Key Figures for the D.Logistics Group

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1 Geschäftsbericht Annual Report 2008

2 Key Figures for the D.Logistics Group Amounts in million Change (%) Results of operations Revenue (total) (0.3) Germany (1.1) Rest of the World International revenue ratio (%) EBITDA EBIT EBT Income tax expense 2.5 (4.0) Income for the period of which attributable to minority interests (23.2) of which attributable to the shareholders of the parent company Earnings per share (EPS), ( ) Balance sheet Noncurrent assets Current assets (9.4) Balance sheet total Equity Liabilities (8.8) Equity ratio (%) Net financial liabilities (11.6) Cash flow / investments Cash flow from operating activities (1.9) Cash flow from investing activities (0.5) (24.8) (98.0) Cash flow from financing activities (15.7) 9.8 Investments in property, plant and equipment Employees Employees (average) 3,187 3, Personnel costs (0.1)

3 To Our Shareholders

4 002 Foreword by the Executive Board We have fulfilled our planning targets for Following its transformation, D.Logistics AG is now well-positioned to face difficult times. Dear shareholders, The start of the financial year 2009 has been marked by bad news and an uncertain outlook at a global level. In this context, we are particularly pleased to be able to report to you that D.Logistics AG has achieved its goals for While we too are noticing some of the effects of the economic crisis, there are no grounds for pessimism. We had already emerged in strengthened form from a successful consolidation phase back in Many companies have yet to go through this process. D.Logistics AG, however, sees itself well-positioned to succeed even in difficult times. Over the past few years, we have consistently transformed the D.Logistics Group into an industrial services provider focusing on packaging services. Today, we offer our customers flexible services throughout the packaging logistics sector. We adapt to the market s requirements and develop solutions that suit our customers needs down the ground.

5 003 This evolution into an intelligent service provider was the correct decision. Concentration on our competences as a packaging specialist for the industrial sector was a key factor behind our positive annual net profit in Our Industrial Goods Packaging segment recorded an extremely positive performance, exceeding the original goals for this segment and making a key contribution to our increased income. D.Logistics Group s operating result of 14.6 million corresponded to an increase of 19 % on Net result after minorities more then quadrupled to 11.5 million. Sales were roughly unchanged at 337 million. A portion of the increased income is due to tax income of 4.6 million which is the result of a profit transfer agreement with our subsidiary Deufol Tailleur GmbH. However, even without this effect D.Logistics Group has realized a significant improvement in its net income. Overall, the annual financial statements for 2008 are in line with our planning published during the year. We are very satisfied with this result. However, we are also aware that it could have been better. Increased operating result due to a positive performance by the Industrial Goods Packaging segment.

6 004 Unfavorable US business performance. However, a positive response mean better results can be expected in With a successful performance in the USA we might have exceeded our planning targets. Instead, the negative result of our US activities had an unfavorable impact on both the result for our Consumer Goods Packaging segment and our overall results. In November and December 2008 in particular, our US business fell short of our ambitions. Accordingly, we achieved no better overall result in the USA in 2008 than in 2007, and clearly failed to match our forecasts of October 2007 regarding our business performance in America. The fact that we were nonetheless able to finish 2008 with a satisfactory overall result reflects D.Logistics Group s solid situation. It is also clear that far better results may be expected if we succeed in activating our potential in the USA. We have already taken steps and made efforts here which have yielded more efficient cost structures. We also acquired new business in the USA in 2008 which will lead to a sales increase in Particularly noteworthy is the successful expansion of our business relationship with the lighting products manufacturer Osram Silvana.

7 005 In Europe, we have also expanded our existing customer relationships. In Belgium, D.Logistics Waremme S. A. concluded a new contract with Mölnlycke Health Care, one of the world s leading manufacturers and suppliers of products for the healthcare sector and hospitals. The contract has a term expiring 2018 and covers the further expansion of its European distribution center in Belgium. In Germany, our subsidiary Dönne + Hellwig Logistics GmbH received an order covering the internal supply system for the AUDI works at Ingolstadt and Neckarsulm. Here, our Company was able to draw on the positive experience it gained in similar projects for Infineon and Infraserv Logistics. A particularly notable success in 2008 was Dönne + Hellwig Logistics GmbH s winning of an order put out to tender by our customer Procter & Gamble. The invitation to tender covered extensive packaging services such as shrink-wrapping, display packaging, labeling and enclosure of products for special campaigns. The contract s term began on January 1, The packaging services are provided at Procter & Gamble s new Customization Center in Euskirchen. This new packaging center is around 10,000 m 2 in size and is thus one of the largest of its kind in German-speaking Europe. The volume of this order is considerable and is equivalent to acquiring a new customer. It will create up to 150 new jobs in the D.Logistics Group. Successful expansion of existing customer relationships. Key major order from Procter & Gamble in specially developed packaging center.

8 006 Improved customer relationship management system. As a service provider, D.Logistics designs intelligent packaging solutions. Economic outlook for 2009 is subject to considerable uncertainty. D.Logistics is also noticing the effects. This success also reflects our positive collaboration with Procter & Gamble and is the result of an improved and intensified customer relationship management system. This is one example which clearly illustrates how D.Logistics AG is succeeding in growing with its customers and developing optimal packaging solutions in close cooperation with them. Establishing ourselves as an intelligent solutions provider was one of the key goals of our restructuring program over the past few years: added value for our customers through a working relationship based on partnership. We will continue to develop this successful model in future. Precisely in view of the turbulence to which the global economy is exposed in 2009, our stable customer base and our positive relationships with our clients represent important potential for D.Logistics AG will not be an easy year either for companies or for national economies. We too have not survived this trend unscathed, and it has proved more dramatic than we had predicted even at the end of Both the beginning of 2009 and the end of the last fiscal year failed to live up to our expectations. Today, no one can reliably predict the ultimate effects of the economic crisis in the remainder of the year. Our predictions for 2009 are also influenced by our customers assessments, and forecasts here are currently subject to a considerable degree of uncertainty.

9 007 We nonetheless expect to come through this crisis favorably. On the one hand, as already mentioned above, we have a very solid clientele. D.Logistics Group is extremely well-placed and has a strong market position in its industry. This is apparent not only in Germany but also in our Belgian and Italian business segments. In addition, D.Logistics Group s development and transformation over the past few years was a process which is now a source of strength. We have successfully overcome a business crisis. Turning points and important strategic decisions lie behind us. The outcome of this is a solid structure and financial position which now enables us to cope with crisis situations. We already proved this in 2008, where we were able to compensate for negative segment trends through success in other sectors will be a difficult year for many companies. We too are feeling the effects of the crisis. Nonetheless, our outlook for the current fiscal year supported by our stable core business remains positive. While we predict falls, particularly in terms of sales, we expect our US business to provide an improved earnings contribution in Our performance in the US is therefore particularly significant for this year s Group result. Strong market position, solid clientele D.Logistics AG is wellplaced to handle an economic crisis. Despite an expected fall in sales, the outlook for 2009 remains positive. The performance of our US business is important.

10 008 We see no grounds for pessimism or for a crisis atmosphere for D.Logistics Group. On the contrary, we envisage further positive trends and favorable opportunities for our Company in Together with our employees, partners and customers, we shall make a committed and prudent effort to improve ourselves further in 2009 and safeguard our business success. Detlef W. Hübner CEO Andreas Bargende COO Tammo Fey CFO

11 009 Our Goals We are expanding the business of logistics with comprehensive solutions for logistics and related industrial services. We specialize in industrial and consumer goods packaging. Our subsidiaries realize specialist solutions and logistics concepts worldwide for all industries and for every size of business. We boost our customers output through an extension of the process chain and innovative services. Our expertise is your advantage the D.Logistics Group is a strong partner in global competition.

12 010

13 011 Industrial Goods Packaging The execution of challenging logistics tasks relating to industrial goods packaging and delivery requires a particular degree of specialist knowledge and logistical expertise. Whether you need to deliver to a neighboring country or around the globe no packaging task is too demanding for us. The customer places an order with us, we do the rest. Our considerable experience in this field enables us to respond to every customer wish and find the best packaging solution for every product.

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15 013 Consumer Goods Packaging Our quality lies in our overall vision. For us, packaging logistics for articles of consumption starts with design and procurement and finishes with the end-customer. Packaging means protection, manageability and sales presentation all in one. From production to distribution, we know what counts and this quality has its own rewards: an especially high level of customer loyalty. D.Logistics packaging expertise has long been exploited by many European and US companies. Its customer base grows year-by-year.

16 014

17 015 Warehouse Logistics A warehouse marks the point of intersection for the full range of logistics services. In modern warehouse logistics, processes are smoothly integrated: incoming goods, commissioning, packaging, transport scheduling and distribution. For this reason, we already consider the full logistics chain when planning a warehouse, and optimally integrate our warehouse management system in a company s business processes where necessary, even from inside the company. With our experts, our customers warehouse logistics needs are in ideal hands.

18 016 Key to Symbols Basis of Preparation Scope of Consolidation Consolidated Income Statement Disclosures Consolidated Balance Sheet Disclosures Consolidated Cash Flow Statement Disclosures Other Disclosures Segment Information Supplementary Disclosures

19 017 Table of Contents 001 To Our Shareholders 002 Foreword by the Executive Board 017 Table of Contents 018 Report of the Supervisory Board 022 Corporate Governance 026 The Share 028 Management Report 030 Business and Economic Environment 040 Results of Operations, Financial and Asset Position 051 Reports on Dependence, Events After the Balance Sheet Date and Expected Developments 058 Risk Report 063 Remuneration Report 066 Consolidated Financial Statements 068 Consolidated Income Statement 069 Consolidated Balance Sheet 070 Consolidated Cash Flow Statement 071 Consolidated Statement of Changes in Equity 072 Notes to the Consolidated Financial Statements 072 General Information 072 Basis of Preparation 082 Scope of Consolidation 085 Consolidated Income Statement Disclosures 090 Consolidated Balance Sheet Disclosures 103 Consolidated Cash Flow Statement Disclosures 104 Other Disclosures 110 Segment Information by Business Division and Region 113 Supplementary Disclosures 116 Auditors Report 117 Responsibility Statement by the Management 118 Facts & Figures 120 Information on D.Logistics AG 120 Income Statement of D.Logistics AG 121 Balance Sheet of D.Logistics AG 122 Key Subsidiaries of D.Logistics AG 123 Glossary 124 Key Group Figures Five-Year Overview 126 Operating Subsidiaries / Affiliates of D.Logistics AG 128 Imprint / Financial Calendar

20 018 To Our Shareholders Report of the Supervisory Board Report of the Supervisory Board In the year under review, the Supervisory Board performed the duties assigned to it by law and the Articles of Association. It regularly advised the Executive Board on matters relating to the management of the Company, and monitored the management of the Company s business activities. The Supervisory Board was directly involved in all decisions of fundamental importance for the Company. This is based in particular on a detailed catalog of transactions requiring the prior approval of the Supervisory Board, which is contained in the by-laws for the Executive Board. This catalog is adjusted on an ongoing basis in accordance with the changing requirements. During the reporting period, the Executive Board informed the Supervisory Board, both verbally and in writing, of all relevant issues concerning the Company s position and material business transactions. The Supervisory Board receives a monthly report consisting of a current income statement for the Group and its three divisions, as well as overviews of the development of sales and operating results at the individual subsidiaries together with target / actual comparisons and corresponding prior-period figures. The Supervisory Board regularly submits questions to the Executive Board on the basis of this data, which the Executive Board then answers accordingly. In addition, there was a comprehensive exchange of opinions between the Chairman of the Supervisory Board and the Executive Board on other current issues. The Chairman informed the other members of the Supervisory Board about these discussions in detail. Meetings of the Supervisory Board The Supervisory Board discussed the reports of the Executive Board and other decision papers in a total of four meetings and also in frequent telephone conversations, and discussed them in detail with the Executive Board. In 13 cases, resolutions were adopted outside meetings. In all of these cases, these urgent decisions that could not be delayed until a regular Supervisory Board meeting were preceded by an in-depth exchange of information by and / or telephone. Key Topics of Discussion The main topic of discussion between the Supervisory Board and the Executive Board in the year under review remained the further development of the Group. Continuing integration of the acquisitions made in the previous year in the Industrial Goods Packaging sector was necessary in order to realize synergies; this goal was largely achieved. At its meeting held on March 31, 2008, the Supervisory Board examined in detail the financial planning for According to the by-laws for the Executive Board, the financial plan must be directed to the Supervisory Board prior to its publication. Following a discussion with the Executive Board of the forecast for key subsidiaries (US companies, So. Ge. Ma. S. p. A., Walpa GmbH and Logis Group) which is included in the valuation of these investments and the envisaged business trend in the Industrial Goods Packaging segment, the Supervisory Board had no reservations regarding the planning.

21 Report of the Supervisory Board To Our Shareholders 019 These considerations were further deepened in relation to the US companies. This was due to these companies performance which remained unsatisfactory in the first half of 2008 and to decision papers concerning the acquisition of the remaining 15 % of the shares from the previous family of owners, the Franks, and the grant of a shareholder loan. The valuation methods for these firms were discussed in detail with the auditors, with the result that no valuation adjustments were necessary at that time (spring 2008). In the second half of the year, the results of these companies then improved considerably in relation to the first half of the year. The key issue at both Supervisory Board meetings on October 2 and December 11, 2008 was the extension due in 2009 of the employment contracts of all the members of the Executive Board. The issue of an improved performance-based remuneration system was particularly significant here. These negotiations had not yet been finalized in the year under review. Other Topics of Discussion On January 8, 2008, the Supervisory Board agreed to the investment program of D.Logistics Waremme S. A. totaling approx. 6.3 million, following a detailed assessment of the underlying contract and the relevant calculations which were found to be plausible. On May 2, 2008, the Supervisory Board granted its consent to the conclusion of a profit and loss transfer agreement with Deufol Tailleur GmbH on the basis of a previous telephone conference between the members of the Supervisory Board and the Chairman of the Executive Board, where the Executive Board presented current model calculations for the expected tax consequences. On April 11, 2008, the Supervisory Board agreed to a capital increase of 584 thousand for our Italian equity investment So. Ge. Ma. S. p. A. This was necessary to balance out a loss in In 2008, the loss-making situation was terminated in Italy, so that no further capital injections are required there at present. The declaration of conformity in accordance with section 161 of the German Stock Corporation Act was unanimously approved and submitted by the Executive Board and the Supervisory Board in February Committees In 2008, the audit committee s activities (preparation of accounting and risk management issues, the necessary independence of the auditors, the grant of the audit engagement to the auditors, the specification of key areas for the audit and the fee agreement) were once again performed by the members of the Supervisory Board. Since the Supervisory Board only has three members and the members of the audit committee and the Supervisory Board thus would be the same people, the waiver of the audit committee which is not mandatorily required by law has no effect on operating procedures and no negative impact on efficiency.

22 020 To Our Shareholders Report of the Supervisory Board Audit of the Single-Entity and Consolidated Financial Statements In accordance with the resolution passed by the Annual General Meeting on June 17, 2008 and the subsequent audit engagement issued by the Supervisory Board, the annual financial statements for the fiscal year from January 1 to December 31, 2008 prepared by the Executive Board in accordance with the German Commercial Code, as well as the management report of D.Logistics AG, were audited by Ernst & Young AG, Wirtschaftsprüfungsgesellschaft, Eschborn / Frankfurt am Main, and issued with an unqualified audit opinion. The consolidated financial statements of D.Logistics AG were prepared in accordance with the International Financial Reporting Standards as stipulated by section 315a of the German Commercial Code. The auditors issued the consolidated financial statements and the Group management report with an unqualified audit opinion. All documents relating to the annual financial statements, including the management report and Group management report, the Executive Board s proposal for the appropriation of net profit and the audit reports issued by the auditors, were presented to the Supervisory Board. The Supervisory Board examined these documents and discussed them in the presence of the auditors. The Supervisory Board concurred with the results of the audit and, based on the results of its own examination, did not raise any objections. The Supervisory Board approved the annual financial statements of D.Logistics AG for 2008 and the consolidated financial statements at the meeting held on March 31, The annual financial statements were thereby adopted. The Supervisory Board also approved the Executive Board s proposal for the appropriation of net profit. Dependence Report The Executive Board has also compiled a report regarding the Company s relationships with associates and presented this to the Supervisory Board together with the audit report produced by the auditors. The auditors have issued the following audit opinion for the report: In accordance with our due audit and assessment, we confirm that 1. the factual information in the report is correct, 2. for the legal transactions stated in the report, the Company s performance was not inappropriately high. Within the framework of its own audits of the report regarding the Company s relationship with associates, the Supervisory Board has determined that no objections are applicable and agrees with the auditors findings.

23 Report of the Supervisory Board To Our Shareholders 021 Composition of the Executive Board and the Supervisory Board Prof. Dr.-Ing. Kai Furmans was reappointed as a member of the Supervisory Board for a period of three years by the Annual General Meeting held on June 17, The membership of the Supervisory Board therefore remains unchanged. The same is true of the Executive Board. The Supervisory Board would like to thank the management and all the employees of the Company for their commitment and dedication in fiscal year Hofheim, March 31, 2009 The Supervisory Board Dr. Wolfgang Friedrich Chairman

24 022 To Our Shareholders Corporate Governance Corporate Governance Responsible Corporate Management The term corporate governance stands for responsible corporate management and control that is geared towards long-term value creation. It relates primarily to the way in which the management bodies operate, the cooperation between them, and the monitoring of their actions. Key aspects of good corporate governance include respect for shareholder interests, efficient cooperation between the Executive Board and the Supervisory Board, ensuring that the interests of the Company are given priority in the case of conflicts of interest, and open and transparent corporate communication. Corporate governance forms an integral part of corporate management at D.Logistics, which is aimed at increasing enterprise value. The key provisions of the Code are documented in the Articles of Association and the by-laws of the Executive Board and the Supervisory Board, and are observed by the management when performing all business activities. Further information on the activities of the Supervisory Board and the cooperation between the Executive Board and the Supervisory Board can be found in the Report of the Supervisory Board starting on page 18. The report on the remuneration of the Executive Board and the Supervisory Board is contained in the management report on page 64. The Executive Board The Executive Board of D.Logistics AG currently consists of three members. The by-laws set out the competencies of the Executive Board as a whole, as well as those of the Chairman and the individual members of the Executive Board. The areas of responsibility of the individual members of the Executive Board are defined in an organizational chart. The management structure of the Executive Board reflects the global orientation of the Company and its function as a holding company. The members of the Executive Board are jointly responsible for managing the Company s business activities. The Executive Board determines the Group s business targets, fundamental strategic orientation, corporate policy and organizational structure. In particular, this includes the management of the Group and its financial resources, the development of its human resources strategy, appointments to management positions within the Group and the professional development of senior executives, as well as the presentation of the Group to the capital markets and the public as a whole. The Executive Board is also responsible for coordinating and monitoring the divisions in accordance with the defined Group strategy. The Supervisory Board The Supervisory Board has three members. It monitors and advises the Executive Board in its management of the Company s business activities, and is responsible for business development, profit planning and further strategic development. It issues the audit engagement to the auditors and approves the single-entity and consolidated financial statements. It also appoints and dismisses the members of the Executive Board, working in conjunction with the latter to ensure long-term succession planning. Any transactions or measures resolved by the Executive Board that materially impact the asset ratios, financial ratios or results of operations of the Company require the prior approval of the Supervisory Board. These are listed in a catalog of transactions requiring approval, which is contained in the by-laws for the Executive Board of D.Logistics AG.

25 Corporate Governance To Our Shareholders 023 In its report to the Annual General Meeting, the Supervisory Board describes any conflicts of interest and how they were treated. Material conflicts of interest relating to a member of the Supervisory Board that are not merely temporary should result in the termination of that person s membership of the Supervisory Board. In the year under review, there were no conflicts of interest relating to members of the Supervisory Board of D.Logistics AG. Shareholders and Annual General Meeting Shareholders exercise their rights and vote at the Annual General Meeting. Each share of D.Logistics AG entitles the holder to one vote. There are no shares with multiple voting rights, preferential voting rights or maximum voting rights. The Annual General Meeting resolves on a number of key issues, including the appropriation of net profit and the approval of the actions of the members of the Executive Board and the Supervisory Board, the election of the auditors, and the election of the members of the Supervisory Board. In addition, the Annual General Meeting resolves on amendments to the Articles of Association, corporate measures, and the authorization of certain intercompany agreements. Accounting and Auditing The consolidated financial statements of the D.Logistics Group are prepared in accordance with the International Financial Reporting Standards (IFRS). The single-entity financial statements of D.Logistics AG are prepared in accordance with the German Commercial Code. The auditors are elected by the Annual General Meeting in accordance with the relevant statutory provisions. The Supervisory Board prepares the proposal to the Annual General Meeting on the election of the auditors. To ensure their independence, the Supervisory Board must obtain from the auditors a declaration concerning any grounds for disqualification or partiality. In issuing the audit engagement to the auditors, it is agreed that the chairman of the Supervisory Board will be informed immediately of any grounds for disqualification or partiality on the part of the auditors which arise during the performance of the audit, the auditors will report without delay on all facts and events of importance for the tasks of the Supervisory Board which arise during the performance of the audit, and the auditors will inform the chairman of the Supervisory Board and / or note in the Auditors Report if, during the performance of the audit, they become aware of facts which show a misstatement in the declaration on the German Corporate Governance Code submitted by the Executive Board and the Supervisory Board.

26 024 To Our Shareholders Corporate Governance Risk Management in the Group D.Logistics has a risk management system that reflects the Company s global orientation. The risk management system forms part of the planning, control and reporting process, and is intended to ensure that the Company s management identifies material risks at an early stage and is able to take measures to counteract these risks. The Chairman of the Supervisory Board remains in regular contact with the Executive Board to discuss issues relating to risk management, as well as the strategy and business development of the Group. Transparency and Communications D.Logistics provides shareholders, financial analysts, shareholders associations, the media and other interested parties with regular information on the financial position of the Company and key developments in its business activities. Information is published in line with the principle of fair disclosure. Accordingly, D.Logistics AG makes new information available to all shareholders and other interested parties at the same time as this information is disseminated to financial analysts and institutional investors. To ensure that information is provided in a timely manner, D.Logistics uses the Internet and other means of communication. A Financial Calendar lists all the dates of key publications (e. g. the Annual Report, Interim Reports or the Annual General Meeting) well in advance. The Financial Calendar can be found on the page Key Data for the D.Logistics Group at the beginning of this Annual Report, and can also be accessed online at In addition to its regular reporting, D.Logistics immediately publishes any new information that could have a significant effect on the Company s share price (ad hoc disclosures). In accordance with statutory requirements, D.Logistics also issues a statement immediately after receiving notification that a shareholder s stake in the Company has reached, exceeded or fallen below the thresholds of 3 %, 5 %, 10 %, 25 %, 30 %, 50 % or 75 % of the voting rights in D.Logistics AG, whether by way of acquisition, disposal or otherwise. Furthermore, in accordance with statutory requirements, details of transactions in financial instruments of D.Logistics AG by members of the Executive Board or the Supervisory Board (and persons defined by the German Securities Trading Act as related parties) are published promptly. An overview of the transactions effected is also provided on the Company s homepage ( under The share in the Investor& Public Relations section. Shareholdings of Members of the Executive Board and the Supervisory Board The Chairman of the Executive Board, Mr. Detlef W. Hübner, holds 52.3 % of the share capital of D.Logistics AG, amounting to 23.1 million shares. Furthermore, the Executive Board also holds 53 thousand shares and approx. 144 thousand options to subscribe for the same number of D.Logistics shares. A detailed breakdown can be found under Supplementary Disclosures on page 113. The members of the Supervisory Board do not hold any shares or options on shares in D.Logistics AG.

27 Corporate Governance To Our Shareholders 025 Declaration of Conformity with the German Corporate Governance Code The declaration of conformity issued by the Executive Board and the Supervisory Board of D.Logistics AG in February 2009 in accordance with section 161 of the German Stock Corporation Act is available on the Internet at In the declaration of conformity, the Executive Board and the Supervisory Board of D.Logistics AG state that the Company complies with most of the recommendations of the German Corporate Governance Code, and has done so in the past. The Executive Board and the Supervisory Board of D.Logistics AG intend to continue to observe the recommendations of the German Corporate Governance Code in the version dated June 6, 2008 in future. Only in the following cases D.Logistics AG does not comply with the recommendations of the Code: Comprehensive non-competition obligation for members of the Executive Board (section of the Code) Not all members of the Executive Board are subject to a comprehensive non-competition obligation. However, the Supervisory Board and the Executive Board must be informed of any ancillary activities performed. Committees of the Supervisory Board (section 5.3 of the Code) The Supervisory Board did not formed any committees, in particular no nomination committee and also no audit committee anymore. Since the Supervisory Board is composed of only three members, the members of the committees would necessarily be identical with the Supervisory Board. Age limit for members of the Executive Board (section of the Code) and the Supervisory Board (section of the Code) No age limit has been specified for the members of these bodies, as their physical and mental capacity is given appropriate consideration as part of the selection process regardless of their age. Remuneration of members of the Supervisory Board (section of the Code) The remuneration paid to members of the Supervisory Board currently only contains a fixed component. The exercise of Chair and Deputy Chair positions and membership in committees is not considered separately. Due to the small size of the Supervisory Board (three members), only the Chairman can be considered as bearing additional responsibility. Publication of consolidated financial statements within 90 days (section of the Code) Due to the large number of companies included in the consolidated financial statements, it was not possible to publish the statements within the required time after the end of the respective reporting periods. The Company will endeavor to comply with this recommendation in future.

28 026 To Our Shareholders The Share The Share Key information for the D.Logistics share German Securities Code Number International Securities Identification Number (ISIN) Stock exchange code Reuters Frankfurt Reuters Xetra Bloomberg DE LOI LOIG.F LOIG.DE LOI GY 2008 Deep in the Red for Shares In the past year, the global stock markets were dominated by the financial and economic crisis. This marked the end-point of a five-year boom on the stock markets was a similarly poor year for shares in Germany, while in the USA one has to go as far back as 1931 to find a price collapse of this magnitude. The MSCI World index fell around 42 %. On the leading US stock exchange, prices fell by nearly 34 %, measured on the Dow Jones Index, and the NASDAQ technology exchange lost over 40 %. On the European stock markets, the EURO STOXX 50 fell more than 44 %. In European terms, in 2008 Germany recorded a mid-table result in the leading country indexes, with a fall of 39.5 % measured on the DAX though this was eased by the price gains realized by the VW share. The small caps performance was considerably worse; the SDAX lost a good 46 % in the course of the year. The CDAX, which maps the broad market and includes the D.Logistics share, lost 42.6 %. D.Logistics Share Records Disproportionately Low Fall in Value The D.Logistics share closed the year with a price loss of 43.6 % and therefore performed slightly better than the sector index of logistics stocks quoted in the prime standard (prime logistics), which lost a good 47 %. Following a comparatively weak start to the year, in the second half of the year in particular our share significantly outperformed the benchmark indexes and closed the period under review at a price of Key figures for the share figures in Earnings per share Equity per share Equity ratio (%) Dividend Peak price Lowest price Closing price for the year Daily trading volume (Ø, units) 48, ,610 Number of shares 44,154,978 44,668,395 Market cap. ( million) Relative performance of the D.Logistics Share indexed, as %, January 1 December 30, D.Logistics AG CDAX Prime Logistics 20 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Volume in million Price fluctuation in Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0

29 The Share To Our Shareholders 027 Share Repurchase Program Launched On September 29, 2008, the Executive Board of D.Logistics AG approved a share repurchase program and the subsequent withdrawal of the acquired shares. Repurchasing began on October 1, 2008 and will be completed no later than March 31, Overall, up to 1,200,000 shares of the Company are to be repurchased. Notice of all repurchases is provided on the website of D.Logistics AG ( In 2008, 513,917 of the Company s own shares were purchased for an average price of and withdrawn as of December 31. D.Logistics financial calendar Annual Financial Statements 2008 April 7, 2009 Interim Report I / 2009 May 14, 2009 Annual General Meeting June 16, 2009 Interim Report II / 2009 August 13, 2009 Interim Report III / 2009 November 12, 2009 Subscribed Capital Decreased by 1 % The registered share capital decreased in the past fiscal year due to withdrawn shares by 513,417, from 44,668,395 to 44,154,978, and is divided up into the same number of no-par value shares to bearer. The number of shares admitted to stock market trading remained constant in relation to December 31, 2008, at 46,292,011 units. An amount of 19,263,858 remained unchanged as Approved Capital as of December 31, 2008 for the issuance of new shares in return for cash contributions or contributions in kind. Shareholder structure as % Shareholder Structure CEO Detlef W. Hübner has Majority Holding D.Logistics AG s ownership structure is crucially determined by the Company s founder and CEO, Detlef W. Hübner. On balance, in the past fiscal year his holdings were increased from 51.7 % to 52.3 % due to minor purchases and the withdrawal of shares as part of the repurchase program. Other shareholders Detlef W. Hübner Significant Rise in Earnings per Share The earnings per share result from dividing the result due to the shareholders of D.Logistics AG by the weighted average number of shares in circulation. In fiscal year 2008, on average 44,603,246 units (previous year: 42,636,302) were in circulation. The earnings per share on this basis were 0.26 (previous year: 0.07). Convertible Bond to Expire in 2009 In December 2004, D.Logistics issued a convertible bond with a subscription right for its shareholders to the value of 7.2 million and with a coupon of 7.00 %. The bond has a time to maturity expiring December 8, 2009 and could be converted into shares at an exercise price of 1.80 for the first time following the 2005 Annual General Meeting. In the second half of 2008, the bond s holders exercised their conversion right with a volume of 900, leading to the fresh issue of 500 shares. In the course of the year, the convertible bond was priced between and and closed the past period at a price of Please see page 99 of the Notes to the Consolidated Financial Statements for detailed information on the structure of the convertible bond. Convertible bond information ISIN Volume of issues Already converted Outstanding volume DE000A0DMK million 4.28 million 2.92 million Issue / redemption price Coupon 7.00 % Maturity December 8, 2009 Closing price Quotation Over-the-counter trading Frankfurt

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31 029 Management Report Business and Economic Environment Results of Operations, Financial and Asset Position Reports on Dependence, Events After the Balance Sheet Date and Expected Developments Risk Report Remuneration Report

32 030 Management Report Business and Economic Environment Legal Structure of the Group Business Fields and Organizational Structure Services Business and Economic Environment Decentralized Structure of the D.Logistics Group The D.Logistics Group has a decentralized organizational structure, with D.Logistics AG as the ultimate holding company. In almost all cases, we have majority holdings in our investments. Please see the chapter Facts & Figures on page 126 for a summary of our operationally active investments and their corporate structure. As a management holding company, we do not have any operating business ourselves and instead mainly perform management activities. These include specifying the strategic business fields, strategic control, appointments to management positions and control of the flow of capital within the Group. We also control risk management and supervise important customers (key accounting). The holding also initiates and supervises Group-wide projects such as Business Development and Operational Excellence. The managing directors of the subsidiaries have a high level of independence as they are best able to assess regional specifics. Management comprises of annual budget planning, target agreements and regular meetings. In addition, internal corporate governance guidelines specify consent requirements for specific types of transactions, e. g. investment schemes exceeding a specific volume. Core Features of the Group The D.Logistics Group is a strong logistics partner for its customers, with finely-honed industry and methodological expertise. Its core features are as follows: Specialist for complex logistics solutions, focus on packaging Specific industry know-how, particularly industrial goods (mechanical and plant engineering, power station construction) and consumer goods (incl. automobile industry and consumer goods producers) Market leader in Germany for industrial export packaging Strong IT expertise to fulfill individual customer requirements Service-Oriented Segment Structure In accordance with the main type of service they offer, D.Logistics AG s equity investments are based in the three business fields of Industrial Goods Packaging, Consumer Goods Packaging and Warehouse Logistics. Industrial Goods Packaging Notes 39, 40 The Industrial Goods Packaging segment comprises specific logistics activities for capital and investment goods manufacturers. This mainly consists of the construction of packaging, production of special packaging, export packaging logistics, long-term packaging and management of major logistics projects. The Group s advanced IT expertise is a major factor for success here. We also provide further industrial services such as disassembly services and spare-parts logistics warehousing.

33 Business and Economic Environment Management Report 031 Services Locations and Sales Markets Competitive Position Consumer Goods Packaging Notes 39, 40 The Consumer Goods Packaging segment comprises logistics services for the consumer goods industry. The main activities in this division are packaging design and production and the entire spectrum from fully automated to manual packaging (displays). We also provide support services such as warehouse planning and management, distribution logistics, transport and document management and value-added services. Warehouse Logistics Notes 39, 40 The Warehouse Logistics division s main services are warehouse planning and management, assembling, spare-parts logistics, just-in-time logistics and value-added services. Air cargo handling is a further important service. The following diagram provides an overview of our individual segments. Business field summary Industrial Goods Packaging Consumer Goods Packaging Warehouse Logistics Type of goods Highly specific goods, e. g. production facilities Bulk goods Bulk goods D.Logistics know-how Technical expertise Process and IT know-how International network Secure, reliable delivery Total Packaging Solution Packaging design Design know-how Packaging technology Process and IT know-how Coverage of all services, from commissioning, packaging, management through to dispatch Geographical focus Germany Eastern Europe Central Europe USA Central Europe Industry focus Mechanical and plant engineering, power station construction Consumer goods, automobile suppliers Automobiles, chemicals, electronics, healthcare, consumer goods, airport services (cargo handling) Majority of Locations in Germany In connection with the business activities of the D.Logistics Group, the terms location and sales market are more or less synonymous. As a service provider, we mainly provide our services on a customer- and project-specific basis; as a rule, sales occur where the service is provided. In Germany, we have 54 locations which account for a total of 55 % of Group sales. The rest of Europe which accounts for around 29 % of business comprises 24 operational facilities in Belgium, France, Italy, Austria, the Slovak Republic and the Czech Republic. We have two locations in the US, which provide around 16 % of sales. The D.Logistics Group s geographical presence is shown in the diagram on the following two pages. Number of locations Industrial Goods Packaging 50 Consumer Goods Packaging 11 Warehouse Logistics 18

34 032 Management Report Business and Economic Environment Locations of the D.Logistics Group BE DE FR CZ AT SK IT Industrial Goods Packaging, 50 locations Consumer Goods Packaging, 11 locations Warehouse Logistics, 18 locations D.Logistics AG

35 Business and Economic Environment Locations of the D.Logistics Group Management Report 033 US Sales by region million Assets by region million Employees by region D.Logistics Gruppe Germany Germany Germany 1,847 Rest of Europe Rest of Europe Rest of Europe USA USA USA

36 034 Management Report Business and Economic Environment Competitive Position Information in Accordance with Section 315 (4) of the German Commercial Code High Level of Customer Loyalty, Varying Levels of Competition The D.Logistics Group provides its services in a range of different competitive scenarios in the various regions and business sectors. The Industrial Goods Packaging segment continued to expand its strong market position in Germany in A broad customer base and customer relationships of many years standing are testimony to this segment s successful performance in competition. In future, we expect it to continue to consolidate its customer relationships and therefore its competitive position. The orientation of the Consumer Goods Packaging segment is mainly product-specific and in accordance with customer relationships. Due to the frequently strong level of integration with customers, this sector is only subject to limited competition. In the Warehouse Logistics segment, the intensity of competition varies. The in-house / outsourcing divisions are generally subject to a lower degree of competition due to their close relationship with customers. Where warehouse logistics is provided in so-called multi-user structures, i. e. multiple customers at a single warehouse, the D.Logistics Group does business in a highly competitive environment. Successful future performance here hinges on providing customer-specific additional services. Information in Accordance with Section 315 (4) of the German Commercial Code Capital As of December 31, 2008, the Subscribed Capital is 44,154,978 (previous year: 44,668,395) and is divided up into the same number of no-par value shares to bearer. Each share provides a single vote and there are no special membership rights or voting right restrictions. As of December 31, 2008, Mr. Detlef W. Hübner, CEO of D.Logistics AG, holds an indirect capital share of 52.3 % (previous year: 51.7 %) through Lion s Place GmbH, Hofheim am Taunus (previously Revlovers GmbH, Hofheim am Taunus). An amount of 19,263,858 remained unchanged as Approved Capital as of December 31, 2008 for the issuance of new shares in return for cash contributions or contributions in kind (end of previous year: 19,263,858). In accordance with the resolution passed by the Annual General Meeting on June 29, 2004, the Company has been authorized to increase the Company s share capital by up to 19,263,858 by May 31, In accordance with the resolution passed by the Annual General Meeting on June 17, 2008, the Company has been authorized to purchase up to 4,466,839 of its own shares in the period from June 17, 2008 to December 16, 2009; this corresponds to 10 % of the share capital as of June Appointment and Dismissal of the Executive Board The appointment and dismissal of the Executive Board is regulated by section 84 in combination with section 85 of the German Stock Corporation Act; accordingly, the Supervisory Board appoints the members of the Executive Board for a maximum period of five years. Where multiple persons are appointed Executive Board members, the Supervisory Board may appoint one of these members as Chairman of the Executive Board. The Supervisory Board may cancel an Executive Board appointment or an appointment to the position of Chairman of the Executive Board for good cause.

37 Information in Accordance with Section 315 (4) of the German Commercial Code Business and Economic Environment Management Report 035 Corporate Management, Goals and Strategy At D.Logistics AG, the appointment and makeup of the Executive Board is regulated in section 8 of the Articles of Association, in accordance with the relevant statutory provisions. Accordingly, the Executive Board has at least two members, who are appointed by the Supervisory Board. The Supervisory Board also specifies the number of Executive Board members and may appoint a Chairman of the Executive Board and a Deputy Chairman. Changes to the Articles of Association Changes to the Articles of Association are regulated in accordance with section 179 and section 133 of the German Stock Corporation Act. Paragraph 1 of section 179 specifies that any change to the Articles of Association requires a vote by the Annual General Meeting. The Annual General Meeting may assign to the Supervisory Board the power to make changes pertaining to the version only. Paragraph 2 states that an Annual General Meeting resolution requires a majority of the share capital represented at the vote, at least three quarters. The Articles of Association may specify a different equity majority, but may only specify a larger equity majority for a change to the Company s purpose of business. It may also specify further requirements. The Articles of Association of D.Logistics AG do not stipulate any different equity majorities or other requirements. In the case of D.Logistics, section 14 of the Articles of Association authorizes the Supervisory Board to make changes pertaining to the version only. Further disclosures in accordance with section 315 (4) of the HGB are provided in the Remuneration Report. Internal Control System The Company s control instruments are intended to support the goal of a long-term increase in enterprise value and are oriented in accordance with profitable sales growth. D.Logistics AG controls its subsidiaries in accordance with their growth perspectives and individual income situations. For this purpose, it has a planning and budgeting process comprising both targets (topdown planning) and detailed planning for the individual units (bottom-up planning). The resulting targets are monitored by a monthly reporting system and deviations are rapidly analyzed. Regular meetings between the Executive Board of D.Logistics AG and the management of the subsidiaries support this process and enable a prompt reaction. Financial Goals D.Logistics key financial goals are constant, profitable sales growth to be achieved both organically and through acquisitions. For the operating business segment, at Group level there is a long-term EBITA margin (EBITA defined as earnings before the financial result, taxes and goodwill amortization / impairment) target of more than 4 % (2008: 4.3 %). In the non-operating business segment, the aim is a further improvement in the financial result and optimization of tax expenditure. In the past fiscal year, a profit and loss transfer agreement was concluded between the lead company in the Industrial Goods Packaging segment, Deufol Tailleur GmbH, and D.Logistics AG in order to optimize the tax load ratio. In terms of the level of debt, the goal is for the D.Logistics Group s equity ratio to clearly exceed 30 % on a long-term basis (December 31, 2008: 40.8 %).