228 x 297 MM. REPORT AREA ANNUAL REPORT

Transcription

1 228 x 297 MM. REPORT AREA ANNUAL REPORT

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3 Key Data for the D.Logistics Group amounts in millions Change (%) Results of operations Revenue (total) Germany Abroad International revenue ratio (%) EBITDA EBIT EBT Income tax expense (3.5) (4.3) (20.1) Profit from continuing operations Profit from discontinued operations Net profit for the period of which attributable to minority interests (0.7) 1.9 of which attributable to the shareholders of the parent company Earnings per share ( ) Balance sheet Current assets Noncurrent assets (6.9) Total assets (0.9) Liabilities (6.6) Equity Equity ratio (%) Net debt (8.8) Cash flow / capital expenditure Net cash from operating activities Net cash used in investing activities (4.7) (2.2) (115.5) Net cash used in financing activities (0.3) (13.8) 97.7 Investments in property, plant and equipment Employees Employees (average) 3,145 3,219 (2.3) Personal expenses (0.5)

4 Financial Calendar April Publication of Annual Report 2006 May Interim Report I / 2007 July Annual General Meeting August Interim Report II / 2007 November Interim Report III / 2007 Key to Symbols Basis of Preparation Basis of Consolidation Consolidated Income Statement Disclosures Consolidated Balance Sheet Disclosures Consolidated Cash Flow Statement Disclosures Other Disclosures Segment Information Supplementary Disclosures Contact D.Logistics AG Rainer Monetha Head of Investor & Public Relations Johannes-Gutenberg-Straße Hofheim (Wallau) Germany Phone: + 49 (61 22) Fax: + 49 (61 22) info@dlogistics.com

5 Contents Foreword by the Executive Board 003 Report of the Supervisory Board 007 Corporate Governance 011 D.Logistics Shares 015 Business and Economic Environment 018 Results of Operations, Financial and Assets Position 025 Report on Post-Balance Sheet Date Events 034 Report on Expected Developments 034 Risk Report 040 Remuneration Report 045 Consolidated Income Statement 048 Consolidated Balance Sheet 049 Consolidated Cash Flow Statement 050 Consolidated Statement of Changes in Equity 051 Notes to the Consolidated Financial Statements 052 General Information 052 Basis of Preparation 052 Basis of Consolidation 062 Consolidated Income Statement Disclosures 065 Consolidated Balance Sheet Disclosures 070 Consolidated Cash Flow Statement Disclosures 086 Other Disclosures 087 Segment Information by Division and Region 090 Supplementary Disclosures 094 Auditors Report 098 Information on D.Logistics AG 100 D.Logistics AG Income Statement 100 D.Logistics AG Balance Sheet 101 D.Logistics AG Key Subsidiaries and Affiliates 102 Glossary 103 Key Group Figures Five-Year Overview 104 Operating Subsidiaries / Affiliates of D.Logistics AG 106 Imprint To our Shareholders 018 Management Report 048 Consolidated Financial Statements 100 Facts & Figures

6 CEO COO CFO Detlef W. Hübner (51), CEO 1979 Managing shareholder of Dönne + Hellwig GmbH; 1998 foundation of D.Logistics AG; Andreas Bargende (43), COO Lawyer; 1993 to 2002 KPMG; since 2000 partner in the Financial Advisory Services / Corporate Restructuring unit; since September 2002 Chief Operating Officer at D.Logistics; Tammo Fey (42), CFO Head of Accounting and Financial Controlling since foundation of the Company in 1998; also board member of various subsidiaries in the D.Logistics Group; appointed Chief Financial Officer in February 2006; Areas of Responsibility: Investor & Public Relations, Human Resources and Risk Management Areas of Responsibility: Legal, Investment Management and Key Accounting Areas of Responsibility: Finance and Financial Controlling We are expanding the concept of logistics with comprehensive solutions for logistics and logistics-related services for industry. We are specialists in the packaging of consumer and industrial goods. Around the world, our subsidiaries implement specialist solutions and logistics concepts in all sizes and across all industries. By extending the process chain and offering innovative services, we improve our customers ability to provide added value. Our expertise puts you ahead the D.Logistics Group is a strong partner in the global marketplace.

7 Foreword by the Executive Board To our Shareholders Page 0 03 Foreword by the Executive Board D.Logistics AG presents excellent financial results Dear shareholders, 2006 was a good year for D.Logistics AG. The past fiscal year was characterized by a sustained upward trend: following a continuous improvement in results, our annual financial statements paint the picture of a strong company that is capable of action. In 2006, revenue for the D.Logistics Group amounted to million, compared with million in Profit from operations (EBITA) also increased to 16.1 million as against 11.4 million in the previous year. This was due in part to the effects from the disposal of the Company s equity interests in GHX Europe GmbH and Schumacher Dienstleistung und Logistik GmbH. Consolidated net profit for 2006 amounted to 11.4 million, up significantly on the prior-period figure of 1.4 million. This also reflects the one-time effect from the disposal of equity interests. Earnings per share (EPS) rose from 0.03 in 2005 to 0.27 in These positive developments enabled us to significantly reduce net debt by 9 % to less than 43 million. Another piece of good news in 2006 was the positive outcome of pending legal disputes. The court of second instance ruled in the Company s favor in the legal proceedings on the insolvency assets of Talhaus GmbH & Co. KG, allowing the corresponding provision recognized in 2005 in the amount of 1.5 million to be reversed. In a further legal dispute, a settlement was reached in favor of our Belgian subsidiary T - D.Logistics Belgium SA, resulting in income of 1 million. More and more customers are placing their trust in the D.Logistics Group We gained new customers in Germany and abroad and expanded existing customer contracts across all divisions. For example, agreements were concluded with several high-profile companies in Italy, including Hitachi Air Conditioning Systems, Panasonic, the glass manufacturer Vetri delle Venezie SPA, and Morellato, Italy s second-largest costume jewelry manufacturer. The D.Logistics Group is the Italian market leader in the area of logistics for the jewelry industry, a position that has been reinforced by the expansion of existing cooperations. We also extended our customer relationships in other European countries. In Belgium, we were contracted with performing packaging services for the detergent segment of Procter & Gamble. In Germany, Bayer CropScience Deutschland GmbH came on board as a new customer, and relationships with Volkswagen and Wacker Chemie AG were expanded.

8 0 04 Page To our Shareholders Foreword by the Executive Board In the USA, the D.Logistics Group won the tender for an extensive cooperation with the global market leader 3M. In future, all of the inner packaging for the successful Post-it brand will be manufactured by our packaging specialists. Negotiations on the further expansion of our relationship with 3M are already in progress. Our existing customer relationship with Gillette in Italy ended as a result of the acquisition of Gillette by the U. S. Procter & Gamble Group. Whilst we regret the loss of this customer, the new cooperation with Procter & Gamble in the area of packaging is expected to more than offset the lost revenue in future. Packaging services as a growth driver Our successful cooperation with new and existing customers in 2006 clearly underlines the fact that the D.Logistics Group enjoys an extremely high degree of customer awareness, particularly in the area of packaging logistics. D.Logistics stands for quality and experience in the area of consumer and industrial goods packaging. We intend to continue to expand this expertise and increasingly position D.Logistics as a packaging group. In the area of industrial goods packaging, we are already the market leader in Germany, with a large, high-profile customer base. The D.Logistics Group currently records its highest growth rates in the industrial goods packaging segment was dominated by the expansion of a wide range of existing customer contracts. The D.Logistics Group strives to meet companies requirements and to grow along with its customers. We will continue to follow this path and strengthen our market position as a packaging specialist, both nationally and internationally. Increase in industrial goods packaging Our aim is to continue to expand our industrial goods packaging business. The strong performance in this division is being reinforced by the substantial economic upturn in the mechanical and plant engineering sector in Germany. In the period from 2004 to 2006, the German mechanical engineering industry recorded total real growth of 18 %. Industry growth of 4 % is forecast for 2007 (source: VDMA 12 / 2006). This growth is occurring not only in Germany, but also as a result of the Company s increasing expansion into the rest of Europe. We intend to meet our customers requirements by expand ing D.Logistics industrial goods packaging capacities in Europe and other regions of the world. Promising negotiations have already been initiated to this extent. In addition to the important development of expanding internationally in conjunction with our customers, we believe that the D.Logistics Group has excellent prospects of establishing its industrial goods packaging activities as a separate entity outside Germany. We are confident that our leading expertise will play an important role in providing complex packaging services for industry at an international level, too.

9 Foreword by the Executive Board To our Shareholders Page 0 05 Leveraging in-house potential A company s value-added potential depends not least on its internal workflows, quality benchmarks and organizational structures. Accordingly, our aim is to improve the performance, quality and service offered by the D.Logistics Group on an ongoing basis. Our efforts to increase operational expertise to the same high level throughout the Group are consolidated under the motto operational excellence. Being successful means learning from the best. By developing and implementing key performance indicators and parameters for overall equipment efficiency, we have a set of effective tools at our disposal for transferring outstanding individual performance to the entire Group. The Company-wide exchange of experience and consultation with our customers forms the basis for all improvements. Accordingly, operational excellence management is defined and process optimization guidelines are established for all D.Logistics Group companies. A culture of efficiency within a company helps to ensure its competitiveness as part of the wider environment. By standardizing internal workflows and creating benchmarks, we are increasing value added throughout the entire D.Logistics Group, thus allowing us to adopt a pricing policy that is in line with market and customer expectations. Operational excellence from the smallest detail to success as a whole Ultimately, the progress of the Company as a whole is the sum total of the success stories and experiences in its individual operating units. Operational excellence means working in the greatest of detail to ensure the success of the D.Logistics Group as a whole. This applies not only to the effective design of workstations and workflows, but also to the evaluation of successful customer audits, the application of lean management principles in the optimization of tonnage reconciliation processes, or the use of state-of-the-art packaging machinery. We have already made substantial progress in this respect at a number of subsidiaries. The D.Logistics Group benefits from this success to a large extent. We intend to make the experience gained as a result available for use by all of our operational units, and will intensify our Company-wide quality improvement program on this basis in 2007.

10 0 06 Page To our Shareholders Foreword by the Executive Board Award for financial communications The regulations and criteria for high-quality financial communications are becoming increasingly stringent. This means we are particularly pleased to note that last year s annual report was singled out for praise by the jurors of the League of American Communication Professionals LLC. Our 2005 annual report won the highest honor, the Overall Platinum Award, and was ranked a superb third out of a total of 1,900 annual reports from 16 countries. Investor relations is a core competency of any successful public company. As such, maintaining a policy of open, responsible communication with our shareholders and investors will remain one of D.Logistics AG s most important priorities in future. Regained strength The past fiscal year demonstrated the capability for action and the financial stability that the D.Logistics Group has regained. Whereas 2005 was characterized by the successful resolution of the crisis facing the Company, we were able to establish a new phase in our history in Our financial resources mean that we now have the necessary scope to take important steps for the future of D.Logistics. The continued, systematic implementation of operational excellence and the international expansion of our industrial goods packaging activities are the first stages in the creation of the new, stronger D.Logistics Group. Our Company s new image is reinforced by our strong contacts with the financial markets. As a healthy company with growth potential, we are once again an interesting potential partner for banks in Germany and abroad. Internal process optimization and external expansion these are D.Logistics targets for the coming months. Our success in achieving these objectives will depend on the commitment and responsibility of all our employees, from packaging engineers and warehousemen right through to senior management. We would like to take this opportunity to thank you for what you have achieved to date and the efforts you have made. We would also like to thank our shareholders, whose confidence is a key factor in our Company s recovery and further growth. We are committed to continuing to work systematically in order to ensure D.Logistics success.

11 Report of the Supervisory Board To our Shareholders Page 0 07 Report of the Supervisory Board On balance, fiscal year 2006 was a successful one for the D.Logistics Group. The financial position improved as a result of the successful course of business and the disposal of our equity interest in GHX GmbH, as well as the elimination of the losses generated by Schumacher GmbH. The strong economic environment had a positive effect on revenue and earnings at our subsidiaries, thus increasing the Group s scope for action. 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 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 to reflect changes in conditions, including adjustments made in During the period under review, 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 (Consumer Goods Packaging, Industrial Goods Packaging and Warehouse Logistics), as well as overviews of revenue and operating profit development 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 examined the reports of the Executive Board and other decision papers at a total of five meetings including a closed meeting not attended by the Executive Board and in frequent telephone conversations, and discussed them in detail with the Executive Board. All of the members of the Supervisory Board participated in all the meetings held, with one exception: Mr. Helmut Olivier was delayed in attending the Supervisory Board meeting on October 9, 2006 due to urgent business commitments. Mr. Olivier s express approval of the resolutions adopted prior to his attendance was obtained the following day after detailed consultation with the Chairman of the Supervisory Board. In nine cases, resolutions were adopted outside meetings. This included matters of material importance to the Company, and in particular the final decision on the disposal of our 50 % equity interest in GHX Europe GmbH, the disposal of the 51 % equity interest in Schumacher GmbH held by Deufol Tailleur GmbH, the conclusion of an additional master loan agreement for D.Logistics AG, and a further capital increase at PickPoint AG. In all of these cases, any urgent decisions that could not be delayed until a regular Supervisory Board meeting were preceded by an in-depth exchange of information by or telephone. The underlying contracts were presented to the Supervisory Board in good time and examined accordingly. The general issues surrounding the cases described above had been discussed at previous Supervisory Board meetings, meaning that the Supervisory Board had already established a general consensus of opinion in each case.

12 0 08 Page To our Shareholders Foreword by the Executive Board The Supervisory Board applied the same procedure in dealing with projects that were presented to it by the Executive Board but that, for various reasons, were not or have not yet been implemented with the result that a formal resolution by the Supervisory Board was not required. 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. This was also a key topic of the closed meeting of the Supervisory Board on September 1, Based on the earnings situation of the holding company, the Supervisory Board unanimously reiterated its opinion that the basis of the Group s business should be expanded in a reasonable manner, but that this expansion should not come at any price. The options identified were then discussed in greater detail together with the Executive Board at a further Supervisory Board meeting on October 9, The principles of annual financial planning were also discussed at the closed meeting. The Supervisory Board s opinion that a top-down approach to planning should be adopted in order to provide stronger performance incentives to all participants has since been implemented by the Executive Board for the 2007 planning period. Key topics relating to individual investees The Supervisory Board meeting on January 13, 2006 was dedicated in particular to the prospects of PickPoint AG. The Supervisory Board continued to examine this topic in detail throughout the year, including at its closed meeting on September 1, Despite promising cooperation measures with other partners, PickPoint AG failed to meet the targets set by its Executive Board. In the course of the year, it became apparent that, in spite of extensive preliminary negotiations, the company would be unable to achieve the degree of acceptance among large mail order companies required to establish its mail order return business (MOR business). Accordingly, intensive work on the company s MOR business is no longer being pursued, although this may be resumed at any time on the basis of past results. Since fall 2006, PickPoint has focused on its activities with customers from industry (B2B). This has developed more slowly than planned, although this was primarily due to a technical delay at a major future customer. A fundamental agreement was signed with this customer in January 2007, and business is now picking up. In its meeting on April 21, 2006, the Supervisory Board discussed the restructuring plan for the Italian subsidiary So. Ge. Ma. S. p. A., among other things. This was necessary because one of its key clients, Gillette, reorganized its logistics operations following its acquisition by Procter & Gamble, with the result that So. Ge. Ma. lost Gillette s business at the end of the year. The management of So. Ge. Ma. has succeeded in acquiring new business to the extent that capacity utilization at the new warehouse in Fagnano Olona, which became available in the summer, is now almost full. The priority now is to acquire additional new business in order to offset the lost revenue from Gillette. The Company pressed ahead with its efforts to increase its equity interest in Deufol Tailleur GmbH.

13 Foreword by the Executive Board To our Shareholders Page 0 09 In summer 2006, we had the opportunity to sell our 50 % equity interest in GHX Europe GmbH to the existing partner (GHX Europa Holding B. V.) at an extremely favorable price. The Executive Board was driven in particular by its realization that the company s future profit expectations were likely to be limited due to the strong influence of the pharmaceuticals industry, which is both a customer and a partner of the company. The Supervisory Board supported the conclusion of the transaction and was involved in the formulation of individual terms of the agreement. It approved the transaction in light of the fact that the conditions were favorable for D.Logistics. The Supervisory Board also approved the disposal of the 51 % equity interest in Schumacher GmbH held by our investee Deufol Tailleur GmbH, in which we hold a 55 % stake, for a token amount. This was necessary in order to avoid greater losses after it became apparent that, in contrast to forecasts at the start of the year, Schumacher GmbH would have borrowing requirements of up to 3 million for the next two years. The Supervisory Board was kept informed of developments. Towards the end of 2006, negative developments were observed at Franks Industries Inc., Sunman, USA (growing operating losses), whereas our other investee in the USA, J & J Packaging Inc., exceeded expectations by some distance. The Supervisory Board is also kept informed of these developments on an ongoing basis, and can become involved in implementing the necessary measures as required. Other topics of discussion Following discussions with the Executive Board, an additional item was added to the catalog of transactions requiring the approval of the Supervisory Board, which is contained in the by-laws for the Executive Board of D.Logistics AG, on October 9, This item relates to capital injections for subsidiaries in excess of 250 thousand p. a. Work on the full implementation of an appropriate system for identifying risks at an early stage has now been completed. The Supervisory Board is provided with the quarterly risk assessments for the Group on a regular basis. These assessments form the basis for the questions submitted to the Executive Board and the discussions of potentially critical areas. 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 accordance with the recommendations of the German Corporate Governance Code, the Supervisory Board has formed an Audit Committee. In the year under review, the Audit Committee prepared the Supervisory Board s resolutions and audit activities with regard to questions of accounting and risk management, the necessary auditor independence, issuing the audit engagement to the auditors, specifying the focuses of the audit, and agreeing the fees. The Chairman of the Audit Committee participated in a number of discussions with the auditors to this end, and also informed the auditors in confidence about aspects of the audit that he considered to be of importance.

14 0 10 Page To our Shareholders Foreword by the Executive Board Audit of the single-entity and consolidated financial statements In accordance with the resolution by the Annual General Meeting on July 4, 2006 and the subsequent audit engagement issued by the Supervisory Board, the annual financial statements for the fiscal year from January 1 to December 31, 2006 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 near Frankfurt / 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 2006 and the consolidated financial statements at the meeting held on April 3, The annual financial statements were thereby adopted. The Supervisory Board also approved the Executive Board s Disclosures in accordance with sections 289 (4) and 315 (4) 4 We addressed the mandatory disclosures in according with sections 289 (4) and 315 (4) and this year s Report. We checked the relevant disclosures and notes in the D.Logistics AG Management Report and in the Group management report. In our view there are complete and we endorse them. Composition of the Executive Board and the Supervisory Board CFO Mr. Schwinger-Caspari left D.Logistics AG with effect from February 15, The Supervisory Board appointed Mr. Tammo Fey, previously the head of Accounting and Finance, as his successor. 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, April 4, 2007 The Supervisory Board Dr. Wolfgang Friedrich Chairman

15 Corporate Governance To our Shareholders Page 0 11 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 7. The report on the compensation of the Executive Board and the Supervisory Board is contained in the management report on page 45. 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 net assets, financial position 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.

16 0 12 Page To our Shareholders Corporate Governance 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 Audit Committee prepares the proposal to the Annual General Meeting on the election of the auditors. To ensure their independence, the Audit Committee must obtain from the auditors a declaration concerning any grounds for disqualification or impartiality. In issuing the audit engagement to the auditors, it is agreed that the Chairman of the Audit Committee will be informed immediately of any grounds for disqualification or impartiality 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 Audit Committee and / or note in the Auditor s 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.

17 Corporate Governance To our Shareholders Page 0 13 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 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 the German Securities Trading Act, 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 ( com) under The share in the Investor & Public Relations section. Shareholdings of members of the Executive Board and the Supervisory Board Members of the Executive Board hold a total of 35.7 % of the share capital of D.Logistics AG, amounting to around 14.5 million shares. In addition, members of the Executive Board hold 160 thousand options to subscribe for the same number of shares in D.Logistics AG, and convertible bonds with a nominal amount of 50 thousand. A detailed breakdown can be found under Supplementary Disclosures on page 94. The members of the Supervisory Board do not hold any shares or options on shares in D.Logistics AG.

18 0 14 Page To our Shareholders Corporate Governance 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 2007 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 12, 2006 in future. Since its last declaration of conformity in February 2006, D.Logistics AG has implemented another recommendation of the Code. Starting from fiscal year 2006, the compensation of the individual members of the Executive Board will be disclosed (section of the Code). D.Logistics AG is also planning to observe the 45-day period for the publication of Interim Reports from fiscal year 2007 onwards (section of the Code). Only in the following cases does D.Logistics AG 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. 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. Compensation of members of the Supervisory Board (section of the Code) The compensation 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.

19 D.Logistics Shares To our Shareholders Page 0 15 D.Logistics Shares Another strong year for shares 2006 was again characterized by an upward trend on the global stock markets. The MSCI World Index rose by a good 14 %. On the leading US stock exchange, the Dow Jones Index closed the year up 16 %, while the Nasdaq technology index grew by just under 10 %. On the European stock markets, the EURO STOXX 50 increased by more than 15 %. With growth of 22 % as measured by the DAX, Germany ranked among the leading European domestic indices in The broader CDAX Index, which also includes D.Logistics shares, gained 24 %. D.Logistics shares: key data German Securities Code Number (WKN) International Securities Identification Number (ISIN) Stock exchange symbol Reuters Frankfurt DE LOI LOIG.F 15% rise in value for D.Logistics shares D.Logistics share price ended the year up 15.1 %, slightly outperforming the sector index for logistics shares listed in the Prime Standard (Prime Logistics), which increased by 14.7 %. After reaching a high of 2.07 in mid-february, a downward trend set in until early May, with the share price falling to a low for the year of During the subsequent recovery from early June until mid-november, the share price returned to its high for the year of 2.07; this was followed by a further market correction. D.Logistics shares closed the reporting period at a price of Reuters Xetra Bloomberg LOIG.DE LOI:GR Comparative performance of D.Logistics shares indexed, in %, January 1 to December 31, D.Logistics AG CDAX Prime Logistics D.Logistics shares: key figures in Earnings per share Shareholders equity per share Equity ratio % Dividend High Low Year-end closing price Average daily trading volume (no. of shares) 82, ,782 Number of shares 42,498,621 42,493,788 Market cap. ( millions) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Volume (in million) Price range (in ) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0.0

20 0 16 Page To our Shareholders D.Logistics Shares D.Logistics Financial Calendar Annual Report 2006 Apr. 12, 2007 Interim Report I / 2007 May 15, 2007 Annual General Meeting Jul. 3, 2007 Interim Report II / 2007 Aug. 14, 2007 Interim Report III / 2007 Nov. 13, 2007 Slight increase in subscribed capital In the past fiscal year, the registered share capital rose by 4,833 from 42,493,788 to 42,498,621 as a result of the exercise of conversion rights; it is composed of 42,498,621 nopar value bearer shares. The number of shares admitted to trading remained unchanged as against December 31, 2005 at 46,292,011. As of December 31, 2006, the authorized capital available for the issue of new shares against cash or non-cash contributions was unchanged from the previous year at 19,263,858. Shareholder structure The ownership structure of D.Logistics is dominated by the major shareholder and founder of the Company, Detlef W. Hübner. His interest in the Company increased from 32.9 % to 34.8 % in the course of the past fiscal year. In total, the members of the Executive Board of D.Logistics AG hold around 35.7 % of the share capital. The following chart shows the shareholder structure at the end of 2006 to the best of the Company s knowledge. Ownership structure in % Management Other shareholders Detlef W. Hübner Infraserv Andreas Bargende Earnings per share Earnings per share are calculated by dividing consolidated net profit by the weighted average number of shares outstanding. In fiscal year 2006, an average of 42,495,602 shares were outstanding (previous year: 42,360,995). Earnings per share calculated on this basis amounted to Key data on the convertible bond ISIN Principal amount Converted in 2005 Converted in 2006 Amount outstanding DE000A0DMK million 0.35 million 0.01 million 6.84 million Issue / redemption price Year-end closing price Listing OTC trading, Frankfurt Convertible bond partially exchanged In December 2004, D.Logistics issued a convertible bond in the principal amount of 7.2 million and with a coupon of 7.00 %; shareholders preemptive subscription rights were not disapplied. The bond matures on December 8, 2009 and was able to be exchanged for shares of the Company for the first time at a conversion price of 1.80 after the end of the 2005 Annual General Meeting. In the second half of 2006, bondholders exercised their conversion rights in respect of bonds with a principal amount of 8,700, with the result that 4,833 new shares were issued. During the year, the convertible bond traded at a price of between and , closing the period at a price of Detailed information on the terms of the convertible bond can be found in the notes to the consolidated financial statements on page 78.

21 018 Business and Economic Environment 025 Results of Operations, Financial and Assets Position 034 Report on Post-Balance Sheet Date Events 034 Risk Report 040 Report on Expected Developments 045 Remuneration Report

22 Our quality lies in our ability to see the big picture. Packaging logistics for consumer products begins with design and procurement and ends with the end customer. Packaging offers protection, manageability and sales presentation all in one. We understand what really matters in all areas from production to distribution and this high quality pays off in a particularly loyal customer base. Many companies in Europe and the United States have long taken advantage of D.Logistics packaging expertise. And the number is growing every year.

23 017

24 0 18 Page Management Report Business and Economic Environment Group Legal Structure Business Segments / Organizational Structure Services Business and Economic Environment D.Logistics AG as an investment holding company decentralized Group structure The D.Logistics Group has a decentralized organizational structure, with D.Logistics AG as the holding company. D.Logistics AG generally holds at least a 50 % investment in individual Group companies. An overview of the operating subsidiaries and associates and the legal structure of the Group is provided under Facts & Figures on page 100. As a management company, our activities are limited to central functions such as strategic planning, financing, risk management and key account management. The holding company also initiates and oversees Group-wide projects such as Business Development and Operational Excellence. Individual managing directors of Group companies enjoy a high degree due to the fact that they can assess the situation on the local market best. Management is driven by annual budgets, agreed targets and regular meetings. Additionally, corporate governance guidelines stipulate approval for certain business transactions, such as capital expenditure projected to exceed predetermined amounts. Key characteristics of the Group The D.Logistics Group is a strong logistics partner for its customers with outstanding sector and methodological expertise. Its key characteristics can be summarized as follows: Specialist in logistics solutions with a focus on packaging for complex projects Sector expertise especially in consumer goods (including automotive and electrical industries) and industrial goods (engineering and plant construction, power station construction) German market leader for industrial export packaging High IT expertise for customer-specific requirements Service-oriented segment structure The subsidiaries of D.Logistics AG are organized into the three segments Consumer Goods Packaging, Industrial Goods Packaging and Warehouse Logistics in accordance with the core services each perform. Consumer Goods Packaging Note 41 The Consumer Goods Packaging segment comprises logistics services for consumer goods. This segment subsumes activities including the design and production of packaging, fully automated and manual packing (displays), warehouse planning and management, distribution logistics, transport coordination, document management and value-added services. Industrial Goods Packaging Note 41 The Industrial Goods Packaging segment performs specialist services for manufacturers of capital and investment goods. These include packaging construction, production of special packaging, export packaging logistics, long-term packaging and the management of major logistics projects. Our high level of IT competency is a key factor behind the success of this segment. The symbols are explained on the bookmark prefacing of this Annual Report.

25 Business and Economic Environment Services Locations and Markets Competitive Position Management Report Page 0 19 Warehouse logistics Note 41 The Warehouse Logistics segment comprises logistics services such as warehouse planning and management, assembling, spare parts logistics, just-in-time logistics and value-added services. Its activities also include cargo handling for international airlines. The following chart provides an overview of the services provided in the individual segments and the geographical and sector focus for each segment. Overview Consumer Goods Industrial Goods of business segments Packaging Packaging Warehouse logistics Type of goods Bulk consumer goods Highly specialized goods e.g. production facilities Bulk consumer goods D.Logistics expertise Total packaging solution Packaging design Design know-how Packaging technology Technical expertise Process and IT know-how International network Secure and reliable delivery Process and IT know-how Coverage of all services from order picking, packaging management to dispatch Geographical focus Central Europe USA Germany Central Europe Sector focus Automotive suppliers, consumer goods Engineering and plant construction, power station construction Automotive, chemicals, electronics, healthcare, consumer goods, airport services (cargo handling) Majority of locations in Germany The terms location and market are largely synonymous in the context of the business activities of the D.Logistics Group. As a service company, we provide the majority of our services for specific customers or projects so that revenue is generally recognized where the service is performed. In Germany, our subsidiaries operate in over 50 locations where a total of 52 % of consolidated revenue is generated. In the rest of Europe, which accounts for approximately 28 % of our business, we maintain twelve operating facilities, located in Italy, Belgium and France. We are represented at two locations in the US, which contribute around 20 % of revenue. Locations Germany 50 Rest of Europe 12 USA 2 High degree of customer loyalty The D.Logistics Group is exposed to a variety of different competitive environments given the variety of services we provide and the different regions and sectors in which we operate. The activities of the Consumer Goods Packaging segment are oriented to specific products and individual customer relationships. Exposure to competition in this area is limited due to strong customer ties. The Industrial Goods Packaging segment further consolidated its strong position in the German market in D.Logistics broad customer base and long-standing relationships show how we responded successfully to competitive challenges in this segment. In the future, we expect to further strengthen our customer relationships, and therefore our competitive stance.

26 0 20 Page Management Report Business and Economic Environment Competitive Position Company strategy, targets and strategy Competitive intensity in the Warehouse Logistics segment varies. Because of close links with customers, in-house outsourcing activities are generally subject to a lower level of competition. But to the extent that Warehouse Logistics operates with multi-user structures, i.e. several customers in one warehouse, the D.Logistics Group is exposed to a competitive environment. In order to keep ahead of competitors in this area, it is necessary to provide additional services tailored to specific customers. Internal management system The management instruments deployed are designed to achieve a sustained increase in enterprise value and profitable revenue growth. As an investment holding company, D.Logistics AG manages its subsidiaries with an alignment to growth and the individual profits situation. The system employed involves both target-oriented planning and budgeting processes with targets (top-down) and detailed planning at an individual unit level (bottom-up). Achievement the objectives arrived at in this fashion is monitored on the basis of monthly reporting, any deviations being subjected to prompt analysis. The Logistics AG Management Board meets regularly with the management teams of its subsidiaries to reinforce this process and to allow for timely response. Financial objectives The primary financial objective is steady profitable earnings growth, to be achieved both organically and through acquisitions. The medium-term Group target is an EBITA margin exceeding 4 %. The focus of our non-operating business activities is on further increasing our financial income and optimizing tax expenses. Falling debt has a positive effect on financial income. For tax optimization purposes, a number of profit transfer agreements were concluded in the Industrial Goods Packaging segment between the management company, Deufol Tailleur GmbH, and its subsidiaries. In respect of indebtedness, D.Logistics goal is to maintain an equity ratio significantly in excess of 30 % (December 31, 2006: 40.3 %). Operational objectives On a strategic alignment level, the principal operational objectives are to consolidate the specialized expertise of the individual operating units and to employ both cross-learning and knowledge-sharing techniques to expand the range of services offered across all locations, thus laying the foundations for further organic growth. An additional aim is to increase operating efficiency over the next few years through the Group-wide Operational Excellence project, geared to widening the EBITA margin.

27 Business and Economic Environment Company strategy, targets and strategy Research&Development Economic environment Management Report Page 0 21 Strategic focus on packaging The D.Logistics Group focuses principally on the strategic expansion of its packaging services. In future, all Consumer Goods Packaging services formerly only partially available in certain regions are to be offered across all locations. For Industrial Goods Packaging, this means extending the full array of services offered throughout Germany to include other European markets. In addition, the process chain of logistics-related services is to be extended across all locations in order to offer services typically outsourced to third-party providers. The D.Logistics Group already offers its customers value-added services which can no longer be designated logistics in its narrower sense. In a number of areas, it is clear that D.Logistics has developed its service range to go beyond the bounds of conventional transport and warehousing logistics, being distinct from and complementary to these. The D.Logistics Group thus has potential for evolving from a logistics provider into an industry service provider. Expanding our service range logistics service provider industrial service provider No conventional research expenses Logistics service providers such as the D.Logistics Group do not incur typical R & D expenses. Instead, we continually develop new products and services while laying the groundwork for new major projects in close partnership with our customers. Global economy remains on track for expansion The global economy continued to expand strongly last year, with momentum accelerating in the fourth quarter after a summer slowdown experienced mainly by industrialized economies. Significantly greater expansion of the US, Japanese and Eurozone economies observed at the end of the year was the primary driver. As of last fall, these three key economies exhibited a striking uniformity of growth. The global economy received further support from declining oil prices as of August resulting in substantially improved consumer spending power of oil consumer nations and lower company expenditure. The German Bundesbank estimates real season-adjusted gross domestic product at 3 % for industrialized nations, as compared to 2.5 % for Economic momentum remained strong in the course of the year in newly industrializing nations, particularly in South and East Asia. Growth accelerating in Europe Economic growth accelerated in Europe in 2006, driven to a considerable extent by domestic demand. Consumer spending increased significantly, largely without exception. This is mainly due to a strengthening job market and wage increases. Private investment also contributed substantially to growth. According to Eurostat, the EU statistical bureau, Eurozone GDP grew by 2.6 % last year (2005: 1.4 %) and by 2.9 % in the EU25 (2005: 1.7 %).

28 0 22 Page Management Report Business and Economic Environment Economic environment Sector-Specific Environment Consumer prices in the Eurozone rose by 2.2 %, as in This relatively high rate of inflation was driven by sharply rising energy prices (+ 7.7 %) and increasing housing costs (+ 4.7 %). German economy strong in 2006 According to Germany s Federal Statistical Office, Germany s GDP increased on a price-adjusted basis by 2.7 % year-on-year in 2006, the biggest economic upswing since the boom year of This represented a major acceleration of the 2005 growth rate (+ 0.9 %). Growth in 2006 was attributable both to the domestic economy and exports. Unlike the two previous years, domestic output contributed more to GDP growth (+ 1.5 percentage points) than foreign trade (+ 1.1 percentage points). A sharp rise in gross capital expenditure was the primary driver, representing the largest increase since German reunification: Equipment expenditure was much greater than in 2005 (+ 7.3 %) as well as construction investment which was up a solid % after years of weakness. Domestic spending also increased in parallel to investment: Consumer spending rising 0.8 % after two years of near stagnation, while government spending increased 1.8 %. Foreign trade remained dynamic with growth rates almost doubling against Real exports outpaced imports at 12.5 % versus %. Service providers occupying increasing share of German logistics market The German logistics market represents 170 billion in annual revenue according to the latest data dating from 2004 (source: The Top 100 of Logistics industry survey), or 7.8 % of German gross domestic product. This figure also represents the maximum theoretical size of the logistics services market given an outsourcing ratio of 100 %. In actual fact, around 53 % of this market volume represents in-house (insourced) logistics activities and around 47 % from commercial logistics service providers. From 2001 to 2004, the logistics market grew at an annual rate of 2.1 %. However, outsourced logistics increased substantially from 71 billion to 78.4 billion over this three-year period. This means that total revenue of the logistics services sector grew above average by 3.5 %, indicating that sales are being shifted towards service providers. Substantial growth for the European logistics market The estimated size of the market consisting of the original 15 Western countries in the European Union plus Switzerland and Norway is 730 billion. Average growth in the period from 2001 to 2004 amounted to 5.4 % p.a., around one percent higher than the growth rate of nominal gross domestic product. Again service providers are estimated to account for less than 50 %, thus there is still enormous unexploited potential for outsourcing.

29 Business and Economic Environment Summary of Business Development Plan achievement Management Report Page 0 23 Highly successful fiscal year for D.Logistics Note 42 Note 20 Sales for the D.Logistics Group came to million, increasing approximately 2.8 % against the 2005 figure of million. EBITA increased by 41.8 % to 16.1 million from 11.4 million in D.Logistics AG shareholders fared even better, benefiting from a share of net profits totaling 11.4 million after 1.4 million in The disposal of our 50 % equity investment in GHX Europe GmbH was a key event in This transaction generated 5.4 million in tax-free income, creating financial leeway for growth opportunities in the D.Logistics Group. As a result net financial liabilities continued to decline considerably, from 47.0 million in 2005 to 42.9 million at the end of The equity ratio rose from 36.7 % to 40.3 %. Change 2006 (%) in million Sales EBITA Net financial liabilities 42.9 (8.7) Earnings targets exceeded The sales guidance for 2006 aimed at a figure between 306 million and 321 million. This was slightly exceeded with actual sales of million. One-time effects impacted here, resulting from such factors as the application of new accounting rules, deconsolidations and appreciation of the euro against the US dollar reducing sales by around 14 million. Taking these effects into account, we considerably exceeded the sales guidance. Projected operating profits ranging between 9.1 million to 10.4 million were widely exceeded by a figure of 16.1 million. The one-time effects mentioned above boosted earnings by 6 million, adjusted for which we generated a result in the upper half of our target range. Actual Target Budget in million Sales Operating profits ,4

30 RESULTS OF OPERATIONS, FINANCIAL AND ASSETS POSITION

31 Results of Operations; Business Financial and Economic and Assets Environment Position Management Report Page 0 25 Results of Operations Sales Results of Operations; Financial and Assets Position Organic growth of 6 % Note 01, 42 With the overall favorable economic environment, sales in the year under review increased by 2.8 % year-on-year to million, thus beating the high-end target of 321 million despite the disposal of Schumacher GmbH in mid-year. Organic growth amounted to 6.0 %, adjusted for the deconsolidation of Schumacher GmbH, or roughly 6.2 % factoring out the slight decline in the US dollar against the euro, amounting to an average of one cent. Consolidated sales Proporby segment tion 2006 Sales In million as % of total assets in million Consumer Goods Packaging % 400 Industrial Goods Packaging % Warehouse Logistics % Holding company % 54% 48% 46% 47% 48% Total % Consumer Goods Packaging remains strongest segment Note 42 Consumer Goods Packaging remained our most active segment with sales up 5.8 % to million, now accounting for 43.3 % of total sales as compared to 42.1 % previously. Italy and the US performed particularly well, with sales up in each country by 8 %. In Belgium sales were up slightly, by 1 %. Industrial Goods Packaging was the second largest segment, contributing 37.4 % to sales, up a substantial 10.6 % to million for the year under review (2005: 34.7 %). Warehouse Logistics sales declined 14.3 % to 62.1 million, now accounting for roughly 19.2 % of Group sales (2005: 23.1 %). This decline was due to poor performance of Schumacher GmbH in the first half of the year and its subsequent deconsolidation. Adjusted for this effect, Warehouse Logistics sales increased by roughly 5.0 %. More than half of sales generated in Germany Note 43 Accounting for 51.7 % (2005: 52.9%) of sales, Germany remains the Group s most important market despite the sale of Schumacher. The US increased its share of sales from 19.2 % to 20.1 %. The rest of Europe increased its percentage by 0.3 percentage points from 27.9 % to 28.2 %. International sales increased its relative share in the past fiscal year to 48.3 % against 47.1 % in % 52% 54% 53% 52% Germany International Consolidated sales by region In million Germany as a % Rest of Europe as a % USA / Rest of the world as a % Holding company as a % Total

32 0 26 Page Management Report Business Results of and Operations; Economic Financial Environment and Assets Position Results of Operations Costs Earnings Development of costs in million Cost of sales Earnings development in million as % of sales Selling expenses as % of sales Administrative expenses as % of sales Other operating income as % of sales Other operating expenses as % of sales Total as % of sales thereof personnel expenses * as % of sales * Total personnel expenses included in all cost items EBITDA EBITA EBT Net profit Operating costs ratio up slightly Note 02, 03, 04, 05, 06 The cost of sales as a percentage of sales increased slightly to 88.2 % (2005: 87.4 %), resulting from increased costs for purchased services, which more than offset lower rental and leasing expenses. Selling expenses rose by 0.5 million, accounting for roughly 1.7 % of sales (2005: 1.6 %). Administrative expenses declined 8.6 % to 24.3 million, with the expense ratio moving down to 7.5 % (2005: 8.5 %). This decline was driven by lower personnel ( 1.1 million) and legal / advisory expenses ( 1.2 million). Other operating income rose primarily due to the disposal of GHX Europe GmbH and reversing provisions, increasing to 4.0 % of sales (2005: 2.5 %). At the same time other operating expenses increased, primarily the result of restructuring expenses, increasing by 0.1 percentage point to 1.6 % of total. The cost ratio improved from 96.4 % to 95.0 %, corresponding to an EBITA margin increase from 3.6 % to 5.0 %. Operating earnings up 42 % Earnings before interest, taxes, depreciation and goodwill amortization / impairment was up 18.0 % to 26.4 million. The EBITDA margin was 8.2 % after 7.1 % in Depreciation of property, plant and equipment and amortization of intangible assets was 6.7 % lower at 10.2 million. EBITA increased nearly 42 % or 4.8 million to 16.1 million, with an EBITA margin of 5.0 % being achieved against 3.6 % in In 2006, 2.5 million was charged against EBITA as scheduled for the reorganization of warehouses in Italy and consolidation of PickPoint AG. The disposals of GHX Europe GmbH and Schumacher GmbH (total 5.75 million) and successful litigation ( 2.05 million) had a positive impact. In 2005, one-time factors contributed 1.1 million to earnings. Strong improvement in net finance costs Net finance costs improved substantially from 4.8 to 2.0 million. Financial income rose from 1.8 million to 2.3 million, including 0.5 million from reversing provisions for the Hövel lawsuit which was won. Financing costs sank from 6.4 to 4.9 million, chiefly due to a substantial decline in average financial liabilities ( 65.4 after 77.7 million in 2005) and lower expenses associated with the convertible bond issue ( 0.9 million versus 1.2 million in 2005). Financing expenses for 2005 also included interest expense of 0.5 million in connection with the abovementioned lawsuit. Profits from associates rose from 0.04 to 0.55 million, and other financial income was zero, after a loss of 0.12 million for Group profits up substantially Earnings before taxes (EBT) totaled 14.1 million in the 2006 fiscal year (2005: 6.6 million). Current income tax expense rose from 2.8 to 3.3 million, with deferred tax expenses of 0.1 million after 1.5 million in Earnings from continuing operations thus totaled 10.6 million (2005: 2.3 million).

33 Results of Operations; Business Financial and Economic and Assets Environment Position Management Report Page 0 27 Results of Operations Earnings Financial Position Financing Investments Earnings imputable to minority interests came to 0.76 million and is largely the result of the deconsolidation of Schumacher GmbH, which generated losses of 2.39 million imputable to minority interests. Earnings after minority interest losses were up to 11.4 million for the year under review versus 1.4 million for Earnings per share for 2006 was (2005: 0.033). Decentralized financing in the D.Logistics Group Note 20 D.Logistics Group financing takes place on a decentralized basis. The main types of financing used are bilateral bank loans and syndicated credit facilities. Some companies in the Group also have loans from shareholders. The Group has credit lines with various banks totaling 29.0 million, of which 14.7 million was utilized at variable interest rates as of December 31, Financial liabilities are subject to the normal risk of interest rate change. The weighted average interest rate for short-term debt was 6.81 % for fiscal year 2006 (2005: 5.98 %). Margin development in million Gross margin EBITDA margin EBITA margin EBIT margin EBT margin Net profit margin Financial debt reduced further Note 20 The financial debt of the D.Logistics Group was further reduced. At Group level, financial liabilities were down 1.2 million to 64.9 million from 66.1 million as of December 31, In the same period, net debt total financial debt less financial receivables and cash fell even more, by 4.1 million from 47.0 million as of the end of the year against 42.9 million on December 31, Bank loans, overdrafts and sight deposits with banks totaled 35.3 million (2005: 39.7 million). Slight increase in investments in property, plant and equipment Note 17, 18, 19 Last fiscal year, investments in property, plant and equipment totaled 7.6 million (2005: 6.8 million). In addition, 0.7 million (2005: 0.4 million) was spent on intangible assets (excluding goodwill). The investment-to-sales ratio for property, plant and equipment was 2.3 % for 2006 (2005: 2.2 %). Financial liabilities in million Convertible bonds Banks of which current of which noncurrent Other financial liabilities of which current of which noncurrent Total Propor- Investments tion 2006 in million Property, plant and equipment % Intangible assets % Noncurrent financial assets % Total %

34 0 28 Page Management Report Business Results of and Operations; Economic Financial Environment and Assets Position Financial Position Investments Cash Flow Investments by segment in million Consumer Goods Packaging Industrial Goods Packaging Warehouse Logistics Holding company Total The largest investment item ( 2.9 million in payments on account and assets under construction) went to expanding display packaging production space for our American subsidiary J & J Packaging Co. to allow for greater capacity. The next largest items were operating and office equipment ( 1.7 million), technical equipment and machinery ( 1.5 million) and leased assets of 1.3 million Investments made in 2006 were financed from operating cash flow or leased. Disposals of property, plant and equipment down Note 17 Net disposals of property, plant and equipment totalized 0.8 million in 2006, involving primarily technical equipment and machinery ( 0.36 million) and operating and office equipment ( 0.33 million). Cash flow from operating activities in million Higher operating cash flow Note Free cash flow for the year under review was 4.6 million, consisting of cash flow from operating activities of 9.3 million and 4.7 million in cash flow from investing activities. Cash flow from investing activities would have been further in the negative but for repayments of financial receivables ( 1.0 million), disposals of noncurrent assets ( 0.6 million) and dividends from financial assets ( 0.45 million). Cash investment and noncurrent assets totaled 6.9 million. 4 2 Change in cash and cash equivalents in thousand 4, ,716 7,806 9,289 Free cash flow: 4,590 Cash and cash equivalents at Dec. 31, 2005 Net cash provided by operating activities Cash flows from investing activities Net cash used in investing activities Disposal of cash and cash equivalents Cash and cash equivalents at Dec. 31, 2006 Cash flow from financing activities was slightly negative at 0.3 million. Bank loans and overdrafts increased by a net 0.7 million. The cash outflows resulted from the decline in other financial liabilities ( 0.8 million) and payments of dividends to minority interests ( 0.3 million). Cash and cash equivalents increased by 3.9 million to 11.7 million as of December 31, 2006.

35 Results of Operations; Business Financial and Economic and Assets Environment Position Management Report Page 0 29 Net Assets Position Total assets slightly lower Notes Total assets of the D.Logistics Group fell slightly in 2006, down 0.9 % to million (2005: million). Current assets rose significantly from 80.5 million to 87.7 million, the result of rising trade payables (+ 4.9 to 52.4 million) and increased cash balances (+ 3.9 to 11.7 million). Tax refunds due also increased slightly (+ 0.4 to 2.1 million), while other assets and other receivables ( 0.6 to 6.6 million) and inventories declined ( 1.5 to 13.8 million). Noncurrent assets decreased 6.9 % year-on-year from to million, predicated largely upon a 6.6 million decline in property, plant and equipment to 55.0 million. Deconsolidation accounted for 1.7 million and currency translation 2.3 million. Property, plant and equipment was sold totaling 0.8 million; depreciation exceeded new investment by 1.8 million. This contributed to a year-on-year increase in the depreciation ratio for property, plant and equipment (ratio of accumulated depreciation to historical cost) by 3.1 percentage points to 56.0 %. Intangible assets declined by 4.3 to 42.7 million, due mainly to a negative currency Balance sheet as % of total assets Assets Current assets Noncurrent assets 38% 43% 62% 57% Equity and liabilities 41% 40% 20% 23% 36% 40% Current liabilities Noncurrent liabilities Equity translation impact on goodwill ( 3.2 million). The capitalization ratio, i. e. property, plant and equipment as a percentage of total assets, declined from 30 % to 27 %. It should be noted that the D.Logistics Group requires relatively levels of high operational assets to provide goods and services, including in particular some real estate. Our packaging segments are also more equipment-intensive than those of other logistics companies. Special fixtures such as high-rack storage systems are reported under operating and office equipment. Working capital, i. e. the difference between current assets and current, non-interest-bearing liabilities, increased by 12.2 million to 33.6 million. This strong increase was to a large extent the result of increasing trade receivables and cash balances as outlined above. Declining current liabilities ( 4.4 to 14.7 million) and current provisions ( 1.7 to 2.6 million) also played a role. A rise in trade payables had a minor offsetting effect (+ 1.7 to 34.2 million) Balance sheet again improved Note Equity of the D.Logistics Group as of the end of fiscal year 2006 was 9.1 % higher at 84.9 million than for 2005 ( 77.9 million). With total assets somewhat lower, the equity ratio increased more strongly from 36.7 to 40.3 %. Net profit for the period of 10.6 million increased equity while currency translation losses due to the strengthening euro recognized directly in equity had an offsetting effect ( 3.3 to 1.6 million). Net debt and equity ratio in million % % % /02 12/03 12/04 12/05 12/06 0 Equity ratio Net debt

36 0 30 Page Management Report Business Results of and Operations; Economic Financial Environment and Assets Position Net Assets Position Disclosures pursuant to 315 HGB Noncurrent liabilities fell substantially from 48.2 to 42.1 million, largely in consequence of declining noncurrent borrowings ( 3.0 million to 25.8 million) and deferred tax liabilities ( 2.4 million to 4.1 million). Other noncurrent debt fell by 0.7 million. Asset cover II, i. e. the ratio of shareholders equity and noncurrent liabilities to assets, improved from % to %. Current liabilities also decreased by 3.2 % to 83.6 million, with other liabilities declining the most ( 4.4 million) with a 2.2 million reduction in personnel-related liabilities. Other provisions declined by 1.7 million to 2.6 million, as 1.5 million was reversed upon successful conclusion of litigation. Tax and other financial liabilities fell by 0.5 million to 2.6 million and 0.3 million to 8.5 million respectively. Current bank loans and overdrafts rose (+ 2.5 million to 21.0 million) along with trade payables (+ 1.7 million to 34.2 million). Disclosures pursuant to 315 (4) HGB Information about the capital As of December 31, 2006 subscribed capital was 42,498,621 (2005: 42,493,788) in the form of an equal number of individual no par value bearer shares. Each share entitles the holder to one vote; no special rights or voting limitations apply. Deter W. Hübner, CEO of D.Logistics AG, held shares equivalent to 34.8 % of the capital as of December 31, As of December 31, 2006 an amount of 19,263,858 was authorized for the issuance of new shares against cash or non-cash consideration (2005: 19,263,858). Pursuant to a June 29, 2004 Annual General Meeting resolution, the Company is authorized to increase its share capital by a maximum amount of 19,263,858 up to May 31, Pursuant to a July 4, 2006 Annual General Meeting resolution, the Company is authorized to repurchase up to a maximum 4,249,378 shares of its own stock to January 3, 2008, corresponding to 10 % of share capital as of June Appointment and discharge of Executive Board members The appointment and discharge of Executive Board members is governed by 84 of the Stock Corporation Act in conjunction with 85 of the Stock Corporation Act, according to which the Supervisory Board appoints Executive Board members for a maximum term of five years. The Supervisory Board may appoint one Executive Board member as chairman, and revoke appointments to the Executive Board or chairmanship thereof for due cause. The appointment and composition of the D.Logistics AG Executive Board conforms with 8 of the Articles of Association, according to which the Executive Board is to consist of at least two members appointed by the Supervisory Board. The Supervisory Board likewise determines the number of Executive Board members, and may appoint an Executive Board chairman and vice-chairman.

37 Results of Operations; Business Financial and Economic and Assets Environment Position Management Report Page 0 31 Additional disclosures pursuant to 315 HGB Employees Amendments to the Articles of Association Sections 179 and 133 of the Stock Corporation Act govern amendments to the Articles of Association. Subsection 1 of 179 stipulates that a resolution of the Annual General Meeting is required for any amendments to the Articles of Association. The Annual General Meeting may transfer authorization to the Supervisory Board to implement amendments relating only to the version. Subsection 2 provides that Annual General Meeting resolutions require a majority of three quarters of voting shares represented. The Articles of Association may establish other provisions with regard to the majority required for voting purposes, but fundamental changes to the nature of the organization require a broad majority vote. The Articles of Association may also establish other requirements. The D.Logistics AG Articles of Association do not stipulate different rules regarding voting majorities or establish other requirements. 14 of the D.Logistics Articles of Association permits granting authorization for changes pertaining solely to the version. Staffing levels up on adjusted basis As of the end of the reporting period, D.Logistics Group staff numbered 3,016 representing a 6.0 % decline versus 2005, down 194. In Germany, employees numbered 1,798 as of December 31, 2006 (59.6 % of total), while international employees totaled 1,218 (40.4 % of total). The reduction in staff levels of 194 employees against 2005 (3,210) reflects the departure of Schumacher GmbH (306 employees) from the consolidated Group of companies. Adjusted for this event, staffing levels rose by 3.9 %. Personnel expenses declined 0.5 % during the year under review to million, down to 32.9 % of sales from 34.0 % Overview of employee numbers D.Logistics Group Germany 1,798 2,017 International 1,218 1,193 Female Male 2,218 2,271 Total 3,016 3,210 Average 3,145 3,219 Employees Proporby segment tion 2006 Personnel expense ratio D.Logistics Group % Consumer Goods Packaging 1, % 50 Industrial Goods Packaging % Warehouse Logistics 1,072 1, % 20 Holding company % Total 3,016 3, % A thank-you for strong commitment The Executive Board would like to thank all employees for their dedication, commitment and flexibility in 2006.

38 0 32 Page Management Report Business Results of and Operations; Economic Financial Environment and Assets Position Development in the Segments Consumer Goods Packaging in million Sales Consolidated sales Gross profit EBITA EBITA margin (%) EBTA Consumer Goods Packaging Note 42 The Consumer Goods Packaging segment posted consolidated sales of million, up 5.8 % after million in This reflects both new customer contracts and new contracts with existing partners. The American companies performed well, in line with expectations. The services thermoforming, display packaging and primary packaging contributed substantially to the good result. The production of packaging materials continued to disappoint. As a full-service provider, this remains a key business that in 2006 again supported the other services mentioned. The measures implemented in this area began to bear initial fruit at the end of the year, though without yet impacting earnings. For 2007 we thus expect substantial improvements. The Belgian units posted satisfactory business results, while results in Italy suffered from one-time expected charge of 1.4 million for the reorganization of warehouse space despite better-than-expected operational performance. Earnings before interest and taxes for the segment were just above the 2005 level ( 3.70 million) at 3.79 million. Industrial Goods Packaging in million Sales Consolidated sales Gross profit EBITA EBITA margin (%) EBTA Industrial Goods Packaging Note 42 Consolidated sales for the Industrial Goods Packaging segment was again up a substantial 10.6 % to million in Machine and plant engineering was the primary earnings driver, as in While building upon our long-standing customer relationships, rising commodity prices, particularly for wood, had a negative impact in the year under review. Extensive integration efforts and streamlining within the organization again formed part of our success in 2006, the Operational Excellence Project achieving initial successes in the optimization of production processes. EBITA for this segment was up a solid 3 % from 5.91 million to 6.09 million. Warehouse Logistics in million Sales Consolidated sales Gross profit EBITA EBITA margin (%) EBTA Warehouse Logistics Note 42 Warehouse Logistics consolidated sales declined 14.3 % to 62.1 million due to poor performance by Schumacher GmbH in the first half of the year prior to departure from the consolidated Group. On an adjusted basis, Warehouse Logistics sales increased by roughly 5.0 %. EBITA for this segment was up nearly 5 % to 3.6 million thanks largely to the Belgian companies and the German Warehouse Logistics business. The now divested company Schumacher GmbH generated operating losses of approximately 0.5 million, weighing down earnings. The company PickPoint AG, consolidated since the fourth quarter of 2005, continues to post a negative EBITA of 1.1 million, which is in line with expectations. This amount was offset by 1.0 million resulting from a lawsuit won in Belgium and recognized as income.

39 REPORT ON POST-BALANCE SHEET DATE EVENTS AND EXPECTED DEVELOPMENTS

40 0 34 Page Management Report Business Report on and Post-Balance Economic Environment Sheet Date Events Report on Expected Developments Planned Orientation of the Group Report on Post-Balance Sheet Date Events No material events occurred after the balance sheet statement closing date that are reportable pursuant to IAS 10. Report on Expected Developments Planned Orientation of the Group The D.Logistics Group is aligned so as to focus on the continual strengthening of our packaging services. In the future, Consumer Goods Packaging is to offer across all locations the entire array of services formerly available only in certain regions. For Industrial Goods Packaging this means extending the full range of services offered throughout Germany to include other European markets. In addition, the process chain of logistics-related services is to be extended across all locations in order to offer services typically outsourced to third-party providers. The D.Logistics Group thus has potential for evolving from a logistics provider into an industry service provider. The D.Logistics Group will retain its holding company structure. Group subsidiaries will thus remain primarily responsible for business development and customer account management in their local markets. The Business Development Group was established in 2005, followed by the Operational Excellence initiative in Both are designed to help the D.Logistics Group achieve its full potential. The Business Development Group supports organic growth across all segments, enabling each operational unit to offer an expanded range of services while building upon and cultivating existing customer relationships. Efforts likewise focus on creating favorable conditions for a new customer acquisition and reducing dependency on major customers to allow D.Logistics to uphold a consistent, one voice profile going forward with regard to new customers as we expand internationally, while maintaining a local-market presence adapted through our individual subsidiaries. The Operational Excellence initiative is designed to enhance performance, service and quality. Knowledge sharing among individual units forms the basis for achieving these objectives in combination with cross learning in order to distribute knowledge pertaining to instruments and methods for increasing efficiency Group-wide. The Business Development Group and Operational Excellence Project will serve to heighten the effectiveness of the D.Logistics Group as a packaging corporation, facilitating our expansion efforts with regard to our range of services and into new regions

41 Business Report and on Expected Economic Developments Environment Management Report Page 0 35 Economic Framework Conditions Slowing global economy The European Economic Advisory Group (EEAG) projects the global economy to slow slightly this year and next, expanding at a rate just under 5 %. The 8.5 % increase in global trade last year is likely to move down to 7.5 % this year before climbing back to 8 % in The broadly positive global economic outlook is reflected in sustained improvement in the OECD leading indicators. The upturn in the US is likely to lose momentum in the short term, with GDP growth retreating to 2.5 % for the current year. In 2008, the economy should pick up again somewhat with growth back up to 2.8 %. Economists predict GDP growth in Japan to slow to 2.0 % in 2007 before moderate acceleration to 2.2 % in Economic expansion in China is projected at around 10 % for the next two years, without any sign of overheating. Other East-Asian countries are expected to see economic growth at a rate ranging around 4.5 % after 5.2 % for EU growth temporarily muted The EEAG predicts economic growth for European Union countries to slow somewhat, though without seriously jeopardizing the recovery. Real GDP growth of 2.2 % is projected for 2007, and 2.5 % for the year following. The demand side will remain firm, with falling unemployment and higher wages stimulating consumer spending. Growth in exports is likely slow in the first half of 2007 due to the modest expansion of the global economy. Capital investment should be strong in this positive demand environment, continuing to increase at a projected figure of approximately 4 % in 2007 and Consumer prices are projected to rise 2.2 % in 2007 as in 2005, coming in less than 2 % in Global economy OECD early indicators Total Europe Germany USA Source: OECD Economic outlook still favorable in Germany The economic upturn in Germany will continue throughout the current year. However, the rate of expansion is not likely to quite match that of 2006, as monetary policy stimuli subside along with negative fiscal policy factors. While exports will also lack some of their 2005 momentum, more robust capital investment by companies in view of favorable depreciation rules expiring in 2008 will provide support. Consumer spending is set to pick up substantially with unemployment down and real disposable incomes tangibly up. The Kiel Institute for the World Economy projects real gross domestic product (GDP) to increase by 2.8 %, while consumer prices are projected to rise by 1.5 %. For the year ahead economists predict the economic upturn will lose momentum due partly to more rapidly increasing wages. GDP growth is likely to fall to 2.4 % as an average for the year. The engineering sector, the key customer industry for Industrial Goods Packaging, will remain strong, the VDMA projecting 4 % growth for the current year.

42 0 36 Page Management Report Report Business on and Expected Economic Developments Environment Prospects for the Logistics Sector Company-Specific Prospects Exploiting market opportunities for industry service providers A trend strongly affecting the future of industry service providers is increasing corporate focus on core competencies. The idea of meeting the challenges of a more closely intermeshed global economy, mass individualization, time-based competition and new environmental requirements by creating ever more complex planning, management and control systems within increasingly large organizational units offers no prospect of success. Such systems involve rapidly rising costs that in many cases exceed the benefit. In response to steadily rising marketplace requirements, businesses are trying to optimize their service offerings for greater depth in order to be more competitive. This has given rise to a trend, underway since the 1990s, towards concentrating on core competencies. Activities identified as foreign to an organization s core competencies are outsourced. The option of outsourcing has thus taken on a strategic character as an issue of major importance for long-term business success. Companies are now outsourcing a lot of their packaging services as well as logistics. For D.Logistics this development opens up a major opportunity to establish itself as a dependable and efficient partner, with outsourcing post-production processes such as packaging becoming more interesting to firms alongside regular shipping and warehousing. Consequently, the market for industry services in Germany und Europe has been growing faster than the overall economy over the last several years. Surveys in which a majority of firms foresee the outsourcing of secondary logistics services increasing through 2010 indicate that this phenomenon is likely to persist. Strategic opportunities for D.Logistics We regard the specific strengths and competencies of the D.Logistics Group as creating strategic growth opportunities, primarily in the Industrial Goods and Consumer Goods Packaging segments. For Industrial Goods Packaging this means expanding our strong market position in Germany by building upon existing business relationships and through potential acquisitions. An additional goal is to have a presence outside Europe through our own subsidiaries. In future, all Consumer Goods Packaging services formerly only partially available in certain regions are to be offered across all locations. Furthermore, specialized services such as Display / Promotional Packaging increasingly popular with customers present further growth opportunities. In addition, the process chain of logistics-related services is to be extended across all locations in order to offer services typically outsourced to third-party providers. The D.Logistics Group already offers services in a number of areas that are distinct from and complementary to conventional transportation and warehousing logistics.

43 Business Report and on Expected Economic Developments Environment Management Report Page 0 37 Company-Specific Prospects Expected results of operations For fiscal year 2007, the D.Logistics Group is planning sales of between 315 and 327 million. The estimate for EBITA is between 11.1 to 12.2 million, equivalent to a margin of 3.5 % to 3.7 %. The following factors play a role in these estimates. Schumacher GmbH, now sold, accounted for roughly 7.4 million sales in Estimates are based on an average assumed exchange rate of USD 1.30 / (2006: USD / ), resulting in lower sales by the amount of 2.4 million. Sales growth on an adjusted basis is thus projected to range between 1 % and 5 %. Potential acquisitions are being reviewed to strengthen our packaging offerings of companies with annual sales of 10 million to 20 million. In earnings planning, it should be taken into account that EBITA in 2006 ( 16.1 million) was impacted positively by income of 7.8 million from the disposal of investments and successful litigation. On an adjusted basis, EBITA is estimated to increase by 34 to 47 %. The table below shows the target corridors without acquisitions. Sales EBITA Forecast 2007 in million in million Consumer Goods Packaging Industrial Goods Packaging Warehouse Logistics Holding company (3.7) (3.4) D.Logistics Group For 2008, we anticipate organic sales growth ranging between 3 % and 7 %, with EBITA margin of approximately 4 %. There are no plans for payment of a dividend in fiscal year 2007.

44 0 38 Page Management Report Report Business on and Expected Economic Developments Environment Company-Specific Prospects Expected financial position For the organic growth projections there is no need for significant external financing at this time. The current financial resources are sufficient to meet current liquidity requirements, offering scope for further organic growth. Investments in property, plant and equipment totaling approximately 8.0 million are budgeted for the current year, equivalent to roughly 2.5 % of sales. This figure is slightly higher than for 2006 ( 7.6 million, 2.3 % of sales). The budgeted investments are to be financed from net cash from operating activities. There are no plans at this time to borrow to finance these investments. Borrowing may be necessary in the event of any acquisition transactions. Management s summary of expected Group performance Over the course of the next several years, the D.Logistics Group will be working to further enhance its profile as a packaging service provider, as we are currently perceived today by both existing and new customers. Our broad customer base and long-standing business relationships, our specialized know-how and our financial resources give us the potential for further organic growth and provide a solid foundation for conducting acquisitions. As we continue to add new complementary services to our existing range, our target is to increase sales and improve earnings.

45 RISK REPORT

46 0 40 Page Management Report Business Risk Report and Economic Environment Risk Policy Risk Management Risk Report The role of D.Logistics AG is to act as an investment and financial holding company for operating subsidiaries which provide logistics and logistics-related services in Germany and abroad. D.Logistics AG has no operating activities of its own but ensures that the resources required for risk management are available, monitoring the implementation of risk policy and risk management procedures on an ongoing basis. Corporate management and control, corporate governance, the by-laws and the risk policy are coordinated within the D.Logistics Group. Exposure to risks is unavoidable in our efforts to achieve long-term success by taking advantage of opportunities in our services divisions and regions in an environment of constantly changing requirements and challenges. These risks are assessed in detail. Our corporate and business strategy is to concentrate operational activities and the risks associated with them within separate legal entities in order to insulate the rest of the Group from possible negative influences. Core risks, representing risks affecting Company assets and income, are monitored on an ongoing basis, to be reduced through implementation of suitable measures. Examples are customers shifting production or late reaction to increasing IT requirement and technological innovation. Non-core and residual risks are accepted provided they can be specifically identified and mapped. Non-core risks are externalized (force majeure, liability to third parties for loss or damage, etc.). In particular, internal corporate governance guidelines (including the D.Logistics AG by-laws) and the active monitoring of subsidiaries as parent company ensure that the deliberate acceptance of risks proceeds in a transparent and controlled fashion. The D.Logistics Group Executive Board considers a highly-developed awareness of risk in all business divisions to be indispensable for the success of its risk policy. Increasing awareness of existing and potential risks is an important element in the management of the business. Because of the varying nature of the areas of risk and the different forms in which risks occur within the individual subsidiaries, this increased awareness is vital to enable the successful implementation of risk policy. Risk management All activities of subsidiary companies are supported by an integrated risk management system without exception. The purpose of risk management activities is firstly to ensure that statutory requirements are complied with, and secondly to promote value-oriented management of individual subsidiaries and the D.Logistics Group as a whole. According to the December 31, 2006 risk inventory, the system covers around 90 % of subsidiary risks as measured against Group revenue. The risk management system was audited in connection with the auditing of the annual financial statements.

47 Business and Economic Environment Risk Report Management Report Page 0 41 Risk identification Individual Risks Risk controlling Risks are identified by managing directors or site managers applying the following ten risk categories: strategy / planning, market / sales, procurement, service provision, finance, personnel, IT, contracts / legal, communication and other. The responsible managers document the risks identified in risk maps on an ongoing basis. Risk measurement is standardized throughout the Group. Risks identified in risk maps are assessed by local or site managers in terms of probability of occurrence and amount of potential loss. Individual risks are assigned quantitative values requiring response upon reaching specific levels. Measures taken to control identified risks are subject to regular on-site monitoring as to their effectiveness. The Executive Board additionally supervises risk identification procedures conducted by individual subsidiaries in the course of regular company visits. Macroeconomic and sector risks For 2007, we do not foresee major risks to the economy and industry. Detailed commentary on our economic and industry outlook is provided on pages 34 ff. of the Report on Expected Developments. Commodity prices, and oil prices in particular, may pose a specific risk. Further rises would likely place a noticeable drag on the global economy. Increasing purchasing costs would result, potentially coupled with falling demand affecting sales in key markets such as our export-oriented machine and plant engineering business. Currency markets may additionally pose risks. Further, sustained appreciation of the euro against the US dollar would hurt sales for European companies. As roughly 20 % of D.Logistics Group sales is dollar-denominated, a stronger euro would also put pressure on sales and earnings due to currency translation. Acquisition and investment risks Acquisition and investment decisions intrinsically involve complex risks as they tie up substantial capital on a long-term basis. Such decisions can only be made on the basis of specific, predefined terms governing responsibilities and approval requirements. Performance-related risks Sales and earnings of the subsidiaries are largely dependent on a relatively small number of business relationships with larger customers. Customers come from different industries (e. g. Procter&Gamble in consumer goods, VW in the automotive industry), creating a certain risk diversification effect in addition to the fact that different, unrelated services are performed for one and the same customer.

48 0 42 Page Management Report Business Risk Report and Economic Environment Individual Risks A primary objective of the D.Logistics Group is to promote customer loyalty, for example, through expanded process identification and improvement (involving risk assessment as needed) and maintaining a high level of customer commitment. Customer surveys conducted for this purpose have provided positive feedback for D.Logistics Group locations, making it possible to design measures to further increase customer satisfaction. One such a measure has been the redoubling of our employee training and education efforts. The acquisition of smaller customers is also important in order to broaden our customer base. The structuring of contracts with customers also poses certain risks, such as when amortization periods for investments are longer than the original contract term. Older contracts only allow limited reaction to quantitative or qualitative changes affecting our business. At the same time, price adjustment clauses are not always adequate for passing on unexpected procurement price increases to customers. Personnel risks A major part of the business success of the D.Logistics Group rests upon the skills and qualifications of its employees and the motivation of the managerial staff of our corporate subsidiaries. For this reason, employees undergo regular training in order to ensure that the quality of the services provided meets customer requirements. Employees at all levels of the company are being progressively sensitized to risk issues to ensure compliance with risk policy. Senior management remuneration packages are being systematically restructured to emphasize variable, performancerelated components such as bonuses as an incentive for reaching targets. External contractors are utilized in some cases, particularly in view of the legal environment in certain countries. This allows managing phases of increased business activity without having to take on permanent employees, creating the potential for capacity underutilization later on. Nearly all subsidiaries are now run by managers with close ties to D.Logistics and an entrepreneurial attitude. Multiple individuals are always involved in decision-making processes at subsidiaries in order to counter the risk of the departure of key personnel. IT risks The steps initiated in past years to improve data communication continued to be implemented in fiscal year As a result, employees can now access internal data irrespective of location. Encryption and filtering mechanisms are used to keep the risk of unauthorized access to an absolute minimum. In addition, a centrally managed virus protection concept has been deployed. The firm-wide antivirus system provides automated virus signature updating on a daily basis, and a firewall is in place to protect against spam.

49 Business and Economic Environment Risk Report Management Report Page 0 43 Individual Risks Aggregate Risk Should security systems fail despite the measures implemented, emergency and recovery plans go into effect to minimize down time. These plans allow for up to % availability after a system crash thanks to backup files and software packages. Data backup for critical, centrally stored data is performed several times a day to minimize the risk of data loss. Financial risks D.Logistics Group pursues a strategy of profitable growth. A key factor in this strategy is having access to the capital and credit markets to secure adequate funding. Different financing groups exist within the D.Logistics Group. The operating companies are largely financed on a decentralized basis. D.Logistics AG s financial risks mainly concern guarantees and loans extended to subsidiaries. An interest rate derivative contract is still in place for managing and limiting interest rate risk in connection with medium-term financing. This cash flow hedge is directly assigned to a specific debt position (see Other Disclosures, page 89). The Group has recognized goodwill in consequence of its expansion strategy. Impairment testing pursuant to IAS 36 may necessitate unscheduled write-downs of goodwill. Based on the December 2006 impairment testing conducted, there is no need to recognize impairment at this time. Legal risks The risks discussed here last year pertaining to guarantees in connection with the sale of the CSC Group in 2002 no longer exist. As of the balance sheet date there are no other risks relating to legal disputes. Overall Group risk position In summary, no operational or financial risks are currently identifiable which potentially jeopardize the continued existence of the D.Logistics Group as a going concern. The Group structure entailing a wide range of services offered in a variety of sectors and regions under an investment holding company has proven effective from a risk standpoint. Operating risks for individual subsidiaries are externalized, i. e. covered through appropriate insurance protection. The risk management system is being continually upgraded and enhanced to allow risks to be identified at an early stage and appropriate countermeasures taken.

50 REMUNERATION REPORT

51 Business and Economic Remuneration Environment report Management Report Page 0 45 Remuneration report Supervisory Board compensation Supervisory Board compensation is governed by 15 of the D.Logistics AG Articles of Association. Supervisory Board members receive fixed compensation of 15,000 for each full fiscal year of service on the Supervisory Board, remitted pro-rata at the end of the quarter. The Supervisory Board Chairman receives twice this amount. Supervisory Board members sitting on the Supervisory Board for less than a full fiscal year receive pro-rata compensation based on length of service on the Board. Supervisory Board members also enjoy full expense reimbursement including any sales tax paid in connection therewith. Supervisory Board compensation totaled 60,000 in This amount breaks down for individual members as follows: Dr. Wolfgang Friedrich (Chairman) 30,000, Helmut Olivier 15,000, Dr. Kai Furans 15,000. Expense reimbursements remitted to Supervisory Board members totaled 500. Executive Board compensation All D.Logistics AG Executive Board members receive both fixed and variable compensation. The variable compensation element consists of a cash bonus whose amount is fixed by the Supervisory Board at its prudent discretion, taking into account the results of D.Logistics AG and the performance of the respective Executive Board member. For two members of the Executive Board, the amount of the cash bonus is subject to an upper limit. Payment of the bonus can be deferred for a maximum period of one year in the event of unforeseen developments. In addition, Executive Board members Bargende and Fey are granted a certain number of stock options for each year of service in accordance with the new stock option plan adopted by shareholders at the 2002 Annual General Meeting. Under the conditions of this stock option plan, the term of the options, a maximum of 500,000 of which are set aside for D.Logistics AG Executive Board members, is three years with a two year lock-up period before exercise. The subscription price is 25% higher than the share price for the exercise period, and exercise is contingent upon the share price on the exercise date exceeding the subscription price by 50%. Further details on the 2002 stock option plan can be found under Stock-based Compensation on page 84. Executive Board members also receive non-cash compensation, consisting mainly of use of a company car. Individual Executive Board members are responsible for paying tax on non-cash benefits. No pension commitments exist with regard to Executive Board members as pension plans are generally not employed within the Group.

52 0 46 Page Management Report Business Remuneration and Economic report Environment Executive Board compensation for the fiscal year totaled 1,210,00 (2005: 1,188,000). Total individual Executive Board member compensation breaks down as follows: Total compensation Fixed salary Other Performance- Exercise value Total compensation based of stock options in thousand components Andreas Bargende Tammo Fey (starting February 15, 2006) Detlef W. Hübner Thomas Schwinger- Caspari (through February 15, 2006) Total ,210 An additional payment of 590,000 was remitted to departed Executive Board member Schwinger-Caspari in 2006 that was charged as an expense in Commitments to Executive Board members in the case of early termination The arrangements in the employment contracts of the three Executive Board members vary due to different employment conditions in place when contracts were signed. The employment contract of Detlef W. Hübner contains no special termination clause nor severance arrangements other than as provided for by applicable law. The employment contract of Andreas Bargende provides for a severance package upon early termination of the agency agreement instigated by the Company on the basis of the fixed salary plus pro-rata average annual bonuses for the remaining duration of the contract. This does not apply in the case of immediate termination for due cause. Bargende enjoys special termination rights with three calendar months notice in the event (a) over 25 % of Company share capital is sold to a third party, thereby materially compromising the member s position on the Executive Board by virtue of a reconstituted Supervisory Board, or in the event that (b) the organizational structure of the Company should be altered in such a way as to compromise materially the effectiveness of member of the Executive Board, or (c) Group sales should decline to below 220 million for an extended period of time because of disposal decisions not supported by the Executive Board member. In the event special termination rights are exercised, said Executive Board member is to receive a settlement on the basis of the fixed salary plus the maximum contractual bonus amount. All settlement amounts are to be discounted at a rate of 6 %. The employment contract of Tammo Fey does not contain general settlement provisions but does contain special termination rights with two calendar months notice in the event that over 25 % of the Company s share capital is transferred to a third party, thereby materially compromising said member s position and capacity on the Executive Board. In such case there is a claim to settlement on the basis of the fixed salary. All three Executive Board member contracts provide for a one-year non-compete clause upon departure from the Company. Departing Executive Board members receive an indemnification equal to 100 % of basic salary.

53 048 Consolidated Income Statement 049 Consolidated Balance Sheet 050 Consolidated Cash Flow Statement 051 Consolidated Statement of Changes in Equity 052 Notes to the Consolidated Financial Statements 098 Auditors Report

54 Performing demanding logistics functions for industrial goods packaging and delivery requires particular expertise and logistics skills. Whether delivering to a neighboring country or around the globe no packaging assignment is too difficult for us. The customer places the order, and we take care of the rest. Our depth of experience in this area allows us to meet every customer request and find the best packaging solution for every product.

55 047

56 0 48 Page Consolidated Financial Statements Consolidated Income Statement Consolidated Income Statement (IFRS) Note / Page in thousand Restated * Sales 322, , / 65 Cost of Sales (284,309) (273,944) 02 / 65 Gross profit 38,054 39,572 Selling expenses (5,445) (4,904) 03 / 65 General and administrative expenses (24,297) (26,573) 04 / 66 Other operating income 12,942 7, / 66 Other operating expenses (5,122) (4,552) 06 / 67 Profit (loss) from operations (EBIT) 16,132 11,374 Financial income 2,322 1, / 67 Finance costs (4,917) (6,448) 07 / 67 Share of profit (loss) of associates / 67 Other financial income (finance costs) 0 (123) 07 / 67 Profit (loss) before taxes (EBT) 14,091 6,620 Income tax expenses (3,460) (4,332) 08 / 67 Profit (loss) from continuing operations 10,631 2,288 Income (loss) from discontinued operations (net of tax) 0 1,036 Income (loss) 10,631 3,324 of which profit (loss) attributable to minority interests (757) 1, / 69 of which profit (loss) attributable to equity holders of parent 11,388 1,401 Earnings per share in Note / Page Restated * Basic and diluted earnings per share, based on the profit attributable to common shareholders of D.Logistics AG / 69 Basic and diluted earnings per share, based on the profit from continuing operations attributable to common shareholders of D.Logistics AG / 69 Basic and diluted earnings per share, based on the profit from discontinued operations attributable to common shareholders of D.Logistics AG / 69 Average amount of shares in circulation 42,495,602 42,360, / 69 * For information on the alignment of the previous year figures as a result of applying IFRIC 4 for the first time, refer to the comments in the Notes.

57 Consolidated Balance Sheet Consolidated Financial Statements Page 0 49 Consolidated Balance Sheet (IFRS) Assets in thousand Dec. 31, 2006 Dec. 31, 2005 Note / Page Restated * Current assets 87,737 80,495 Cash and cash equivalents 11,716 7, / 70 Financial receivables 1,151 1, / 70 Trade receivables 52,352 47, / 70 Inventories 13,766 15, / 71 Tax receivables 2,140 1,697 Other receivables and other assets 6,612 7, / 71 Noncurrent assets 122, ,915 Property, plant and equipment 54,998 61, / 76 Investment property 1,073 1, / 76 Goodwill 41,540 45, / 76 Intangible assets 1,200 1, / 76 Equity-method accounted investments 2,208 2, / 76 Other financial assets / 76 Financial receivables 9,108 10, / 70 Other receivables and other assets 6,563 3, / 71 Deferred tax assets 5,920 6, / 67 Total assets 210, ,410 Equity and Liabilities in thousand Dec. 31, 2006 Dec. 31, 2005 Note / Page Restated * Current liabilities 83,571 86,358 Bank loans and overdrafts 20,972 18, / 77 Other financial liabilities 8,492 8, / 77 Trade payables 34,239 32, / 79 Tax liabilities 2,646 3,134 Other liabilities 14,665 19, / 79 Other provisions 2,557 4, / 79 Noncurrent liabilities 42,087 48,201 Bank loans and overdrafts 25,795 28, / 77 Other financial liabilities 9,640 10, / 77 Other liabilities / 79 Provisions for pensions 1,987 2, / 80 Other provisions / 79 Deferred tax liabilities 4,115 6, / 67 Equity 84,938 77,851 Equity attributable to minority interests 5,163 6, / 83 Group equity 79,775 71,677 Subscribed capital 42,499 42, / 82 Capital reserves 104, , / 82 Unappropriated net income (65,402) (76,765) Other recognized income and expense (1,532) 1, / 83 Total equity and liabilities 210, ,410 * For information on the alignment of the previous year figures as a result of applying IFRIC 4 for the first time, refer to the comments in the Notes.

58 0 50 Page Consolidated Financial Statements Consolidated cash flow statement Consolidated cash flow statement Note / Page in thousand Restated * Result 10,631 3,324 Adjustments to reconcile net income (loss) to cash flows from operating activities (Income) loss from discontinued operations 0 (1,036) Depreciation and amortisation charges 10,224 10,965 (Gain) loss from disposal of property, plant and equipment 195 (262) (Gain) loss from sale of investments (6,260) (183) (Income) loss from equity-accounted affiliates (554) (38) Deferred taxes 127 1,534 Other non cash revenue (expenses) Changes in assets and liabilities from operating activities Change in trade accounts receivable (8,033) (1,782) Change in inventories 1,470 (3,432) Change in other receivables and other assets 2,066 5,095 Change in trade accounts payable 3,861 (4,576) Change in other liabilities (2,622) (4) Change in accrued expenses (1,760) (1,881) Change in other assets / liabilities (76) (70) Net cash provided by (used in) operating activities 9,289 7, / 86 Purchase of intangible assets and property, plant and equipment (6,926) (6,796) Proceeds from the sale of intangible assets and property, plant and equipment 631 3,133 Purchase of financial assets (4) 0 Proceeds from the sale of financial assets 165 1,372 Dividends received Purchase of subsidiaries (25) (616) Net change in financial receivables 1, Net cash provided by (used in) investing activities (4,699) (2,180) 31 / 86 Proceeds from borrowings 6,079 1,327 Repayment of borrowings (5,351) (26,619) Proceeds from capital increase 64 13,434 Dividends paid to minority shareholders (293) (128) Net change in other financial liabilities (823) (1,810) Net cash provided by (used in) financing activities (324) (13,796) 32 / 86 Change in cash and cash equivalents from the disposal of subsidiaries (356) (248) Change in cash and cash equivalents 3,910 (8,534) 33 / 86 Cash and cash equivalents at the beginning of the period 7,806 16,340 Cash and cash equivalents at the end of the period 11,716 7,806 * For information on the alignment of the previous year figures as a result of applying IFRIC 4 for the first time, refer to the comments in the Notes.

59 Consolidated Statement of Changes in Equity Consolidated Financial Statements Page 0 51 Consolidated Statement of Changes in Equity Other recognized income and expense** in thousand Subscribed capital Unpaid contributions Capital reserves Unappropriated net income Cumulative translation adjustment Gain (loss) from fair value measurement of financial instruments Reserve for cash flow hedges Total Group equity Equity attributable to minority interest Total equity Balance at Dec. 31, 2004 as reported 42,292 (2,280) 190,491 (165,027) (2,229) (96) (23) 63,128 4,379 67,507 Adjustments * Balance at Dec. 31, 2004 (adjusted *) 42,292 (2,280) 190,491 (164,733) (2,229) (96) (23) 63,422 4,379 67,801 Profit (loss) 1,401 1,401 1,923 3,324 Changes recognized directly in equity 4, ,175 4,175 Total recognized income and expense 1,401 4, ,576 1,923 7,499 Capital increases 202 2, ,679 2,679 Dividends (128) (128) Withdrawals from capital reserves (86,567) 86, Balance at Dec. 31, , ,121 (76,765) 1, (1) 71,677 6,174 77,851 Profit (loss) 11,388 11,388 (757) 10,631 Changes recognized directly in equity (25) (3,333) (54) 28 (3,384) (3,384) Total recognized income and expense 11,363 (3,333) (54) 28 8,004 (757) 7,247 Capital increases Dividends (293) (293) Changes in basis of consolidation (25) (25) Balance at Dec. 31, , ,210 (65,402) (1,559) ,775 5,163 84,938 * For information on the alignment of the previous year figures as a result of applying IFRIC 4 for the first time, refer to the comments in the Notes. ** For further explanations see note 27 on page 83

60 0 52 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements General Information Basis of Preparation Notes to the 2006 Consolidated Financial Statements General Information D.Logistics Aktiengesellschaft, domiciled in Hofheim am Taunus, was established by way of a notarial instrument dated October 26, The Company was entered in the Frankfurt am Main commercial register under the number HRB on December 22, The Articles of Association were adopted on October 26, 1998 and last amended on December 30, The purpose of the Company is to manage existing equity investments and those to be acquired at a future date and to operate as a managing holding company, particularly for logistics companies. The address of the Company s registered office is Johannes-Gutenberg-Strasse 3 5, Hofheim, Germany. The Company s shares are traded on the Regulated Market of the Frankfurt Stock Exchange. The Executive Board approved the IFRS consolidated financial statements on March 23, 2007 so that they could then be forwarded to the Supervisory Board. Basis of Preparation Consolidation In accordance with Article 4 of Regulation (EC) No / 2002 of the European Parliament and of the Council of July 19, 2002 on the application of international accounting standards (Official Journal of the European Communities L 243 / 1), the Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRSs). In preparing the consolidated financial statements, the Company also observed and applied the provisions of section 315a (1) of the German Commercial Code. All IFRSs (IFRSs, IASs, IFRICs, SICs) as adopted by the European Union and effective as of the balance sheet date were applied. All significant subsidiaries over which D.Logistics AG has legal or effective control are included in the consolidated financial statements. In addition to D.Logistics AG, the consolidated financial statements include 24 (previous year: 25) fully consolidated subsidiaries in Germany and 11 (previous year: 11) in other countries (hereinafter referred to as the D.Logistics Group or the Group ). Joint ventures are included in the consolidated financial statements using the equity method in accordance with IAS 31. Proportionate consolidation is not applied. Other significant equity investments are accounted for using the equity method if D.Logistics does not hold a controlling interest, but is able to exert a significant influence on the operating and financial policies of the investee. This is always the case if it holds between 20 % and 50 % of the voting rights ( associates ). On acquisition of an equity investment accounted for using the equity method, the difference between cost and proportionate equity is initially allocated to the assets and liabilities of this investment by making certain adjustments to the fair values. Any remaining excess of cost of acquisition over net assets acquired is recognized as goodwill, and is not amortized. If the fair value of an investment in an associate falls below its carrying amount, its carrying amount is written down to the fair value. The impairment loss is recognized in income, and the new carrying amount of the investment then represents historical cost. The annual financial statements of consolidated companies are prepared as of the reporting date of the consolidated financial statements.

61 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 53 Basis of Preparation Acquisition accounting is performed in accordance with the purchase method, whereby the cost of the acquired interests is eliminated against the parent s share of the revalued equity at the date of acquisition. Any resulting difference is allocated to the corresponding assets and liabilities of the subsidiary insofar as it is due to hidden reserves or hidden liabilities. Any remaining excess of cost of acquisition over net assets acquired is recognized as goodwill. In accordance with IFRS 3 (Business Combinations), goodwill is not amortized over the expected useful life, but instead tested at least annually to establish whether there is any need to recognize impairment losses. Minority interests represent the share of net profit / loss and net assets that is not attributable to the Group. Minority interests are reported separately in the consolidated income statement and the consolidated balance sheet. They are reported on the face of the balance sheet as a separate component of equity from the equity attributable to the shareholders of the parent company. Intercompany receivables and liabilities, revenue, expenses, income and profits are eliminated as part of consolidation. Currency translation The consolidated financial statements are prepared in euros, the functional and presentation currency of the D.Logistics Group. Unless indicated otherwise, all amounts are given in thousands of euros. Each company within the D.Logistics Group determines its own functional currency. The annual financial statements of consolidated foreign subsidiaries whose functional currency is not the euro are translated into euros, the Group currency, on the balance sheet date using the functional currency concept in accordance with IAS 21. Financial statements are translated using the modified closing rate method, i. e. balance sheets are translated from the functional currency to the reporting currency at the middle rate on the balance sheet date, while income statements are translated at the average rates for the year. Differences resulting from the translation of assets and liabilities compared with the translation of the previous year and translation differences between the income statement and the balance sheet are taken directly to equity and are reported under Accumulated changes recognized directly in equity. When a foreign operation is disposed of, the cumulative amount recognized in equity for this foreign operation is reversed to the income statement. Foreign-currency transactions are translated at the spot rate of the foreign currency to the functional currency prevailing at the transaction date. Foreign-currency monetary assets and liabilities are translated at the rate on the balance sheet date. The resulting foreign exchange differences are recognized in profit or loss for the period, with the exception of foreign exchange differences resulting from foreign-currency loans insofar as the loans are used to hedge a net investment in a foreign operation. These are recognized directly in equity until the net investment is disposed of and only recognized in profit or loss on the date of disposal. Deferred taxes relating to these foreign exchange differences are also recognized directly in equity. Non-monetary items carried at cost in a foreign currency are translated at the rate at the transaction date. Non-monetary items carried at fair value in a foreign currency are translated at the rate prevailing when their fair value was determined.

62 0 54 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Basis of Preparation The exchange rates for the translation of key currencies that are not part of the European Monetary Union changed as follows: Middle rate as of the balance sheet date Average rate for the year Foreign currency per US dollar Sales recognition Sales are primarily generated from services, products and rental agreements. These sales are recognized when the relevant service has been rendered or the goods delivered, the amount of sales can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the Group. Sales are recognized net of purchase price reductions such as cash and sales discounts and rebates. Cost of sales Cost of sales comprises the cost of the products and services sold. As well as direct material and manufacturing costs, it also includes indirect overheads such as depreciation of manufacturing equipment, amortization of certain intangible assets and write-downs on inventories. Cost of sales is recognized in the income statement when incurred. Earnings per share Earnings per share (EPS) are calculated in accordance with IAS 33. Basic earnings per share are calculated by dividing the net profit / loss for the period attributable to the holders of common shares of the parent company by the weighted average number of common shares outstanding. Shares newly issued or repurchased during a period are included pro rata for the time they are outstanding. Diluted earnings per share are calculated by dividing the net profit / loss for the period attributable to the holders of common shares of the parent company by the weighted average number of common shares outstanding and the weighted average number of common shares that would be issued following the conversion of all potential common shares with a dilutive effect into common shares. Intangible assets and goodwill Purchased intangible assets with finite useful lives are recognized at cost and amortized on a straight-line basis over their economic lives. Capitalized software licenses are amortized over their expected useful life of three to eight years or over the term of the relevant agreement. The amortization recognized is allocated to the relevant functions in the income statement based on the asset s use. If there are indications of impairment and the recoverable amount is less than amortized cost, impairment losses are recognized on the intangible assets. If the reasons for impairment cease to apply, the impairment losses are reversed accordingly. This does not apply to capitalized goodwill. Costs incurred in connection with the purchase or internal development of computer software for internal use, including the costs incurred to commission the software ready for use, are capitalized and amortized on a straight-line basis over its expected useful life of three to eight years. Goodwill is recognized in accordance with IFRS 3 (Business Combinations) in conjunction with IAS 36. These standards require goodwill to be tested annually for impairment, rather than amortized.

63 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 55 Basis of Preparation Property, plant and equipment Property, plant and equipment is carried at cost less straight-line depreciation recognized over the economic life of the respective item. Assets are removed from the balance sheet on disposal or scrapping; any disposal gains or losses are recognized in income. The following useful lives are used for depreciation: Useful lives of property, plant and equipment Factory and office buildings years Operating and office equipment 3 10 years Machinery and equipment 6 20 years Vehicle fleet 5 7 years Leasehold improvements 10 years If there are indications of impairment and the recoverable amount is less than amortized cost, impairment losses are recognized on the items of property, plant and equipment. If the reasons for impairment cease to apply, the impairment losses are reversed accordingly. More complex items of property, plant and equipment consisting of clearly separable components with different useful lives are split into these components for the purposes of calculating depreciation. Depreciation is calculated using the useful lives of the individual components. Investment property Investment property as defined by IAS 40 is carried at depreciated cost and, if applicable, depreciated on a straight-line basis over the same useful lives used for items of property, plant and equipment of the same type. The fair value of investment property is determined using recognized valuation techniques or on the basis of the current market price of comparable properties and disclosed in the Notes. Leases The process of determining whether an arrangement contains a lease is performed on the basis of the substance of the arrangement at the date on which it is entered into, and requires a judgment on whether meeting the respective contractual obligations is dependent on the use of one or more specific assets and whether the arrangement transfers the right to use those assets. Group as lessee Finance leases that transfer substantially all the risks and rewards incident to ownership of an asset to the Group result in the leased asset and the corresponding liability being recognized at the inception of the lease at the lower of the fair value of the asset or the present value of the minimum lease payments. If there is no reasonable certainty that the D.Logistics Group will obtain ownership at the end of the lease term, recognized leased assets are depreciated on a straight-line basis over the shorter of the lease term or the useful life of the asset.

64 0 56 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Basis of Preparation Lease payments are apportioned between the finance charge and the repayment of the outstanding liability so as to produce a constant rate of interest on the remaining balance of the liability. Finance charges are recognized as an expense immediately. Lease payments under operating leases are expensed on a straight-line basis over the term of the lease. Group as lessor Leases that do not transfer substantially all the risks and rewards incident to ownership of an asset from the Group to the lessee are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and expensed over the lease term in proportion to the recognition of rental income. Contingent rent is recognized in the period in which it is generated. Joint ventures and associates Investments in joint ventures and associates are accounted for using the equity method. The cost of investments accounted for using the equity method is increased or decreased annually by changes in equity insofar as these are attributable to the D.Logistics Group. Other financial assets Under the provisions of IAS 39, these financial instruments are classified as held for trading, held to maturity or available for sale. Financial instruments held for trading are carried at fair value, with fair value changes recognized in the income statement. Held-to-maturity investments are carried at amortized cost using the effective interest method. Available-for-sale financial assets are carried at fair value, with fair value changes less income tax expense recognized as gains or losses from the fair value measurement of financial instruments and presented as a separate item within equity. The Company s management classifies financial assets on acquisition and checks their classification at each balance sheet date. Equity investments, including investments in unconsolidated affiliates, and noncurrent financial instruments are classified as available for sale and carried at fair value. If there are indications of impairment, an impairment test is performed and impairment losses are recognized accordingly. Financial instruments Derivative financial instruments are by definition held for trading, and are therefore classed as at fair value through profit or loss. As such, they are carried at fair value. Changes in fair value are recognized in the income statement. Changes in the fair value of derivatives for which hedge accounting is used are recognized either in profit or loss or, if the derivative is a cash flow hedge, in equity in Accumulated changes recognized directly in equity. The financial instruments in their entirety are explained in Note (42).

65 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 57 Basis of Preparation Cash and cash equivalents Cash and short-term deposits on the face of the balance sheet comprise cash on hand, checks, bank balances and short-term deposits with an original maturity of up to three months. Receivables and other current assets Receivables and other current assets are recognized at their principal amount or cost on acquisition (settlement date). Valuation allowances are recognized to take account of identifiable specific risks. Receivables bearing no or little interest and with a maturity of more than one year are measured at amortized cost using the effective interest method. Inventories Inventories are carried at the lower of cost and net realizable value. As a rule, carrying amounts are calculated using the weighted average cost method; for certain inventories, the FIFO method is used. Cost comprises all production-related costs, calculated on the basis of normal employment. As well as direct costs (such as direct material and manufacturing costs), it also includes fixed and variable material and manufacturing overheads relating to the production process and appropriate portions of depreciation of manufacturing equipment. Deferred taxes Deferred taxes are calculated using the balance sheet liability method in accordance with IAS 12. This standard requires deferred taxes to be recognized for all temporary differences between the tax bases of the individual companies and the carrying amounts according to IFRSs, and on consolidation adjustments. Deferred tax assets are also recognized for future benefits expected to arise from tax loss carryforwards. However, deferred tax assets have only been recognized for accounting differences and for tax loss carryforwards to the extent that it is probable that the asset will be realized. Deferred tax assets are measured at the applicable national rates of income tax. In Germany, deferred tax assets were calculated using a tax rate of % (previous year: 39 %). This includes corporation tax at 25 %, the solidarity surcharge of 5.5 % and the average rate of trade tax within the Group. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when an asset is realized or a liability is settled. other recognized income and expense Items taken directly to equity are reported under this item, unless they result from capital transactions with shareholders, such as capital increases or dividend payments. This item includes cumulative translation adjustments and unrealized gains or losses from the fair value measurement of financial instruments, and derivatives used in cash flow hedges. They are recognized including deferred taxes. Share-based payment The Group applies IFRS 2 (Share-based Payment) in the course of its accounting. In this context, it has elected to apply the transitional provisions contained in IFRS 1, according to which IFRS 2 only has to be applied to share-based payments granted after November 7, 2002 that have not vested prior to the first-time application of IFRS 2. For further information on share-based payments, please refer to Note (29).

66 0 58 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Basis of Preparation Provisions for pensions and similar obligations The actuarial valuation of pension provisions for defined benefit plans is based on the projected unit credit method prescribed in IAS 19. The interest element of pension expenses is shown as a finance cost. Prior-period actuarial gains and losses that exceed 10 % of the greater of the defined benefit obligation or the fair value of the plan assets are recognized immediately as income or expense. In the case of defined contribution pension plans (e.g. direct insurance schemes), the contributions payable are recognized immediately as an expense. Provisions are not recognized for defined contribution plans, as in these cases, the Group has no other obligation above and beyond its obligation to pay premiums. Other provisions Other provisions are recognized where a present obligation exists to third parties as a result of a past event, an outflow of resources is expected and the amount can be reliably measured. They are uncertain obligations that are recognized in the amount of the best estimate. Provisions with a remaining maturity of more than one year are discounted at market interest rates reflecting the risk specific to the liability and the period of time until the settlement date. Financial liabilities and other liabilities Financial liabilities are carried at amortized cost. Differences between historical cost and the repayment amount and transaction costs are accounted for using the effective interest method. Other liabilities are carried at their nominal value or the repayment amount. Assets and liabilities held for sale IFRS 5 requires the presentation and disclosure of information that enables readers of the financial statements to assess the financial impact of discontinued operations and noncurrent assets held for sale (or disposal groups). A noncurrent asset or disposal group is classified as held for sale if the related carrying amount is to be realized largely through a disposal, rather than through continued use. These assets or disposal groups are measured at the lower of their carrying amount and fair value less costs to sell. A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations or part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations, or is a subsidiary acquired exclusively with a view to resale. Cash flow statement The cash flow statement is prepared in accordance with the provisions of IAS 7 and shows the changes in the Group s cash and cash equivalents in the course of the year under review as a result of cash inflows and outflows. A distinction is made between cash flows from operating activities, investing activities and financing activities. Cash flows from operating activities are presented using the indirect method. Segment reporting Segment reporting is performed in accordance with IAS 14 (Segment Reporting). The segments correspond to those of the internal reporting structure. Therefore, the operating segments of the D.Logistics Group form the basis of the primary format of segment reporting and the geographical regions the basis of the secondary format of segment reporting. Segmentation aims to make transparent the net assets, financial position and results of operations of the Group s individual activities and its various regions.

67 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 59 Basis of Preparation Borrowing costs All borrowing costs are expensed in the period in which they are incurred. Government grants D.Logistics has received government grants relating to its investment projects. In accordance with IAS 20, these were deducted when determining the carrying amount of the respective assets. The grant is therefore recognized as income over the asset s useful life by means of a reduction in depreciation. Government grants are recognized if there is reasonable assurance that the grants will be received and the Company meets the conditions attached to the grants. Management judgments and key sources of estimation uncertainty The preparation of the consolidated financial statements in accordance with IFRSs sometimes requires the Executive Board to make estimates or assumptions that can affect the reported amounts of assets, liabilities and financial liabilities as of the balance sheet date, and the income and expenses for the reporting period. Actual amounts and changes may differ from these estimates and assumptions. The significant judgments and estimates applied are described in the following section: Recognition and measurement of other provisions. This is based on an estimate of the probability of the future outflow of benefits, supplemented by past experience and the circumstances known at the balance sheet date. As such, the actual outflow of benefits may differ from the amount recognized under other provisions. Deferred tax assets from tax loss carryforwards are recognized on the basis of an estimate of the future recoverability of the corresponding tax benefits, i. e. if there is expected to be sufficient taxable income or reduced tax expense in future. The actual taxable income situation in future periods, and hence the extent to which tax loss carryforwards can actually be utilized, may differ from the estimate performed at the date on which the deferred taxes are recognized. Significant forward-looking estimates and assumptions are made in the context of the impairment tests performed on goodwill, because the discounted cash flow method used for these tests requires the calculation of future cash flows, an appropriate rate of interest and long-term future growth rates. Any change in these factors may affect the results of such impairment tests. New accounting standards The IASB has adopted a range of new standards and interpretations, the application of which has been compulsory since January 1, The following IFRSs and IFRICs were applied by the D.Logistics Group for the first time in the year under review: IAS 21 (The Effects of Changes in Foreign Exchange Rates) requires that all exchange differences arising on monetary items that form part of the reporting entity s net investment in a foreign operations be recognized as a separate component of equity, irrespective of the currency in which the monetary item is denominated. Any subsidiary of the Group may have monetary items receivable from or payable to a foreign entity. The application of the revised IAS 21 did not have a material effect on the consolidated financial statements as of December 31, IAS 39 (Fair Value Option and Cash Flow Hedge Accounting): In 2005, three amendments to IAS 39 were published, the first-time application of which was compulsory for fiscal years beginning on or after January 1, The amendments relate to financial guarantees (following the revision of IAS 39 and IFRS 4 (Financial Guarantee Contracts), financial guarantees fall exclusively within the scope of IAS 39), cash flow hedges of forecast intragroup transactions, and the application of the fair value option. The amendments to IAS 39 did not have a material effect on the consolidated financial statements as of December 31, 2006.

68 0 60 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Basis of Preparation IFRIC 4 (Determining Whether an Arrangement Contains a Lease) lists the criteria by which lease elements can be identified in arrangements that do not take the legal form of a lease. Contractual elements meeting the criteria listed in IFRIC 4 are accounted for in accordance with IAS 17 (Leases). The first-time application of IFRIC 4 with effect from January 1, 2006 resulted in adjustments that are discussed in detail under First-time application of IFRIC 4 below. Accounting standards and interpretations not yet required to be applied: IAS 1 (Presentation of Financial Statements): This amendment requires that an entity make disclosures aimed at allowing the readers of the financial statements to evaluate the reporting entity s objectives, policies and processes for managing capital. The additional disclosure requirements resulting from the amendment of IAS 1 (Presentation of Financial Statements) were not implemented in the consolidated financial statements. First-time application is compulsory for fiscal years beginning on or after January 1, IFRS 7 (Financial Instruments: Disclosures): IFRS 7 sets out the disclosure requirements for financial instruments for industrial companies and banks and similar financial institutions. IFRS 7 supersedes IAS 30 (Disclosures in the Financial Statements of Banks and Similar Financial Institutions) and the disclosure requirements of IAS 32 (Financial Instruments: Presentation and Disclosure). It requires that an entity make disclosures aimed at allowing the readers of the financial statements to evaluate the significance of financial instruments for the Group s financial position and performance and the nature and extent of the risks resulting from those financial instruments. The application of IFRS 7 is compulsory for fiscal years beginning on or after January 1, 2007, and will result in an increase in the disclosures on financial instruments in the notes to the consolidated financial statements. IFRIC 7 (Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies): This interpretation contains guidance on the application of IAS 29 in the event that it becomes necessary to adjust the financial statements of an entity reporting in the currency of a hyperinflationary economy. The first-time application of IFRIC 7 is compulsory for fiscal years beginning on or after March 1, It is not expected to apply to the Group s consolidated financial statements. IFRIC 8 (Scope of IFRS 2): The first-time application of the amendments is compulsory for fiscal years beginning on or after May 1, The provisions of IFRIC 8 are not expected to have a material effect on the consolidated financial statements. IFRIC 9 (Reassessment of Embedded Derivatives): IFRIC 9 addresses the specific features of accounting for embedded derivatives in accordance with IAS 39. In accordance with IFRIC 9, an entity must assess whether it is required to recognize an embedded derivative separately from the underlying contract when the respective contract is first entered into. Subsequent reassessment is prohibited unless there is a change in the terms of the contract that significantly modifies the associated cash flows. This assessment is based on the extent to which the cash flows from the embedded derivatives and / or the underlying contract have changed compared with the original cash flows. The application of IFRS 9 is compulsory for fiscal years beginning on or after June 1, 2006, but earlier application is encouraged. IFRIC 9 is not expected to have a material effect on the consolidated financial statements.

69 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 61 Basis of Preparation First-time application of IFRIC 4 (embedded leases) D.Logistics AG has applied IFRIC Interpretation 4 (Determining Whether an Arrangement Contains a Lease), which is compulsory for fiscal years beginning on or after January 1, 2006, in its present consolidated financial statements. The accounting changes required by IFRIC 4 resulted in the restatement of prior-period figures. In accordance with the criteria set out in IFRIC 4, certain items of property, plant and equipment in the Warehouse Logistics and Consumer Goods Packaging segments have been classified as embedded finance leases. This relates to land, buildings, technical equipment and machinery that is used exclusively on a customer-specific basis. The disposal of the respective item of property, plant and equipment is assumed and a financial receivable is recognized in the amount of the net investment. This will reduce the sales and earnings of the affected segments in future, with financial income from the corresponding financial receivables recognized instead. This accounting change results in the following restatements: Reconciliation of equity in thousand 2005 Equity as of December 31, 2005 (reported) 77,456 Adjustment due to the accounting change for specific items of property, plant and equipment to be reclassified as finance leases (IFRIC 4) Change in property, plant and equipment (10,694) Change in financial receivables 11,271 Deferred taxes (182) Total adjustments 395 Equity as of December 31, 2005 (restated) 77,851 Reconciliation of net profit after minority interests in thousand 2005 Share of net profit attributable to the shareholders of the parent company (reported) 1,300 Adjustment due to the accounting change for specific items of property, plant and equipment to be reclassified as finance leases (IFRIC 4) Change in sales (1,788) Change in cost of sales 1,040 Change in financial income from leases 880 Deferred tax expense (31) Total adjustments 101 Profit / (loss) attributed to equity holders adjusted 1,401 The prior-period amounts for the notes affected by these restatements have been restated accordingly.

70 0 62 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Scope of Consolidation Scope of Consolidation Consolidated companies In addition to D.Logistics AG, the group of fully consolidated companies includes all major subsidiaries and subgroups over which D.Logistics AG has legal or effective control., Dec. 31, 2005 Additions Disposals Dec. 31, 2006 Consolidated subsidiaries thereof in Germany thereof abroad Companies accounted for using the equity method thereof in Germany thereof abroad Total As of the reporting date December 31, 2006, the basis of consolidation of the D.Logistics Group consisted of 24 fully consolidated subsidiaries in Germany and 11 in other countries. Schumacher Dienstleistung und Logistik GmbH, which was previously fully consolidated, was sold in the year under review. In addition, the service operations of D.Services GmbH were hived off into the newly formed D.Logistics Services GmbH in the year under review. The following table shows the companies fully consolidated as of December 31, 2006: Companies fully consolidated as of December 31, 2006 Country Equity interest (%)* Aircon Airfreight Container Maintenance GmbH, Mörfelden-Walldorf Germany 56.7 Baumann Technologie GmbH, Oberhausen Germany 56.0 D.Logistics Airport Services GmbH, Hofheim Germany D.Logistics Services GmbH, Hofheim Germany D.Services Immobilien GmbH & Co. KG, Hofheim Germany 94.8 Dönne + Hellwig Logistics GmbH, Hofheim Germany Dualogis GmbH, Obernburg Germany 51.0 Pickpoint AG, Hofheim Germany 92.2 Deufol Tailleur GmbH, Oberhausen (including subsidiaries) Germany 55.0 Alltrans Exportverpackung GmbH, Hamburg Germany 65.5 APL / Techno-Pack Verpackungs GmbH, Frankfurt Germany BVU Bayerisches Verpackungsunternehmen GmbH, Munich Germany Deufol Exportverpackung GmbH, Oberhausen Germany Deutsche Tailleur Industrie-Service GmbH, Nuremberg Germany DTG Eggemann Industrieverpackung GmbH, Bochum Germany DTG Madlener Verpackungslogistik GmbH, Remshalden Germany 60.0 DTG Mannheim GmbH, Mannheim Germany GGZ Gefahrgutzentrum Frankenthal GmbH, Frankenthal Germany GTV Logistik GmbH, Philippsburg Germany 100.0

71 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 63 Scope of Consolidation Companies fully consolidated as of December 31, 2006 Country Equity interest (%)* Günter Baumann Transport + Verpackung GmbH, Oberhausen Germany Horst Lange GmbH, Hamburg Germany 56.7 IAD Industrieanlagen-Dienst GmbH, Munich Germany IAS Industrieanlagen-Service GmbH, Nuremberg Germany Tailleur & Topp GmbH, Berlin Germany D.Logistics North America Inc., Sunman, Indiana (including subsidiaries) USA Franks Industries Inc., Sunman, Indiana USA 85.0 J & J Packaging Inc., Brookville, Indiana USA 85.0 D.Logistics Packing N. V., Tienen Belgium D.Logistics Tienen N. V., Tienen Belgium D.Logistics Services N. V., Tienen (including subsidiaries) Belgium Arcus Installation N. V., Houthalen Belgium AT + S N. V., Houthalen Belgium T - D.Logistics N. V., Waremme Belgium 98.8 Local_Log. S. R. L., Rho Italy So. Ge. Ma. S. p. A., Rho Italy 95.0 * attributable to the relevant parent Investments accounted for using the equity method The following companies were included in consolidation using the equity method: Companies accounted for using the equity method as of December 31, 2006 Country Equity interest (%) SIV Siegerländer Industrieverpackung GmbH, Kreuztal Germany 50.0 Abresch Industrieverpackung GmbH, Viernheim Germany 50.0 Deutsche Tailleur Bielefeld GmbH & Co. KG, Bielefeld Germany 30.0 D.Logistics France SAS, Saint Nabord France 24.0 The figures of the investments accounted for using the equity method are as follows: Assets in thousand Dec. 31, 2006 Dec. 31, 2005 Current assets 3,641 4,581 Noncurrent assets 2,232 3,905 Total assets 5,873 8,486 Equity and liabilities in thousand Liabilities 4,833 8,525 Equity 1,040 (39) Total equity and liabilities 5,873 8,486 Sales 19,746 19,945 Total expenses (18,589) (19,782) Annual net profit 1,

72 0 64 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Scope of Consolidation Acquisition and disposals By way of a notarized agreement dated August 10, 2006, D.Logistics AG sold its 50 % interest in and receivables from GHX Europe GmbH, which was previously consolidated using the equity method, to Global Healthcare Exchange Europa Holding B.V. 2.0 million of the total selling price of 7.5 million was recognized in fiscal year The further cash flow from the transaction can be broken down as follows: 3.0 million as of January 1, 2007, 1.0 million as of June 30, 2007, and the remaining 1.5 million spread over the period until mid The last tranche has been recognized as a long-term receivable with a present value of 1.3 million. A disposal gain in the amount of 5.37 million was recognized in the consolidated financial statements of D.Logistics AG. This was calculated as the present value of the purchase price ( 7.32 million) less the carrying amount of the assets sold ( 1.85 million) and the transaction costs ( 0.10 million). By way of a further notarized agreement dated August 10, 2006, Deufol Tailleur GmbH, which is included in the consolidated group of D.Logistics AG, disposed of its 51 % interest in Schumacher Dienstleistungen und Logistik GmbH. This disposal was effected in order to prevent the continued negative earnings development at Schumacher GmbH from having a further impact on the Group s consolidated earnings. The selling price was one euro. GmbH recorded revenue of 7.4 million and an operating loss of 1.27 million in the first half of the year. The following table shows the accounting effects of these deconsolidations: in thousand Jun. 30, 2006 Dec. 31, 2005 Assets 6,070 5,410 thereof current 4,191 3,389 thereof noncurrent 1,879 2,021 Equity and liabilities 6,070 5,410 thereof current liabilities 5,976 3,931 thereof noncurrent liabilities thereof equity (315) 1,005

73 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 65 Consolidated Income Statement Disclosures Consolidated Income Statement Disclosures 01 Sales Sales include rental and lease income from investment property in the amount of 230 thousand (previous year: 232 thousand). For further information on sales, please refer to the segment reporting. 02 Cost of sales The following expenses are included in the cost of sales: in thousand Restated Cost of purchased services 88,982 83,726 Personnel expenses 88,583 88,208 Cost of materials 61,751 58,302 Rental and lease expenses 17,603 16,234 Depreciation and amortization 8,099 9,246 Incidental office space costs 3,933 4,549 Maintenance costs 4,116 3,167 Insurance premiums 2,987 2,834 Vehicle fleet costs 1,853 1,944 Expenses for loss or damage incurred 1, Other 5,298 4,784 Total 284, ,944 Cost of sales include expenses of 124 thousand (previous year: 284 thousand) relating to investment property that generated income throughout the entire fiscal year. 03 Selling expenses The following expenses are included in selling expenses: in thousand Personnel expenses 3,701 3,461 Travel expenses Rental and lease expenses Bad debt charges Cost of purchased services Advertising costs Other selling expenses Total 5,445 4,904

74 0 66 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Consolidated Income Statement Disclosures 04 General and administrative expenses The following expenses are included in general and administrative expenses: in thousand Personnel expenses 13,740 14,872 Legal and consulting costs 2,089 3,334 Depreciation and amortization 1,217 1,628 IT and communications costs 1,059 1,073 Cost of purchased services Rental and lease expenses Incidental office space costs Travel expenses Annual General Meeting and annual report Other administrative expenses 3,358 2,556 Total 24,297 26, Other operating income The following table shows the breakdown of other operating income: in thousand Gains on disposals 5,453 0 Reversal of provisions 1,613 3,213 Income from legal proceedings 1,479 0 Gain on disposal of Schumacher Insurance compensation Gains on disposal of other noncurrent assets Exchange rate gains Miscellaneous 3,212 3,951 Total 12,942 7,831

75 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 67 Consolidated Income Statement Disclosures 06 Other operating expenses The following table shows the breakdown of other operating expenses: in thousand Relocation costs 1, Bad debt charge for Schumacher Write-down of Dahn Losses on disposal of noncurrent assets Legal costs 0 1,050 Miscellaneous 2,493 2,673 Total 5,122 4, Net finance costs Net finance costs can be broken down as follows: in thousand Restated Financial income 2,322 1,779 from bank balances from convertible bond from capital leases Reversal of provisions Finance costs (4,917) (6,448) from financial liabilities (3,538) (4,216) from convertible bond (882) (1,174) from finance leases (497) (520) Addition to provisions 0 (538) Share of profit of associates Other finance costs 0 (123) Total (2,041) (4,754) 08 Income tax expense The Group s income taxes can be broken down as follows: in thousand Restated Effective income tax expense Germany 1,123 1,270 Abroad 2,210 1,528 Deferred income taxes due to the occurrence or reversal of temporary differences Germany Abroad (774) 1,174 Total 3,460 4,332

76 0 68 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Consolidated Income Statement Disclosures As of December 31, 2006, deferred taxes for companies in Germany were calculated using a total tax rate of % (previous year: 39 %). The relevant local tax rates are used to calculate the deferred taxes of foreign companies. The difference between expected and reported income tax expense is attributable to the following causes: in thousand Restated Profit from continuing operations before income taxes 14,091 6,620 Income tax rate (incl. trade tax) of the D.Logistics Group (%) Expected tax expense 5,406 2,582 Effect of different tax rates (150) (167) Effect of changes in tax rates 50 0 Valuation allowances and unrecognized deferred tax assets on loss carryforwards 1,633 3,387 Effect of the utilization of previously unrecognized tax losses (660) (155) Effect of tax-exempt income (3,255) (1,361) Effect of expenses not deductible for tax purposes Tax effect of investments accounted for using the equity method (41) 142 Prior-period tax effects (111) 0 Other (288) (853) Income tax expense 3,460 4,332 Effective tax rate (%) Deferred tax assets can be broken down as follows: in thousand Restated Tax loss carryforward 1,855 3,291 Changes recognized directly in equity Finance leases 651 1,820 Convertible bond Provisions for pensions and similar obligations Other 2, Total 5,920 6,169 Deferred tax assets include 3,574 thousand (previous year: 4,832 thousand) for consolidated companies in Germany. In Germany, tax loss carryforwards can be carried forward indefinitely, although domestic income is subject to minimum taxation. As of December 31, 2006, tax loss carryforwards amounted to a total of 88.0 million (previous year: 84.6 million). Of this amount, 83.2 million can be carried forward indefinitely. Temporary differences relating to shares in subsidiaries and associates for which no deferred taxes were accounted for total 5.1 million (previous year: 2.7 million).

77 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 69 Consolidated Income Statement Disclosures Deferred tax liabilities can be broken down as follows: in thousand Restated Differences in the depreciation periods of items of property, 3,035 3,545 plant and equipment Finance leases 499 1,618 Changes recognized directly in equity 14 1,170 Other Total 4,115 6, Net profit attributable to minority interests The consolidated net profit attributable to minority interests primarily consists of profit shares attributable to companies in the Deufol Tailleur Group. 10 Earnings per share In accordance with IAS 33, basic earnings per share are calculated by dividing the consolidated net profit or loss for the period attributable to shareholders of D.Logistics AG by the average number of shares outstanding during the fiscal year. Newly issued shares are included ratably for the period they are in issue. The weighted average increased as a result of the partial conversion of the convertible bond in August Earnings are diluted when the average number of shares is increased by adding potential shares from option and conversion rights. The convertible bonds issued in December 2004 are not dilutive because their conversion to common shares would not reduce earnings per share from continuing operations. Earnings per share in thousand Restated Profit from continuing operations attributable to holders of common shares of D.Logistics AG 11, Profit from discontinued operations attributable to holders of common shares of D.Logistics AG 0 1,036 Net profit attributable to holders of common shares of D.Logistics AG 11,388 1,401 Shares outstanding Figures in units Weighted average number of shares 42,495,602 42,360, Other consolidated income statement disclosures The following personnel expenses are included in the expense items: in thousand Wages and salaries 89,990 90,439 Social security contributions 16,034 16,102 Total 106, ,541 The average number of employees in 2006 was 3,145 (previous year: 3,219). At December 31, 2006, the Group had a total of 3,016 employees (previous year: 3,210). The Group auditors fees recognized in the consolidated income statement amounted to 418 thousand (previous year: 295 thousand) for audits of financial statements and 25 thousand (previous year: 0) for other services.

78 0 70 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Consolidated Balance Sheet Disclosures Consolidated Balance Sheet Disclosures 12 Cash and cash equivalents The following table shows the breakdown of cash and cash equivalents: in thousand Cash on hand Checks not yet paid in Bank balances 11,463 7,610 Total 11,716 7,806 There are no restrictions on the amounts reported as cash and cash equivalents. 13 Financial receivables In accordance with the criteria set out in IFRIC 4, embedded finance leases have been identified in certain contracts with customers. This relates primarily to land, buildings, technical equipment and machinery that is used exclusively on a customer-specific basis. Corresponding financial receivables have been recognized on the basis of the net investment in the future lease installments to be paid by the customer. The total of the future minimum lease payments can be broken down as follows as of December 31, 2006: in thousand Total future minimum lease payments 17,348 19,251 thereof due within one year 1,953 1,903 thereof due between one and five years 7,115 7,333 thereof due in more than five years 8,280 10,015 Present value of future minimum lease payments 12,406 13,458 thereof due within one year 1,179 1,052 thereof due between one and five years 4,645 4,630 thereof due in more than five years 6,582 7,776 Interest element 4,942 5,793 These amounts differ from the amounts reported under financial receivables in the balance sheet by 2,147 thousand due to the fact that the minimum lease payments include expected future investment. 14 Trade receivables All trade receivables are non-interest-bearing and are generally due within days. in thousand Trade receivables 53,477 48,655 Valuation allowances (1,125) (1,221) Trade receivables, net 52,352 47,434 Trade receivables from related parties amount to 645 thousand (previous year: 363 thousand).

79 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 71 Consolidated Balance Sheet Disclosures 15 Inventories The following table shows the breakdown of inventories: in thousand Raw materials, consumables and supplies 10,587 11,255 Finished products and merchandise 2,143 2,525 Work in progress 956 1,458 Payments on account Total 13,766 15, Other receivables and other assets The following table shows the breakdown of the Other receivables item: in thousand Total Current Total Current Value added tax and other taxes receivable Receivables from employees Receivables from related parties ,195 2,195 Guarantees and pledged bank accounts 2, , GHX purchase price receivable 5,334 4, Receivables from former shareholders 1, ,350 0 Purchase price receivable from the sale of the plot of land in Fagano Olona (Italy) 0 0 1,500 1,500 Loan receivable from Aescudata GmbH Prepaid expenses Other receivables and other assets 1, ,644 1,248 Total 13,175 6,612 10,572 7,215

80 0 72 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Consolidated Balance Sheet Disclosures Consolidated statement of changes in assets 2006 in thousand Gross values Dec. 31, 2005 Currency Changes in Additions Disposals Reclassifi- Dec. 31, 2006 translation the basis of cations adjustments consolidation Property, plant and equipment Land, land rights and buildings 37,599 (1,575) (74) 109 (7) (26) 36,026 Technical equipment and machinery 48,933 (3,025) (868) 1,520 (1,364) ,437 Operating and office equipment 31,281 (233) (2,718) 1,747 (1,667) ,553 Advance payments made and assets under construction 501 (142) 0 2,860 (24) (348) 2,847 Leased assets 12, ,317 (1,376) (10) 12,746 Investment property 1, ,948 Total 133,064 (4,975) (3,660) 7,566 (4,438) 0 127,557 Intangible assets Patents, licenses, trademarks and similar rights and assets 10,577 0 (459) 277 (3,735) 0 6,660 Goodwill 45,131 (3,218) (773) 0 41,540 Total 55,708 (3,218) (459) 677 (4,508) 0 48,200 Financial assets Financial assets accounted for using the equity method 1, (1,166) Shares in affiliated companies Other equity investments 60 0 (6) Noncurrent loans Noncurrent financial instruments Total financial assets 2,064 0 (6) 4 (1,166) Total 190,836 (8,193) (4,125) 8,247 (10,112) 0 176,653

81 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 73 Consolidated Balance Sheet Disclosures Depreciation and amortization charges Net amounts Dec. 31, 2005 Currency Changes in Additions Disposals Reclassifi- Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2006 translation the basis of cations adjustments consolidation 12,249 (548) (44) 1,919 (7) (7) 13,562 25,350 22,464 33,380 (1,936) (275) 3,353 (1,000) (49) 33,473 15,553 11,964 16,768 (180) (1,592) 2,354 (1,340) 66 16,076 14,513 12, ,847 7, ,611 (1,276) (10) 7,500 5,640 5, ,178 1,073 70,329 (2,664) (1,911) 9,355 (3,623) 0 71,486 62,735 56,071 8,644 0 (329) 869 (3,724) 0 5,460 1,933 1, ,131 41,540 8,644 0 (329) 869 (3,724) 0 5,460 47,064 42,740 (332) 0 0 (554) (696) 0 (1,582) 2,120 2, (6) (305) 0 (6) (554) (696) 0 (1,561) 2,369 2,457 78,668 (2,664) (2,246) 9,670 (8,043) 0 75, , ,268

82 0 74 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Consolidated Balance Sheet Disclosures Consolidated statement of changes in assets 2005 (restated) in thousand Gross values Dec. 31, 2004 Currency Changes in Additions Disposals Reclassifi- Dec. 31, 2005 translation the basis of cations adjustments consolidation Property, plant and equipment Land, land rights and buildings 38,301 2,016 (969) 215 (1,999) 35 37,599 Technical equipment and machinery 44,301 3,841 (271) 2,226 (1,694) ,933 Operating and office equipment 32, (337) 2,707 (3,690) 55 31,281 Advance payments made and assets under construction 4, (4,260) (617) 501 Leased assets 12, (839) (3) 12,815 Investment property 1, ,935 Total 134,154 6,171 (1,573) 6,794 (12,482) 0 133,064 Intangible assets Patents, licenses, trademarks and similar rights and assets 11, (2,228) 0 10,577 Goodwill 39,744 4, ,770 (452) 0 45,131 Total 51,569 4, ,169 (2,680) 0 55,708 Financial assets Financial assets accounted for using the equity method 3, (1,452) 0 1,788 Shares in affiliated companies (16) 9 25 Other equity investments (42) (9) 60 Noncurrent loans Noncurrent financial instruments (300) 0 2 Total financial assets 3, (1,810) 0 2,064 Total 189,275 10,263 (992) 9,262 (16,972) 0 190,836

83 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 75 Consolidated Balance Sheet Disclosures Depreciation and amortization charges Net amounts Dec. 31, 2004 Currency Changes in Additions Disposals Reclassifi- Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2005 translation the basis of cations adjustments consolidation 12, (495) 1,926 (1,999) 0 12,249 26,112 25,350 29,544 2,262 (145) 3,367 (1,650) 2 33,380 14,757 15,553 17, (258) 2,641 (3,091) 0 16,768 15,003 14, , , ,558 (746) (2) 7,175 6,361 5, ,246 1,178 66,019 3,098 (898) 9,596 (7,486) 0 70,329 68,135 62,735 9, ,361 (2,147) 0 8,644 2,550 1, ,744 45,131 9, ,361 (2,147) 0 8,644 42,294 47,064 (294) 0 0 (38) 0 0 (332) 3,456 2, (50) (225) 0 0 (30) (50) 0 (305) 3,777 2,369 75,069 3,098 (743) 10,927 (9,683) 0 78, , ,168

84 0 76 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Consolidated Balance Sheet Disclosures 17 Property, plant and equipment Property, plant and equipment also includes leased buildings and machinery and equipment where the Group as lessee is considered to be the economic owner because all substantial risks and rewards incident to the use of the leased assets are transferred. Within leased assets, the following amounts are attributable to the Operating and office equipment and Technical equipment and machinery asset classes: in thousand Restated Cost 7,417 7,486 Accumulated depreciation and amortization charges (4,319) (4,272) Net carrying amount 3,098 3,214 The following amounts are attributable to Land and buildings : in thousand Cost 5,329 5,329 Accumulated depreciation and amortization charges (3,181) (2,903) Net carrying amount 2,148 2,426 As of December 31, 2006, the fair value of investment property was 1.3 million. The fair value of investment property was measured on the basis of the Company s yield analysis. In the year under review, a property was written down in the amount of 451 thousand. This write-down was reported in the income statement under other operating expenses, and was based on a change in the estimated future income from the property as well as current market data. 18 Intangible assets Intangible assets primarily consist of the goodwill recognized on consolidating acquirees. The currency translation adjustments result from the translation of the US dollar-denominated financial statements of the Group s US subsidiaries. Other intangible assets include an internally generated intangible asset (distribution network) with a carrying amount of 298 thousand as of December 31, The useful life of the distribution network is estimated to be five years. 19 Financial assets In addition to investments in associates and joint ventures accounted for using the equity method, the Financial assets item also includes shares in unconsolidated affiliated companies, other equity investments, loans and noncurrent financial instruments.

85 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 77 Consolidated Balance Sheet Disclosures 20 Financial liabilities The following table provides an overview of the liabilities to banks (bank loans, overdrafts and noncurrent borrowings) and other financial liabilities of the D.Logistics Group: in thousand thereof with a remaining maturity of thereof with a remaining maturity of Total up to 1 to 5 over Total up to 1 to 5 over 1 year years 5 years 1 year years 5 years Banks 46,767 20,972 14,917 10,878 47,294 18,508 15,312 13,474 Convertible bonds 7,408 1,760 5, ,466 2,222 5,244 0 Liabilities under finance leases 5,046 1,261 2,572 1,213 5,386 1,259 2,587 1,540 Miscellaneous financial liabilities 5,678 5, ,967 5, Total other financial liabilities 18,132 8,492 8,427 1,213 18,819 8,762 8,517 1,540 Financial liabilities 64,899 29,464 23,344 12,091 66,113 27,270 23,829 15,014 Property, plant and equipment in the amount of 35.7 million, trade payables in the amount of 14.8 million and inventories in the amount of 8.9 million have been pledged as collateral to secure liabilities to banks and other financial liabilities. Bank loans and overdrafts The Group has agreed credit lines with various banks amounting to 29.1 million. As of December 31, 2006, 14.7 million of this amount had been utilized at variable rates of interest. The financial liabilities carried in the balance sheet are subject to standard market interest rate risk. The weighted average interest rate on current borrowings in fiscal year 2006 was 6.81 % (previous year: 5.98 %). The following table shows the material noncurrent bank loans of the Group : Currency Carrying Remai- Effective Currency Carrying Remai- Effective amount ning interest amount ning interest ( thou- matu- rate (%) ( thou- matu- rate (%) sands) rity sands) rity (years) (years) Loans EUR 12, EUR 13, Loans EUR 3, EUR 3, Loans EUR EUR 1, Loans USD 9,438 to USD 9,655 to The conditions of some of the Company s loan agreements require it to achieve certain financial ratios (covenants). At December 31, 2006, the Company failed to meet the respective targets for one loan agreement due to the high cash outflow for investments and tax payments. This relates to liabilities in the amount of 13.3 million. This did not trigger an automatic repayment obligation. It is at the bank s discretion to demand or waive a repayment. The bank gave a written declaration of waiver to the company.

86 0 78 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Consolidated Balance Sheet Disclosures Convertible bond On December 8, 2004, D.Logistics AG placed a convertible bond in the principal amount of 7.2 million with shareholders and institutional investors in Germany and abroad. It issued a total of 72,000 individual bonds with a face value of each at an issue price of 100 %. The individual bonds have a maturity of five years and bear interest of 7.00 % per year. The bond can be converted into up to 4.0 million new shares from the Company s contingent capital at a conversion price of The conversion right can be exercised on business days after the 2005 Annual General Meeting until December 8, 2009, except for the non-exercise periods detailed in section of the bond terms and conditions. On conversion, the Company can opt to make a cash settlement for some or all of the shares. The bond is unsecured and ranks equally with all current and future non-subordinated liabilities of the Company. The Company has undertaken, for as long as the bond is outstanding, not to pledge any more of its assets as collateral for capital market liabilities without allowing bondholders equal ranking for this collateral. The convertible bond also includes the Company s right to make early repayment in the event of a change of control over the Company. The Company is entitled to make early repayment due to immateriality; immateriality is deemed to exist when the total amount of individual bonds outstanding falls below 1.5 million. The convertible bond is traded on the Regulated Unofficial Market of the Frankfurt Stock Exchange. IAS 39 requires that the derivative embedded in the convertible bond (conversion right) be separated from the bond, as the economic risks and characteristics of the conversion right are not closely related to those of the host contract (convertible bond), and measured at fair value. The fair value of the derivative at the balance sheet date was 1,760 thousand (previous year: 2,222 thousand). The change of 462 thousand resulting from its measurement at fair value is reported in the income statement under financial income. The fair value was measured using a Black-Scholes model with the following parameters: interest rate 3.89 %, conversion price 1.80, expected volatility %. The 347 thousand increase in the fair value of the underlying agreement due to the use of the effective interest method was also recognized in financial income. Liabilities under finance leases As of December 31, 2006, total future minimum lease payments from finance leases were as follows: in thousand Total future minimum lease payments 9,952 11,032 of which due within one year 2,392 2,340 of which due in one to five years 5,578 5,722 of which due in more than five years 1,982 2,970 Present value of future minimum lease payments 8,072 8,531 of which due within one year 1,861 2,038 of which due in one to five years 4,408 4,548 of which due in more than five years 1,803 1,945 Interest element 1,880 2,501

87 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 79 Consolidated Balance Sheet Disclosures 3,026 thousand (previous year: 3,145 thousand) of the liabilities under finance leases are included in noncurrent borrowings. Of these, liabilities of 600 thousand (previous year: 779 thousand) have a remaining maturity of up to one year, liabilities of 1,836 thousand (previous year: 1,568 thousand) have a remaining maturity of one to five years and liabilities of 590 thousand (previous year: 798 thousand) a remaining maturity of more than five years. Other financial liabilities Other financial liabilities can be broken down as follows: in thousand Loans from related parties 5,422 4,854 Miscellaneous 256 1,113 Total 5,678 5, Trade payables Trade payables amounting to 34,239 thousand (previous year: 32,568 thousand) all have remaining maturities of less than one year. They include trade payables of 1,865 thousand (previous year: 1,884 thousand) that have not yet been invoiced. 22 Other liabilities Other liabilities can be broken down as follows: in thousand Total Current Total Current Value added tax and other taxes payable 2,204 2,204 2,233 2,233 Social security liabilities 1,205 1,205 1,988 1,988 Liabilities to employees relating to wages and salaries 1,924 1,924 2,340 2,340 Other liabilities to employees (annual leave, overtime, etc.) 6,075 6,075 7,035 7,035 Liabilities from put options 1,835 1,835 2,483 2,483 Liabilities to related parties Miscellaneous 1, ,212 2,754 Total 14,961 14,665 19,544 19, Other provisions The following table shows the changes in other provisions: in thousand Jan. 1, Utili- Reversal Addi- Curr- Changes Dec. 31, 2006 zation tion ency in the 2006 trans- basis of lation consolidifferen- dation ces Guarantee and liability risk 1, ,153 Litigation risk 2, , (49) 643 Other risks 1, (22) 1,015 Total 4,534 1,051 1,782 1,181 0 (71) 2,811

88 0 80 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Consolidated Balance Sheet Disclosures A provision recognized in the previous year in the amount of 1.5 million for a case lost in the court of first instance was reversed in the year under review due to the successful appellate proceedings. Provisions for guarantee and liability risks included assuming obligations for former subsidiaries and the claims from damage and other warranties. These provisions were recognized on the basis of experience from previous years. The provisions recognized by the D.Logistics Group are mainly current provisions. More specifically, the outflows are structured as follows based on when they are expected to be settled: Current Noncurrent Total in thousand Guarantee and liability risk 1, ,153 1,048 Litigation risk 643 2, ,285 Other risks 842 1, ,015 1,201 Total 2,557 4, ,811 4, Provisions for pensions The D.Logistics Group has both defined contribution and defined benefit pension schemes in place. The defined benefit pension plans include pension obligations (funded and unfunded) and noncurrent benefit entitlements (provisions for similar post-employment benefits). Noncurrent benefit entitlements are recognized in the balance sheet at the Italian subsidiaries. The recognized provisions can be broken down as follows: in thousand Pension provisions Provisions for other post-employment benefits 1,403 1,562 Total 1,987 2,095 The pension obligations (actuarial present value of benefit entitlements or defined benefit obligation) were calculated using actuarial methods. The calculations were based on the following parameters: Germany Italy in thousand Discount rate 4.4 % 4.4 % 4.3 % 4.0 % Turnover rate * 0.0 % 0.0 % 0.0 % 0.0 % Salary trend 1.0 % 1.0 % 3.0 % 3.0 % Pension trend 1.0 % 1.0 % 3.0 % 3.0 % * No assumptions are made with regard to turnover, as all benefits are vested.

89 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 81 Consolidated Balance Sheet Disclosures Pension obligations are measured in accordance with the provisions of IAS 19. The following table shows the changes in the present value of the total obligation: in thousand Present value of the obligation at January 1 2,004 2,083 Current pension expense Interest cost Pension payments (345) (109) Actuarial losses (15) (234) Present value of the obligation at December 31 1,896 2,004 The present value of the total obligation was 2,107 thousand at December 31, 2003 and 2,083 thousand at December 31, Adjustment to reconcile the total obligation to net pension provisions: in thousand Present value of the total obligation at December 31 1,896 2,004 Unrealized gains Net pension provisions at December 31 1,987 2,095 The net pension provisions recognized in the balance sheet changed as follows in the fiscal year: in thousand Net pension provisions at January 1 2,095 1,923 Current pension expense Pension payments (345) (109) Net pension provisions at December 31 1,987 2,095 Pension expense in the fiscal year can be broken down as follows: in thousand Current service cost Interest cost Actuarial gains / (losses) (15) 17 Total pension expense In the case of the defined contribution plans, the D.Logistics Group does not enter into any obligations above and beyond its obligation to pay contributions. In 2006, pension expenses relating to defined contribution plans totaled 672 thousand (previous year: 556 thousand).

90 0 82 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Consolidated Balance Sheet Disclosures 25 Subscribed capital As of December 31, 2006, the subscribed capital was 42,498,621 (previous year: 42,493,788), composed of the same number of no-par value bearer shares. In the past fiscal year, the subscribed capital increased by 4,833 as a result of the exercise of conversion rights attaching to the convertible bond issued in December As of December 2005, an amount of 19,263,858 (year-end 2004: 19,263,858) was available as authorized capital for issuing new shares against cash or non-cash contributions. The Annual General Meeting on June 29, 2004 resolved to authorize the Company to increase the Company s share capital by up to 19,263,858 in the period to May 31, In addition, following the reversal of the authorization to create contingent capital in 2000, new contingent capital was created in 2004, authorizing the Company to increase its share capital by a nominal amount of 15,000,000 in the period to May 31, The total nominal amount of bonds may not exceed 500,000,000. Including outstanding options, contingent capital amounted to 15,523,056 at December 31, The Annual General Meeting on July 4, 2006 resolved to authorize the Company to purchase up to 4,249,378 treasury shares in the period between July 4, 2006 and January 3, 2008; this corresponds to 10 % of the share capital as of July Capital reserves Capital reserves increased from 104,121 thousand to 104,210 thousand in the year under review. This was due to the premium paid when the 2004 convertible bond was converted into shares in 2006 and the recognition of stock options in 2006.

91 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 83 Consolidated Balance Sheet Disclosures 27 Other recognized income and expense The following table shows the changes in the components of other recognized income and expense, including tax effects: Before Tax After Before Tax After in thousand taxes effect taxes taxes effect taxes Cumulative translation adjustment as of January 1 2,909 (1,135) 1,774 (3,654) 1,425 (2,229) Change in unrealized gains / losses (5,439) 2,106 (3,333) 6,563 (2,560) 4,003 Realized gains / losses Cumulative translation adjustment as of December 31 (2,530) 971 (1,559) 2,909 (1,135) 1,774 Unrealized gains / losses from the fair value measurement of financial instruments as of January 1 89 (35) 54 (161) 65 (96) Change in unrealized gains / losses Realized gains / losses (89) 35 (54) 250 (100) 150 Unrealized gains / losses from the fair value measurement of financial instruments as of December (35) 54 Cash flow hedge reserve (1) 0 (1) (38) 15 (23) Change in unrealized gains / losses 54 (18) (15) 22 Realized gains / losses (12) 4 (8) Cash flow hedge reserve as of December (14) 27 (1) 0 (1) Deferred taxes recognized directly in equity amount to 2,127 thousand (previous year: 2,675 thousand). In addition, the balance of deferred tax assets and liabilities changed by 207 thousand due to currency translation at the closing rate. 28 Equity attributable to minority interests Equity attributable to minority interests primarily relates to the minority interests in companies of the Deufol Tailleur Group. The changes in these interests are presented in detail in the statement of changes in equity.

92 0 84 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Consolidated Balance Sheet Disclosures 29 Share-based payment Stock Option Plan September 2000 A stock option plan with a volume of up to 2,141,993 ( Stock Option Plan September 2000 ) was approved for employees at the Extraordinary General Meeting on September 26, 2000 in Frankfurt am Main. The exercise of the options is tied to hurdles. After approval by the Executive Board and the Supervisory Board, an initial tranche of 350,000 stock options was issued to around 2,400 employees in the fourth quarter of ,490 options from this tranche were still in circulation at December 31, The term of the options was six years and ended on October 27, After approval by the Executive Board and the Supervisory Board, a second tranche of 75,000 stock options was issued to 66 employees in the third quarter of ,000 options from this tranche are still in circulation. Half of the transferred options may be exercised after a lock-up period of three years and the remaining half after five years. The term of the options is six years and ends on September 20, Stock Option Plan August 2002 At the Annual General Meeting on August 13, 2002, a stock option plan was resolved for members of the Executive Board and members of the management of subsidiaries in Germany and abroad with a volume of up to 850,000 shares ( Stock Option Plan August 2002 ). The issue period is limited to twelve days after publication of quarterly or annual financial statements. The subscription price is calculated as the average price after such a publication plus 25 %. Stock options may be exercised for the first time two years after issue and only during the issue period of ten days, starting twelve days after the publication of quarterly or annual financial statements. An exercise hurdle of an additional 50 % on the subscription price must be observed. The stock options may be issued on one or several occasions up to August 12, 2007, and have a term of three years. In 2006, a total of 80,000 stock options were issued under the Stock Option Plan August 2002 (2005: 100,000 stock options; 2004: 100,000 stock options; 2003: 33,334 stock options). The changes in the options issued to eligible employees under the Stock Option Plan August 2002 are summarized in the following table: Number Exercise price Number Exercise price (average, in ) (average, in ) Options outstanding (at January 1) 233, , Options granted 80, , Options forfeited 116, Options exercised Options expired 16, Options outstanding (at December 31) 180, , of which exercisable at December 31 50,

93 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 85 Consolidated Balance Sheet Disclosures IFRS 2 (Share-based Payment) must be applied for the first time to stock options issued after November 7, 2002 that were not exercisable on January 1, The D.Logistics Group decided not to adopt the standard prior to the effective date, as a result of which IFRS 2 is applied only to options outstanding under the Stock Option Plan August The total number of options outstanding as of December 31, 2006 (193,000) therefore includes 13,000 options that have not been recognized in accordance with IFRS 2. In accordance with IFRS 2, the fair value of the stock options issued is determined using an option pricing model. The total value of the options at the issue date is recognized ratably as a personnel expense over the lock-up (vesting) period. In the year under review, the options issued under the Stock Option Plan August 2002 resulted in personnel expenses of 19.9 thousand (previous year: 36.1 thousand). The weighted average remaining contractual term of the options outstanding as of December 31, 2006 is 1.62 years (previous year: 1.82 years). The weighted average fair value of the options granted during the fiscal year was 19,408 (previous year: 38,670). The range of subscription prices for options outstanding at the end of the reporting period is between 2.10 and 2.28 (previous year: 2.10 and 2.69). The fair value of equity-settled stock options is determined at the grant date using the Black- Scholes option pricing model. The calculation at the relevant exercise date was based on the following parameters: Issue / valuation date Jun. 29, 2004 Jun. 6, 2005 Apr. 21, 2006 Sep. 5, 2006 Share price at the issue date ( ) Subscription price ( ) Expected share price volatility (%) Expected dividend yield (%) Risk-free interest rate (%) Term of options (years) The expected volatility is based on the assumption that future trends can be inferred from historical volatility; however, actual volatility may differ from the assumptions made. No other factors relating to the option grant were incorporated into the measurement of fair value.

94 0 86 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Consolidated Cash Flow Statement Disclosures Consolidated Cash Flow Statement Disclosures The consolidated cash flow statement is prepared in accordance with IAS 7. It shows the origin and use of cash flows in fiscal years 2006 and 2005 and is therefore of key importance when it comes to assessing the financial position of the D.Logistics Group. The cash flow statement distinguishes between cash flows from operating activities, investing activities and financing activities. The cash and cash equivalents reported in the cash flow statement correspond to the Cash and cash equivalents item in the balance sheet and comprise cash on hand, checks and immediately available bank balances with an original maturity of up to three months. A breakdown of cash and cash equivalents is provided in Note (12). Net cash from or used in investing activities and financing activities is determined on the basis of cash flows in each case. By contrast, net cash from or used in operating activities is derived using the indirect method. 30 Net cash provided by (used in) operating activities Net cash provided by (used in) operating activities amounted to 9.3 million in fiscal year 2006 (previous year: 7.7 million). It should be noted that adjustments were made for the effects of changes in the basis of consolidation million of the cash inflow from the disposal of GHX Europe in 2006 in the amount of 2.0 million was allocated to other receivables and other assets, as receivables from the company in this amount were sold as part of the transaction. Net cash provided by (used in) operating activities includes the following payments: in thousand Interest received 1,387 2,004 Interest payments 4,428 5,223 Income tax payments 2,922 1,884 In 2006, as in the previous year, there were no cash flows from dividends paid or received. 31 Net cash provided by (used in) investing activities The past fiscal year saw net cash provided by (used in) investing activities of 4.7 million, compared with 2.2 million in Net cash provided by (used in) financing activities In the past fiscal year, net cash provided by (used in) financing activities totaled 0.3 million, compared with 13.8 million in The proceeds from capital increases relate to minority interests. 33 Change in cash and cash equivalents 0.36 million of the change in cash and cash equivalents is due to the disposal of equity investments. Further disclosures on these disposals can be found under Acquisitions and disposals on page 64. Overall, cash and cash equivalents increased by 3.9 million. Net debt, which is defined as the difference between the Group s financial liabilities and cash and cash equivalents, fell by 4.1 million.

95 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 87 Other Disclosures Other Disclosures 34 Contingencies and contingent liabilities Within the Group, guarantees have been granted to third parties only for items reported in the balance sheet or reciprocal rental payment guarantees within the Group. The Group has guarantees to associates totaling 996 thousand (previous year: 1,416 thousand). Expenses amounting to 15,893 thousand (previous year: 17,240 thousand) were recognized in the consolidated income statement due to rental agreements and leases that do not qualify as finance leases under IFRSs (operating leases). The proportion of contingent lease payments included therein is of minor significance. Claims relating to packaging damages were brought against a subsidiary. The Company has been found to be liable in the pending court proceedings. The claim for damages amounts to 7.1 million. In the Company s opinion, the level of damages will be considerably less and within the scope of the risk covered. 35 Obligations under operating leases Group as lessee The future (non-discounted) minimum lease payments under such non-cancelable leases that had an original or remaining maturity of more than one year as of December 31, 2006 are as follows: in thousand Dec. 31, 2006 Dec. 31, 2005 Not later than one year 10,416 17,634 Later than one year and not later than five years 26,802 41,639 Later than five years 5,459 28,731 Total minimum lease payments 42,677 88,004 These standard market obligations result primarily from leases for warehouse or office space, vehicles, and IT and office equipment. The leases have terms of between one and six years and, in some cases, contain a renewal option. 36 Receivables under operating leases Group as lessor The D.Logistics Group has concluded leases for the commercial leasing of its investment property. These leases have remaining, non-cancelable terms of between three and five years. All leases contain a clause under which the rent can be adjusted annually on the basis of prevailing market conditions. In the process of the first-time application of IFRIC 4 further operating leases were identified with the Group as lessor. These contracts have remaining, non-cancelable terms of between one and five years. As of December 31, 2006, receivables in the form of future minimum lease payments under non-cancelable operating leases are as follows: in thousand Dec. 31, 2006 Dec. 31, 2005 Not later than one year 1,364 1,385 Later than one year and not later than five years 2,694 3,038 Later than five years 1,012 1,545 Total minimum lease payments 5,070 5,968

96 0 88 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Other Disclosures 37 Sale and leaseback transactions In fiscal year 2005, a company belonging to the D.Logistics Group sold an undeveloped plot of land on which the investor subsequently constructed a logistics center. This logistics center was leased back under a long-term property lease concluded in fiscal year In accordance with IAS 17, the transaction involving the sale of the plot of land that has been leased back under the property lease is classified as a sale and leaseback transaction. The book profit realized in fiscal year 2005 was 205 thousand. The annual liabilities under the property lease amount to 1,428 thousand. 38 Contingent assets As of the balance sheet date, there were no contingent assets that could have a significant financial impact on the D.Logistics Group. 39 Government grants There are a number of conditions attached to the government grants extended to the Company. The D.Logistics Group currently meets these conditions in full. If it fails to meet the conditions, the D.Logistics Group may be obliged to repay the grants received. This obligation has not been recognized as a liability. In previous years, the D.Logistics Group received government grants for its investment projects totaling 0.7 million. It was required to repay an amount of 0.3 million, which was recognized in full as a liability. Over and above this, the conditions attached to these grants have been met in full. 40 Financial risk management In the course of its operating activities, the D.Logistics Group is exposed in particular to interest rate risk, currency risk, default risk and risks arising from price fluctuations. The D.Logistics Group uses a standardized, Group-wide risk management system to manage these risks. The aim is to establish an operating routine based on actions, and therefore on constant risk minimization. Within the D.Logistics Group, derivatives are used exclusively for risk reduction purposes. Currency risk Due to the foreign-currency cash inflows and outflows arising from its operating activities, the D.Logistics Group is exposed to risks resulting from changes in foreign exchange rates. As a whole, these risks are of minor significance for the D.Logistics Group. If the amounts involved are significant, the D.Logistics Group uses forward exchange transactions to manage currency risks. The D.Logistics Group has not currently used any forward exchange transactions to hedge currency risks. Liquidity risks Financing is fully decentralized in the D.Logistics Group. The main types of financing deployed are bilateral bank credits and syndicated lines of credit. In addition, some companies in the Group also have loans from shareholders. The liquidity status of the consolidated companies is monitored by means of monthly reporting on an ongoing basis.

97 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 89 Other Disclosures Interest rate risk Interest rate derivatives were entered into in connection with medium-term financing measures for the purposes of managing and limiting the related interest rate risk. In September 2002, five interest rate hedging transactions were concluded in US dollars, one of which expired in 2003, one in 2004 and one in These interest rate swaps are directly allocated to certain loans in the form of cash flow hedges. The change in the fair value of these interest rate swaps is reported in accumulated changes recognized directly in equity. The fair values are based on market prices for comparable instruments. Default risk The risk of default is small, as the portfolio of receivables is widely spread and risks are concentrated only to a limited extent on a certain number of large customers from various sectors of industry. In addition, transactions are only entered into with counterparties of impeccable financial standing. Risks arising from price fluctuations As a result of its activities, the D.Logistics Group is exposed to procurement risk. The Group manages this risk primarily through order-based purchasing and long-term supply contracts. The following table shows the notional amounts and maturities of the Group s interest rate derivatives as of December 31, 2006: Interest rate derivatives Maturity Currency Notional amount Start date Maturity date US dollar 4,234,231 Oct. 1, 2002 Sep. 1, 2007 Fair values The following table shows carrying values and deviating fair values in the Group. Financial instruments used: Net carrying amount Fair value in thousand Financial assets Other financial assets 10,259 11,271 13,035 14,832 Financial liabilities 63,139 63,891 64,704 67,398 Current account liabilities 14,674 9,387 14,674 9,387 Bank loans 32,093 37,907 32,013 38,790 Underlying agreement convertible bond 5,648 5,244 6,938 7,015 Liabilities under finance leases 5,046 5,386 5,401 6,239 Other financial liabilities 5,678 5,967 5,678 5,967

98 0 90 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Segment Information by Division and Region Segment Information by Division and Region 41 Segment reporting The provisions of IAS 14 (Segment Reporting) require certain data and key figures in the annual financial statements to be broken down by business line and region. Based on its products and services, D.Logistics AG s business lines are allocated to the Consumer Goods Packaging, Industrial Goods Packaging and Warehouse Logistics segments. Consumer Goods Packaging The Consumer Goods Packaging segment comprises logistics services for consumer goods. The activities consolidated under this segment include the design and production of packaging, primary packaging, secondary packaging (display construction), warehouse planning and management, distribution logistics, transport coordination, document management and value-added services. Industrial Goods Packaging The Industrial Goods Packaging segment performs specialist logistics activities for manufacturers of capital and investment goods, such as packaging design, the production of special packaging, export packaging logistics, long-term packaging and the management of major logistics projects. Warehouse Logistics The Warehouse Logistics segment comprises logistics services such as warehouse planning and management, assembling, spare parts logistics, just-in-time logistics and value-added services. Its activities also include cargo handling for international airlines. Holding company The holding company comprises the Group s administrative activities and, in addition to Group management functions, includes support functions such as key account management and corporate communications. Transactions between the operating segments or between the operating segments and the holding company are concluded at arm s length prices. The D.Logistics Group operates mainly in Germany, Italy, Belgium and the USA. For the purposes of the secondary reporting format, its operations are therefore divided into Germany, Rest of Europe and USA / Rest of the World.

99 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 91 Segment Information by Division and Region 42 Segment information by division (primary reporting format) Consumer Industrial Ware- Holding Consoli- Group Goods Goods house company dation in thousand Packaging Packaging Logistics 2006 External sales 139, ,479 62, ,363 Internal sales 9,373 20,617 2,772 1,299 (34,061) 0 Total sales 148, ,096 64,851 1,590 (34,061) 322,363 EBITA = EBIT 3,788 6,089 3,624 1,518 1,113 16,132 Financial result (1,964) (765) (971) 1,659 0 (2,041) of which earnings from associates (5) EBTA = EBT 1,824 5,324 2,653 3,177 1,113 14,091 Taxes (1,103) (1,389) (1,206) (3,460) Profit (loss) from discontinued operations (net of tax) 0 Profit (loss) for the period 10,631 Assets 84,024 45,105 40,764 32, ,536 Non-allocated assets 8,060 Total assets 210,596 Financial liabilities 18,637 14,835 15,612 15, ,899 Other debt 29,878 14,403 7,679 2, ,998 Non-allocated debt 6,761 Total liabilities 125,678 Depreciation, amortization and impairment 4,503 2,462 2,197 1, ,224 Investments 4,935 1,846 1, , (restated) External sales 131, ,914 72, ,516 Internal sales 8,228 17,023 2,356 1,141 (28,748) 0 Total sales 140, ,937 74,784 1,459 (28,748) 313,516 EBITA = EBIT 3,703 5,907 3,447 (1,924) ,374 Financial result (2,131) (954) (880) (789) 0 (4,754) of which earnings from associates (8) (500) 0 38 EBTA = EBT 1,572 4,953 2,567 (2,713) 241 6,620 Taxes (2,474) (506) (1,675) (4,332) Profit (loss) from discontinued operations (net of tax) 1,036 Profit (loss) for the period 3,324 Assets 85,884 42,132 45,914 30, ,544 Non-allocated assets 7,866 Total assets 212,410 Financial liabilities 18,363 16,266 16,798 14, ,113 Other debt 26,572 15,514 12,023 4, ,741 Non-allocated debt 9,705 Total liabilities 134,559 Depreciation, amortization and impairment 4,663 3,094 2, ,965 Investments 2,867 2,307 2,920 1, ,262

100 0 92 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Segment Information by Division and Region 43 Segment information by region (secondary reporting format) Market prices are used as the basis for transfer prices between Group companies. Germany Rest of USA / Rest Holding Consoli- Group Europe of the company dation in thousand World 2006 External sales 166,422 90,852 64, ,363 Internal sales 23,340 2,776 6,646 1,299 (34,061) 0 Total sales 189,762 93,628 71,444 1,590 (34,061) 322,363 EBITA = EBIT 7,454 3,942 2,105 1,518 1,113 16,132 Financial result (1,546) (317) (1,837) 1,659 0 (2,041) EBTA = EBT 5,908 3, ,177 1,113 14,091 Taxes (2,262) (1,388) (48) (3,460) Assets 60,912 56,181 52,800 32, ,536 Financial liabilities 15,952 19,762 13,370 15, ,899 Other debt 19,815 24,417 7,728 2, ,998 Depreciation, amortization and impairment losses 3,865 2,503 2,794 1, ,224 Investments 2,705 1,365 3, ,247 Employees (average) 1, , (restated) External sales 165,632 87,396 60, ,516 Internal sales 19,276 2,274 6,057 1,141 (28,748) 0 Total sales 184,908 89,670 66,227 1,459 (28,748) 313,516 EBITA = EBIT 8,888 2,706 1,463 (1,924) ,374 Financial result (1,607) (625) (1,733) (789) 0 (4,754) EBTA = EBT 7,281 2,081 (270) (2,713) 241 6,620 Taxes (1,952) (2,570) (133) (4,332) Assets 63,467 54,232 56,231 30, ,544 Financial liabilities 17,589 23,528 10,310 14, ,113 Other debt 24,877 20,550 8,682 4, ,741 Depreciation, amortization and impairment losses 4,877 2,577 2, ,965 Investments 4,474 2,369 1,251 1, ,262 Employees (average) 2, ,219

101 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 93 Segment Information by Division and Region 44 Goodwill by segment The following table shows the allocation of goodwill by segment: Consumer Industrial Warehouse Total Goods Goods Logistics in thousand Packaging Packaging Carrying amount as of Dec. 31, ,031 24,109 7,991 45,131 Additions Currency translation adjustments (3,218) 0 0 (3,218) Impairment losses Disposals 0 0 (773) (773) Reclassifications 15 0 (15) 0 Carrying amount as of Dec. 31, ,228 24,109 7,203 41, Impairment testing In accordance with IAS 36 (Impairment of Assets), goodwill should be tested for impairment at least once a year. In the course of impairment testing, the carrying amount of a cash-generating unit (CGU) is compared with its recoverable amount. The recoverable amount of a CGU is the higher of its carrying amount less costs to sell and its value in use. In the D.Logistics Group, the Consumer Goods Packaging, Industrial Goods Packaging and Warehouse Logistics segments are defined as CGUs. This corresponds to the procedure adopted in previous years and the chosen structure for Group management and financial reporting purposes. The recoverable amount is the value in use as calculated on the basis of the present value of future cash flows. Future cash flows are determined on the basis of the multiple-year financial plans of the companies included in consolidation. The concrete planning period in each case is 3 years. The forecasts contained therein are based on past experience and expected future segment and market development. Discount rates are determined on the basis of market data and amount to 6.91 % for the Group s CGUs. The terminal growth rates (2 %) do not exceed the long-term growth rates for the industry and region in which the cash-generating units operate. Impairment testing did not identify the need to recognize impairment losses for the CGUs defined above. 46 Events after the balance sheet date There were no significant events after the balance sheet date that would require disclosure in accordance with IAS 10.

102 0 94 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Supplementary Disclosures Supplementary Disclosures Disclosures concerning the executive bodies The following persons were appointed to the Executive Board during the reporting period: Name and position Other board positions held Detlef W. Hübner Businessman CEO Appointed until July 31, 2009 Andreas Bargende Lawyer COO Appointed until August 31, 2009 Tammo Fey Businessman CFO Appointed until February 14, 2009 Thomas Schwinger-Caspari Degree in business administration CFO until February 15, 2006 Deputy Chairman of the Supervisory Board of Neue Sentimental Film AG, Frankfurt am Main (since May 28, 2004) Group positions: Chairman of the Supervisory Board of PickPoint AG, Darmstadt (since January 14, 2003) Member of the Board of Directors of Local_Log S. R. L., Rho, Italy (since November 18, 2003) Managing Director of D.Logistics Airport Services GmbH, Hofheim (since March 3, 2005) Managing Director of Deufol Tailleur GmbH, Oberhausen (since April 12, 2006) Group positions: Managing Director of D.Services GmbH, Hofheim (until June 23, 2006) Member of the Supervisory Board of PickPoint AG (since August 14, 2006) Group positions: Member of the Supervisory Board of PickPoint AG, Hofheim (until August 14, 2006) Member of the Board of Directors of Local_Log S. R. L., Rho, Italy (until January 23, 2007) The total remuneration of the Executive Board can be broken down as follows: in thousand 2006 Fixed remuneration 756 Variable remuneration 388 Total remuneration 53 Fair value of stock options granted 13 Total 1,210 Total remuneration in the previous year amounted to 1,188 thousand. In addition, payment claims of 590 thousand were paid to a former Executive Board member in the past fiscal year; this amount was expensed in In 2006, 50,000 stock options were issued to members of the Executive Board (previous year: 100,000). For further information, please refer to the remuneration report contained in the management report.

103 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 95 Supplementary Disclosures The following persons were appointed to the Supervisory Board during the reporting period: Name and position Dr. Wolfgang Friedrich Ministerialrat (retired) Chairman of the Supervisory Board Appointed until the 2007 AGM Helmut Olivier Member of the Executive Board of Lehman Brothers AG Deputy Chairman Appointed until the 2007 AGM Prof. Dr.-Ing. Kai Furmans Holder of the endowed chair in logistics at the University of Karlsruhe Supervisory Board member since July 26, 2005 Appointed until the 2008 AGM Other board positions held No other board positions held No other board positions held No other board positions held No loans or advances were granted to members of the Supervisory Board, nor were any contingent liabilities assumed in favor of the members of the Supervisory Board. In 2006, as in the previous year, the total remuneration of the Supervisory Board amounted to 60 thousand. This amount was paid to the individual members as follows: 30 thousand to Dr. Wolfgang Friedrich, 15 thousand to Helmut Olivier, and 15 thousand to Prof. Kai Furmans.

104 0 96 Page Consolidated Financial Statements Notes to the Consolidated Financial Statements Supplementary Disclosures Shareholdings of executive body members The number of shares held by members of the Executive Board amounted to 15,168,572 no-par value shares as of December 31, The number of options held by members of the Executive Board was 160,000 as of December 31, The members of the Supervisory Board did not hold any shares or options on shares of D.Logistics AG. The individual holdings of the Executive Board members are as follows: value No-par No-par value Options as of Options as of shares as of shares as of Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2006 Dec. 31, 2005 Executive Board Detlef W. Hübner 14,785,239 13,975, ,000 Andreas Bargende 383, , , ,667 Tammo Fey Thomas Schwinger-Caspari n,a, 383, ,667 Total 15,168,572 14,742, , ,334 In addition, Mr. Detlef W. Hübner held D.Logistics AG convertible bonds with a principal amount of 50 thousand as of December 31, Directors dealings Directors dealings in D.Logistics AG s financial instruments are published in a timely manner in accordance with the relevant legal requirements. An overview of transactions is also provided on the D.Logistics AG homepage ( under Shares in the Investor & Public Relations section. Declaration of conformity in accordance with section 161 of the German Stock Corporation Act The declaration of conformity with the recommendations of the Government Commission on the German Corporate Governance Code required under section 161 of the German Stock Corporation Act was issued in February 2007 and made permanently available to shareholders on the Internet. Related parties General As well as the companies included in the consolidated financial statements, D.Logistics AG also has direct or indirect relations with non-consolidated affiliated companies, joint ventures and associates in the course of its normal business. Business relationships with these companies are entered into on an arm s length basis. The following table shows the services performed by the Group for related parties and for the Group by related parties in the past fiscal year:

105 Notes to the Consolidated Financial Statements Consolidated Financial Statements Page 0 97 Supplementary Disclosures Transactions with related parties in thousand 2006 Associates and other equity investments Other related parties Sales 1, Expenses (2,173) (2,739) Receivables 1, Liabilities 425 5,550 in thousand 2005 Associates and other equity investments Other related parties Sales Expenses (2,061) (1,980) Receivables 1, Liabilities (122) 5,091 The transactions with other related parties relate primarily to Mr. Manfred Wagner. Mr. Wagner is the managing director of Deufol Tailleur GmbH and holds an indirect interest in the Deufol Tailleur subgroup. Mr. Wagner has made direct and indirect loans to Deufol Tailleur GmbH and Günter Baumann Transport + Verpackung GmbH. The carrying amount of these loans at December 31, 2006 was 5.3 million. In addition, relationships with companies in which Mr. Wagner holds an interest resulted in expenses amounting to 2,259 thousand and income of 276 thousand in the year under review. Services were provided at arm s length prices in all cases and relate mainly to rental agreements and purchased materials. The transactions with other related parties also include relationships with companies in which Mr. Detlef W. Hübner holds a majority interest. These transactions resulted in income amounting to 150 thousand and expenses of 20 thousand in the year under review. At December 31, 2006, the Group had receivables from these companies in the amount of 118 thousand.

106 0 98 Page Consolidated Financial Statements Auditors Report Auditors Report We have audited the consolidated financial statements comprising the balance sheet, income statement, cash flow statement, statement of changes in equity, and the notes and the Group management report prepared by D.Logistics AG, Hofheim am Taunus, for the fiscal year from January 1 to December 31, The preparation of the consolidated financial statements and the Group management report in accordance with IFRSs as adopted by the EU and the supplementary provisions of German commercial law required to be applied under section 315a (1) of the Handelsgesetzbuch (HGB German Commercial Code) is the responsibility of the Company s management. Our responsibility is to express an opinion on the consolidated financial statements and the Group management report based on our audit. We conducted our audit of the consolidated financial statements in accordance with section 317 of the HGB and the German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting standards and in the Group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements 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 the companies included in the consolidated financial statements, the determination of the companies to be included in the consolidated financial statements, the accounting and consolidation principles used and significant estimates made by the management, as well as evaluating the overall presentation of the consolidated financial statements and the Group management report. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations. In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSs as adopted by the EU and the supplementary provisions of German commercial law required to be applied under section 315a(1) of the HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The Group management report is consistent with the consolidated financial statements, as a whole provides a suitable understanding of the Group s position and suitably presents the opportunities and risks of future development. Eschborn / Frankfurt am Main, March 23, 2006 Ernst & Young AG Wirtschaftsprüfungsgesellschaft Hanft Wirtschaftsprüfer Vöhl Wirtschaftsprüfer

107 100 Information on D.Logistics AG 103 Glossary 104 Key Group Figures Five-Year Overview 106 Operating subsidiaries / affiliates of D.Logistics AG 108 Imprint

108 The warehouse is where all logistics services come together. Modern warehouse logistics seamlessly integrate different workflows: incoming goods, picking, packing, transport scheduling and distribution. This is why we take the entire supply chain into account when designing a warehouse and optimally integrate our warehouse management function with a company s operations and with the company itself, if necessary. Customers warehouse logistics are in the best possible hands with our experts.

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