 7,452,069.64 0.00 454,532,033.51

The development of intangible assets and the development of property, plant and equipment form part of the notes to the consolidated financial statements.

37

Consolidated statement of changes in non-current assets

Accumulated amortisation/impairment Carrying amount

Exchange Impairment1 Jan 2007 differences Amortisation losses Disposals 31 Dec 2007 31 Dec 2007 31 Dec 2006

0.00 0.00 -811.11 0.00 0.00 -811.11 9,227,256.81 0.00

0.00 0.00 0.00 -4,879,413.31 0.00 -4,879,413.31 0.00 0.00

0.00 0.00 -811.11 -4,879,413.31 0.00 -4,880,224.42 9,227,256.81 0.00


Exchange Impairment1 Jan 2008 differences Amortisation losses Disposals 31 Dec 2008 31 Dec 2008 31 Dec 2007

-811.11 0.00 -4,866.68 0.00 0.00 -5,677.79 1,770,320.49 9,227,256.81

-4,879,413.31 0.00 0.00 0.00 0.00 -4,879,413.31 0.00 0.00

-4,880,224.42 0.00 -4,866.68 0.00 0.00 -4,885,091.10 1,770,320.49 9,227,256.81


Exchange Impairment 1 Jan 2007 differences Amortisation losses Disposals 31 Dec 2007 31 Dec 2007 31 Dec 2006

0.00 0.00 0.00 0.00 0.00 0.00 1,111.97 0.00

0.00 0.00 -443,011.09 0.00 0.00 -443,011.09 96,683,762.11 0.00

0.00 0.00 -443,011.09 0.00 0.00 -443,011.09 96,684,874.08 0.00


Exchange Impairment 1 Jan 2008 differences Amortisation losses Disposals 31 Dec 2008 31 Dec 2008 31 Dec 2007

0.00 0.00 0.00 0.00 0.00 0.00 22,416,075.68 1,111.97

-443,011.09 -592,303.27 -13,634,430.73 0.00 0.00 -14,669,745.09 417,446,212.74 96,683,762.11

-443,011.09 -592,303.27 -13,634,430.73 0.00 0.00 -14,669,745.09 439,862,288.42 96,684,874.08

38


General notes

HCI HAMMONIA SHIPPING AG is a stock corporation listed on the Hamburg Stock Exchange

(Hanseatische Wertpapierbörse Hamburg) and has its registered office in Hamburg, Germany. The

company address is: Bleichenbrücke 10, 20354 Hamburg. The company is entered in the register of

companies kept at the District Court (Amtsgericht) Hamburg under no. HRB 98689.

HCI HAMMONIA SHIPPING AG and its subsidiaries are active in the international shipping industry.

HCI HAMMONIA SHIPPING AG intends to position itself as an international supplier in the container

ship charter business. This objective is intended to be realized by the purchase and operation of sea -

going vessels, the sale of seagoing vessels, and the conclusion of charter agreements through the

subsidiaries organized in the legal form of limited partnerships with a limited liability company as general

partner (GmbH & Co. KG). As of the balance sheet date nine subsidiaries were active in the operation of

ships. The ships operated by the subsidiaries are put into commission all over the world.

The group’s fiscal year is the calendar year. In the years 2008 and 2007, the group did not have own

employees.

(1) Basis of presentation

The consolidated financial statements of HCI HAMMONIA SHIPPING AG for the fiscal year ended

December 31, 2008 have been prepared pursuant to the provisions of Regulation (EC) No. 1606/2002

of the European Parliament and the Council of July 19, 2002 on the application of international account-

ing standards in accordance with the International Financial Reporting Standards (IFRS) passed and

announced by the International Accounting Standards Board (IASB) as applicable in the European

Union (EU) and completed with the statements required by German commercial law as stipulated by

Section 315 a (1) HGB. The IFRS requirements were fully complied with and their application leads to

the presentation of a true and fair view of the financial position and results from operations of the

HCI HAMMONIA SHIPPING Group. The provisions of German commercial law as stipulated by Section

315a (3) HGB read in conjunction with Section 315a (1) HGB were also taken into consideration.

As the group had taken up business operations only in the course of the preceding year, the figures of

the fiscal year are comparable with the prior-year figures only to a limited extent.

The consolidated income statement is presented according to total cost accounting.

The consolidated financial statements are generally prepared on the basis of amortized or depreciated

acquisition or production costs for the recognition of assets and liabilities. This does not apply for intan-

gible assets and other liabilities from the acquisition of subsidiaries as well as derivative financial instru-

ments. These have been recognized at fair value.

The consolidated financial statements are based on the going concern assumption.

Notes to the consolidated financial statements of HCI HAMMONIA SHIPPING AG

39

Notes

The consolidated financial statements have been prepared in euro. The figures presented in the notes to

consolidated financial statements are stated in EUR thousand.

Consolidated financial statements and group management report are published in the electronic Federal

Gazette (elektronischer Bundesanzeiger).

(2) Consolidation

(a) ) Principles of consolidation

Apart from HCI HAMMONIA SHIPPING AG, all subsidiaries are included in the consolidated

financial statements. The subsidiaries are companies whose financial and business policies

HCI HAMMONIA SHIPPING AG is able to control directly or indirectly.

Generally HCI HAMMONIA SHIPPING AG acquires its subsidiaries as mere shelf companies. Provisions

of IFRS 3: Business Combinations do not apply for such acquisitions. In particular, no goodwill needs to

be recognized and amortized.

However, in some cases subsidiaries are acquired that have already displayed economic activities to a

certain extent (conclusion of ship purchase agreements, loan agreements, interest hedge agreements).

These subsidiaries are consolidated at the date of acquisition under the purchase method. According to

the purchase method, acquisition costs of the interest acquired are offset against the proportionate fair

value of the acquired assets and assumed liabilities of the subsidiary at the time of acquisition. Any

resulting positive difference is capitalized as derivative goodwill. Negative differences resulting from con-

solidation at the time of acquisition are recognized immediately in profit or loss after another review of

the carrying amounts. The date of acquisition is the point in time when the control over the net assets

and financial and operating activities of the acquired company is transferred to the group.

Any hidden reserves or hidden liabilities identified upon fair value measurement of assets and liabilities

within the scope of initial consolidation are carried, amortized, depreciated, written off, or reversed in

the following periods according to the development of assets and liabilities. Derivative goodwill is tested

for impairment in the following periods at least once every year and, in case of impairment, written down

unscheduled to the lower recoverable amount.

Subsidiaries are included in the consolidated financial statements by way of full consolidation as of the

point in time control has been transferred to HCI HAMMONIA SHIPPING AG.

Expenses and income as well as receivables and payables between consolidated companies are elimi-

nated. Inter-company profits and losses have been eliminated if material.

The financial statements of HCI HAMMONIA SHIPPING AG and the consolidated subsidiaries

are prepared according to the same accounting policies and valuation methods. The financial

statements of consolidated subsidiaries have been prepared as of the balance sheet date of

HCI HAMMONIA SHIPPING AG.

Investments in subsidiaries held by other shareholders concern minority interests held by the limited

partners of the single-ship limited partnerships. They are reported under liabilities as “minority interests”

to the amount of the proportionate limited liability capital net of unpaid contributions.

40


(b) ) Basis of consolidation

The basis of consolidation as of December 31, 2008 includes the following fully consolidated companies.

The share in the subsidiaries’ capital is presented in brackets and corresponds with the percentage of vot-

ing rights:

Parent

HCI HAMMONIA SHIPPING AG, Hamburg

Subsidiary – general partner

Verwaltung HCI HAMMONIA Schiffahrts GmbH, Hamburg, (100%)

Shipping-subsidiaries

MS “HAMMONIA TEUTONICA” Schiffahrts GmbH & Co. KG, Hamburg, (97.62 %)

MS “HAMMONIA ROMA” Schiffahrts GmbH & Co. KG, Hamburg, (97.64 %)

MS “HAMMONIA MASSILIA” Schiffahrts GmbH & Co. KG, Hamburg, (97.64 %)

MS “HAMMONIA HOLSATIA” Schiffahrts GmbH & Co. KG, Hamburg, (97.61 %)

MS “HAMMONIA POMERENIA” Schiffahrts GmbH & Co. KG, Hamburg, (97.60 %)

MS “HAMMONIA BAVARIA” Schiffahrts GmbH & Co. KG, Hamburg, (97.72 %)

MS “WESTPHALIA” Schiffahrts GmbH & Co. KG, Hamburg, (97.39 %)

MS “SAXONIA” Schiffahrts GmbH & Co. KG, Hamburg, (97.39 %)

MS “HAMMONIA FIONIA” Schiffahrts GmbH & Co. KG, Hamburg, (98.56 %)

MS “HAMMONIA HAFNIA” Schiffahrts GmbH & Co. KG, Hamburg, (98.56 %)

MS “HAMMONIA DANIA” Schiffahrts GmbH & Co. KG, Hamburg, (98.56 %)

(c) First-time consolidation

The HCI HAMMONIA SHIPPING Group acquired three subsidiaries (MS “HAMMONIA FIONIA”,

MS “HAMMONIA HAFNIA”, and MS “HAMMONIA DANIA) in early April 2008. These were mere shelf com-

panies that had not unfolded any business activities at the time of purchase. Business operations were

taken up only after the date of acquisition by the purchase and operation of one seagoing vessel each.

In the context of the acquisitions over the fiscal year no material assets and liabilities were acquired or

assumed.

The group net income includes EUR 2,199k from the additional business generated by the subsidiaries

acquired in the fiscal year.

If the business combinations had been effected as of January 1, 2008 already, this would have had no

effect on the amount of the group revenue as the acquired subsidiaries took up revenue-generating

activities only after the date of acquisition. It would have had no material effect on the group result for

the same reason.

(d) Translation of foreign currency financial statements

Pursuant to legal provisions (Sections 315a (1), 298 (1) read in conjunction with Section 244 HGB), the

consolidated financial statements are prepared in euro (presentation currency). The functional currency

of the single-ship limited partnerships for the purpose of IAS 21 is the U.S. dollar (USD). The functional

41

Notes

currency (USD) results from the fact that transactions related to the acquisition of ships and their financ-

ing, the charter market, and the market for material vessel operating costs are all settled in USD. There-

fore, in accordance with IAS 21, all transactions of the shipping subsidiaries settled in the local currency,

EUR, or in other currencies are translated into USD at the exchange rate as of transaction date. Mone-

tary assets and liabilities are adjusted to the USD exchange rate as of balance sheet date.

Assets and liabilities of subsidiaries whose functional currency is not the euro are translated at the

exchange rate as of balance sheet date. Items of the income statement are translated at the respective

year’s annual average exchange rate. Equity components of subsidiaries as well as minority interests

are translated at the respective historical exchange rate of the time they incur. Exchange differences

resulting from translation are recognized directly in equity under „foreign currency translation adjust-

ment“.

Exchange rates for the translation of financial statements prepared in foreign currencies have developed

in relation to the euro as follows:

For the translation of financial statements prepared in foreign currencies with regard to single-ship limited

partnerships that took up business operations due to the acquisition of seagoing vessels only in the

course of fiscal year 2008, average exchange rates were determined and applied for the period of busi-

ness operations.

(3) Accounting policies and valuation methods

(a) Recognition of income and expenses

Revenues are recognized at the time performances are effected if the amount of revenues can be reliably

determined and economic benefits will probably accrue.

Operating expenses are recognized on the date of performance or expensed as incurred.

Interest is recognized as expenses or income, respectively, in the period in which the interest incurs.

Interest expenses arising in connection with the acquisition and production of certain assets are not

capitalized in the group.

Minority interests in earnings are calculated on the basis of the result determined in accordance with the

accounting principles of German commercial law.

(b)) Intangible assets

Acquired intangible assets are capitalized at acquisition costs. Acquired intangible assets with definite

useful lives are amortized over the expected economic useful lives of three years from the time they are

ready for use on a straight-line basis.

Average exchange rate Exchange rate as of balance sheet date

Foreign currency for EUR 1 2008 2007 31 Dec 2008 31 Dec 2007

USD 1.4708 1.4570 1.3917 1.4721

42


In the context of the acquisition of subsidiaries, the group capitalized intangible assets resulting from

hidden reserves from contracts related to the purchase of seagoing vessels in the previous year. The

intangible assets are reclassified to property, plant and equipment upon the acquisition of the seagoing

vessels and then depreciated according to the seagoing vessels’ respective useful lives.

Intangible assets with indefinite useful lives do not apply for the group with the exception of derivative

goodwill. The carrying amounts of derivative goodwill are subjected to an impairment review at least

once a year. The goodwill that arose in the context of business combinations in the previous year

were written off entirely in the year it arose. Therefore no goodwill is recognized for the

HCI HAMMONIA SHIPPING Group as of December 31, 2008.

There are no intangible assets generated within the group.

(c) ) Property, plant and equipment

Items of property, plant and equipment are capitalized at acquisition or production costs and depreciated

over their expected economic useful lives on a straight-line basis. Useful lives applied correspond with the

expected useful lives within the group. The group’s property, plant and equipment include seagoing ves-

sels and advance payments made on seagoing vessels. Useful lives of new ships are 25 years. The

remaining useful lives of second-hand seagoing vessels are estimated on the basis of the respective ship’s

technical condition at the time of acquisition.

Significant parts of an item of property, plant and equipment (seagoing vessels, major regular maintenance

activities) are depreciated separately (component approach).

Gains or losses from the disposal of intangible assets and property, plant and equipment are reported in

other operating income or other operating expenses.

(d) ) Impairment losses of intangible assets and property, plant and equipment

The HCI HAMMONIA SHIPPING Group subjects fixed assets to impairment reviews and recognizes

impairment losses if necessary.

For the purpose of conducting impairment reviews, derivative goodwill is allocated to the reporting units

to which goodwill is allocated also for the group’s internal reporting purposes. These reporting units

usually correspond to the individual group companies. The reporting units’ cash flows are discounted

with a rate for the cost of capital oriented towards the rate applied by peer companies. Impairment loss-

es are recognized if the present value of the cash flows is smaller than the carrying amount of the intan-

gible assets and property, plant and equipment as well as the net working capital of the reporting unit

including allocated derivative goodwill.

Impairment losses are recognized for other intangible assets and property, plant and equipment if the

assets’ carrying amount is no longer covered by the expected proceeds from disposal or the discount-

ed net cash flow from continued use as a result of certain events or developments. The cash flows are

also discounted with a rate for the cost of capital oriented towards peer companies. If the determination

of a recoverable amount is not possible for individual assets, cash flows of the group of assets on the

next higher level are used for which such cash flows can be determined. In the reporting period no

impairment losses were recognized for other intangible assets and property, plant and equipment.

43

Notes

Impairment losses are reversed insofar as the reasons for the recognition of impairment losses no

longer apply in the following periods. The amount of the reversal is limited to the amount that would

have resulted had the impairment loss not been recognized. Impairment losses recognized for goodwill

are not reversed.

(e) Financial instruments

The HCI HAMMONIA SHIPPING Group generally recognizes financial assets upon delivery, i.e. as of

settlement date.

The financial instruments applied by the HCI HAMMONIA SHIPPING Group include cash and cash

equivalents, receivables, financial liabilities and loans as well as derivative financial instruments in the

form of interest rate swap and currency hedges.

Financial assets are initially recognized at fair value plus directly attributable transaction costs,

unless the financial assets are allocated to the category “at fair value through profit and loss”. The

HCI HAMMONIA SHIPPING Group does not have primary financial assets to be allocated to this cate-

gory as of the balance sheet date. Financial assets are subsequently valuated at fair value or amortized

acquisition costs in application of the effective interest method depending on the classification of the

individual financial instruments in accordance with IAS 39.

Financial liabilities are initially recognized at fair value less transaction costs and subsequently at amor-

tized acquisition costs or, with regard to financial liabilities of the category “at fair value through profit

and loss”, at fair value. The HCI HAMMONIA SHIPPING Group does not have primary financial liabilities

to be allocated to this category as of the balance sheet date.

Financial assets are derecognized if either the rights to receive the cash flows generated from these

assets have expired or virtually all risks have been transferred to a third party in such a way that the

criteria for derecognition are fulfilled. Financial liabilities are derecognized if the obligations are either

extinguished, canceled, or expired.

(i) Cash and cash equivalents

Cash and cash equivalents include balances on current accounts and term deposits with maturities of

only a few days.

(ii) Receivables and other financial assets

Receivables and other primary financial assets allocated to the category “loans and receivables” are ini-

tially recognized at fair value. Subsequent valuation occurs at amortized acquisition costs in application

of the effective interest method.

Impairment losses of receivables and other primary financial assets are executed in applying allowance

accounts. Valuation allowances are recorded if there is objective evidence that there is a default risk for

the respective financial asset. The amount of the valuation allowance is based on past experience or

individual risk assessment.

(iii) ) Financial liabilities

Financial liabilities are initially recognized at fair value. They are subsequently valuated generally at amor-

tized acquisition costs in consideration of the effective interest method.

44


(iv) ) Derivative financial instruments

Derivatives applied by the group are interest rate swap contracts and currency hedges, used for hedging

interest rate and currency risks. Derivative financial instruments are reported at fair value. The recogni-

tion of changes in the fair value of derivative financial instruments depends on whether these instru-

ments are applied as hedging instruments and whether the requirements for hedge accounting are met

in accordance with IAS 39.

If these requirements are not met despite an existing economic hedging relationship, changes in fair

value of the derivative financial instruments are recognized immediately in profit or loss.

The effective portion of a change in the fair value of a derivative financial instrument designated as a

hedging instrument and fulfilling the requirements for hedge accounting for the purpose of hedging cash

flows (cash flow hedge) is recognized directly in accumulated other equity, taking into account the related

tax effect. The ineffective portion is recognized in the income statement. The effective portion is recog-

nized in profit or loss only if the hedged item affects profit or loss.

(v) Fair values of financial instruments

Fair values of financial instruments are determined on the basis of corresponding market values or valu-

ation methods. The fair value of cash and cash equivalents and other current primary financial instru-

ments corresponds to the carrying amounts as of the respective balance sheet dates.

Fair values of non-current receivables and other assets as well as non-current provisions and liabilities

are determined on the basis of the expected cash flows in applying the reference interest rates as of the

balance sheet date. Fair values of derivative financial instruments are determined on the basis of the ref-

erence interest rates as of the balance sheet date.

(f) Inventories

Inventories concern the seagoing vessels’ stock of lubricants kept on board. The amount of inventories

is determined on the basis of inventory stocktaking as of the balance sheet date. Acquisition costs are

established according to the FIFO method. Inventories are valuated at the lower of acquisition cost and

net recoverable amount.

If the reasons that resulted in an impairment of inventories cease to apply, the impairment loss is

reversed.

(g) Other provisions

Provisions are recognized insofar as an obligation towards a third party exists as a result of a past event

and the obligation will probably result in a future outflow of resources that can be reliably estimated. If

the provision cannot be recognized because one of the above criteria is not met, the corresponding

obligations are disclosed under contingent liabilities unless the probability that payment will be claimed

is very low. Provisions for obligations are discounted if these obligations will probably not result in an

outflow of resources in the following year. The carrying amount of provisions is reviewed as of each bal-

ance sheet date.

(h) Income taxes

Current taxes are expensed as incurred at the amounts owed.

Deferred taxes are recognized to account for future tax effects resulting from temporary differences

45

Notes

between the tax base of assets and liabilities and their related carrying amounts in the financial state-

ments according to IFRS as well as on loss carry-forward. The measurement of deferred taxes is based

on the tax laws in effect at the end of the respective fiscal year and applicable to the fiscal years during

which the differences reverse or loss carry-forward is probably utilized. Deferred tax assets on tempo-

rary differences or tax loss carry-forwards are recognized only if their realizability appears sufficiently

certain.

Deferred taxes are recognized for temporary differences resulting from the fair value measurement of

assets and liabilities in the context of company acquisitions. Deferred taxes for temporary differences

arising in subsequent measurement with regard to derivative goodwill are recognized only if the deriva-

tive goodwill is tax deductible.

Loss carry-forward is not taken into account in the determination of deferred tax assets in the context of

earnings contributions covered by taxation in accordance with Section 5a EStG (tonnage tax) governing

the separate and uniform determination of the taxable income single-ship companies.

Due to tonnage taxation, differences between the tax base of assets and liabilities and their carrying

amounts in the financial statements according to IFRS with regard to the single-ship limited partner-

ships have been considered permanent.

The carrying amount of deferred tax assets is reviewed as of each balance sheet date and reduced to

the extent it is no longer probable that sufficient taxable income will be available against which the

deferred tax asset can be partially utilized.

Deferred tax assets and deferred tax liabilities are offset against each other if the company has an

enforceable claim to set off current tax assets against current tax liabilities and deferred taxes refer to

income taxes of the same taxable entity, raised by the same tax authority.

(i) Foreign currency transactions

Acquisitions and sales in foreign currency are translated at the daily exchange rate as of the date of

transaction. Assets and liabilities in foreign currency are translated into the functional currency at the

exchange rate as of the balance sheet date. The average USD exchange rate as of December 31, 2008

on which the consolidated financial statements of HCI HAMMONIA SHIPPING AG are based comes to

1.3917 USD/EUR (previous year: 1.4721 USD/EUR). Foreign exchange gains and losses resulting from

these currency translations are recognized directly in profit or loss.

(j) Use of estimates

The estimates and assumptions underlying the preparation of the consolidated financial statements at

hand affect the measurement of assets and liabilities, the disclosure of contingent assets and contin-

gent liabilities as of the relevant balance sheet dates, and the amounts of income and expenses in the

reporting period.

Estimates must be made particularly for determining the carrying amounts of deferred taxes. There are

uncertainties with respect to the interpretation of complex tax issues. Therefore differences between the

actual results and our assumptions, or future changes to our estimates, can result in changes of the tax

result in future periods. Due to our assessment of the tax situation of the HCI HAMMONIA SHIPPING

Group no deferred taxes were considered in the consolidated financial statements; in particular, no ben-

efits from tax loss carry-forward were capitalized.

46


Further significant estimates and assumptions primarily concern the determination of the useful lives

of seagoing vessels, their residual values at the end of their useful lives, and the estimate of cash flows

within the framework of conducting impairment reviews (carrying amounts of seagoing vessels includ-

ing maintenance component as of the balance sheet date: EUR 417,446k; previous year: EUR 96,684k).

The group makes assessments and assumptions relating to expected future developments in the con-

text of preparing financial statements. Estimates derived from these assumptions and assessments will

of course hardly ever match the actual circumstances to occur in the future.

(4) New accounting regulations issued by the IASB

The basis of the accounting of the HCI HAMMONIA SHIPPING Group according to IFRS are the

accounting standards of the IASB as adopted by the European Commission for application in the

European Union within the framework of the endorsement process in accordance with Regulation

(EC) No. 1606/2002 read in conjunction with Section 315a (1) HGB. Newly issued IFRS or amend-

ments to IFRS announced in fiscal years 2007 and 2008 by the IASB are required to be applied by

the HCI HAMMONIA SHIPPING Group only after a corresponding resolution of the European Com-

mission within the framework of the endorsement process.

The following Standards had to be applied in the consolidated financial statements of

HCI HAMMONIA SHIPPING AG for the fiscal year ended December 31, 2008 for the first time:

■ In October 2008 the IASB released amendments to IAS 39: Financial Instruments : Disclosures,allowing the reclassification of certain financial assets of the category “at fair value through profit andloss” on certain conditions to another category according to IAS 39 due to the developments on thefinancial markets. The amendments were adopted by the EU in October 2008 and may be appliedretrospectively as of July 1, 2008. In November 2008 the IASB published additional explanationsregarding these provisions that have not yet been adopted by the EU.

■ IFRIC 14: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interac-tion, released in July 2007 and applicable for fiscal years beginning on or after January 1, 2008, con-tains provisions for the determination of the maximum amount of the surplus from a defined benefitthat may be capitalized as an asset according to IAS 19. This Interpretation was adopted by the EUin December 2008.

Above-mentioned amendments or Interpretations had no effect on the consolidated financial state-

ments of HCI HAMMONIA SHIPPING AG according to IFRS.

The following Standards and Interpretations released by IASB or IFRIC, do not have to be applied

yet, either because they have not yet been adopted by the EU or the point in time of first compulsory

application has not arrived yet. Insofar as they have been already adopted by the EU, the

HCI HAMMONIA SHIPPING Group has not applied them ahead of schedule.

Standards and Interpretations already adopted by the EU but not subject to compulsory application in

fiscal year 2008 are as follows:

■ In November 2006 the IASB released IFRS 8: Operating Segments, designated to replace IAS 14governing segment reporting. According to IFRS 8, segment reporting is oriented towards the inter-nal reporting structure for the definition and presentation of reportable segments (“managementapproach”). IFRS 8 requires application for fiscal years beginning on or after January 1, 2009.

47

Notes

■ In March 2007 an amendment to IAS 23: Borrowing Costs was released, according to which bor-

rowing cost arising in connection with financing so-called “qualifying assets” must be capitalized.

Revised Standard IAS 23 requires application for fiscal year 2009.

■ In September 2007 the IASB released a revision of IAS 1: Presentation of Financial Statements. Due

to the amendments to IAS 1, the consolidated financial statements for fiscal years beginning on or

after January 1, 2009 will include an overall presentation of results, stating expenses and income

both resulting and not resulting in profit or loss.

■ In January 2008 the IASB released an amendment to IFRS 2: Share-based Payment : Vesting Condi-

tions and Cancellations, containing a definition of vesting conditions. The amendment requires initial

application for fiscal year 2009.

■ In February 2008 the IASB released an amendment to IAS 32: Financial Instruments : Presentation

and IAS 1: Presentation of Financial Statements – Puttable Financial Instruments and Obligations

Arising on Liquidation. The changes especially concern the classification of cancelable financial

instruments, including limited partners’ interests, as equity or borrowed capital as well as connected

statements in the notes to consolidated financial statements. The amendments require application

starting with fiscal year 2009.

■ In May 2008 the IASB released “Improvements to IFRS”, containing minor amendments to 20 exist-

ing IFRS Standards. Insofar as the amendments to the respective Standards do not provide different

time regulations, the amendments require application for fiscal years beginning on or after January 1,

2009.

■ In May 2008 the IASB released amendments to IFRS 1: First-Time Adoption of IFRS, requiring initial

application for fiscal year 2009.

■ In June 2007, IFRIC 13: Customer Loyalty Programs was released, concerning the recognition of

customer loyalty awards granted to customers. IFRIC 13 requires application for fiscal years begin-

ning on or after July 1, 2008.

The HCI HAMMONIA SHIPPING Group does not expect significant effects on the group’s financial posi-

tion and results from operations due to the application of these Standards in fiscal year 2009.

The first-time application of amended IAS 1 will result in a modified presentation of the consolidated

financial statements especially because of the inclusion of income and expenses resulting and not

resulting in profit or loss in an overall presentation of results.

Standards and Interpretations released by IASB or IFRIC whose application for IFRS consolidated finan-

cial statements requires prior adoption by the EU according to Section 315a HGB are as follows:

■ Revised Standard IFRS 3: Business Combinations released in January 2008 contains material

changes in the application or the purchase method to business combinations, particularly changing

the recognition of interests of outside investors, the disclosure of successive business acquisitions,

and the treatment of conditional purchase price components and acquisition costs. The revised

standard requires application for fiscal years beginning on or after July 1, 2009.

■ The amendments to IAS 27: Consolidated and Separate Financial Statements, also released in Jan-

uary 2008, concern the accounting treatment of transactions involving interests in subsidiaries over

which the parent retains control as well as transactions involving interests in subsidiaries resulting in

the former parent’s loss of control. The revised Standard requires application for fiscal years begin-

ning on or after July 1, 2009.

48


■ In July 2008 the IASB released an amendment to IAS 39: Eligible Hedged Items – Amendments to

IAS 39: Financial Instruments : Recognition and Measurements, including a clarification relating to

the application of the accounting treatment of hedging relationships. The new regulation requires

application for fiscal years beginning on or after July 1, 2009.

■ In November 2008 the IASB released a revised IFRS 1: First-time Adoption of IFRS, requiring first-

time application for fiscal year 2009.

■ IFRIC 12: Service Concession Arrangements was released in November 2008 and requires applica-

tion for fiscal years beginning on or after January 1, 2008. The Interpretation governs the accounting

treatment of obligations and rights assumed in the context of service concession agreements.

■ In July 2008, IFRIC 15: Agreements for the Construction of Real Estate was released, providing spe-

cial regulations for the contract construction of real estate with regard to the application of IAS 11:

Construction Contracts and IAS 18: Revenues. IFRIC 15 requires initial application for fiscal year 2009.

■ In July 2008, IFRIC 16: Hedges of a Net Investment in a Foreign Operation was released. IFRIC 16

includes specific regulations for the hedging and identification of foreign currency risks. IFRIC 16

requires application for fiscal years beginning on or after October 1, 2008.

■ In November 2008, IFRIC 17: Distribution of Non-cash Assets to Owners was released, containing

provisions for the measurement of non-monetary dividends distributed to partners, among other

things. IFRIC 17 requires application for fiscal years beginning on or after July 1, 2009.

Subject to their adoption by the EU, these Standards and Interpretations will be applied at the time of first

required application. The HCI HAMMONIA SHIPPING Group assumes at present that the application of

these Standards and Interpretations will not have a material effect on the presentation of the company’s

financial position and results from operations. The effects of the amendments to IAS 27 and IFRS 3 on the

group’s financial position and results from operations will particularly depend on the acquisitions of compa-

nies and disposals of investments in companies that the company will carry out subsequent to the date of

applications of these two Standards.

Notes to the consolidated balance sheet

(5) Intangible assets

Changes of the individual items of intangible assets of the HCI HAMMONIA SHIPPING Group are present-

ed in the statement of changes in non-current assets. The amounts shown as of the balance sheet date

exclusively concern acquired intangible assets. They can be broken down as follows:

In the previous year the group had acquired contracts on the purchase of seagoing vessels within the

framework of business combinations. The capitalized contracts are reclassified to property, plant and

EUR 000’s 31 Dec 2008 31 Dec 2007

Ship purchase contracts 1,761 9,213

Costs for internet presence 9 14

1,770 9,227

49

Notes

equipment upon the acquisition of the seagoing vessels and depreciated over their respective useful

lives. In this fiscal year the amount of EUR 7,452k was reclassified due to the acquisition of three seago-

ing vessels. The amount stated as of the balance sheet date relates to another seagoing vessel that was

delivered at the beginning of 2009.

Costs for the company’s presence on the Internet relate to HCI HAMMONIA SHIPPING AG. The capital-

ized amounts are amortized over an expected useful life of three years on a straight-line basis. The

remaining useful life as of December 31, 2008 is 1 year and 10 months.

(6) Property, plant and equipment

The group’s property, plant and equipment consist of seagoing vessels (technical equipment and

machinery) as well as advance payments made on seagoing vessels. The seagoing vessels are char-

tered out to liner shipping companies within the framework of operating lease relationships.

Items of property, plant and equipment are carried at depreciated acquisition costs and depreciated

over their useful lives on a straight-line basis. Seagoing vessels are considered integral items; with

regard to charges for the large classes, generally due after 5 years, an adequate amount is split off and

amortized as a special item over 5 years. For vessels not yet docked, class charges are estimated

depending on size and amortized over the remaining period until docking, while the capitalization is only

p.r.t. if docking is intended to take place sooner than after 5 years according to schedule. For ships

already docked, class charges actually incurred are amortized until the next docking.

The determination of useful lives reflects the probable physical wear and tear, technical obsolescence,

and legal as well as contractual provisions. Thus determined useful lives of new ships amount to 25

years. The useful lives of second-hand seagoing vessels are estimated on the basis of the respective

technical state at the time of acquisition.

Furthermore, the amount of scheduled depreciation is determined by the recoverable amounts at the

end of an asset’s economic useful life. The residual value of seagoing vessels equals their scrap value.

The scrap value is subject to considerable market fluctuations. For the determination of residual values

as of the balance sheet date, a scrap value of USD 280.00 per ton (previous year: USD 450.00 per ton)

was assumed.

Please refer to the statement of the development in property, plant and equipment for further informa-

tion.

EUR 000’s 31 Dec 2008 31 Dec 2007

Technical equipment and machinery

Seagoing vessels 413,457 96,288

Large class charges 3,989 396

417,446 96,684

Advance payments and construction in process 22,416 1

439,862 96,685

50


(7) Other financial assets (non-current)

Non-current receivables relate to transaction costs (service charges et al.) from loan arrangements con-

cluded in previous years. Upon disbursement of the loans, transaction costs are netted against the loans

and amortized over the term of the loan.

(8) Inventories

Inventories comprise raw materials and supplies identified on the basis of stocktaking as of the balance

sheet date. The item is made up of the following components:

Write-downs of inventories were not required in the fiscal years presented.

(9) Trade receivables

All receivables from customers are recognized at acquisition costs, at present without valuation

allowances. There are no overdue amounts. In general specific valuation allowances are provided for

special risks.

Trade receivables bear no interest and have remaining terms to maturity of up to one year.

(10) Receivables from related parties

Receivables result from current settlement transactions with HAMMONIA Reederei GmbH & Co. KG as

the contractual ship operating company.

Valuation allowances for identifiable default risks were not necessary as of respective balance sheet

dates.

Receivables from related parties have remaining terms to maturity of up to one year.

Further disclosures on related party transactions can be found under note (43).

(11) Income tax receivables

Receivables relate to tax refund claims from withholding tax on capital.

Income tax receivables have terms to maturity of up to one year.

EUR 000’s 31 Dec 2008 31 Dec 2007

Lubricating oil 1,503 279

Deck equipment 92 30

Machine equipment 74 25

1,669 334

51

Notes

(12) Other assets (current)

Other current assets can be broken down as follows:

Other assets have remaining terms to maturity of up to one year.

(13) Cash and cash equivalents

Cash and cash equivalents comprise balances at banking institutions and can be broken down as fol-

lows:

Balances and term deposits are recognized at face value. Term deposits have terms to maturity of only

a few days. Current account balances yield interest at variable interest rates for daily callable balances.

Term deposits yield interest according to the prevailing interest rates for short-term cash items.

(14) Equity

Changes of the equity components are presented in the consolidated statement of changes in equity.

(a) Subscribed capital

In 2007 the fully paid-in share capital divided into 50,000 shares at EUR 1.00 each was reallocated to

50 no-par value bearer shares with a proportionate interest in the subscribed capital of EUR 1,000.00

each. Then the capital was increased in 2007 by the issue of 136,364 new no-par value bearer shares.

By the end of 2007 the subscribed capital thus consisted of 136,414 no-par value bearer shares with a

proportionate interest in the subscribed capital of EUR 1,000.00 per share. The subscribed capital

remained unchanged in fiscal year 2008. All shares are fully entitled to dividends and voting rights.

EUR 000’s 31 Dec 2008 31 Dec 2007

Deferred interest claims 1 20

Claims related to overpaid interest 0 8

Other financial assets 1 28

Tax refund claims from input taxes 149 351

Deferrals related to insurance 481 121

Other deferrals 12 1

Sundry 55 3

Other miscellaneous assets 697 476

Other assets 698 504

EUR 000’s 31 Dec 2008 31 Dec 2007

Current accounts 2,560 422

Term deposits 18,083 48,060

20,643 48,482

52


At the Annual General Meeting of HCI HAMMONIA SHIPPING AG held on June 11, 2008 the Manage-

ment Board was authorized to increase the company’s share capital, with the Supervisory Board’s con-

sent, until June 10, 2013 by up to altogether EUR 68,207k through the one-time or repeated issuance

of up to 68,207 no-par value bearer shares against contribution in cash (authorized capital). The Man-

agement Board was authorized to partially preclude the shareholders’ subscription rights for the adjust-

ment of fractional amounts with the Supervisory Board’s consent.

The Management Board was authorized to determine the further particulars of the execution of capital

increases from the authorized capital with the Supervisory Board’s consent. The Supervisory Board was

authorized to amend the wording of the articles of incorporation commensurate with the scope of the

capital increase from authorized capital after the complete or partial execution of the increase of the

share capital or after the expiration of the term of authorization.

(b) Capital reserve

In the context of the capital increase carried out by the issue of 136,364 new shares in connection with

the IPO of HCI HAMMONIA SHIPPING AG on November 16, 2007, an amount of EUR 13,636k was

allocated to capital reserve in accordance with Section 272 (2) no. 1 HGB.

In accordance with IAS 32.37 the equity capital provided in the year 2007 was reduced by the issue

costs associated with fundraising activities to the amount of EUR 3,864k. These costs have to be

reduced generally by related income tax benefits, according to IAS 32.37. As no tax payments are

expected for the company under prevailing tax law due to the business model of HCI HAMMONIA

SHIPPING AG, the costs for raising equity capital were deducted to their full amount from the added

equity capital.

(c) Retained earnings

Retained earnings include results earned in the previous period and in the period under review by the

companies included in the consolidated financial statements insofar as these results have not been

distributed as dividends.

Retained earnings include surplus reserves set aside by the parent company. In accordance with Sec-

tion 150 (2) AktG (German Stock Corporation Act), an amount of EUR 5k was allocated to the statutory

reserve of HCI HAMMONIA SHIPPING AG in fiscal year 2008.

(d) Accumulated other equity

Accumulated other equity comprises the changes in the fair values of derivatives as part of cash flow

hedges as well as foreign currency translation adjustments.

Fair value changes of derivatives as part of cash flow hedges relate to forward interest rate swaps used

by the subsidiaries for hedging variable-interest loans, classified as cash flow hedges in accordance

with IAS 39.

The item “foreign currency translation adjustment” results from the translation of the separate financial

statements of companies included in the consolidated financial statements from their fuctional currency

(USD) into the presentation currency (EUR).

53

Notes

(15) Financial liabilities (non-current)

The disclosure concerns liabilities to banks and essentially comprises loans raised for financing the pur-

chase of ships. The following material loans exist as of the balance sheet date:

The ship mortgage loans are collateralized by promissory notes issued by the respective shipping com-

panies. These are collateralized by senior ship mortgages in favor of the financing credit institutions. Fur-

thermore, the shipping companies have assigned all claims from the present and future operation of the

vessels and from the insurance policies to the financing banks.

The total carrying amount of the assets serving as collateral for liabilities comes to EUR 419,757k. Of

this total, EUR 417,446k relate to mortgaged seagoing vessels and EUR 2,311k to trade receivables.

The liabilities’ remaining terms to maturity are as follows:

(16) Liabilities from financial derivatives (non-current)

The disclosure relates to the market values of forward interest rate swaps for hedging variable interest

payments under loan agreements. For further information please refer to note (40) (a) (ii).

Face Redemption Availment as of Durationamount p.a. 31 Dec 2008 interest until planed

TUSD TUSD TUSD TEUR rate redemption

MS HAMMONIA 25,983 1,614 9,400 6,754 USD-LIBOR + margin 3 Jan 2023BAVARIA 8,661 737 0 0 CIRR 4 Jan 2021

MS HAMMONIA 60,750 6,231 59,192 42,532 USD-LIBOR + margin 30 May 2018DANIA 13,400 0 10,900 7,832 USD-LIBOR + margin 31 May 2018

MS HAMMONIA 60,750 6,231 59,192 42,532 USD-LIBOR + margin 30 May 2018FIONIA 12,000 0 8,850 6,359 USD-LIBOR + margin 31 May 2018

MS HAMMONIA 60,750 6,231 59,192 42,532 USD-LIBOR + margin 30 May 2018HAFNIA 13,400 0 11,800 8,479 USD-LIBOR + margin 31 May 2018

MS SAXONIA 30,000 2,072 27,928 20,068 USD-LIBOR + margin 31 Dec 2019

MS WESTPHALIA 30,000 2,308 28,269 20,313 USD-LIBOR + margin 28 Feb 2021

MS HAMMONIA 16,337 834 16,129 11,590 USD-LIBOR + margin 6 June 2022TEUTONICA 15,975 1,360 15,635 11,234 CIRR 6 June 2020

MS HAMMONIA 16,422 838 16,422 11,800 USD-LIBOR + margin 20 Oct 2022MASSILIA 16,058 1,367 16,058 11,538 CIRR 20 Oct 2020

MS HAMMONIA 16,273 830 16,065 11,544 USD-LIBOR + margin 21 May 2022HOLSATIA 15,912 1,354 15,573 11,190 CIRR 21 May 2020

MS HAMMONIA 24,690 1,534 23,539 16,914 USD-LIBOR + margin 29 Nov 2021POMERENIA 8,230 700 7,705 5, 536 CIRR 29 Nov 2019

EUR 000’s 31 Dec 2008 31 Dec 2007

Terms of less than 1 year 0 0

Terms between 1 year and 5 years 90,697 0

Terms of over 5 years 176,742 0

Total 267,439 0

54


The remaining terms to maturity of financial derivatives are as follows:

(17) Minority interests

Minority interests refer to the limited partnership interests of minority shareholders in the currently eleven

singe-ship limited partnerships. The item can be broken down as follows:

The remaining terms to maturity of minority interests are as follows:

(18) Other liabilities (non-current)

Other non-current financial liabilities concern encumbrances from a contract on the delivery of a sea -

going vessel. The contract was acquired in the context of a business combination in the previous year.

Upon the seagoing vessel’s delivery in early 2009, liabilities are set off against the seagoing vessel’s

acquisition costs.

(19) Financial liabilities (current)

EUR 000’s 31 Dec 2008 31 Dec 2007

Terms of less than 1 year 3,041 0

Terms between 1 year and 5 years 9,360 582


Total 16,654 582

EUR 000’s 31 Dec 2008 31 Dec 2007

Minority interests in limited liability capital 2,514 897

Minority interests in group earnings 126 -114

Special withdrawal accounts 0 0

Total 2,640 783

EUR 000’s 31 Dec 2008 31 Dec 2007

Terms of less than 1 year 126 0

Terms between 1 year and 5 years 0 0


Total 2,640 783

EUR 000’s 31 Dec 2008 31 Dec 2007

Ship mortgage loans 22,170 0

Deferred interest 1,170 82

Total 23,340 82

55

Notes

Current financial liabilities relate to the current portion of ship mortgage loans as well as liabilities from

the deferral of interest payment obligations. Please also refer to note (15) for ship mortgage loans.

Current financial liabilities have remaining terms to maturity of up to one year.

(20) Trade payables

The trade payables of EUR 1,541k (previous year: EUR 618k) all have remaining terms to maturity of up

to one year.

The statement includes deferrals to the amount of EUR 594k (previous year: EUR 494k).

(21) Payables to related parties

Payables to related parties can be broken down as follows:

The payables to related parties have remaining terms to maturity of up to one year.

Please refer to note (43) for further information on related party transactions.

(22) Income tax liabilities

Current income tax liabilities include liabilities from municipal trade taxes to the amount of EUR 193k

(previous year: EUR 16k) and liabilities from corporation taxes and solidarity surcharge to the amount of

EUR 7k (previous year: EUR 3k).

These liabilities have remaining terms to maturity of up to one year.

(23) Other liabilities (current)

Other current liabilities can be broken down as follows:

Reimbursement obligations result from the settlement of accounts with shipyards.

These liabilities have remaining terms to maturity of up to one year.

EUR 000’s 31 Dec 2008 31 Dec 2007

Payables to contractual ship operating company and companies subject to its control 755 461

Payables to HCI Hanseatische Schiffsconsult GmbH from fundraising activities as well as from controlling and administrative services and other services 0 982

Payables to executive bodies of HCI HAMMONIA SHIPPING AG 27 10

Total 782 1,453

EUR 000’s 31 Dec 2008 31 Dec 2007

Reimbursement obligations 116 0

Accruals 1 12

Miscellaneous tax liabilities 5 1

Other miscellaneous liabilities 2 0

Total 124 13

56


(24) Liabilities from financial derivatives (current)

The disclosure relates to the market value of a forward exchange transaction. This transaction has a

remaining term to maturity of less than one year. For further explanation please refer to note (40) (a) (ii).

Notes to the consolidated income statement

(25) Revenues

This item includes the shipping companies’ charter revenues that can be broken down as follows:

(26) Vessel operating costs

Vessel operating costs are made up of the following components:

(27) Personnel expenses

Personnel expenses of the year 2007 related to contributions to the statutory accident insurance of HCI

HAMMONIA SHIPPING AG.

(28) Other operating income

Other operating income can be broken down as follows:

EUR 000’s 2008 2007

Pool revenues 26,858 1,592

Time charter 19,854 0

Total 46,712 1,592

EUR 000’s 2008 2007

Costs for repair and equipment 2,067 243

Ship operating fees, commissions 2,102 66

Costs for ship personnel 6,119 243

Lubricating oil and grease used 1,336 43

Fuels used 770 64

Insurance 1,384 49

Miscellaneous costs 463 21

Total 14,241 729

EUR 000’s 2008 2007

Income from the recognition of negative goodwill arising upon first-time consolidation of subsidiaries 0 9,271

Forward exchange transaction gains 960 0

Other foreign exchange gains 1,388 97

Reimbursement from chartereres 190 8

Proceeds from the sale of fuel 610 91

Miscellaneous 263 1

Total 3,411 9,468

57

Notes

(29) Other operating expenses

Other operating expenses are made up of the following components:

(30) Depreciation, amortization and impairment of property, plant and equipment and intangible

assets

Amortization, depreciation and impairment can be broken down as follows:

Impairment losses of intangible assets of the year 2007 related to derivative goodwill arising in the con-

text of the first-time consolidation of certain companies.

(31) Interest income

This item can be broken down as follows:

(32) Interest expenses

Interest expenses essentially result from the ships’ financing and can be broken down as follows:

EUR 000’s 2008 2007

Legal, audit and consultancy fees 629 238

Forward exchange transaction losses 189 0

Other foreign exchange losses 1,949 34

Costs related to the commencement of operations at single-ship companies 634 203

Fees from controlling and administrative services and other services 1,451 375

Miscellaneous 547 69

Total 5,399 919

EUR 000’s 2008 2007

Amortization of intangible assets 5 1

Impairment losses of intangible assets 0 4,879

Depreciation of property, plant and equipment 13,634 443

Total 13,639 5,323

EUR 000’s 2008 2007

Interest income from short-term deposits 1,345 458

Other interest income 62 16

Total interest income 1,407 474

EUR 000’s 2008 2007

Interest expense for ship mortgage loans 6,997 0

Interest expense for forward interest rate swaps 1,023 0

Supply rates 327 49

Other interest expenses 247 7

Total interest expenses 8,594 56

58


(33) Income taxes

Taxes paid or owed on income as well as deferred taxes are recognized as income taxes. Income taxes

comprise trade taxes, corporation taxes, and solidarity surcharge.

Income tax expenses can be broken down by origin as follows:

Current income tax expense relates to municipal trade taxes of single-ship limited partnerships to the

amount of EUR 177k. In addition, the item includes corporation and municipal trade tax liabilities of the

general partner.

German-based companies in the legal form of a corporation owe corporation tax at a rate of 15 % (pre-

vious year: 25 %) plus a solidarity surcharge of 5.5 % on corporation tax owed. In addition, these com-

panies and subsidiaries in the legal form of partnerships are subject to municipal trade tax, the amount

of which is determined on the basis of municipality-specific assessment rates.

The notional income tax expense that would have arisen by applying the tax rate of the controlling group

company HCI HAMMONIA SHIPPING AG of 32 % (previous year: 40 %) to earnings before taxes as

determined in accordance with IFRS can be reconciled to income tax expenses reported in the consoli-

dated income statement as follows:

Permanent differences include the effects of minority interests in group net income settled via tonnage

tax.

Corporation and trade tax loss carry-forwards are subject to certain restrictions. A positive taxable

income of up to EUR 1,000k can be reduced without limitation, while amounts exceeding this threshold

can only be reduced by up to 60 % by an existing loss carry-forward.

Deferred tax assets on temporary differences and tax loss carry-forward are recognized to the extent

that their recoverability is sufficiently certain in the near future. For temporary differences and tax loss

EUR 000’s 2008 2007

Current income tax expense 179 20

Deferred income tax expense/income 0 2

Total 179 22

EUR 000’s 2008 2007

Earnings before income taxes according to IFRS 9,478 4,485

Group tax rate 32% 40%

Expected tax expense 3,033 1,794

Permanent differences -3,191 -1,875

Non-deductible business expenses 337 74

Adjustment of the carrying amount of deferred taxes 0 2

Miscellaneous 0 27

Tax expense/income as reported in the income statement 179 22

59

Notes

carry-forwards for corporation tax purposes to the amount of EUR 5,667k (previous year: EUR 4,039k)

and for trade tax purposes to the amount of EUR 6,071k (previous year: EUR 4,054k), no deferred tax

assets were recognized in fiscal year 2008 as the generation of sufficient taxable income for these

amounts in the near future appears improbable.

The ability to carry forward tax losses in Germany is not subject to any restrictions under current law.

(34) Earnings per share

Earnings per share reflect the portion of the earnings generated in a given period attributable to one

share, calculated by dividing group earnings by the weighted number of shares issued. Earnings per

share may be diluted by so-called potential shares (such as convertible bonds or stock options). The

HCI HAMMONIA SHIPPING Group does not have such potentially diluting agreements on the purchase

of shares. Therefore basic earnings equal diluted earnings per share. Basid and diluted earnings per

share are calculated as follows:

The weighted average number of shares outstanding for fiscal year 2007 is calculated on the basis of

the opening balance as of January 1, 2007 and by adding the shares issued within the framework of the

capital increase carried out in the year 2007 and entered in the register of companies.

Notes to the consolidated cash flow statement

(35) General information

The cash flow statement distinguishes between cash flows from operating, investing and financing

activities.

(36) Analysis of cash and cash equivalents

Cash and cash equivalents reported in the cash flow statement correspond to the same item reported

in the balance sheet. Cash equivalents are term deposits with original terms to maturity of only a few

days.

2008 2007

Group net income for the year attributable to equity holders of the parent EUR 000’s 9,478 4,485

Weighted average number of shares outstanding Number 136,414 17,229

Group net income for the year attributable to equity holders of the parent per share EUR 69.48 260.31

Shares outstanding Days

Balance as of January 1, 2007 50 319

Capital increase against cash contribution

(entry in register of companies on 11/16/2007) 136,364 46

Weighted number of shares 17,229 365

60


(37) Explanation of cash flows

The cash flow from operating activities is determined in application of the indirect method and amounts

to EUR 24,989k (previous year: EUR 1,974k). Cash flows from investing and financing activities are

determined according to the direct method.

The change in cash flows compared to the previous year is accounted for by the fact that the HCI HAM-

MONIA SHIPPING Group commenced business operations only for a part of the previous year.

(38) Other non-cash investing and financing activities

No material non-cash transactions occurred in the fiscal years of comparison.

Notes to segment reporting

(39) General information

The business operations of the HCI HAMMONIA SHIPPING Group currently relate to one business seg-

ment only – charter shipping with container vessels. According to IAS 14, a presentation of segment

reporting is therefore not required.

Other disclosures

(40) Financial instruments and financial risk management

(a) Financial instruments

(i) ) Disclosures of financial instruments

The HCI HAMMONIA SHIPPING Group uses a large number of financial instruments.

The following table presents the financial assets and liabilities according to the categories for financial

instruments defined by IAS 39. In order to allow the reconciliation with items reported in the balance

sheet, assets and liabilities outside the scope of definitions of IAS 39 are reported separately as non-

financial assets /non-financial liabilities (NFA/NFL).

61

Notes

AssetsEUR 000’s 31 Dec 2008

Carrying amount Balance sheet AFV HTM LAR AFS NFA

Non-current assets

Intangible assets 1,770 0 0 0 0 1,770

Property, plant and equipment 439,862 0 0 0 0 439,862

Other financial assets 11 0 0 11 0 0

Current financial assets

Inventories 1,669 0 0 0 0 1,669

Trade receivables 2,311 0 0 2,311 0 0

Receivables from related parties 50 0 0 50 0 0

Income tax receivables 62 0 0 0 0 62

Other assets 698 0 0 1 0 697

Cash and cash equivalents 20,643 0 0 20,643 0 0

AssetsEUR 000’s 31 Dec 2007

Carrying amount Balance sheet AFV HTM LAR AFS NFA

Non-current assets

Intangible assets 9,227 0 0 0 0 9,227

Property, plant and equipment 96,685 0 0 0 0 96,685

Other financial assets 327 0 0 327 0 0

Current assets

Inventories 334 0 0 0 0 334

Trade receivables 81 0 0 81 0 0

Receivables from related parties 3 0 0 3 0 0

Income tax receivables 58 0 0 0 0 58

Other assets 504 0 0 28 0 476

Cash and cash equivalents 48,482 0 0 48,482 0 0

62


The categories “financial assets at fair value through profit and loss (AFV)” and “financial liabilities at fair

value through profit and loss (LFV)” are measured at fair value.

The categories “loans and receivables (LAR)” and “financial liabilities measured at amortized cost (LAC)”

are recognized at amortized acquisition costs.

With regard to unlisted financial instruments with short remaining terms to maturity such as current

receivables, cash and cash equivalents, and current liabilities, carrying amounts as of the balance sheet

date approximate the fair values.

Equity and liabilitiesEUR 000’s 31 Dec 2008

Carrying amount Balance sheet LAC LFV NFL

Non-current liabilities

Financial liabilities 267,438 267,438 0 0

Liabilities from financial derivatives 16,654 0 0 16,654

Minority interests 2,640 2,640 0 0

Other liabilities 1,016 0 0 1,016

Current liabilities

Financial liabilities 23,340 23,340 0 0

Trade payables 1,541 1,541 0 0

Payables to related parties 782 782 0 0

Income tax liabilities 200 0 0 200

Other liabilities 124 116 8

Liabilities from financial derivatives 123 0 123 0

Equity and liabilitiesEUR 000’s 31 Dec 2007

Carrying amount Balance sheet LAC LFV NFL

Non-current liabilities

Financial liabilities 0 0 0 0


Minority interests 783 783 0 0

Other liabilities 1,016 0 0 1,016

Current liabilities


Trade payables 618 618 0 0

Payables to related parties 1,453 1,453 0 0

Income tax liabilities 19 0 0 19

Other liabilities 13 0 13


63

Notes

With regard to unlisted financial instruments with long remaining terms to maturity such as non-current

receivables and liabilities, the fair value corresponds to the respective financial instrument’s cash value

in application of current interest parameters.

Net results from financial instruments are allocated to the separate valuation categories of IAS 39 as fol-

lows:

Apart from interest income and interest expenses, net results include effects from foreign currency

translation and the measurement at fair value. As opposed to the prior-year consolidated financial state-

ments, interest income and interest expenses are included in net results. Prior-year figures were adjust-

ed accordingly. Net gains / net losses of the category LFV recognized directly in equity relate to differ-

ences from foreign currency translation recognized in equity.

Interest relating to financial instruments is included in interest income or interest expenses. Foreign

exchange gains are reported in other operating income and foreign exchange losses are reported in

other operating expenses.

(ii) Disclosures of derivative financial instruments

Due to its global scope of business activities, the HCI HAMMONIA SHIPPING Group is particularly

exposed to risks of changes in interest and exchange rates. In order to reduce these risks, derivative

financial instruments are used.

The use of derivative financial instruments within the HCI HAMMONIA SHIPPING Group is regulated by

corresponding guidelines and exclusively serves the hedging of existing underlying transactions as well

as of planned transactions with sufficiently high probability of occurrence. Said binding guidelines deter-

mine the executives responsible, the scope of action, and reporting duties. According to these guide-

lines, commercial transactions involving derivative financial instruments may only be concluded with

banking institutions that have excellent credit ratings.

31 Dec 2008 31 Dec 2007

EUR 000’s recognize resulting recognize resulting directly in in profit directly in in profit equity or loss total equity or loss total

Net gains / Net losses

Financial assets at fair value through profit or loss (AFV) 0 960 960 0 0 0

Held-to-maturity investments (HTM) 0 0 0 0 0 0

Loans and Receivables (LAR) 0 -502 -502 0 124 124

Available-for-sale financial assets (AFS) 0 0 0 0 0 0

Financial liabilities at fair value through profit or loss (LFV) -7 -189 -196 0 0 0

Financial liabilities measured at amortised cost (LAC) 0 -8,552 -8,552 0 -43 -43

64


The HCI HAMMONIA SHIPPING Group uses forward exchange transactions to hedge concluded or

expected underlying transactions. Within the framework of interest hedge, risks are reduced by interest

derivatives in the form of interest rate swaps.

Face amounts and fair values of interest and currency derivatives can be broken down as follows:

The HCI HAMMONIA SHIPPING Group recognizes certain derivatives that meet the criteria defined by

IAS 39 for the designation of hedging relationships as cash flow hedges in accordance with IAS 39.

Cash flow hedges are made to hedge interest rate risks in connection with variable cash flows. The

effectiveness of the hedges is assessed as of the balance sheet date in application of the critical term-

method or rather dollar offset method.

31 Dec 2008 31 Dec 2007

EUR 000’s Face amount Fair value Face amount Fair value

Assets

Currency derivatives 0 0 0 0

Interest derivatives 0 0 0 0

Total 0 0 0 0

Liabilities

Currency derivatives 2,500 123 0 0

Interest derivatives 202,928 16,654 27,172 582

Total 205,428 16,777 27,172 582

65

Notes

As of December 31, 2008 the following material hedging relationships meet the requirements of IAS 39

for the disclosure as cash flow hedges:

Hedged item Hedge

Disburse- Face ment amount 31 Dec 31 Dec Interest Market 2008 Interest 2008 rate value Term USD 000’s rate Maturity USD 000’s % EUR 000’s Type Beginning End

10,000 USD-LIBOR 30 Jan 2012 10,000 4.840 -654 Interest rate 30 Jan 2009 30 Jan 2012 + margin swap




17,322 USD-LIBOR 03 Jan 2023 8,622 4.250 -433 Interest rate 02 Sep 2009 03 Jan 2012 + margin swap

15,693 USD-LIBOR 29 Nov 2021 7,810 3.990 -326 Interest rate 29 Aug 2008 29 Aug 2011 + margin swap

13,964 USD-LIBOR 31 Dec 2019 13,964 4.230 -678 Interest rate 31 Dec 2008 30 Dec 2011 + margin swap

14,135 USD-LIBOR 28 Feb 2021 14,135 4.050 -595 Interest rate 29 Aug 2008 29 Aug 2011 + margin swap

65,192 USD-LIBOR 30 May 2018 65,192 2.0 – -4,707 Interest rate 30 May 2008 29 May 2009 + margin 7.15 swap

65,192 USD-LIBOR 30 May 2018 65,192 2.0 – -4,828 Interest rate 30 May 2008 29 May 2009 + margin 7.15 swap

68,942 USD-LIBOR 30 May 2018 67,500 3.355 -2,459 Interest rate 30 May 2008 30 May 2013 + margin swap

-16,654

66


Market values of interest rate swaps are determined according to the mark-to-market method. Meas-

urements are based on interest yields of approx. 1.2 % (1 year), approx. 1.4 % (2 years), approx. 2.1 %

(5 years), and up to approx. 2.5 % (10 years).

In fiscal year 2008, fair value changes of interest rate swaps to the amount of EUR -16,072k (previous

year: EUR 0k) were recognized directly in equity. The item interest expenses included expenses for inter-

est rate swaps to the amount of EUR 1,023k (previous year: EUR 0k) in fiscal year 2008 (cp. note (32)).

No gains or losses resulting from ineffectiveness of hedges had to be recognized in the fiscal years of

comparison.

(b) Financial risk management

The HCI HAMMONIA SHIPPING Group has a central risk management system for the identification,

measurement, and control of risks. With respect to payments made or received or planned to be made

or received throughout the group, risk exposures result from market risks (interest rate risks and curren-

cy risks), credit risks, and liquidity risks. Interest rate risks are controlled through a combination of fixed

and variable interest items as well as through entering into interest rate hedges. Currency risks from

anticipated payments to be made in foreign currencies are limited by the use of currency hedges and

similar instruments. Credit risks are reduced by operating the seagoing vessels in pool arrangements

and the prudent selection of charterers. Liquidity risks are managed by group-wide controlling of antici-

pated income and expenses as well as through lines of credit.

The performance of risk management is measured periodically against appropriate benchmarks.

Group-internal binding guidelines provide for objectives, principles, tasks, and authorities of the finance

function, taking into account the principle of the separation of functions.

(i) Financial risks

Due to the international scope of its business operations, the HCI HAMMONIA SHIPPING Group is

exposed to a number of financial risks. These especially include the effects from changes in exchange

rates and interest rates. In the context of the existing risk management process, these risks are limited.

Currency risk

Due to the fact that the main income and expenses connected with business activities relate to one cur-

rency (USD), the group’s currency risk resulting from exchange rate fluctuations is altogether limited.

The USD is the functional currency for the single-ship limited partnerships. Currency risks merely con-

cern the measurement of cash and cash equivalents held in EUR and trade payables in EUR.

The functional currency of HCI HAMMONIA SHIPPING AG is the euro (EUR). The payment of adminis-

trative costs and, above all, payouts to shareholders of HCI HAMMONIA SHIPPING AG are made in

EUR. Significant currency risks exist for the group on the one hand with respect to the transformation of

equity capital raised don the level of HCI HAMMONIA SHIPPING AG within the framework of capital

increases into USD to be used as own funds for the purchase of seagoing vessels. On the other hand,

currency risks exist with respect to surpluses generated in USD on the level of the single-ship limited

partnerships that have to be transformed into EUR to be used by HCI HAMMO-NIA SHIPPING AG for

the payment of own costs as well as for payouts to shareholders.

In order to limit these risks, the group generally applies currency hedges.

67

Notes

For the determination of sensitivities presented in the following table, a hypothetical currency devalua-

tion or revaluation of the EUR in relation to the USD as of December 31, 2008 and December 31, 2007

by 10 % is assumed. All other variables remain unchanged. On these conditions, the following material

effects on result (EBT) and equity of the HCI HAMMONIA SHIPPING Group would have resulted:

Interest rate risk

Risks resulting from interest rate changes generally exist for the HCI HAMMONIA SHIPPING Group in

connection with loans taken out for financing the purchase of seagoing vessels.

The loan agreements include arrangements on variable interest rates for future loans payable for the

most part. In order to reduce the risk of interest rate changes due to the variable-interest portion of

loans taken out, the group entered into interest rate hedges (interest rate swaps). The interest rate

hedges are designated as cash flow hedges and are deemed fully effective as of the balance sheet

date.

A hypothetical increase or decrease of the market interest level by 50 basis points (parallel translation of

the interest curves) and otherwise unchanged variables would have the following effects on result (EBT)

and equity, affecting the financial result:

(ii) Default risk

The HCI HAMMONIA SHIPPING Group is exposed to the risk that business partners cannot fulfill their

obligations. In order to reduce this risk of default, the maximum amount of which corresponds to the

carrying amounts recognized for the respective financial assets, appraisals of creditworthiness are car-

ried out. For identifiable default risks especially with regard to trade receivables, adequate valuation

allowances are recorded.

The theoretical maximum default risk comes to the following amount:

Result (EBT) Equity

EUR 000’s % 2008 2007 2008 2007

USD exchange rate fluctuations +10 411 -26 0 0

-10 -411 26 0 0

Result (EBT) Equity

EUR 000’s Basis points 2008 2007 2008 2007

Adjustment of the

interest level +50 305 0 3,968 367

-50 -305 0 -4,093 -369

EUR 000’s 31 Dec 2008 31 Dec 2007

Trade receivables 2,311 81

Receivables from related parties 50 3

Other financial assets 1 28

Cash and cash equivalents 20,643 48,482

Maximum default risk 23,005 48,594

68


Trade receivables are for the most part receivables from pool arrangements and liner shipping compa-

nies. They are not hedged by any special instruments.

Bank deposits are held only at partners with impeccable credit ratings.

The entire financial assets existing as of the respective balance sheet dates were neither subject to valu-

ation allowance nor overdue. As of the balance sheet date there are no indicators for the contingency

that debtors might not fulfill their obligations.

(iii) Liquidity risk

Liquidity management safeguards the maintenance of liquidity within the HCI HAMMONIA SHIPPING

Group at any given time. It makes sure that cash and cash equivalents are available to a sufficient

amount to cover business operations and investments at any time. The minimizing of financing costs is

a significant additional prerequisite to an efficient financing management. Generally speaking, open

items are intended to be refinanced in matching maturities. As refinancing instruments, cash or capital

market products such as loans or guarantees can be utilized.

The required basic data are determined through monthly rolling liquidity planning with a planning hori-

zon of twelve months. Liquidity planning is subject to periodical deviation analyses.

The following table presents the outflow of resources from financial liabilities contractually determined

as of December 31, 2008:

31 Dec 2008

EUR 000’s Remaining Remaining Remainingterms terms terms

of up to one of between one of more than year and five years five years Total

Financial liabilities 23,689 91,658 177,367 292,715

Minority interests 126 0 2,514 2,640

Trade payables 1,541 0 0 1,541

Payables to related parties 782 0 0 782

Other liabilities 116 0 0 116

Liabilities from financial derivatives 3,697 13,482 7,297 24,476

69

Notes

The following table presents the outflow of resources from financial liabilities contractually determined

as of December 31, 2007:

(iv) Capital management

The capital management of the HCI HAMMONIA SHIPPING Group is primarily oriented towards maintain-

ing a strong equity base. The Management Board regularly reviews net indebtedness. The following table

presents shareholders’ equity, equity-to-assets ratio, and net financial indebtedness:

Net financial indebtedness is calculated as the difference between current financial liabilities and cash

and cash equivalents. The increase of net financial indebtedness compared to the previous year results

from the investments in seagoing vessels made in the fiscal year 2008 and the loans taken out for

financing these investments. The objectives of capital management are considered achieved in the fis-

cal years of comparison.

In addition, capital management of the HCI HAMMONIA SHIPPING Group is also aimed at the dividend

level as the HCI HAMMONIA SHIPPING Group seeks to provide its shareholders with an adequate divi-

dend yield.

HCI HAMMONIA SHIPPING AG is not subject to statutory capital requirements. In particular, the com-

pany does not have any obligation to dispose or otherwise issue shares in connection with existing

share-based payment programs or convertible bonds. Please refer to note (14) (a) for information on the

authorized capital.

31 Dec 2007

EUR 000’s Remaining Remaining Remainingterms terms terms

of up to one of between one of more than year and five years five years Total


Minority interests 0 0 783 783

Trade payables 618 0 0 618

Payables to related parties 1,453 0 0 1,453

Other liabilities 0 0 0 0

Liabilities from financial derivatives 0 1,211 0 1,211

31 Dec 2008 31 Dec 2007

Shareholders’ equity (in EUR 000’s) 153,216 151,133

Equity-to-assets ratio (in %) 32.8 97.1

Net financial indebtedness / Net financial surplus (in EUR’000) -270,136 48,400

70


(41) Operating leases

The charter transactions recorded in the item revenues involve so-called operating leases in accor-

dance with IAS 17.10 read in conjunction with IAS 17.12. The operating leases relate to different types

of charter transactions.

The ships of the 7,800 TEU class are chartered out to the world’s largest container liner shipping com-

pany under long-term time charters.

The ships of the 2,500 TEU and 3,100 TEU classes are operated in two respective pool arrangements.

Under these arrangements, the individual ships enter into individual charter agreements with liner ship-

ping companies; however, the revenues of all pool ships are pooled, and a charter rate is paid out to the

pool members calculated as the average of all pool partners involved. Future pool rates are thus

dependent on the follow-up charter contracts of the pool partners involved. Therefore the exact amount

of pool rates realizable for the HCI HAMMONIA SHIPPING Group from the membership in the two pool

arrangements in the next years is uncertain.

The following table presents the future minimum charter rates in accordance with IAS 17.56 (a), deter-

mined exclusively on the basis of binding pool charter agreements (not including follow-up charters) and

the directly realizable charter rates from time charters, arranged according to terms to maturity:

Charter agreements are concluded at customary conditions and include cost transfer with respect to

ship personnel, insurance, and other vessel operating costs, not including fuels, to the owner.

The company collected EUR 46,712k from operating leases in fiscal year 2008 (previous year: EUR 1,592k).

(42) Other financial obligations

Other financial obligations result in particular from agreements for the purchase of the seagoing vessels

MS “HAMMONIA ROMA” and MS “HAMMONIA BAVARIA”. Advance payments for these two seagoing

vessels, delivered on January 5, 2009, were made already at the end of 2008. As of January 5, 2009,

remaining purchase price payments of altogether USD 66,300k and EUR 2,450k (totaling EUR 50,089k)

were due.

As of the balance sheet date, there are other financial obligations of EUR 1,549k per year arising from

the agreement for consultancy and other services concluded with HCI Hanseatische Schiffsconsult

GmbH. These are determined on the basis of an annual rate of 1.0 % of the respective equity capital.

The contract has a remaining term of 18.5 years as of the balance sheet date. The sum of financial obli-

gations thus amounts to EUR 28,664k as of the balance sheet date.

EUR 000’s Up to 1 year 1 - 5 years > 5 years Total

65,894 153,084 169,495 388,473

71

Notes

(43) Related party disclosures

(a) General information

In accordance with IAS 24, related parties of the HCI HAMMONIA SHIPPING Group are individuals and

companies that control the group or have a significant influence over the group, or are controlled by the

group or are subject to its significant influence.

One of the managing directors of HCI Hanseatische Schiffsconsult GmbH is also a member of the Man-

agement Board of HCI HAMMONIA SHIPPING AG. HCI Hanseatische Schiffsconsult GmbH and the affil-

iated companies of the HCI Group are therefore considered related parties.

HAMMONIA Reederei GmbH & Co. KG and its affiliates are considered related parties due to the fact that

the company is the contractual ship operator and managing limited partner of the single-ship limited

partnerships, and because one of its managing directors is also a member of the Management Board of


Moreover, the members of the Supervisory Board and the Management Board of HCI HAMMONIA

SHIPPING AG are related parties, as are the subsidiaries of the HCI HAMMONIA SHIPPING Group.

In addition to the business relationships with the subsidiaries included in the consolidated financial state-

ments by way of full consolidation, the following business relationships existed with related parties.

(b) Relationships with HCI Hanseatische Schiffsconsult GmbH

The following business relationships existed with HCI Hanseatische Schiffsconsult GmbH and its affiliates

in the fiscal years of comparison:

HCI HAMMONIA SHIPPING AG concluded an agreement with HCI Hanseatische Schiffsconsult GmbH

on the provision of controlling and administrative services and other services with a term of 20 years

(service agreement) effective July 1, 2007, according to which HCI Hanse-atische Schiffsconsult GmbH

receives a consideration to the amount of 1.0 % p. a. of the company’s respective equity for the pur-

pose of Section 266 (3) letter a (German Commercial Code) plus any applicable sales tax. The propor-

tionate payment is due at the end of each quarter on the basis of the company’s equity as of the end of

the preceding quarter as reported for that quarter in the respective interim financial statements.

Balance sheet (in EUR 000’s) 31 Dec 2008 31 Dec 2007

Payables to HCI Hanseatische Schiffsconsult GmbH 0 982

Income statement (in EUR 000’s) 2008 2007

Other operating expenses 1,451 375

72


(c) Relationships with HAMMONIA Reederei GmbH & Co. KG

The following business relationships existed with HAMMONIA Reederei GmbH & Co. KG and its affili-

ates in the fiscal years of comparison:

HCI HAMMONIA SHIPPING AG concluded an agreement with HAMMONIA Reederei GmbH & Co. KG

on the cooperation on the level of the single-ship limited partnerships (in the following “cooperation

agreement”). Pursuant to the cooperation agreement, HAMMONIA Reederei GmbH & Co. KG con-

cludes ship operating contracts with the single-ship limited partnerships under which the company pro-

vides the customary ship operating services and receives a consideration of 4 % of the received gross

freight revenues. As contractual ship operator, HAMMONIA Reederei GmbH & Co. KG also receives an

increased ship operation expense of EUR 125k in the first year of operation from the respective single-

ship limited partnership. For preparatory ship operation, HAMMONIA Reederei GmbH & Co. KG

receives EUR 25k from the respective single-ship limited partnership. As compensation for the

increased ship operating expense and advisory services in connection with the sale of a vessel or in the

context of liquidation proceedings in case of a total loss, HAM-MONIA Reederei GmbH & Co. KG

receives a lump-sum payment of 2 % of the gross sales proceeds or the insurance benefit payment plus

applicable sales tax from the respective subsidiary. The compensation does not have to be paid if the

vessel is sold to HAMMONIA Reederei GmbH & Co. KG or one of the related parties of HAMMONIA

Reederei GmbH & Co. KG. This also applies if HAMMONIA Reederei GmbH & Co. KG exercises an

existing purchase option. A decision on the sale of the first 8 ships is subject to the approval of all part-

ners within the first 10 years following acquisition of the vessels. The partners of the single-ship limited

partnerships have determined that any disposal of the vessels during the above-mentioned period shall

only be made in exceptional circumstances. In view of its status as contractual ship operator, HAMMO-

NIA Reederei GmbH & Co. KG is always entitled to withhold its approval to the disposal of the vessels

during said period unless the purchaser is willing to acquire the ship operating agreement as well as the

chartering agreement concluded with Peter Döhle Schiffahrts-KG or to conclude these agreements at

the same conditions anew, and the purchaser imposes this assumption obligation upon potential legal

successors. Any decision made on the disposal of the vessels after this period of 10 years is subject to

the approval of the service company, HCI Hanseatische Schiffsconsult GmbH. HCI Hanseatische

Schiffsconsult GmbH has to withhold its approval if the provisions with respect to the purchase option

have not been observed or if the minimum sale price to be determined by the decision is below the cur-

rent market value.

As managing limited partner of the single-ship limited partnerships, HAMMONIA Reederei GmbH & Co.

KG assumes their management and represents them in legal transactions. For its management servic-


Receivables from HAMMONIA Reederei GmbH & Co. KG and its affiliates 50 3

Payables to HAMMONIA Reederei GmbH & Co. KG and its affiliates 755 461


Vessel operating costs 1,903 66

Other operating expenses 525 200

73

Notes

es, HAMMONIA Reederei GmbH & Co. KG receives a preference share in profits from the respective

single-ship limited partnership. In the fiscal years of comparison no claim to a preference share in profits

was accrued.

HAMMONIA Reederei GmbH & Co. KG receives a financing intermediation fee of EUR 200k or rather

EUR 100k per loan agreement for the intermediation of low-interest CEXIM financing provided for

financing the purchases of the seagoing vessels MS “HAMMONIA HOLSATIA”, MS “HAMMONIA MAS-

SILIA”, MS “HAMMONIA ROMA”, MS “HAMMONIA TEUTONICA”, and MS “HAMMONIA POMERE-

NIA”. In fiscal year 2008, HAMMONIA Reederei GmbH & Co. KG received total intermediation fees of

EUR 600k (previous year: EUR 100k), to be amortized over the terms of the loan agreements.

In the fiscal years of comparison, the group made the following payments or advance payments for new

ships to subsidiaries of HAMMONIA Reederei GmbH & Co. KG:

For the purchase of the two seagoing vessels MS “HAMMONIA BAVARIA” and MS “HAMMONIA

ROMA” from the subsidiaries of HAMMONIA Reederei GmbH & Co. KG, the group has to make final

payments on the purchase price of USD 66,300k and EUR 2,450k upon delivery of the seagoing ves-

sels in early January 2009, after advance payments made in fiscal year 2008.

(d) Relationships with related persons

Members of the Supervisory Board receive a fixed annual compensation of EUR 5,000.00 each,

according to the articles of incorporation. The chairman of the Supervisory Board receives one and a

half times this amount. In addition, the members of the Supervisory Boar are reimbursed for expenses

incurred in connection with Supervisory Board activity as well as sales tax payable for the Supervisory

Board compensation.

Purchase prices

2008 2007

Seagoing vessel USD 000’s EUR 000’s USD 000’s EUR 000’s

MS POMERENIA 0 0 35,530 10,296

MS WESTPHALIA 0 0 45,000 0

MS SAXONIA 0 0 45,000 0

MS TEUTONICA 46,323 320 0 0

MS HOLSATIA 46,374 286 0 0

MS MASSILIA 46,466 334 0 0

MS BAVARIA 10,899 8,046 0 0

MS ROMA 8,926 0 0 0


Payables to executive bodies of the HCI HAMMONIA SHIPPING Group 5 10


Other operating expenses 18 18

74


The total remuneration paid to members of the Supervisory Board for fiscal year 2008 amounts to EUR 18k

(previous year: EUR 18k).

The Management Board did not receive any remuneration in fiscal years 2008 and 2007.

Furthermore, above-mentioned persons were neither granted advances nor loans, nor did contingen-

cies exist in favor of these persons.

(44) Executive bodies

(a) Management Board

The following persons were appointed members of the company’s Management Board in the fiscal year:

Dr. Karsten Liebing,

managing director of HAMMONIA Reederei GmbH & Co. KG, Hamburg

Jens Burgemeister,

managing director of HCI Hanseatische Schiffsconsult GmbH, Hamburg

(b) Supervisory Boardt

The Supervisory Board consisted of the following members:

Werner Berg,

managing director of AKTIVA Beteiligungs- und Verwaltungs-GmbH, Berlin (chairman)

Christian Kuppig,

managing director of HCI Hanseatische Capitalberatungsgesellschaft mbH, Hamburg (until April 2,

2008; deputy chairman)

Kai-Kristian Meyer,

managing director of HCI Hanseatische Schiffsconsult GmbH, Ahrensburg (until April 2, 2008)

Michael Hummel,

department head of capital investments of Sparkasse Vogtland, Auerbach

(since April 2, 2008; deputy chairman since April 2, 2008)

Andreas Uibeleisen,

bank manager of KfW (retired), Bad Homburg (since April 2, 2008)

Werner Berg is an advisory board member of the following companies:

– CENTRO PARK KG KAWI Grundstücksverwaltungs-GmbH & Co.

– Schiffahrtsgesellschaft “HANSA CENTAUR” mbH & Co. KG

– CTO Gesellschaft für Containertransport mbH & Co. KG MS “NAUPLIUS”

– CTO Gesellschaft für Containertransport mbH & Co. KG MS “TEGESOS”

– CTO Gesellschaft für Containertransport mbH & Co. KG MS “CHAMPION”

– Beteiligungs-Kommanditgesellschaft MS BUXHANSA Verwaltungs- und Bereederungs GmbH & Co.

– Beteiligungs-Kommanditgesellschaft MS BUXFAVOURITE Verwaltungs- und Bereederungs GmbH & Co.

– Beteiligungs-Kommanditgesellschaft MS BRÜSSEL Verwaltungs- und Bereederungs GmbH & Co.

– Beteiligungsgesellschaft LARENTIA + MINERVA mbH & Co. KG

– MT “BEN FLOR” GmbH & Co. KG

75

Notes

– MT “BEATRICE” GmbH & Co. KG

– Hermann Buss GmbH & Co. KG MS “EMS TRADER”

– MS “E.R. SEOUL” Schiffahrtsgesellschaft mbH & Co. KG

– MS “E.R. SHENZHEN” Schiffahrtsgesellschaft mbH & Co. KG

– MS “E.R. YANTIAN” Schiffahrtsgesellschaft mbH & Co. KG

– MS “E.R. LONG BEACH” Schiffahrtsgesellschaft mbH & Co. KG

– MS “E.R. TIANSHAN” Schiffahrtsgesellschaft mbH & Co. KG

– MS “E.R. TEXAS” Schiffahrtsgesellschaft mbH & Co. KG

– Reederei MS “E.R. LOS ANGELES” Beteiligungsgesellschaft mbH & Co. KG

– Reederei MS “E.R. SWEDEN” Beteiligungsgesellschaft mbH & Co. KG

– Reederei MS “E.R. LONDON” Beteiligungsgesellschaft mbH & Co. KG

– Schiffsportfolio Global 1

– Schiffsportfolio Global 2

– Ocean Shipping I GmbH & Co. KG

– Prometheus Immobilien Verwaltungs GmbH & Co. KG – Erster IBV-Immobilienfonds für Deutschland

(no longer active)

– Thesaurus Immobilien Verwaltungs GmbH & Co. KG – LBB Fonds 12 (no longer active)

Kai-Kristian Meyer is an advisory board member of the following companies:

– MT “Cape Bellavista” Tankschiffahrts GmbH & Co. KG (no longer active)

– MT “Cape Bon” Tankschiffahrts GmbH & Co. KG (no longer active)

– MT “Cape Bird” Tankschiffahrts GmbH & Co. KG (no longer active)

– MS “Cape Don” Schiffahrts GmbH & Co. KG (no longer active)

– MS “Cape Denison” Schiffahrts GmbH & Co. KG (no longer active)

Michael Hummel is an administrative board member of the following company:

– Sparkasse Vogtland

Andreas Uibeleisen is an advisory board member of the following companies:

– Schiffahrtsgesellschaft Wappen von Frankfurt mbH & Co. KG

– HCI Hammonia I GmbH & Co. KG

– Reederei MS “Reinbek” GmbH & Co. KG

– Conti 7. Beteiligungsfonds GmbH & Co. KG

(45) Costs for the audit of financial statementsg

The total fees of the auditor HANSA PARTNER GmbH Wirtschaftsprüfungsgesellschaft, Hamburg, can

be broken down as follows:

EUR 000’s 2008 2007

Auditing services 116 90

Other certification and consultancy services 73 0

Tax consultancy services 0 0

Other services 0 0

Total 189 90

76


(46) Corporate Governance Code

Management Board and Supervisory Board of HCI HAMMONIA SHIPPING AG declare that the recom-

mendations of the “Government Commission German Corporate Governance Code” have, with few

exceptions, been complied with and will be complied with in the future. The declaration of compliance

stipulated by Section 161 AktG (German Stock Corporation Act) was released by the Management

Board and the Supervisory Board on December 12, 2008 and made permanently available to the

shareholders on the website of HCI HAMMONIA SHIPPING AG at www.hci-hammonia-shipping.de.

(47) Disclosures in accordance with Sections 21 et seq. WpHG

As of the preparation of the consolidated financial statements, HCI HAMMONIA SHIPPING AG had

received the following notifications of reportable shareholdings pursuant to Section 21 WpHG (German

Securities Trading Act):

Sparkasse Hildesheim, Hildesheim, Germany, notified us pursuant to Section 21 (1a) WpHG that its

share of the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, came to 3.30 %

(4,500 voting rights) as of November 26, 2007. In accordance with Section 22 (1) sentence 1 no. 6

WpHG, 3.30 % (4,500 voting rights) are attributable to Sparkasse Hildesheim.

Debeka Lebensversicherungsverein a.G., Koblenz, Germany, notified us on December 3, 2007 pur-

suant to Section 21 (1a) WpHG that it held a share of the voting rights of 6.66 % (9,090 voting rights) as

of November 26, 2007 (date of first-time admission of the shares of HCI HAMMONIA SHIPPING AG,

Hamburg, Germany, to trading).

Debeka Krankenversicherungsverein a.G., Koblenz, Germany, notified us on December 3, 2007 pur-

suant to Section 21 (1a) WpHG that it held a share of the voting rights of 6.66 % (9,090 voting rights) as

of the date of first-time admission of the shares of HCI HAMMONIA SHIPPING AG, Hamburg, Germany,

to trading on November 26, 2007.

Sparkasse Singen-Radolfzell, Singen, Germany, notified us on December 5, 2007 pursuant to Section

21 (1a) WpHG that its share of the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany,

came to 3.33 % (4,545 voting rights) as of November 26, 2007.

Deutscher Ring Lebensversicherungs-AG, Hamburg, Germany, notified us on December 6, 2007 pur-

suant to Section 21 (1a) WpHG that its share of the voting rights of HCI HAMMONIA SHIPPING AG,

Hamburg, Germany, came to 5.996 % as of November 26, 2007 5 (8,180 voting rights).

Deutsche Ring Krankenversicherungsverein a.G., Hamburg, Germany, notified us on December 6, 2007

pursuant to Section 21 (1a) WpHG that its share of the voting rights of HCI HAMMONIA SHIPPING AG,

Hamburg, Germany, came to 3.995 % as of November 26, 2007 (5,450 voting rights).

HAMMONIA Reederei GmbH & Co. KG, Hamburg, Germany, notified us on December 5, 2007 pur-

suant to Section 21 (1a) WpHG that its share of the voting rights of HCI HAMMONIA SHIPPING AG,

Hamburg, Germany, came to 9.86 % (13,452 voting rights) as of the date of first-time admission of the

shares to trading on November 26, 2007. In accordance with Section 22 (1) sentence 1 nos. 2 and 6

WpHG, the share of the voting rights is attributed to HAMMONIA Reederei GmbH & Co. KG indirectly

through the stake held by HSH Nordbank AG, Hamburg, Germany.

77

Notes

Döhle ICL Beteiligungsgesellschaft mbH, Hamburg, Germany, notified us pursuant to Section 21 (1a)

WpHG that it had acquired a share of the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg,

Germany, that came to 3.33 % (4,546 voting rights) as of the date of first-time admission of the shares

to trading on November 26, 2007.

Jochen Döhle, Germany, notified us on December 6, 2007 pursuant to Section 21 (1a) WpHG that he

had acquired a share of the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, that

came to 13.56 % (18,498 voting rights) as of the date of first-time admission of the shares to trading on

November 26, 2007. According to Section 22 (1) sentence 1 no. 1 WpHG, the voting rights of 3.33 %

(4,546 voting rights) held by Döhle ICL Beteiligungsgesellschaft mbH, Hamburg, Germany, entered in

the register of companies at the District Court (Amtsgericht) Hamburg under no. HRB 85804, are attrib-

utable to Jochen Döhle; Peter Döhle Schiffahrts-KG, Hamburg, Germany, holds an interest of 100 % in

Döhle ICL Beteiligungsgesellschaft mbH, Hamburg, Germany, and Jochen Döhle holds an interest of

100 % in the managing partner of Peter Döhle Schiffahrts-KG, Beteiligungs- und Verwaltungsge-

sellschaft Peter Döhle mbH, Hamburg, Germany. In addition, a share of the voting rights of 9.86 %

(13,452 voting rights) is attributed to Jochen Döhle pursuant to Section 22 (1) sentence 1 nos. 2 and 6;

sentence 2 WpHG indirectly through the stake held by HSH Nordbank AG, Hamburg, Germany.

Peter Döhle Schiffahrts-KG, Hamburg, Germany, notified us on December 6, 2007 pursuant to Section

21 (1a) WpHG that it had acquired a share of the voting rights of HCI HAMMONIA SHIPPING AG, Ham-

burg, Germany, that came to 13.19 % (17,998 voting rights) as of the date of first-time admission of the

shares to trading on November 26, 2007. According to Section 22 (1) sentence 1 no. 1 WpHG, a share

of the voting rights of 3.33 % (4,546 voting rights) is attributed to Peter Döhle Schiffahrts-KG that are

held by Döhle ICL Beteiligungsgesellschaft mbH, Hamburg, Germany, entered in the register of compa-

nies at the District Court (Amtsgericht) Hamburg under no. HRB 85804, in which Peter Döhle Schif-

fahrts-KG holds an interest of 100 %. In addition, a share of the voting rights of 9.86 % (13,452 voting

rights) is attributed to Peter Döhle Schiffahrts-KG pursuant Section 22 (1) sentence 1 nos. 2 and 6; sen-

tence 2 WpHG indirectly through the stake held by HSH Nordbank AG, Hamburg, Germany.

Beteiligungs- und Verwaltungsgesellschaft Peter Döhle mbH, Hamburg, Germany, notified us on

December 6, 2007 pursuant to Section 21 (1a) WpHG that it had acquired a share of the voting rights of

HCI HAMMONIA SHIPPING AG, Hamburg, Germany, that came to 13.19 % (17,998 voting rights) as of

the date of first-time admission of the shares to trading on November 26, 2007. According to Section

22 (1) sentence 1 no. 1 WpHG, a share of the voting rights of 3.33 % (4,546 voting rights) is attributed to

Beteiligungs- und Verwaltungsgesellschaft Peter Döhle mbH that are held by Döhle ICL Beteiligungsge-

sellschaft mbH, Hamburg, Germany, entered in the register of companies at the District Court (Amts-

gericht) Hamburg under no. HRB 85804, in which Peter Döhle Schiffahrts-KG, Hamburg, Germany,

whose managing partner is Beteiligungs- und Verwaltungsgesellschaft Peter Döhle mbH, holds an inter-

est of 100 %. In addition, a share of the voting rights of 9.86 % (13,452 voting rights) is attributed to

Beteiligungs- und Verwaltungsgesellschaft Peter Döhle mbH pursuant to Section 22 (1) sentence 1 nos.

2 and 6; sentence 2 WpHG indirectly through the stake held by HSH Nordbank AG, Hamburg, Germany.

MLP AG, Wiesloch, Germany, notified us pursuant to Section 21 (1a) WpHG that its share of the voting

rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, came to 3.67 % (5,000 voting rights) as

of November 26, 2007. The share of 3.67 % (5,000 voting rights) is attributed to MPL AG in accordance

with Section 22 (1) sentence 1 no. 2 WpHG. The voting rights attributed to MLP AG are held by the fol-

78


lowing companies, whose respective share of the voting rights of HCI HAMMONIA SHIPPING AG

comes to 3 % or more, controlled by MLP AG: Feri Finance AG, Feri Institutional Advisors GmbH, Fer-

rum Pension Management S.a.r.l.

Feri Finance AG, Bad Homburg, Germany, notified us pursuant to Section 21 (1a) WpHG that its share

of the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, came to 3.67 % (5,000 vot-

ing rights) as of November 26, 2007. The share of 3.67 % (5,000 voting rights) is attributed to Feri

Finance AG in accordance with Section 22 (1) sentence 1 no. 1 WpHG. The voting rights attributed to

Feri Finance AG are held by the following companies, whose respective share of the voting rights of HCI

Hammonia Shipping AG comes to 3 % or more, controlled by Feri Finance AG: Feri Institutional Advi-

sors GmbH, Ferrum Pension Management S.a.r.l.

Feri Institutional Advisors GmbH, Bad Homburg, Germany, notified us pursuant to Section 21 (1a)

WpHG that its share of the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, came

to 3.67 % (5,000 voting rights) as of November 26, 2007. The share of 3.67 % (5,000 voting rights) is

attributed to Feri Institutional Advisors GmbH in accordance with Section 22 (1) sentence 1 no. 1

WpHG. The voting rights attributed to Feri Institutional Advisors GmbH are held by the following compa-

ny, whose share of the voting rights of HCI Hammonia Shipping AG comes to 3 % or more, controlled

by Feri Institutional Advisors GmbH: Ferrum Pension Management S.a.r.l.

Ferrum Pension Management S.a.r.l., Luxembourg, Luxembourg, notified us pursuant to Section 21

(1a) WpHG that its share of the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany,

came to 3.67 % (5,000 voting rights) as of November 26, 2007.

Ärzteversorgung Westfalen-Lippe, Münster, Germany, notified us pursuant to Section 21 (1a) WpHG

that its share of the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, came to 3.67 %

(5,000 voting rights) as of November 26, 2007. The share of 3.67 % (5,000 voting rights) is attributed to

Ärzteversorgung Westfalen-Lippe in accordance with Section 22 (1) sentence 1 no. 2 WpHG indirectly

through the stake held by Ferrum Pension Management S.a.r.l.

Norddeutsche Landesbank Girozentrale, Hannover, Germany, notified us that its share of the voting

rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, fell below the threshold of 10 % as of

February 7, 2008. Its share of the voting rights now comes to 8.771 %. This share equals 11,965 voting

rights.

Sparkasse Vogtland, Plauen, Germany, notified us pursuant to Section 21 (1) WpHG that its share of the

voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, exceeded the threshold of 3 % as

of June 20, 2008 and now comes to 3.30 % (4,500 voting rights).

HSH Nordbank AG, Hamburg, Germany, notified us pursuant to Section 21 (1) WpHG that its share of

the voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, fell below the threshold of 30 %

as of June 17, 2008 and came to 29.91 % (40,799 voting rights) as of that day.



as of July 31, 2008 and came to 20.06 % (27,364 voting rights) as of that day.

79

Notes



as of August 5, 2008 and came to 19.75 % (26,942 voting rights) as of that day.

HCI Capital AG, Hamburg, Germany, notified us pursuant to Section 21 (1) WpHG that its share of the

voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, fell below the threshold of 3 % as

of August 1, 2008 and now comes to 3,287 voting rights. This share of the voting rights is attributed to

HCI Capital AG through HSH Nordbank AG, Hamburg, Germany, in accordance with Section 22 (1)

sentence 1 nos. 2 and 6 WpHG.

Correction of the notification of voting rights as of August 5, 2008:

HCI Capital AG, Hamburg, Germany, notified us pursuant to Section 21 (1) WpHG that its share of the

voting rights of HCI HAMMONIA SHIPPING AG, Hamburg, Germany, fell below the threshold of 3 % as

of August 1, 2008 and now comes to 2.81 % (3,287 voting rights). This share of the voting rights is

attributed to HCI Capital AG through HSH Nordbank AG, Hamburg, Germany, in accordance with Sec-

tion 22 (1) sentence 1 nos. 2 and 6 WpHG.

(48) Subsequent events

The seagoing vessel MS “HAMMONIA BAVARIA” was delivered to the HCI HAMMONIA SHIPPING

Group on January 5, 2009. The remaining amounts of the purchase price to be paid came to USD

26,600k and EUR 2,450k. For the financing of the remaining purchase price payment, the company

used a remaining amount of USD 25,244k from the ship mortgage loan extended and an overdraft of

USD 1,586k. The remaining amount of the purchase price was paid with own funds.

The seagoing vessel MS “HAMMONIA ROMA” was delivered to the HCI HAMMONIA SHIPPING

Group on January 5, 2009. The remaining amount of the purchase price to be paid came to USD

39,700k. For the financing of the remaining purchase price payment, the company drew on a ship

mortgage loan of USD 32,579k and an overdraft of USD 500k. The remaining amount was paid with

own funds.

(49) Exemption pursuant to Section 264b HGB

The exemption pursuant to Section 264b HGB (German Commercial Code) with respect to the publica-

tion of financial statements has been made use of for the following consolidated subsidiaries:

MS “HAMMONIA TEUTONICA” Schiffahrts GmbH & Co. KG

MS “HAMMONIA ROMA” Schiffahrts GmbH & Co. KG

MS “HAMMONIA MASSILIA” Schiffahrts GmbH & Co. KG

MS “HAMMONIA HOLSATIA” Schiffahrts GmbH & Co. KG

MS “HAMMONIA POMERENIA” Schiffahrts GmbH & Co. KG

MS “HAMMONIA BAVARIA” Schiffahrts GmbH & Co. KG

MS “WESTPHALIA” Schiffahrts GmbH & Co. KG

MS “SAXONIA” Schiffahrts GmbH & Co. KG

MS “HAMMONIA FIONIA” Schiffahrts GmbH & Co. KG

MS “HAMMONIA HAFNIA” Schiffahrts GmbH & Co. KG

MS “HAMMONIA DANIA” Schiffahrts GmbH & Co. KG

80


(50) List of shareholdings in accordance with Section 313 (2) through (4) HGB

The list of shareholdings of HCI HAMMONIA SHIPPING AG and the group as of December 31, 2008 is

published in the electronic Federal Gazette (elektronischer Bundesanzeiger) in accordance with Sec-

tions 287 and 313 HGB.

The consolidated financial statements were prepared by the Management Board as of April 2, 2009 and

released to be submitted to the Supervisory Board. The consolidated financial statements will be sub-

mitted to the Supervisory Board for approval at the Supervisory Board meeting held on April 16, 2009.

Hamburg, April 2, 2009


Statutory Declaration

We assure to the best of our knowledge that the consolidated financial statements provide, in accor-

dance with applicable accounting standards, a presentation of the group’s financial position and results

from operations that corresponds with the actual conditions and that the group management report

presents the course of business including the business result and the situation of the group in a way

that corresponds with the actual conditions and describes the essential opportunities and risks of the

group’s probable future development.







81

Auditors’ Report

Auditors’ Report

We have audited the consolidated financial statements prepared by HCI HAMMONIA SHIPPING AG,

Hamburg, comprising the balance sheet, income statement, cash flow statement, statement of changes

in equity and notes, together with the Group Management Report, for the financial year from January 1 to

December 31, 2008. The preparation of the consolidated financial statements and the Group Manage-

ment Report in accordance with IFRS, as adopted by the EU, and the additional requirements of German

commercial law pursuant to section 315a, paragraph 1 HGB (German Commercial Code) is the respon-

sibility of the Management Board of the company. Our responsibility is to express an opinion on the con-

solidated financial statements and the Group Management Report, on the basis of our audit.

We conducted our audit of the consolidated financial statements in accordance with Section 317 HGB

with due regard for the German generally accepted standards for the audit of financial statements prom-

ulgated by the Institute of Public Auditors in Germany (IDW). These standards require that we plan and

perform the audit such that mis-statements materially affecting the presentation of the net assets, finan-

cial position and results of operations in the consolidated financial statements in accordance with the

applicable financial reporting framework, and in the Group Management Report, are detected with rea-

sonable assurance. Knowledge of the business activities and the economic and legal environment of the

Group and expectations as to possible mis-statements are taken into account in the determination of

audit procedures. The effectiveness of the accounting-related internal control system and the evidence

supporting the disclosures in the consolidated financial statements and the Group Management Report

are examined primarily on a test basis within the framework of the audit. The audit includes assessing the

annual financial statements of those companies included in the consolidated financial statements, the

determination of entities to be included in consolidation, the accounting and consolidation principles

used and significant estimates made by management, as well as evaluating the overall presentation of

the consolidated financial statements and Group Management Report. We believe that our audit pro-

vides a reasonable basis for our opinion.

Our audit has not led to any objections.

In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRS

as adopted by the EU, the additional requirements of Germany commercial law pursuant to section

315a, paragraph 1 HGB and the additional provisions of the Articles of Association, and give a true and

fair view of the net assets, financial position and results of operations of the Group. The Group Manage-

ment Report is consistent with the consolidated financial statements, and as a whole provides a suitable

view of the Group’s position and suitably presents the opportunities and risks of future development.


HANSA PARTNER GmbH

Wirtschaftsprüfungsgesellschaft

(sgd. Dr. Tecklenburg) (sgd. Arp)

Wirtschaftsprüfer Wirtschaftsprüfer

82


copy

Annual Financial Statements: Solid from all angles

The Corinth Canal: It separates the Greek mainland from the

Peloponnesian peninsula. The canal through the Isthmus of

Corinth is 6.3 kilometers in length and was built between 1881

and 1893. Since then it has connected the Saronic Gulf with the

Gulf of Corinth and saved the journey around the Peloponnesus

of about 400 kilometers. The canal had to be cut through rock up

to 84 meters deep. Thus a water depth of roughly 8 meters was

achieved. The canal is about 24 meters wide at the water surface

and narrows to a width of about 21 meters further down.

84


EUR 2008 2007

Revenues 123,000.00 8,000.00

Other operating income 117,683.13 32,404.90

Personnel expensesSocial security contributions 0.00 146.38

Depreciation and amortization of intangible assets and property, plant and equipment 4,866.68 811.11

Other operating expenses 3,448,297.44 671,385.73

Income from investments 10,768,506.57 234,690.14

Other interest income and similar income 1,163,230.35 437,707.26

Operating result 8,719,255.93 40,459.08

Extraordinary expenses 0.00 3,864,515.45

Net income/PY: Net loss 8,719,255.93 3,824,056.37

Loss carry-forward 3,830,088.02 6,031.65

Allocation to surplus reserves 5,000.00 0.00

Retained earnings/PY: Accumulated loss 4,884,167.91 3,830,088.02

Income statement

85

Balance sheet

Assets

EUR 31 Dec 2008 31 Dec 2007

A. Non-current assets

I. Intangible assets

Licenses, industrial property rights and similar rights and assets as well as licenses to such rights and assets 8,922.21 13,788.89

II. Financial assets

Investments in affiliated companies 137,110,126.69 99,974,174.75

B. Current assets

I. Receivables and other assets

1. Receivables from affiliated companies 10,991,814.93 236,777.20

2. Other assets 158,768.04 11,150,582.97 422,703.70

II. Balances at banks 6,884,440.07 46,793,291.52

C. Accruals and deferrals 24,035.35 0.00

155,178,107.29 147,440,736.06

Equity and Liabilities

EUR 31 Dec 2008 31 Dec 2007

A. Equity

I. Subscribed capital 136,414,000.00 136,414,000.00

II. Capital reserve 13,636,400.00 13,636,400.00

III. Surplus reserves

Statutory reserve 5,000.00 0.00

IV. Retained earnings/PY: Accumulated loss 4,884,167.91 -3,830,088.02

154,939,567.91 146,220,311.98

B. Provisions

Other provisions 199,500.00 223,500.00

C. Liabilities

1. Trade payables 39,039.38 986,318.21

2. Other liabilities 0.00 39,039.38 10,605.87

155,178,107.29 147,440,736.06

Income statement / Balance sheet

86


Development of non-current assets

EUR Acquisition and production costs

1 Jan 2008 Additions Disposals 31 Dec 2008

I. Intangible assets

Licenses, industrial property rights and similar rights and assets as well as licenses to such rights and assets 14,600.00 0.00 0.00 14,600.00

II. Financial assets

Investments in affiliated companies 99,974,174.75 99,682,787.92 -62,546,835.98 137,110,126.69

99,988,774.75 99,682,787.92 -62,546,835.98 137,124,726.69

87

Consolidated statement of changes in non-current assets /Statement of share property

Statement of share property as of December 31, 2008

Accumulated depreciation and amortization Carrying amount

1 Jan 2008 Additions Disposals 31 Dec 2008 31 Dec 2008 31 Dec 2007

811.11 4,866.68 0.00 5,677.79 8,922.21 13,788.89

0.00 0.00 0.00 0.00 137,110,126.69 99,974,174.75

811.11 4,866.68 0.00 5,677.79 137,119,048.90 99,987,963.64

Company Registered office Equity Interest Result 2008EUR % EUR

MS “HAMMONIA POMERENIA” Schiffahrts GmbH & Co. KG Hamburg 14,038,407.02 97.60 2,266,477.57

MS “SAXONIA” Schiffahrts GmbH & Co. KG Hamburg 13,330,958.18 97.39 2,138,929.13

MS “WESTPHALIA” Schiffahrts GmbH & Co. KG Hamburg 13,966,083.08 97.39 2,342,059.80

MS “HAMMONIA ROMA” Schiffahrtsgesellschaft mbH + Co. KG Hamburg 7,705,004.59 97.64 195,913.07

MS “HAMMONIA HOLSATIA” Schiffahrtsgesellschaft mbH + Co. KG Hamburg 11,712,685.25 97.61 883,573.83

MS “HAMMONIA TEUTONICA” Schiffahrtsgesellschaft mbH + Co. KG Hamburg 11,782,735.17 97.62 836,289.73

MS “HAMMONIA MASSILIA” Schiffahrtsgesellschaft mbH + Co. KG Hamburg 11,320,544.01 97.64 281,556.22

MS “HAMMONIA BAVARIA” Schiffahrts-GmbH + Co. KG Hamburg 11,672,348.21 97.72 -183,112.53

MS “HAMMONIA FIONIA” Schiffahrts-GmbH + Co. KG Hamburg 18,966,054.56 98.56 804,507.87

MS “HAMMONIA HAFNIA” Schiffahrts-GmbH + Co. KG Hamburg 19,120,929.91 98.56 738,450.24

MS “HAMMONIA DANIA” Schiffahrts-GmbH + Co. KG Hamburg 18,923,687.29 98.56 530,529.74

Verwaltung HCI HAMMONIA Schiffahrts GmbH Hamburg 55,934.33 100.00 22,942.15

88


Corporate Governance

The vessel HAMMONIA DANIA at the large class docking in May

2008 at Dubai

90


Corporate Governance Report

Management Board and Supervisory Board of HCI HAMMONIA SHIPPING AG aim at generating an attrac-

tive and sustainable return on the investment of our company’s shareholders and at increasing the share-

holder value in the long term. HCI HAMMONIA SHIPPING AG is a management holding company for ship

investments.

HCI HAMMONIA SHIPPING AG is listed on the stock exchange for the purpose of providing easy and flexi-

ble access to the attractive asset category of ship investments especially to institutional investors.

Management Board and Supervisory Board of HCI HAMMONIA SHIPPING AG are committed to responsi-

ble conduct for the benefit of the company’s shareholders. Potentially conflicting interests of Management

Board and Supervisory Board members are disclosed in detail in the company’s stock exchange prospec-

tus. The notes of this annual report contain information about transactions involving closely related compa-

nies and individuals. In our opinion, the firmly established cooperation of HCI HAMMONIA SHIPPING AG,

HCI Hanseatische Schiffsconsult GmbH, and HAMMONIA Reederei GmbH & Co. KG is a key factor for the

successful realization of our strategy and the achievement of the company’s goals.

The German Corporate Governance Code (the “Code”) provides rules and guidelines for corporate gover-

nance and the supervision of listed companies in Germany. The Code promotes transparency and efficien-

cy in corporate management and is intended to bolster the confidence of domestic and international

investors and other shareholders in the management and supervision of listed companies. Management

Board and Supervisory Board of HCI HAMMONIA SHIPPING AG commit themselves to the general objec-

tives of the Code. However, the specific organization of business activities leads to a number of exceptions

from the Code’s recommendations.

Management Board and Supervisory Board

The Management Board has two members who manage the company on their own responsibility. The

members of the Management Board, Jens Burgemeister and Dr. Karsten Liebing, are also managing

directors of HCI Hanseatische Schiffsconsult GmbH and HAMMONIA Reederei GmbH & Co. KG, respec-

tively. This allows the close connection of services and the two companies’ respective know-how with


The Supervisory Board of HCI HAMMONIA SHIPPING AG, consisting of three members, supervises and

advises the Management Board. Because of its small number of members, the Supervisory Board has not

established committees and deals with all relevant topics in full session. Chairman of the Supervisory

Board is Werner Berg. Michael Hummel and Andreas Uibeleisen were appointed successors of retired

Supervisory Board members Kai-Kristian Meyer and Christian Kuppig by court order on April 1, 2008 and

were officially elected by shareholders’ resolution at the Annual General Meeting of June 11, 2008 for the

remaining terms of the retired members of the Supervisory Board.

Shareholdings

The members of Management Board and Supervisory Board do not hold shares of the company.

91


Communication

HCI HAMMONIA SHIPPING AG reports business events in press releases and ad hoc announcements.

Detailed information is provided in the form of annual reports and half-year interim reports. The company

informs about developments by quarter with its interim financial statements. The company’s website pro-

vides all relevant information about the stock and the General Meeting as well as a financial calendar. Our

investor relations staff is always happy to answer your questions; contact data can also be found on the

website.

Declaration of compliance in accordance with Section 161 AktG

Management Board and Supervisory Board of HCI HAMMONIA SHIPPING AG (the “company”) declare

that the company complied with the recommendations of the “Government Commission German Corpo-

rate Governance Code” in its version of June 17, 2007 (in the following: “Code – old version”) as

announced by the Federal Ministry of Justice in the official section of the electronic Federal Gazette on July

20, 2007 between the issue of the last declaration of compliance and August 8, 2008 with the following

exceptions. The company’s Management Board and Supervisory Board also declare that the company

has complied with the recommendations of the “Government Commission German Corporate Gover-

nance Code” in its version of June 6, 2008 (the “Code”) as announced by the Federal Ministry of Justice in

the official section of the electronic Federal Gazette on August 8, 2008 with the following exceptions since

August 8, 2008 and intends to do so in the future.

According to No. 3.8 (2) of the Code, an adequate deductible shall be provided for if the company

contracts D&O insurance for Management Board and Supervisory Board.

The D&O insurance in effect for members of the company’s Management Board and Supervisory Board

does not provide for a deductible. The company holds the view that the agreement of a deductible is not a

suitable instrument for improving the board members’ sense of responsibility in observing their duties and

responsibilities and exercising their functions. The practice adopted by the company is in line with interna-

tional standards.

According to No. 4.2.1 of the Code, the Management Board shall have a chairman or speaker.

The allocation of duties and responsibilities is arranged in detail in the rules of procedure for the company’s

Management Board. For this reason, the company finds the appointment of a chairman or speaker of the

Management Board unnecessary. The allocation of certain areas of responsibility to individual Manage-

ment Board members is not intended.

According to Nos. 4.2.2 and 4.2.3 of the Code, the Supervisory Board shall decide the amount and

structure of the Management Board’s remuneration, remuneration instruments applied, and material

components of the contracts of employment in full session. Furthermore, the Code offers recommen-

dations for the arrangement of remuneration in case of premature termination of the Management

Board members’ employment contracts and in the event of a change of control.

As the members of the company’s Management Board do not receive remuneration for their service to the

company and as there are no employment contracts, decisions on the remuneration’s amount and struc-

ture and remuneration instruments applied are not required. Even in the case of premature termination of

employment or in the event of a change of control, the company’s Management Board members would

not receive remuneration.

92


According to Nos. 4.2.4 and 4.2.5 of the Code, the total remuneration of each Management Board

member shall be disclosed in a remuneration report.

As the members of the company’s Management Board do not receive remuneration for their service to the

company, disclosure is not required.

According to No. 4.3.4 of the Code, conflicting interests of the Management Board shall be disclosed

to the Supervisory Board promptly; all business transactions between the company and members of

the Management Board or related parties shall correspond with standards customary in the trade.

Due to the contractual framework of the company, some conflicts of interests do arise; these have already

been disclosed in detail in the stock exchange prospectus in their entirety.

According to No. 5.1.2 (1) sentence 2 of the Code, a long-term succession plan for Management

Board members is recommended.

Such a long-term succession plan for the company’s Supervisory Board and Management Board is not

provided for.

According to No. 5.1.2 (2) sentence 3 of the Code, an age limit shall be determined for members of the

Management Board.

The company neither has nor intends to introduce a general age limit for Management Board members.

The company does not find such a limit adequate as the company’s management primarily depends on

knowledge, skills, and professional experience.

According to Nos. 5.3.1 through 5.3.3 of the Code, the Supervisory Board shall establish committees,

made up of professionally qualified members, dependent on company specifics and the number of

Supervisory Board members.

In view of the fact that the company’s Supervisory Board has three members in accordance with the arti-

cles of incorporation, the establishment of committees is not intended.

According to No. 5.4.1 sentence 2 of the Code, an age limit for Supervisory Board members shall be

determined and considered in proposals for the appointment of Supervisory Board members.

The company neither has nor intends to introduce a general age limit for Supervisory Board members. The

company does not find such a limit adequate as the company’s supervision primarily depends on knowl-

edge, skills, and professional experience.

93


According to No. 5.4.6 (2) sentence 1 of the Code, the members of the Supervisory Board shall

receive success-oriented remuneration in addition to fixed remuneration.

The company’s articles of incorporation do not provide for success-oriented remuneration for Supervisory

Board members, and an introduction of such a provision is not intended. The company holds the view that

success-oriented remuneration is not a suitable instrument for supporting the Supervisory Board’s con-

trolling function. Furthermore, Section 7 (1) sentence 4 of the company’s articles of incorporation provides

that by shareholders’ resolution the Supervisory Board may be granted a higher remuneration than deter-

mined in the articles of incorporation, so that adequate flexibility is provided for.

The Management Board and the Supervisory Board of HCI HAMMONIA SHIPPING AG

Berlin, December 12, 2008

For the Management Board

Jens Burgemeister

For the Supervisory Board

Werner Berg

Remuneration report

Each member of the Supervisory Board receives a fixed annual compensation of EUR 5,000.00 in accor-

dance with the articles of incorporation. The chairman of the Supervisory Board receives one and a half

times of that amount. Furthermore, expenses linked to the duties and responsibilities of Supervisory Board

membership are reimbursed.

The Management Board members do not receive any remuneration.

Information about remuneration can also be found in the group management report on page 25.

94


Werner Berg

Chairman of the Supervisory Board

Dear shareholders,

following the IPO in November 2007 and an abbreviated fiscal year, HCI HAMMONIA SHIPPING AG

completed a full fiscal year of operations in 2008 for the first time.Three new ships were taken over

ahead of schedule. Due to the sale and leaseback transaction with Maersk, the fleet was enhanced by

three large container ships of 7,800 TEU each at the end of April and in early May, respectively. With the

delivery of the 2,500 TEU vessels HAMMONIA BAVARIA and HAMMONIA ROMA, the final two ordered

ships were put into commission successfully in January 2009.

The Supervisory Board has three members. My colleagues on the Board, Michael Hummel and

Andreas Uibeleisen, were appointed successors of retired Supervisory Board members Kai-Kristian

Meyer and Christian Kuppig by court order on April 1, 2008 and officially elected by the shareholders at

the Annual General Meeting of June 11, 2008 for the remaining terms of the retired members of the

Supervisory Board.

The Supervisory Board supervised the company’s management and advised the Management Board

with regard to all issues of relevance. The Supervisory Board informed itself promptly and comprehen-

sively about the company’s economic development and financial situation. Management Board and

Supervisory Board discussed corporate planning for the medium term together. The chairman of the

Supervisory Board maintained continuous close contact with the Management Board even outside the

regular board meetings.

Report of the Supervisory Board

95

Report of the Supervisory Board

In the past fiscal year the Supervisory Board held four meetings. The key issues debated in these meet-

ings were:

■ Adoption of the financial statements and the management report as well as the consolidated finan-cial statements and the group management report for the year 2007;

■ adoption of the interim financial statements for the first half-year 2008;

■ the subsidiaries’ risk management; following the market developments on the shipping markets andassessing the effects on the company;

■ extensive debates about the purchase of new ships and financing, interest and currency transactions;

■ preparation and realization of the Annual General Meeting 2008 and its resolution proposals;

■ evaluation of further investments;

■ issues of corporate governance and the issue of a joint declaration of compliance in accordance withSection 161 AktG together with the Management Board;

■ preparatory measures for the realization of a capital increase in 2009.

HANSA PARTNER GmbH Wirtschaftsprüfungsgesellschaft, Kehrwieder 11, 20457 Hamburg, Germany,

was appointed auditor and group auditor for fiscal year 2008 by shareholders’ resolution. The auditing

firm audited the financial statements and the management report of HCI HAMMONIA SHIPPING AG as

of December 31, 2008 according to HGB as well as the consolidated financial statements and the group

management report as of December 31, 2008 according to IFRS/IAS, including respective accounting,

and issued an unqualified auditor’s certificate. The Supervisory Board approved the result of the audit

and the auditing firm’s issue of the certificate and it approved of the auditor’s reports on the financial

statements and consolidated financial statements. In its meeting of April 16, 2008 the Supervisory Board

approved of the annual accounting documents prepared by the Management Board for HCI HAMMONIA

SHIPPING AG and the group. The annual financial statements were thus established.

The Supervisory Board thanks the Management Board and everyone else involved in the successful

development of the company for their commitment towards reaching the first entrepreneurial milestones

of HCI HAMMONIA SHIPPING AG in the year 2008.


Werner Berg

Chairman of the Supervisory Board

96


Contact Details

HCI HAMMONIA SHIPPING AGBleichenbrücke 10 20354 HamburgPhone: +49 40 88881-0Fax: +49 40 88881-199www. hci-hammonia-shipping.deE-Mail: [email protected]

Financial Calendar

27 Apr 2009 Publication of the 2008 financial statements

12 May 2009 Interim statement on the first quarter of 2009

10 Jun 2009 Annual General Meeting

31 Aug 2009 Publication of 2009 half-yearly financial report

13 Nov 2009 Interim statement on the third quarter of 2009

97

Imprint

Published by · HCI HAMMONIA SHIPPING AGBleichenbrücke 10 · 20354 HamburgConcept and Compilation · PvF Investor Relations Schmidtstraße 51 · 60326 Frankfurt am MainDesign · Sieler Kommunikation und Gestaltung GmbHSchubertstraße 14 · 60325 Frankfurt am MainPrinting and Processing · LD Medien- und Druckgesellschaft mbHBehringstraße 14 · 22765 Hamburg

Our Annual Report is published in English and German.

© HCI HAMMONIA SHIPPING AG, 2009


Bleichenbrücke 10 20354 HamburgPhone: +49 40 88881-0Fax: +49 40 88881-199www. hci-hammonia-shipping.deE-Mail: [email protected]

annual report 2008 - hammonia schiffsholding ag · annual report 2008 at home on the ... contact...

Documents