consumer goods packaging - deufol - … in property, plant and equipment 8,500 9,163 23,865 31,956...

D.Logistics North America Inc. (US)

Consumer Goods Packaging

Franks Industries Inc. (US)

J&J Packaging Inc. (US)

D.Logistics Packing N.V.(BE)

So.Ge.Ma. S.p.A. (IT)

GHX Austria GmbH 1) (AT)

GHX Belgium B.V.B.A. 1) (BE)

GHX Switzerland AG 1) (CH)

GHX UK Ltd. 1) (GB)

TecSol Ltd. –A GHX Company 2) (GB)

D.Logistics Services N.V. (BE)

Arcus Installation N.V. (BE)

AT+S N.V. (BE)

E&A Consult B.V.B.A. 2) (BE)

GHX Europe GmbH 1)

Aescudata Gesellschaft für Datenverarbeitung mbH 1)

Aescudata Gesellschaft fürDatenverarbeitung mbH 1) (AT)

AIRCON Airfreight ContainerMaintenance GmbH

D.Logistics Airport Services GmbH

D.Services GmbH

Dönne+Hellwig Logistics GmbH

DUALOGIS GmbH

Local_log S.R.L. (IT)

D.Logistics Tienen N.V. (BE)

D.Logistics France SAS 2) (FR)

SCI Immo DLS 2)

(FR)

T-D.Logistics Belgium N.V. (BE)

Warehouse Logistics

50.0

85.0

100.0

95.0

85.0

60.0

100.0

51.0

100.0

100.0

100.0

100.0

100.0

100.0 43.7

100.0

56.7

100.0

94.78

100.0

51.0

99.97

100.0

24.0

0.57

98.86

97.5

1.25

100.0

Operating subsidiaries/affiliates of D.Logistics AG*

GGZ GefahrgutzentrumFrankenthal GmbH

Schumacher Dienstleistung & Logistik GmbH

DLogistics Korea Ltd. 2) (KR)

GTV Logistik GmbH

L+L Lager und LogistikGmbH & Co. KG

L+L Lager und LogistikVerwaltungs GmbH

Droppoint Holdings Ltd. 3) (GB)

Droppoint Australia Ltd. 3) (AU)

Droppoint New Zealand Ltd. 3) (NZ)

Pickpoint AG 3)

Collectpoint plc 2) 3)

(GB)

Pick Point GmbH 2) 3)

(AT)

Deufol Tailleur GmbH

Baumann Technologie GmbH

Deutsche Tailleur Industrie-Service GmbH

APL/Techno-PackVerpackungs GmbH

DTG Verpackungs-Logistik GmbH

DTG Madlener Verpackungs-Logistik GmbH & Co. KG

DTG Mannheim GmbH

Deufol Exportverpackung GmbH

Deufol Securitas Int. GmbH 1)

Securitas Int. B.V. 1)

(BE)

Abresch Industrieverpackung GmbH 1)

BVU Bayerisches Verpackungsunternehmen GmbH

Industrial Goods Packaging

BVU Automotive Beteiligungs GmbH

BVU Automotive GmbH & Co. KG

Deutsche Tailleur Bielefeld GmbH & Co. KG 1)

Deutsche Tailleur Bielefeld Beteiligungs GmbH 1)

DTG EggemannIndustrieverpackung GmbH

G. Baumann Transport + Verpackung GmbH

Horst Lange GmbH

IAD Industrieanlagendienst GmbH

SIV Siegerländer Industrieverpackung GmbH 1)

Tailleur & Topp GmbH

Alltrans Exportverpackung GmbH

17.5

51.0

100.0

100.0

85.0

16.12

50.0

100.0

51.0

17.5

75.0

25.0

100.0

100.0

10.0

100.0

100.0

60.0

75.0

100.0

50.0

50.0

100.0

55.0

46.0

100.0

50.0

100.0

100.0

30.0

30.0

100.0

100.0

56.7

100.0

50.0

100.0

65.0

*as at March 2005

In % Direct investments Included at equity

Indirect investments Unconsolidated

Discontinued operations3)

2)

1)

Key Data for the D.Logistics Group

in € thousands 2004 2003 2002 2001 2000

Income Statement

Total sales 312,470 303,495 342,582 484,272 382,518

Germany 167,740 158,756 156,477 173,930 185,137

Abroad 144,730 144,739 186,105 310,342 197,377

International sales ratio (%) 46.32 47.69 54.32 64.08 51.60

EBITDA 22,756 19,519 5,587 42,371 35,004

EBITA 8,906 4,871 (6,205) 24,463 24,503

EBIT 8,906 (19,725) (6,205) 12,420 23,384

EBT 3,072 (26,768) (16,279) 1,643 18,590

Income taxes (1,648) (3,736) (1,484) (5,311) (7,762)

Minority interests (2,106) (2,189) (613) (1,599) (1,207)

Income (loss) from discontinued operations (1,111) (5,299) 3,303 (20,407) —

Effect of the first-time application of SFAS 142 — — (76,593) — —

Net income (loss) (1,793) (37,992) (91,666) (25,674) 9,621

Earnings per share (€) (0.05) (1.08) (2.68) (0.90) 0.36

Balance Sheet

Current assets 99,515 86,752 130,257 187,650 144,208

Noncurrent assets 131,053 150,295 188,106 370,340 297,431

Total assets 230,568 237,047 318,363 557,990 441,639

Liabilities 168,695 185,215 223,034 363,248 220,081

Shareholders’ equity 61,873 51,832 95,329 194,742 221,558

Equity ratio (%) 26.84 21.87 29.94 34.90 50.16

Net debt 75,977 86,624 100,648 199,541 76,381

Cash Flows/Capital Expenditures

Net cash provided by (used in) operating activities 8,179 10,726 5,879 (399) 13.468

Net cash provided by (used in) investing activities (601) 8,149 33,946 (122,761) (289.852)

Net cash provided by (used in) financing activities (6,177) (22,895) (55,656) 138,232 279.731

Investments in property, plant and equipment 8,500 9,163 23,865 31,956 24.858

Employees

Employees (as of December 31) 3,364 3,543 3,686 6,214 4.782

Personnel costs 107,424 116,494 128,858 195,314 137.979

To Our Shareholders* 002

From the Divisions* 016

Management Report* 024

Consolidated* 046Financial Statements

Information on D.Logistics AG* 092

Facts & Figures* 095

004 * Foreword by the Executive Board

008 * Report of the Supervisory Board

011 * Corporate Governance

014 * D.Logistics’ Shares

Contents

026 * Report on Economic Position

036 * Report on Post-Balance Sheet Date Events

037 * Report on Expected Developments

040 * Risk Report

048 Consolidated Income Statement

049 Consolidated Balance Sheet

050 Consolidated Cash Flow Statement

051 Statement of Changes in Consolidated Shareholders’ Equity

052 * Notes to the Consolidated Financial Statements

052 Accounting Policies

060 Scope of Consolidation

064 Notes to the Consolidated Income Statement

068 Notes to the Consolidated Balance Sheet

076 Stock-based compensation

077 Notes to the Consolidated Cash Flow Statement

078 Contingent Liabilities and Other Financial Liabilities

080 Segment Information by Business Area and Region

084 Summary of Material Differences Between HGB and US GAAP

088 Supplementary Disclosures

091 * Independent Auditors’ Opinion

095 * Glossary

096 * Key Group Figures – Five-Year Overview

key to symbols overleaf * Financial Calendar

key to symbols overleaf * Publication Details

018 * Consumer Goods Packaging

020 * Industrial Goods Packaging

022 * Warehouse Logistics

092 Income Statement of D.Logistics AG

093 Balance Sheet of D.Logistics AG

094 D.Logistics AG Key Subsidiaries and Affiliates

ISIN: DE0005101505 WKN: 510150

Mission Statement

Logistics has many parts – we view it as a whole. D.Logistics AG optimizes the entire logisticschain. We specialize in the packaging of consumer and industrial goods, as well as warehouselogistics. Around the world, our subsidiaries implement logistics concepts and specialist solutionsin all sizes and across all industries. By extending the process chain and offering innovativeservices, we improve our customers’ ability to provide added value.

The D.Logistics Group is a strong logistics partner for the global marketplace.

To Our Shareholders*

Positive development at D.Logistics

Dear shareholders,

2004 was a successful year for D.Logistics AG. We continued our upward trend and demonstrated

that corporate crises can be overcome by a program of systematic consolidation. One of the key

objectives implemented in 2004 was the conclusion of restructuring measures. Having returned to

operating profitability in 2003, we recorded a steady improvement in earnings in 2004.

This overall positive development is reflected in the figures for the past fiscal year. The D.Logistics

Group actually exceeded its sales and earnings forecasts for the year as a whole. Despite the ex-

change rate impact caused by the strong euro, and disposals of consolidated companies, Group sales

rose by 3.0% to € 312.5 million. EBITA improved significantly in 2004, by € 4 million to € 8.9 million.

We have recorded positive EBITA in each of the last nine quarters, meaning that our operating

turnaround is built on solid foundations. Alongside the streamlining of the order portfolio and the

implementation of debt and cost reduction measures, the reorientation of internal organizational

and staff structures had the desired effect.

There is every reason to view the future development of the D.Logistics Group with a strong

sense of optimism. In 2004, we acquired more prominent new customers, including Oral-B and

Osram Sylvania, and successfully expanded business relations with existing clients such as Krones,

Medion and Siemens.

Financing and capital increase

The D.Logistics Group’s financial indebtedness was further reduced in 2004. As of the end of the

year, net debt amounted to € 76.0 million (previous year: € 86.6 million). D. Logistics AG reached an

agreement at the end of March 2005 on follow-on financing for its existing syndicated loan. The

credit line amounts to € 13.6 million, thus safeguarding planned liquidity requirements. The term of

this standby facility is one year, guaranteeing a sound basis for the Company’s further development.

In May 2004, the Executive Board of D.Logistics AG resolved a non-cash capital increase from

authorized capital in the amount of € 3.1 million. The capital was increased by the contribution of

shareholder loans. Based on an issue price of € 1.71 per share, the capital increase reduced

D.Logistics AG’s debt by around € 5.3 million.

page 04/096 _AR 2004 *Foreword by the Executive BoardTo Our Shareholders*

Foreword by the Executive Board

Detlef W. Hübner (50)1979 Managing shareholder of Dönne + Hellwig GmbH; 1998 Formation of D.Logistics AG; Areas of Responsibility: Investor & Public Relations, Human Resources and Risk Management

Andreas Bargende (42)1993 to 2002 KPMG; lawyer and since 2000 partner in the Financial AdvisoryServices /Corporate Restructuring unit; since 09/2002 Chief Operating Officer at D.Logistics;Areas of Responsibility: Legal, InvestmentManagement and Key Accounting

AR 2004_ page 05/096*Foreword by the Executive Board To Our Shareholders*

Convertible bond

The Company’s financial restructuring program was completed in December 2004 with the issue of

a convertible bond with a notional volume of € 7.2 million. The 72,000 bonds, each with a notional

amount of € 100.00, were placed with shareholders and institutional investors in Germany and

abroad. The first conversion opportunity is after the 2005 Annual General Meeting at a conversion

price of € 1.80. The cash inflow from the convertible bond will serve to optimize the maturity struc-

ture of liabilities and improve the Company’s credit rating. The proceeds will strengthen the funding

base for the expansion of our business activities, as well as increasing the financial stability of the

D.Logistics Group.

New management structures bear fruit

The D.Logistics Group has taken a systematic approach to streamlining its management. The reor-

ganization of the existing hierarchies into team-oriented management structures has proved its

worth, not least with the successful response to the accident at the warehouse in Oleggio, Italy.

The structural damage, for which D.Logistics was not responsible, led to bottlenecks that we were

able to resolve swiftly and to the satisfaction of all concerned. D.Logistics demonstrated excellent

crisis management skills in this situation, and many of the companies affected extended their con-

tracts early, thus underlining the strength of our customer relationships.

Direct processes – lean management. For us, the concept of quality encompasses both process

and management quality. Establishing transparent planning and coordination structures and strength-

ening local competencies must be key priorities for a group like D.Logistics. The right decisions

can only be made within clear structures. Accordingly, we will continue to ensure high standards

of process planning and management at all levels in future, as well as stressing the importance of

executive development.

Thomas Schwinger-Caspari (42)1991 to 2002 KPMG; auditor in the Financial Advisory Services /Transaction Services unit; since 09/2002 Chief Financial Officer at D.Logistics; Areas of Responsibility: Finances and Financial Control

/096 _AR 2004 *Foreword by the Executive BoardTo Our Shareholders*

Logistics value chain

Nowadays, logistics is no longer an isolated process between production and the end user. Com-

prehensive logistics concepts cover everything from production planning and parts procurement,

through packaging and warehouse management, down to distribution. Our core competencies and

many years of experience put us in a strong position within this process chain. We are the German

market leader for industrial export packaging. Our sector-specific expertise in the area of consumer

and industrial goods includes the automotive and electricals sectors, mechanical and plant engineering,

and power plant construction. Our SAP-certified IT infrastructure and the IT solutions we have

developed set new standards for the market.

A large number of well-known companies place their trust in the packaging and logistics expertise

of the D.Logistics Group.

As a specialist in packaging for complex projects and state-of-the-art warehouse logistics, we

occupy key positions along the logistics chain, allowing us to optimize the entire “logistics value

chain” from a single source.

Expanding our service range

The main impetus for expanding the logistics chain comes from the customer. Customers demand

a level of process awareness that includes the integration of upstream procurement activities and

distribution management as part of an end-to-end logistics offering. Consequently, we plan to

further expand our service range, building on the foundations of our primary sales drivers – the

packaging of consumer and industrial goods, and warehouse logistics. Production planning, parts

procurement and supply management for our customers’ production processes will increasingly

form part of our logistics management activities, while distribution to end users and the establish-

ment of efficient sales networks will grow in importance.

D.Logistics already coordinates the entire procurement process for its customer Sanford, the US-

based manufacturer of stationery brands, including Rotring and Papermate. We perform successful

logistics management in the areas of purchasing, materials planning and supplier management, and

right through to export and delivery.

For future projects, we will increasingly use the expertise offered by our subsidiaries and new

alliances to leverage the potential of transport services. For example, we will integrate forwarding

services into our logistics management offering on a project-by-project basis. Our aim for 2005 is

to press ahead with the expansion of our service range in the areas of procurement and distribution.

AR 2004_ page 07/096*Foreword by the Executive Board To Our Shareholders*

Local growth

The D.Logistics Group intends to further expand its successful customer-oriented regional strategy.

A logistics service provider has to grow wherever customer demand is strongest. Our subsidiaries’

logistics solutions for their respective regions can be combined seamlessly with existing structures,

or can be integrated directly within the customer itself using our Inhouse-Outsourcing® concept.

In the area of warehouse logistics in particular, companies are increasingly discovering the bene-

fits of combining existing regional structures with the external expertise of a specialist service provider.

Our Warehouse Logistics segment allows companies to hand over the responsibility for state-of-the-

art, on-site warehouse management to our experts.

This high degree of customer proximity means that D.Logistics is able to adapt to heightened

demand and capacity requirements both quickly and efficiently. As an Inhouse-Outsourcing® partner,

we grow along with the company. The advantages of this concept are underlined by a wide range

of successful cooperations, such as with Lufthansa Cargo and Infineon. We believe that this area

will continue to offer significant growth potential in future.

Recognized excellence in financial communication

Transparent, comprehensive communication with our shareholders is of particular importance to us.

For this reason, we were honored to receive the Gold Award from the League of American Com-

munications Professionals for our 2003 Annual Report, which was ranked among the best in its

peer group from a field of 1,200 reports. We guarantee that we will continue to provide our share-

holders with comprehensive financial communication in future, keeping them informed of all the

key events relating to the Company.

Bright prospects for the future

We have mastered the problems that faced us in the past. By working together, we have succeeded

in steering D.Logistics back to a steady course over the past three years. This kind of achievement

would not have been possible without the efforts of everyone involved in the Company. We would

therefore like to express our particular gratitude to the employees of the D.Logistics Group.

The high level of customer satisfaction has been a key factor in our return to profitability. Our

customers of many years’ standing have remained faithful to us even in difficult times, and so have

supported us along the way.

We are looking to the future with optimism and confidence. The D.Logistics Group can boast

efficient structures, outstanding service products and a global reputation for its expertise as a strong

logistics partner. In 2005, we will once again do everything within our power to ensure that this

stable upward trend continues.

/096 _AR 2004 *Report of the Supervisory BoardTo Our Shareholders*

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.

During the period under review, the Executive Board informed the Supervisory Board, both ver-

bally and in writing, of all relevant issues concerning the Company’s position and material business

transactions. It provided the Supervisory Board with current data on the sales and earnings devel-

opment of D.Logistics AG and its subsidiaries and on income/expenditure development and plan-

ning (cash statement) on a regular basis, together with its comments on this data, as applicable.

In addition, there was a comprehensive exchange of opinions between the Chairman of the Super-

visory Board and the Executive Board. The Chairman informed the other members of the Supervisory

Board in detail about these discussions.

The Supervisory Board examined the reports of the Executive Board at a total of three meetings

and in regular telephone conversations, and discussed the results of its examinations with the Executive

Board. Every member of the Supervisory Board attended at least half of these meetings. In a further

20 cases, resolutions were adopted by way of a vote conducted by e-mail or telephone.

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 was the development and stabilization of the Group. Whereas in the previous two

years, priority was given to streamlining the investment portfolio with the aim of orienting business

activities toward profitable areas with high development potential, discussions in the year under

review primarily focused on reinforcing and strengthening the earnings base in the Group’s core

business areas.

The Executive Board and the Supervisory Board discussed a number of options for achieving this

goal, both at the holding company and at the subsidiaries. It was agreed that, in the medium term,

one key objective will be the significant expansion of the business activities of the Group as a whole

with a view to providing a broader overall basis for the existing structures.

As in previous years, another topic of discussion was the reorganization of the Group’s financial

structure. The syndicated loan agreement concluded in the summer has since been replaced by a

follow-on agreement with a modified syndicate.

The Supervisory Board was also closely involved in the preparations for the issue of a convertible

bond. The corresponding agreements and the terms and conditions of the bond were discussed in

detail with the Executive Board.

Report of the Supervisory Board

AR 2004_ page 09/096*Report of the Supervisory Board To Our Shareholders*

Further topics of discussion

The situation at the Company’s Italian subsidiaries (need for recapitalization at So.Ge.Ma. S.p.A.,

major damage to the Oleggio warehouse, extreme difficulty in finding a solution for the economic

use of the property in Fagnano Olona) was the subject of an ongoing exchange of information. At

present, these problems can only be considered to have been partially resolved. The Executive Board

and the Supervisory Board are of the opinion that the Italian subsidiaries are active in an attractive,

expanding market, and that they will make a consistently positive contribution to consolidated net

income following the conclusive resolution of the current issues and the introduction of efficient

organizational and staff structures.

The contribution of loan receivables by the major shareholder Detlef W. Hübner as a non-cash

contribution against the issue of shares was completed in the year under review.

A further revision of the internal corporate governance framework will be concluded in the near

future. The main objective is to adjust the rights of approval reserved for the Supervisory Board to

reflect the Group’s holding structure even more effectively than is already the case.

The auditors for fiscal year 2004 issued a report on the implementation status of the risk manage-

ment system. This report was discussed in detail by the Executive Board and the Chairman of the

Supervisory Board. It was concluded that the early recognition of risks is generally guaranteed, but

that some of the corresponding responsibilities must be documented more clearly. A working party

consisting of the Executive Board, the Chairman of the Supervisory Board and two representatives of

the auditors will complete this project in the near future.

Finally, the principles for the 2005 business plan were discussed in detail with the Executive Board

at the Supervisory Board meeting held on December 9, 2004.

Committees

In accordance with the recommendations of the German Corporate Governance Code, the Super-

visory Board has formed an Audit Committee. In the year under review, the Audit Committee pre-

pared 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. It 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 it considered to be of importance.

The Audit Committee was directly involved in the events leading to a change in the auditors in

the year under review. Prior to approving the 2003 annual financial statements, the Chairman and

the entire Supervisory Board held in-depth discussions with the previous auditors and were satis-

fied that the qualifications to their audit opinion on the consolidated financial statements related

to formal aspects and did not embody any material financial risks for the Company.

/096 _AR 2004 *Report of the Supervisory BoardTo Our Shareholders*

Audit of the single-entity and consolidated financial statements

In accordance with the resolution by the Annual General Meeting on June 26, 2004 and the subse-

quent audit engagement issued by the Supervisory Board, the annual financial statements for the

fiscal year from January 1 to December 31, 2004 prepared by the Executive Board in accordance

with the Handelsgesetzbuch (HGB – German Commercial Code), as well as the management report

of D.Logistics AG accompanying the Group management report, 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 US GAAP.

Making use of the exemption provision contained in section 292a of the HGB, the Company did not

prepare consolidated financial statements in accordance with HGB. The supplemental disclosures

required by section 292a of the HGB were added accordingly. The auditors issued the US GAAP con-

solidated financial statements and the Group management report with an unqualified audit opinion.

All documents relating to the annual financial statements and the Executive Board’s proposal for

the appropriation of net profit, as well as 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. At the meeting held on April 15, 2005,

the Supervisory Board took note of the 2004 consolidated financial statements and the 2004 annual

financial statements of D.Logistics AG. The Supervisory Board approved and thus adopted the financial

statements on April 20, 2005 by telephone, and concurred with the Executive Board’s proposal for the

appropriation of profit.

For the purpose of correcting errors, the consolidated financial statements for 2003 and the previ-

ous years were amended in several points. Details can be found in the notes to the 2004 consolidated

financial statements (section entitled “Adjustments to Correct Errors and Reflect Reclassifications”).

Composition of the Executive Board and the Supervisory Board

There were no changes in the composition of the Executive Board or the Supervisory Board.

By resolution of the Supervisory Board on December 21, 2004, Detlef W. Hübner’s term as Chair-

man of the Executive Board, which was scheduled to end on December 31, 2004, was extended until

July 31, 2009.

The Supervisory Board members Dr. Wolfgang Friedrich and Helmut Olivier, whose terms ended

as of the end of the Annual General Meeting on June 29, 2004, were reappointed by the same Annual

General Meeting. Prof. Kai Furmans was appointed as an alternate member for both of the aforemen-

tioned members of the Supervisory Board.

The Supervisory Board would like to thank the management and all the employees of the Company

for their commitment and dedication in fiscal year 2004.

Hofheim, April 20, 2005

Dr. Wolfgang Friedrich

Chairman of the Supervisory Board

AR 2004_ page 011/096*Corporate Governance To Our Shareholders*

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 be-

tween 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 management when performing all business activities.

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.

Close cooperation between the Executive Board and the Supervisory Board

The Executive Board informs the Supervisory Board regularly, comprehensively and without delay of

all issues relating to the management and strategic development of the Company and the business

performance and financial position of the Group. The Company’s strategy is determined in con-

junction with the Supervisory Board. The rights of approval of the Supervisory Board with regard to

significant business transactions are set out in the by-laws of the Executive Board.

Supervisory Board

The Supervisory Board of D.Logistics AG consists of three members. The Supervisory Board has formed

an Audit Committee. The Committee is responsible for questions of accounting and risk manage-

ment. It discusses the interim financial statements, the annual financial statements of D.Logistics

AG and the consolidated financial statements of the D.Logistics Group. The Committee makes

recommendations on the appointment of the auditors, assesses the auditors’ suitability and inde-

pendence, and issues the engagement for the audit of the annual financial statements on the basis

of the resolution adopted by the Annual General Meeting. The Committee is also responsible for

agreeing the corresponding fees and stipulating the focuses of the audit.

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 individ-

ual 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.

Corporate Governance

/096 _AR 2004 *Corporate GovernanceTo Our Shareholders*

Compensation of the Executive Board and the Supervisory Board

All members of the Executive Board of D.Logistics AG receive both fixed and variable compensation.

In addition, two members of the Executive Board are granted a certain number of stock options

for each year of service in accordance with the new stock option plan resolved by 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 the members of the Executive Board of D.Logistics AG, is three

years, with a lockup period before exercise of two years. The subscription price is 25% higher than

the share price for the exercise period, and there is a restriction on exercise insofar as the share price

on the exercise date must be 50% higher than the subscription price.

As pension commitments are not usual within the Group, no pension commitments have been

made to members of the Executive Board.

In accordance with Article 15 of the Articles of Association, the members of the Supervisory Board

receive fixed compensation of € 15,000 and are reimbursed for expenses incurred. The Chairman

receives double this amount.

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 recognizes 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

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 devel-

opments 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 fashion, 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 Finan-

cial Calendar can be found inside the back cover of this Annual Report, and can also be accessed

online at www.dlogistics.com.

In addition to its regular reporting, D.Logistics immediately publishes any new information that

could significantly influence 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 5%, 10%, 25%, 50% or 75% of the voting rights in D.Logistics AG,

whether by way of acquisition, disposal or otherwise. Furthermore, in accordance with the Wert-

papierhandelsgesetz (WpHG – German Securities Trading Act), details of securities transactions

effected by members of the Executive Board or the Supervisory Board (and persons defined by the

WpHG as related parties) are published immediately after D.Logistics receives notification of such

transactions (directors’ dealings).

AR 2004_ page 013/096*Corporate Governance To Our Shareholders*

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 accordance with section 161 of the Aktiengesetz (AktG – German Stock Corporation Act) is

available on the Internet at www.dlogistics.com. In the declaration of conformity in accordance with

section 161 of the AktG, the Executive Board and the Supervisory Board of D.Logistics AG state that

the Company complies with 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 future. Only in the following cases does D.Logistics AG not comply with the recommendations

of the Code:

Individual disclosure of Executive Board compensation (section 4.2.4 of the Code)

The Executive Board will not disclose the compensation of the individual members, but will instead

disclose the total remuneration of the Executive Board as a whole, subdivided into basic salary, vari-

able components and stock options.

Comprehensive non-competition obligation for members of the Executive Board (section

4.3.1 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 activi-

ties performed.

Age limit for members of the Executive Board (section 5.4.1 of the Code) and the Supervisory

Board (section 5.4.1 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 5.4.5 of the Code)

The compensation paid to members of the Supervisory Board currently only contains a fixed com-

ponent. 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 and of interim financial

statements within 45 days (section 7.1.2 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.

/096 _AR 2004 *D.Logistics’ SharesTo Our Shareholders*

Reasonable year for the stock markets

2003 was largely characterized by an upward trend on the global stock markets. Quoted prices on

the leading US stock exchange increased by a relatively low 3.2% compared with the Dow Jones

Index. Gains on the Nasdaq technology index were more substantial, amounting to 8.6% over the

course of the year. On the European stock markets, the EURO STOXX 50 increased by 6.9%. With

growth of almost 7.3% compared with the DAX, Germany ranked in the middle of the leading

European domestic indices. However, the past year in Germany again belonged to the small- and

mid-caps: the SDAX, on which D.Logistics’ shares are listed, grew by 21.6%.

Unsatisfactory share price performance for D.Logistics

D.Logistics’ shares ended the year down 40.5%, thus significantly underperforming the SDAX.

After reaching a high for the year of € 2.61 in February, a downward trend set in that lasted until

August, with the share price falling to around € 1.20. The subsequent recovery saw the share price

top € 1.50 in October before declining again, reaching a low for the year of € 1.10 on the day before

Christmas. However, the D.Logistics share price bounced back slightly towards the end of the fiscal

year and closed the reporting period at € 1.28.

* less own shares

D.Logistics’ Shares

3.0

2.0

1.0

0.0

15

10

5

0

D.Logistics AG SDAX Prime Logistics

indexed, in %. January 1 to December 31, 2004

Volume (in € millions) Price (in €)

D.Logistics’ shares: 2004 2003key figures

in €

Earnings per share (0.05) (1.08)

Shareholders’ equityper share 1.46 1.35

Equity ratio (%) 26.84 21.87

Dividend — —

High 2.61 2.74

Low 1.10 0.90

Year-end closing price 1.28 2.15

Average daily volumetrading (Ø, no. of shares) 108,397 106,534

Number of shares 42,292,011 38,527,717

Market cap. (€ millions)* 54.13 82.04

D.Logistics’ shares: key data

Wertpapierkennnummer (German SecuritiesCode Number) 510 150

International SecuritiesIdentification Number (ISIN) DE0005101505

Stock exchange symbol LOI

Reuters Frankfurt LOIG.F

Reuters Xetra LOIG.DE

Bloomberg LOI

120

110

100

90

80

70

60

50

Comparative performance of D.Logistics‘ shares

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

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

In 2005, the share price recovered again. The logistics stock ended the first quarter up 35%, closing

on March 31, 2005 at € 1.73. The SDAX recorded growth of 13% in the same period.

AR 2004_ page 015/096*D.Logistics’ Shares To Our Shareholders*

Increase in subscribed capital

In the past fiscal year, the registered share capital rose from € 38,527,717 to € 42,292,011 as a result

of three non-cash capital increases; it is composed of the same number of no-par value bearer shares.

Following the listing decision by the Frankfurt Stock Exchange on October 6, 2004, the number of

shares of D.Logistics AG admitted to trading also increased from 38,527,717 as of December 31, 2003

to 42,292,011.

As of December 31, 2004, the authorized capital available for the issue of new shares against

cash or non-cash contributions amounted to € 19,263,858 (previous year: € 17,512,690).

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 fell from 34.8% to 31.6% in the course of

the past fiscal year. As of March 2005, he held around 13.5 million shares (31.8% of the share capital).

In total, the members of the Executive Board of D.Logistics AG hold around 33.7% of the share

capital. The following chart shows the shareholder structure as of March 2005 to the best of the

Company’s knowledge.

Earnings per share

Earnings per share are calculated by dividing consolidated net income by the weighted average

number of shares outstanding. In fiscal year 2004, an average of 39,475,315 shares (less treasury

shares) were outstanding (previous year: 35,102,507). Earnings per share calculated on this basis

amounted to €–0.05.

Convertible bond issued

In December, D.Logistics issued a convertible bond in the principal amount of € 7.2 million and a

coupon of 7.00%; shareholders’ preemptive subscription rights were not disapplied. The bond

matures on December 8, 2009 and can be exchanged for shares of the Company for the first time

after the end of the 2005 Annual General Meeting at a conversion price of € 1.80.

The proceeds of the bond issue were used to reduce current financial liabilities by around € 4.2 mil-

lion, thus improving the financing structure. The remaining funds were used to strengthen the Com-

pany’s operating business.

Key data on the convertible bond

ISIN DE000A0DMK52

Principal amount € 7.20 million

Nominal value per bond € 100.00

Issue/redemption price 100%

Coupon 7.00%

Interest payment annually, on Dec. 8

Maturity December 8, 2009

Conversion price € 1.80 per share

Listing OTC trading, Frankfurt

Year-end closing price 2004 € 100.99

D.Logistics’ Financial calendar

Annual Report 2004 Apr. 20, 2005

Interim Report I /2005 May 19, 2005

Annual General Meeting Jul. 26, 2005

Interim Report II /2005 Aug. 18, 2005

Interim Report III /2005 Nov. 17, 2005

Annual Report 2005 Apr. 27, 2006

Ownership structure

in %

Management

Other shareholders 60.95 31.84 Detlef W. Hübner

0.91 Thomas Schwinger-Caspari

Trustees 5.39 0.91 Andreas Bargende


Our quality lies in our ability to see the big picture. Packaging logistics for consumerproducts begins with design and procurement and ends with the end customer.Packaging offers protection, manageability and sales presentation all in one. Weunderstand what really matters in all areas from production to distribution andthis high quality pays off – in a particularly loyal customer base. Many companiesin Europe and the United Sates have long taken advantage of D.Logistics’ packagingexpertise. And the number is growing every year.

Numbers #2004**

42,292,011

From

the

Divis

ions*

From the Divisions*

/096 _AR 2004 * Consumer Goods PackagingFrom the Divisions*


From design to delivery

In the Consumer Goods Packaging segment, D.Logistics AG is one of the few providers on the

market to cover the entire range of relevant services. We specialize in packaging for bulk consumer

goods and automotive distribution – from the very first step, right through to delivery to the end

customer.

As part of our “Total Packaging Solution”, which has been marketed mainly in the USA to date,

we also develop the packaging design in cooperation with the customer, taking into account their

requirements for ease of handling and product protection. We mainly produce packaging using

materials such as cardboard and plastics. Our manufacturing processes range from simple repackag-

ing to secondary packaging for displays. D.Logistics also performs product warehousing, delivery

management and distribution. Our excellent IT systems guarantee a high level of process reliability

at all times.

High degree of customer loyalty

In 2004, our core business activities were strengthened by a large number of contract extensions.

During D.Logistics’ restructuring phase, some elements of which were extensive, our customers –

including global players such as Beiersdorf, Bosch, Duracell, Gillette, Hewlett Packard and Sanford –

demonstrated a high degree of confidence in our expertise and stability.

Warehousing difficulties in Italy successfully overcome

In February 2004, structural defects were discovered at a warehouse in Oleggio that had been newly

leased by our Italian subsidiary So.Ge.Ma. This unforeseen event meant that local capacities were

unavailable.

The incident, for which D.Logistics was not responsible, led to bottlenecks and organizational dif-

ficulties that posed a major challenge for the regional management.

Thanks to the exemplary efforts of the Italian management team, these problems were resolved

quickly and without the loss of customers, and the necessary relocation to a newly leased ware-

house was implemented without delay. The local management team demonstrated a prudent and

professional approach to crisis management, and a number of the affected customers showed their

appreciation with the early extension of their contracts with the D.Logistics Group.

amounts in € millions

AR 2004_ page 019/096*Consumer Goods Packaging From the Divisions*

Major new customers

In October 2004, D.Logistics entered into a partnership with Osram Sylvania to become the sole

supplier of automotive light bulb packaging. Osram Sylvania, a US-based subsidiary of Siemens, is one

of the largest manufacturers of lighting products and components for private households, compa-

nies, industry, and a wide range of specialist applications. Osram Sylvania employs around 11,200

people across 22 facilities in North America. The agreement with our subsidiaries Franks Industries

and J&J will initially run until 2007, with an estimated annual volume of € 4.8 million.

In August 2004, D.Logistics acquired another new customer in the shape of Oral-B, the leader

on the market for toothbrushes and interdental products with annual sales of US$ 4.5 billion.

D.Logistics is the new packaging supplier for Oral-B’s toothbrushes and its partner for the manufacture

of secondary packaging.

Awards for D.Logistics

Progressive corporate management is reflected not only in balance sheets and strategies, but also

in the treatment of employees. Our subsidiary in Tienen, Belgium, was recognized twice for its

achievements in this area.

Junior Chamber International, a global organization for young professionals, presented D.Logistics

with an award for excellence in employee training. Voted the best of 750 companies in the Leuven

region with a workforce of more than 50 employees, D.Logistics was rewarded for its high pro-

portion of female employees and its established training program for the coordination of training

and further education measures.

D.Logistics received a further award from the Belgian government. The prize, endowed with

€ 10,000, recognized D.Logistics’ optimization of home-to-work travel using public transport, bicy-

cles and the formation of car pools.

Expanding our service range

As a quality and cost leader, we see excellent potential for a further expansion of our services in the

Consumer Goods Packaging segment. As well as establishing new customer relations and alliances,

we intend to increasingly integrate the processes of procurement and distribution into our logistics

management activities. The D.Logistics Group will also adapt to reflect the trend towards the out-

sourcing of packaging services, such as by launching the Total Packaging Solution concept, which

has already been implemented in the USA, on the European market and establishing multi-client pack-

centers.

/096 _AR 2004 * Industrial Goods PackagingFrom the Divisions*

From Germany to anywhere in the world

When it comes to industrial components and production facilities, there is nothing that we cannot

package and transport with the highest standards of safety and quality. D.Logistics is the German

market leader for the export packaging of industrial goods. We provide full-service logistics, from

the production of specialist and export packaging in all sizes right through to distribution manage-

ment and engineering. Our geographical focus lies in Germany, and we specialize in the mechanical,

power plant constructionand plant construction industries.

We have many years of experience in the area of full process management, taking care of every

detail from parts procurement to customs clearance. We perform logistics services for large-scale

industrial projects: whether the customer wishes to send auto parts or a major plant, we ensure that

everything, from the smallest screw to the largest assembly line, reaches its destination safely and

on time.

For Barmag and Krones, for example, we have expanded the conventional logistics chain to

include upstream process steps such as procurement. Other customers include Alstom Power, KHS,

MAN and Siemens.

Successful collaboration with Krones AG

For the past eight years, our subsidiary Deutsche Tailleur Industrie-Service GmbH has been a partner

of Krones AG, one of the largest German manufacturers of filling and packaging technology. This

cooperation has been systematically expanded, with the result that D.Logistics Group is now respon-

sible not only for the packaging of machinery and production facilities, but also for key stages in the

logistics chain, such as warehouse management and internal transportation. In 2003 and 2004, we

equipped Krones’ new operating facilities in Flensburg and Rosenheim, and we also performed dis-

tribution activities for Krones for the first time starting from November 2004.



AR 2004_ page 021/096* Industrial Goods Packaging From the Divisions*

Partnership with Siemens AG

When it comes to logistics, Siemens AG relies on the expertise and experience of D.Logistics in a

number of areas. This long-standing cooperation was successfully extended in 2004 with the

renewal of service agreements for Siemens’ Berlin, Nuremberg and Erlangen sites. With this move,

Siemens AG demonstrated its commitment to the D.Logistics Group as a reliable logistics partner.

Further development and expansion

We aim to further enhance our position as the leading German provider of industrial export pack-

aging. In expanding our range of logistics services, we will build upon our experience in the man-

agement of procurement processes. In future, we will apply this expertise intensively in expanding

the logistics chain and serving our existing and new customers’ key processes even more compre-

hensively than before.

Customer location policy is another important factor in the expansion of our activities in the area

of export packaging, with a number of companies increasingly looking to relocate operations to

Eastern Europe and Asia. As a global logistics partner, that is why we are also seeking to expand

into foreign markets, such as the Czech Republic and Asia, in our Industrial Goods Packaging seg-

ment. We also intend to enter into global alliances and cooperations as a further strategic measure.

/096 _AR 2004 *Warehouse LogisticsFrom the Divisions*

More than just warehousing

We are experts in the field of modern warehousing solutions. D.Logistics performs all of the services

relating to warehouse logistics in full. We take care of warehouse planning and the entire range of

warehouse management activities, from commissioning, packaging and materials management,

through to delivery. Our offering includes traceability, processing small quantities and samples, han-

dling hazardous materials, distribution, customs clearance and airport services.

The services we provide are oriented not only on the specific requirements of the customer, but

also, with Inhouse-Outsourcing®, on the relevant operational and physical requirements. Our sub-

sidiaries become an integral part of the customer’s internal processes, applying their process and IT

expertise to ensure smooth operations. This proven, long-standing concept frees companies from

the responsibility of performing warehouse logistics without forcing them to implement extensive

structural changes. Inhouse-Outsourcing® gives customers the security of being able to realize opti-

mal warehouse management on-site.

Exemplary cooperation

D.Logistics performs warehouse logistics activities in a number of European countries for companies

such as Lufthansa Cargo, Mölnlycke, VW, Medion, Goodyear and Bosch. At the Obernburg logistics

center alone, where D.Logistics manages a finished goods warehouse with 36,000 pallet spaces for

Acordis Industrial Fibres, more than 120,000 tonnes of chemical fibers are processed annually on floor

space of 53,000 m2. With a team of 65 employees, D.Logistics controls incoming and outgoing goods,

transport scheduling and the commissioning and preparation of over 270,000 pallets every year.

In other areas, too, D.Logistics can boast examples of excellent cooperation. Our Inhouse-Out-

sourcing® system is established at one of the main hubs for the flow of goods in Europe, Frankfurt

Airport. With 270 on-site employees, D.Logistics performs cargo handling for Lufthansa Cargo AG.

Lufthansa Cargo is the market leader for global air freight, and Frankfurt Airport represents a special

challenge for every logistics provider. Our logistics experts guarantee perfect warehouse manage-

ment – 24 hours a day, 365 days a year. Every year at Frankfurt Airport, we load around 90,000 tonnes

of freight onto pallets and unload around 135,000 tonnes. In the export segment, we not only

assemble and load air pallets and containers, but also ensure the smooth handling of hazardous

goods. For imports, we are responsible for breaking down incoming goods consignments, as well as

performing precise quantity and quality control and appropriate storage. The cycle of all of these

processes is determined by the tight air freight timetable, and we break down consignments on the

basis of precise times of arrival.

Warehouse Logistics


AR 2004_ page 023/096*Warehouse Logistics From the Divisions*

The new Ennigerloh Logistics Center

In future, D.Logistics AG will combine warehouse logistics with distribution services at its state-of-

the-art logistics center in Ennigerloh. Our subsidiary Schumacher Dienstleistung und Logistik GmbH

is constructing this new logistics hub within reach of the transshipment ports of Hamburg and Rot-

terdam.

Following the first construction phase, which will be completed by the middle of the year, the

Ennigerloh Logistics Center will have 29,000 m2 of warehouse space. The second construction phase

will extend this area by a further 20,000 m2. In the process, Schumacher will increase its total ware-

house space to more than 120,000 m2.

Its proximity to the two largest deep-sea container ports in Europe and direct road and rail con-

nections combine to make the Ennigerloh Logistics Center an important hub for goods distribution.

This new logistics site in Northern Germany is a good example of the way in which we are extending

our service chain. The long-standing experience of our subsidiary in the area of forwarding services is

seamlessly integrated into the warehouse logistics management activities of one of the most modern

warehouses in Germany. In particular, Ennigerloh forms a key part of the logistics chain for electronics

and computer manufacturer Medion, with which D.Logistics has cooperated since 2003.

Expansion and increasing demands

Logistics centers offering modern warehouse management are growing in importance. EU enlarge-

ment alone has increased goods transport with member states in Central and Eastern Europe by

190%, with the population of the European Single Market growing by a further 75 million.

Accordingly, logistics sites within Germany, as a transit and export nation, will become more and

more relevant, with growth in demand not only for warehouse management, but increasingly for

high-quality additional services and complex logistics management, too. In key logistics sectors such

as the automotive industry and consumer goods in particular, rising transport volumes will drive up

demand for distribution management and value-added services.

D.Logistics therefore intends to further optimize existing structures and operating units and

enhance its warehouse logistics offering with additional services. Process steps such as finishing, pack-

aging, internal logistics and empties management will be integrated into the warehouse logistics con-

cept, and D.Logistics’ service range will also be expanded to include distribution and transport man-

agement in future.


Performing demanding logistics functions for industrial goods packagingand delivery requires particular expertise and logistics skills. Whetherdelivering to a neighboring country or around the globe – no packagingassignment is too difficult for us. The customer places the order, andwe take care of the rest. Our depth of experience in this area allows usto meet every customer request and find the best packaging solutionfor every product.

ISIN

:DE/000/510150/5

ADVT.

108,397

04

Mana

gem

ent R

epor

t*

Management Report*

/096 _AR 2004 *Report on Economic PositionManagement Report *

Operating environment

Introduction

We have applied section 315 (3) of the Handelsgesetzbuch (HGB – German Commercial Code) and

combined the Group Management Report and Analysis and the Management Report and Analysis

of D.Logistics AG.

Strong global economic growth

The current upturn in the global economy is the strongest seen in decades. According to IMF estimates,

global economic output increased by 5% in 2004, a growth rate last experienced in the mid-1970s.

Over half of this growth has been driven by the United States and Asia (particularly China). The fore-

cast for the next two years is also positive. Growth is expected to ease a little and thus help to prevent

overheating, but otherwise remain buoyant.

Global economic growth will continue to be driven by the United States. Although this country

does not have the highest growth rate (4.3%), it carries by far the most weight in the world. Japan

has overcome its period of stagnation, which lasted more than ten years, and has just entered a new

period of economic upturn. Europe is still lagging behind considerably, mainly due to Germany’s dis-

appointing performance.

Modest recovery in Europe

After three years of poor performance, growth in the EU accelerated in 2004. Strong demand from

countries outside the EU had a positive effect, but domestic consumption was sluggish in many

member states. Modest increases in wages and employment only had a mildly stimulating effect on

consumer spending.

According to estimates published by Eurostat, the Statistical Office of the European Communities,

gross domestic product increased by 2.0% in the euro zone and by 2.2% in the EU15.

No economic breakthrough in Germany

The German economy has been treading water since the summer of last year. After the global eco-

nomic upturn, which had been buoyant until then, and the resulting strong demand for German

exports lost some of their initial momentum, the scene is once again dominated by continued weak

domestic demand.

According to calculations by Germany’s Federal Statistical Office, German gross domestic product

increased by 1.6% in real terms year-on-year. After the poor economic performance in the previous

three years, this is the strongest increase since 2000 (+2.9%). However, the calendar effect of +0.6

percentage points was unusually strong in the year under review; if this effect is eliminated, the

GDP growth rate for 2004 was only 1.0%. The main driver of this modest recovery was an increase

in exports, which was significantly higher than the growth in imports. Public-sector consumption was

slightly higher, but both private consumption and gross capital expenditure declined.

Restructuring program completed

The 2002 restructuring program had the following three main dimensions: the integration of Group

companies into the new decentralized structures, the streamlining of our investment portfolio, and

operational measures to stimulate continuing operations.

The measures taken in 2004 had an operational focus and included the streamlining of contracts,

additional sales and marketing activities, initiatives to optimize locations, and a further reduction in

fixed-cost thresholds and administration levels.

Report on Economic Position

The symbols are explained on the bookmark at the back of this Annual Report

AR 2004_ page 027/096*Report on Economic Position Management Report *

As a result, we made significant productivity progress and generated tangible effects on liquidity

and tax savings. The positive development of business was hampered by one-time factors (e.g. the

warehouse closure in Italy, increases in the prices of materials, customer supply problems). The fact

that we achieved our budget in spite of these problems is evidence that the Group has emerged

stronger from the crisis of the past few years. Further significant improvements are planned for the

coming years.

Restatements

A number of adjustments were made for prior periods to correct errors and reflect reclassifications.

As a result, the Group’s figures for the previous year were restated. For further details, please refer

to the section entitled ”Adjustments to Correct Errors and Reflect Reclassifications“ in the notes to

the consolidated financial statements.

Higher comparable sales in spite of exchange rate losses

In an overall difficult economic environment, particularly in Germany, comparable sales increased by

3.0% to € 312.5 million year on year, exceeding the – already increased – comparable target of € 300

million for the year by around € 12.5 million. The sales figures do not include some of the services

provided by our Italian subsidiary (€ 16.4 million in 2003 and € 18.1 million in 2004) or the sales of

Droppoint Holdings Ltd. (€ 0.4 million in 2003 and € 0.78 million in 2004) reported under discontinued

operations.

The euro exchange rate, which appreciated further against the US dollar in 2004, led to a drop in

sales of € 5.2 million.

If sales are adjusted for the changes in the companies included in consolidation (Aescudata GmbH,

PLC GmbH) and currency fluctuations, the growth rate is 6.3%.

Consumer Goods Packaging again strongest segment

With sales of € 128.0 million, the Consumer Goods Packaging segment remains our most important

area of activities, in spite of the change in accounting policies. Sales remained fairly constant, and

the segment percentage of total sales dropped again from 42.2% to 41.0%; adjusted for exchange

rates, sales increased by 4.0% and the proportion would have been 41.9%. The increase in sales

was primarily due to new customers won and project extensions in the United States and Belgium.

A significant increase in sales (+7.1% to € 99.3 million) in the period under review meant that our

second largest segment, Industrial Goods Packaging, contributed 31.8% (previous year: 30.6%) to

Group sales. The increase was also due to organic growth.

500

450

400

350

300

250

200

150

100

50

0

00 01 02 03 04

312

01

01

Consolidated sales 2004 2003 Proportion 2004by segment

in € millions

Consumer Goods Packaging 127.97 128.09 40.95%

Industrial Goods Packaging 99.32 92.76 31.78%

Warehouse Logistics 84.95 82.50 27.19%

Holding company 0.24 0.14 0.08%

Total 312.47 303.49 100.0%

383

343

303

Sales

in € millions

484

Sales


In the Warehouse Logistics segment, sales were up 3.0% to € 85.0 million, or 27.2% of the Group’s

activities. The Group’s purely organic growth was significantly higher, because the 2003 statements

included the sales of Aescudata GmbH amounting to around € 3.6 million. This company is no longer

fully consolidated.

Over half of sales generated in Germany

With a sales proportion of 53.5%, Germany remains the Group’s most important market. Even

though dollar-denominated sales in the United States were up 10.5%, their proportion of total sales

declined slightly from 17.2 to 16.8% due to the weak dollar. The proportion of sales generated in the

rest of Europe declined from 30.5 to 29.5%.

On balance, this means that the weighting of sales last fiscal year shifted further in favor of

Germany.

Earnings up significantly

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by almost 17% to

€ 22.8 million, pushing up the EBITDA margin to 7.3%, after 6.4% in 2003.

Depreciation of property, plant and equipment and amortization of intangible assets fell by 5% to

€ 13.9 million.

EBITA was up 83%,or € 4.0 million, and reached € 8.9 million. An encouraging development is

that in spite of special circumstances, for example the warehouse closure in Italy, increases in the prices

of input materials or customer supply problems, we exceeded our budgeted target of € 8.7 million.

Losses from discontinued operations

At the end of the divestitive program, there were additional charges, resulting from the disposal deci-

sion regarding Droppoint Holdings Ltd., totaling € 0.65 million. There was also a loss of € 0.46 million

on the sale of the shares of D.Services & Logistics GmbH, Vienna.

The total loss on discontinued operations was € 1.11 million.

Net loss significantly reduced

The net loss for the year decreased significantly from € 38.0 million in 2003 to € 1.8 million in 2004.

It is important to note that income from continuing operations has been positive since the third

quarter. Contributing factors were a further reduction in interest expense by € 1.8 million, and in

particular the tax optimization program implemented. Income tax expense fell from € 2.6 million to

€ 1.8 million; the amount reported for deferred taxes was € 0.2 million, compared with – € 1.1 mil-

lion in 2003. Minority interests reduced slightly from € 2.2 million to € 2.1 million.

Decentralized procurement

To support the provision of goods and services by the D.Logistics Group, the necessary procurement

functions have generally been decentralized. However, when the same item is required Group-wide,

purchasing volumes are pooled within the Group in order to take advantage of bulk discounts. Con-

tracts for high-value items or blanket orders must comply with a central approval procedure.

00 01 02 03 04

8.9

4.9

– 6.2

24.424.5

Group EBITA

in € millions

30

25

20

15

10

5

0

– 5

– 10

01

11

02

Consolidated sales 2004 2003by region

in € millions

Germany 167.2 158.6

as a % 53.50 52.26

Rest of Europe 92.2 92.5

as a % 29.51 30.47

USA/Rest of world 52.5 52.3

as a % 16.81 17.22

Holding company 0.2 0.1

as a % 0.08 0.05

Total 312.5 303.5

Earnings

Procurement


Materials are purchased to supply the raw materials and supplies (especially wood and paper, but also

foil and steel) needed by our packaging companies. In addition, we perform the materials manage-

ment function for several of our customers. For this service, contracts are in place to ensure that any

risks can be passed to the customer. However, the significance of materials management in the financial

statements of the D.Logistics Group is set to decline, because a volume of around € 18 million gener-

ated by our Italian subsidiary is no longer reported. In the past, we purchased the inventories for one

of our customers for our own account and resold them on agreed terms and conditions. Now, we only

report the service component, but inventories are procured and warehoused on consignment, which

means that they remain the property of the supplier until called for. This further reduces procurement

risks as well as impairment and currency risks.

Raw materials and supplies are purchased at market prices. High capacity utilization levels large-

ly compensated for the price increases, some of which were considerable, in the input products (e.g.

plywood, OSB) in cases where the increases could not be passed on to customers, or only with a delay.

Operating services and labor are procured as required on the basis of market prices or competitive

bids. Several blanket contracts are in place that guarantee favorable purchasing conditions.

Warehousing space and equipment are also procured at market prices, on the basis of supply and

demand. Purchases in foreign currency are hedged, if necessary.

Investments

Last fiscal year, investments in property, plant and equipment totaled € 8.5 million. In addition, € 1.1

million (previous year: € 3.0 million) was spent on intangible assets (excluding goodwill). The invest-

ment-to-sales ratio for property, plant and equipment was 2.7% in 2004 (previous year: 3.0%).

Investments 2004 2003 Proportion 2004

in € millions

Property, plantand equipment 8.50 9.16 73.78%

Intangible assets 1.11 8.00 9.64%

Financial assets 1.91 0.92 16.58%

Total 11.52 18.08 100.00%

Additions to property, plant and equipment were mainly attributable to the establishment of new

warehouses in Italy and the construction of an automated small-parts warehouse in Belgium.

The majority of investments were for operating and office equipment, including in particular ware-

house equipment, fork-lifts etc. Leasehold improvements are also regular investment items. The

investments made in 2004 were financed from cash flow or leased.

18, 19, 20, 31

Investments 2004 2003by segment

in € millions

Consumer Goods Packaging 3.24 4.61

Industrial Goods Packaging 3.97 2.02

Warehouse Logistics 2.62 4.61

Holding company 1.69 6.84

Total 11.52 18.08

Investments


Disposals

In 2004, there were disposals of property, plant and equipment totaling € 4.7 million. This figure in-

cludes the disposal of a non-operating property in the Industrial Goods Packaging segment (€ 2.5 mil-

lion) and of another non-operating property in the United States (€ 0.85 million). Book gains totaling

€ 0.04 million were realized.

In addition, there was a reduction in property, plant and equipment due to currency translation

differences of € 1.6 million.

Decentralized financing in the D.Logistics Group

Financing is fully decentralized in the D.Logistics Group. The main types of financing used are bilat-

eral bank credits and syndicated lines of credit. Some companies in the Group also have loans from

shareholders. With the exception of Italy, the decentralized financing groups stabilized considerably

in the year under review. In Italy, D.Logistics AG implemented capital increases totaling € 3.7 million

to finance the losses incurred as a result of the warehouse closure, due to circumstances beyond our

control.

D.Logistics AG is currently financed by a financing agreement with a banking syndicate. This agree-

ment is due for renewal on March 31, 2005. An oral agreement to extend the existing syndicated

loan has already been concluded. The credit line of € 13.6 million is sufficient to meet the forecast

cash requirements. The standby facility has a maturity of one year through March 31, 2006.

In addition, we expect a cash inflow of around € 14.1 million after recently winning a legal dispute

with Infraserv GmbH & Co. Höchst KG (see Report on post-balance sheet date events).

Debt reduced further

The financial debt of the D.Logistics Group was again reduced significantly. At Group level, financial

liabilities were reduced by € 9.3 million, from € 101.6 million as of December 31, 2003 to €92.3 mil-

lion as of December 31, 2004. In the same period, net debt fell by € 10.6 million, from € 86.6 million

as of December 31, 2003 to € 76.0 million as of the end of 2004. The balance of banks loans and

overdrafts and sight deposits with banks was € –53.6 million (previous year: €–63.7 million).

Capital increases implemented

In 2004, D.Logistics AG implemented three non-cash capital increases from authorized capital with

a total nominal volume of € 3.76 million (see Notes on Shareholders’ Equity on p. 74). This resulted

in a reduction in financial liabilities of around € 5.3 million and in other liabilities of € 1.2 million. This

measure improved the balance sheet structure and reduced net interest expense by lowering the

amount of interest-bearing debt.

Convertible bond issued

In December, D.Logistics AG issued a convertible bond with preemptive rights for shareholders amount-

ing to € 7.2 million and a coupon of 7.00%. The bond matures on December 8, 2009; it can be con-

verted into shares at an exercise price of € 1.80 per share after the 2005 Annual General Meeting.

Financing

18, 19, 20, 31

21

21

26, 27

21

Financial liabilities 2004 2003

in € millions

Convertible bonds 7.27 0.07

Banks 69.99 78.64

of which current 40.61 40.75

of which noncurrent 29.38 37.89

Other financial liabilities 15.13 22.86

of which current 8.36 7.64

of which noncurrent 6.69 15.22

Total 92.32 101.71


20

15

10

5

0

– 5

8.610.7

5.9

– 0.4

00 01 02 03 04

The proceeds were used, among other things, to replace current financial liabilities of around € 4.2 mil-

lion. The remaining funds were used to strengthen operating activities. In addition to improving the

financing structure, this measure secured the current low level of interest rates for the medium term.

Free cash flow used to reduce liabilities

The free cash flow for the period under review was € 7.6 million. In 2003, it was € 18.9 million, due

to some late cash inflows relating to the disposal of CSC (€ 13 million). In 2004, free cash flow con-

sisted of net cash provided by operating activities amounting to € 8.2 million and net cash used in

investing activities amounting to –€ 0.6 million. Net cash used in investing activities would have been

higher if it had not included proceeds from the disposal of investments (€ 1.2 million) and from dis-

posals of property, plant and equipment (€ 4.9 million). Cash investments in assets totaled € 6.8 mil-

lion. The free cash flow was used to reduce financial liabilities.

30 – 33

Total assets slightly lower

Total assets of the D.Logistics Group fell by 2.7% to € 230.6 million in 2004 (previous year: € 237.0

million). This reduction is partly due to exchange rate effects, which went hand in hand with a relatively

strong euro compared with the previous year.

Current assets jumped from € 86.8 million to € 99.5 million primarily because a receivable of

€ 11.6 million was recognized after winning the legal dispute with Infraserv. Trade accounts receivable

remained more or less unchanged (€ 45.5 million), but inventories were up €1.6 million to € 11.9 mil-

lion, and cash and cash equivalents increased by € 1.4 million to € 16.3 million. Other current assets

increased by € 7.2 million to € 20.6 million.

Year-on-year, noncurrent assets fell by 12.7% from €150.3 million to € 131.1 million. The main

reason for this decline was the 10.5% fall in property, plant and equipment to € 77.1 million. This

includes the disposal of two non-operating properties with a total book value of around € 3.2 million.

This contributed significantly to a year-on-year increase in the depreciation ratio for property, plant and

equipment (ratio of accumulated depreciation to historical cost) by 4.9 percentage points to 46.8%.

Goodwill dropped from € 42.9 million to € 38.3 million. This reflects the deconsolidation and dispos-

al of the former PLC GmbH and Aescudata GmbH. In addition, there was a reduction in goodwill due

to currency translation (€–2.0 million).

Net cash provided byoperating activities

in € millions

18.7

Net assets

Cash and cashequivalents as of

December 31, 2003

Investments Disposals Net cash used ininvesting activities

exchange rate changes

Cash and cashequivalents as of

December 31, 2004

14,944

+ 8,179+ 6,180

– 6,117

– 65 16,340

Free cash flow: 7,578

Net cash provided by operating

activities

Change in cash and cash equivalents

amounts in € thousands– 6,781


The capitalization ratio, i.e. the ratio of property, plant and equipment to total assets, fell from 36%

to 33%. It should be noted in this regard that the creation of goods and services in the D.Logistics

Group requires a relatively high deployment of operating assets, including in particular some special-

purpose real estate. The actual packaging segments are also more equipment-intensive than in oth-

er logistics companies. Special fixtures such as high-rack storage systems are reported under operat-

ing and office equipment.

Working capital, i.e. the difference between current assets and current, non-interest-bearing lia-

bilities, increased by € 20.9 million to € 35.5 million. This sharp increase is due to technical reporting

reasons. It is only temporary because most of the increase was caused by recognizing the receivable

from Infraserv (€ 11.6 million). Another reason for the increase is the reduction in other current lia-

bilities (–€ 2.2 million) and the decrease in current provisions (–€ 5.6 million).

Improved balance sheet

Shareholders’ equity of the D.Logistics Group as of the end of fiscal year 2004 was € 61.9 million,

19.4% higher than at the end of 2003 (€ 51.8 million). At the same time, total assets were lower,

which led to a disproportionately sharp increase in the equity ratio from 21.9% to 26.9% Share-

holders’ equity increased as a result of capital increases of around € 17.6 million (less € 2.3 million

in outstanding contributions) and decreased as a result of exchange rate losses (€ 3.7 million) directly

taken to equity and because of the net loss for the period of € 1.8 million.

Noncurrent liabilities (including minority interests) fell sharply from € 63.7 million to € 54.6 million.

The fall was mainly due to a reduction in bank loans and overdrafts by € 8.5 million to € 29.4 million

and the repayment of other financial liabilities, taking them from € 15.3 million to € 13.9 million. Financ-

ing was primarily related to operating assets and real estate. Asset cover II, i.e. the ratio of sharehold-

ers’ equity and noncurrent liabilities to assets, improved from 80.9% to 91.0%.

Current liabilities (including discontinued operations) also fell significantly, from € 121.5 million to

€ 114.1 million. The sharpest fall was recorded for other accrued expenses (–€ 5.6 million to € 16.8 mil-

lion). In addition, short-term bank loans and overdrafts remained largely constant at € 40.6 million.

Other current liabilities fell by € 2.5 million to € 9.3 million.

Fewer employees

As of the end of 2004, the D.Logistics Group had 3,364 employees. This is 179 employees, or 5.0%,

fewer than a year before. As of December 31, 2004, the Group employed 2,135 people (or 63.5%

of the total workforce) in Germany and 1,229 (or 36.5%) in other countries.

The reduction compared with the previous year’s figure (3,543) is due to the deconsolidation of

companies (50), capacity-related personnel adjustments in the Consumer Goods Packaging and Ware-

house Logistics segments, and employee losses in connection with the streamlining of contracts. In

the Industrial Goods Packaging segment, the upturn in business led to an increase in the number of

employees by around 7.3%.

Overview of 2004 2003employee numbers

D.Logistics Group

Germany 2,135 2,248

Abroad 1,229 1,295

Female 1,050 1,077

Male 2,314 2,466

Total 3,364 3,543

Average 3,383 3,568

Balance sheet 2004 2003

as % of total assets

Current assets 43.16 36.60

Noncurrent assets 56.84 63.40

Total assets 100.00 100.00

Current liabilities 49.47 51.25

Noncurrent liabilities 23.69 26.88

Shareholders’ equity 26.84 21.87

Total liabilitiesand shareholders’ equity 100.00 100.00

Employees


Personnel expenses fell by 7.8% to € 107.4 million. The personnel expense ratio, i.e. the ratio of per-

sonnel expense to sales, fell from 38.4% to 34.4%.

A thank-you for strong commitment

The Executive Board would like to thank all employees for their dedication, commitment and flexibil-

ity in an economic environment that continued to be difficult in fiscal year 2004.

No conventional research expense

Logistics service providers such as the D.Logistics Group do not incur conventional R&D expenses.

Instead, in preparing for new major projects or by cooperating closely with our customers, we con-

tinually develop new products and services.

Decentralized Group structure

The D.Logistics Group has a decentralized organizational structure, with D.Logistics AG at the top

performing the parent and holding company functions. A complete organization chart can be found

in the front fold-out cover of the Annual Report. The individual managing directors enjoy a high

degree of independence in recognition of the fact that they know the local market best. The Group

is managed through the use of annual budgets and forecasts, agreed targets and regular meetings.

Service-oriented business segmentation

The subsidiaries of D.Logistics AG are assigned to one of the three segments, Consumer Goods Pack-

aging, Industrial Goods Packaging and Warehouse Logistics, on the basis of the core services performed

in each case.

Further streamlining of the Group’s legal structure

Last fiscal year, the legal structure of the Group was further streamlined by selling a marginal invest-

ment in Austria and merging companies in the Industrial Goods Packaging segment. In addition, the

Company decided to sell its shares in Droppoint Holdings Ltd. In total, the number of fully consoli-

dated companies in the Group decreased from 50 to 44 as of December 31, 2004.

Employees 2004 2003 Proportion 2004by segment

D.Logistics Group

Consumer Goods Packaging 1.039 1.087 30.89%

Industrial Goods Packaging 894 833 26.57%

Warehouse Logistics 1.418 1.609 42.15%

Holding company 13 14 0.39%

Total 3.364 3.543 100%

50

40

30

20

10

0

Personnel expense ratio

in %

00 01 02 03 04

34.438.437.640.3

36.1

Research & Development

Organization/

Legal Group structure



The Consumer Goods Packaging segment generated consolidated sales of € 128.0 million, similar to

the previous year’s figure of € 128.1 million.

The sales figures do not include some of the services provided by our Italian subsidiary (€ 16.4 mil-

lion in 2003 and € 18.1 million in 2004), see section on “Adjustments to Correct Errors and Reflect

Reclassifications“ on page 53.

The continued weakness of the US dollar in 2004 led to a drop in sales of € 5.2 million as a result

of currency translation. That meant that the dollar-denominated 10.5% increase in sales in the Unit-

ed States, which was in part due to successfully attracting new customers, was neutralized by the

strength of the euro.

At our Italian subsidiary, So.Ge.Ma. S.p.A., sales remained stable, in spite of the warehouse closure

due to circumstances beyond our control. In addition, organic growth led to a 5% increase in busi-

ness in Belgium.

EBITA of € 3.6 million was € 2.1 million higher than in the previous year. The result would also have

been better without the losses incurred as a result of the warehouse closure in Italy.


Consolidated sales of the Industrial Goods Packaging segment increased significantly by 7.1% to

€ 99.3 million. One important reason for this was flourishing business performance among major

customers in the machine and plant engineering industry.

In the year under review, the segment extended major customer contracts and adjusted terms and

conditions in line with increased price levels. Extensions to current service contracts were also agreed;

the full volume effect will only be felt in the new fiscal year.

The comprehensive legal and organizational restructuring of the Company performed in the

previous year resulted in tangible effects on liquidity and in tax savings. The restructuring was con-

cluded in the year under review with the creation of a leaner management structure and personnel

measures.

EBITA rose by over 29% from € 3.2 million to € 4.2 million.

Warehouse Logistics

The Warehouse Logistics segment generated consolidated sales of € 85.0 million, € 2.45 million or 3.0%

above the previous year’s figure. This positive development is all the more significant since, as a result

of restructuring-related contract terminations, this segment had to make up for significant short-

falls. The segment’s organic growth was significantly higher, because the 2003 financial statements

included the sales of Aescudata GmbH amounting to around € 3.6 million. This company has since

been deconsolidated. Droppoint Holdings Ltd. has also been removed from the segment figures; this

company is now reported under discontinued operations. The figures for 2003 have been adjusted

to reflect this.

Schumacher Dienstleistung & Logistik GmbH made a significant contribution; it generated signifi-

cant sales increases, among other things, with customers gained in the previous year (e.g. Medion AG).

D.Logistics Airport Services GmbH and the Belgian companies performed better than budgeted.

The turnaround continued to filter through to the operating result. EBITA increased dispropor-

tionately by 63%, to € 4.6 million, reflecting in particular the positive effect of eliminating unprof-

itable contracts.

01

01

01

Consumer Goods 2004 2003Packaging

in € millions

Sales 115.3 111.8

Consolidated sales 99.0 92.8

Gross profit 11.7 10.5

EBITA 4.16 3.22

EBITA margin (%) 4.2 3.5

EBTA 3.60 1.34

Warehouse Logistics 2004 2003

in € millions

Sales 87.4 86.6



EBITA 4.56 2.80


EBTA 1.60 0.68

Developments

by segment

Industrial Goods 2004 2003Packaging

in € millions

Sales 135.0 129.7



EBITA 3.55 1.50


EBTA 1.9 (1.80)


Impairment losses on financial assets add to loss

Sales and other operating income totaling € 4.47 million were reduced by operating expenses (person-

nel expenses plus other operating expenses) of € 9.38 million (previous year: € 19.78 million). Depre-

ciation of property, plant and equipment and amortization of intangible assets fell from € 1.04 mil-

lion to € 0.87 million. This takes the pretax loss before net financing costs and taxes to € 5.78

million (previous year’s loss: € 11.50 million).

Net financing costs amounted to € 15.84 million (previous year: € 17.02 million). This includes

income from investments of € 0.44 million (previous year: € 0.13 million) and interest income of

€ 2.48 million (previous year: € 2.63 million). This is reduced by impairment losses on financial assets

of € 16.96 million (previous year: € 17.62 million) and interest expense of € 1.81 million (previous

year: € 2.16 million). The loss from ordinary activities therefore amounted to € 21.62 million (previous

year’s loss: € 28.52 million).

After tax rebates of € 0.01 million (previous year: € 0.29 million) the net loss for the year is

€ 21.61 million (previous year: € 28.23 million).

Total assets down – equity ratio up

Total assets of D.Logistics AG declined in the year under review from € 127.6 million to € 116.0 mil-

lion. Noncurrent assets fell from € 88.2 million to € 83.4 million. Since depreciation and amortization

exceeded investments, property, plant and equipment and intangible assets decreased from € 10.5 mil-

lion to € 9.7 million. Financial assets dropped from € 77.7 million to € 73.8 million.

Current assets, including prepaid expenses, fell from € 39.4 million to € 30.3 million, mainly because

an intercompany receivable was reclassified from current assets to financial assets. In the same peri-

od, other assets rose from € 5.1 million to € 16.0 million, because a receivable was recognized in the

amount of € 11.6 million following the finding of the arbitration tribunal against Infraserv.

Primarily due to the net loss for the year, shareholders’ equity declined from € 84.2 million to

€ 80.3 million. The increase in additional paid-in capital by the premium on the shares subscribed by

Infraserv had a positive effect. Because of the lower total-asset figure, the equity ratio fell by more

than three percentage points to 69.2%.

Accrued expenses totaled € 5.7 million, compared with € 6.6 million. Liabilities fell by € 6.1 million

to € 30.0 million. There were significant movements in financial liabilities, whose total fell by € 8.7

million to € 2.1 million. They decreased for reasons such as the non-cash capital increase against a

contribution of shareholder loans (€ 5.3 million) and the repayment of current shareholder loans (€ 4.2

million). Bond liabilities increased due to the issue of a convertible bond (€ 7.2 million). In addition,

some bank loans and overdrafts were repaid (€ 1.2 million).

D.Logistics AG 2004 2003Income statement

In € thousands

Sales 1,421 925

Other operating income 3,049 8,394

Personnel expenses (2,295) (2,148)

Depreciationand amortization (872) (1,042)

Other operating expenses (7,080) (17,631)

Net financingincome (costs) (15,842) (17,022)

Income (loss) fromordinary activities (21,619) (28,523)

Income taxes 10 291

Net income (loss) (21,609) (28,232)

D.Logistics AG 2004 2003Balance sheet

as % of total assets

Noncurrent assets 73.78 69.14

of which financial assets 63.57 60.92

Current assets 26.22 30.86

Total assets 100.00 100.00

Shareholders’ equity 69.22 66.01

Accrued expenses 4.89 5.19

Liabilities 25.90 28.29

of which financial liabilities 14.73 14.34

Total liabilitiesand shareholders’ equity 100.00 100.00

Supplemental disclosures

for D.Logistics AG

Income statement

Assets

and financial position

/096 _AR 2004 *Report on Post-Balance Sheet Date EventsManagement Report *

Unchanged operating environment

After the end of 2004, there have not been any events in the general economic environment, apart

from those already described, that could have a significant influence on the D.Logistics Group. The

renewed weakness of the dollar does not necessitate any change to the assessment of the Compa-

ny. Business performance in the first two months of 2005 confirms the statements made in the fol-

lowing “Report on Expected Developments” section.

Decision in the Infraserv case

In the first part of its decision, published September 29, 2004, the arbitration tribunal to which the

case was submitted had already ruled that the contract entered into in 2001 for the purchase of 40%

of Infraserv Logistik GmbH, Höchst, could not be performed because of substantive legal flaws.

In the second part of the decision, published on March 17, 2005, the arbitration tribunal requires

Infraserv GmbH & Co. Höchst KG to make a cash contribution for the transfer of the shares sub-

scribed. The cash contribution amounts to € 12.78 million for 1.63 million shares and € 0.65 million

for 0.65 million shares. In addition, interest is charged on the amount of € 12.8 million starting on

various dates in 2004. The interest accrued by mid-April amounts to around € 0.71 million.

New financing agreement

At the end of March, D.Logistics AG concluded an oral agreement to extend the syndicated loan that

was available until then. The credit line of € 13.6 million is sufficient to meet the full extent of the

forecast cash requirements. The standby loan has a maturity of one year, thus putting the future

development on a sound financial basis.

Changes in the companies included in consolidation

The contract dated December 20, 2004 reduces the interest in DTG Bielefeld GmbH & Co. KG from

50% plus 1 vote to 30% with effect from January 1, 2005. The interest has been sold to the newly

appointed managing director. The profit entitlement was also transferred as of January 1, 2005.

Report on Post-Balance Sheet Date Events

AR 2004_ page 037/096*Report on Expected Developments Management Report *

Global economy continues to expand

After the sharp upturn of the past year, the chances that the global economy will have above-aver-

age growth remain favorable. The overall healthy start into the new year is a good indication that

this will turn out to be the case. As in 2004, growth in 2005 is expected to be driven by the United

States and China. The fact that the situation returned to a more normal cycle in 2004 has created

conditions that are even more favorable for sustainable expansion.

However, there is still a considerable risk of setbacks. The world’s limited crude oil reserves and

production capacities as well as geopolitical tension in the Middle East will keep oil markets volatile

and susceptible to disruptions. Furthermore, significant international trade imbalances, in particular

the US current account deficit of more than 5% of gross domestic product, are potential risk factors.

Slight weakening in the EU

After the euro zone economy grew by an estimated 2% last year, the results of the latest Ifo World

Economic Survey indicate that the economic climate worsened again in the first quarter of 2005

compared with the fourth quarter of 2004. Unfortunately, the assessment of the current economic

situation deteriorated before the upturn could gain momentum and Europe managed to catch up

with the buoyant global economy. More positive news is that the expectations regarding economic

development in the next six months have not worsened further and generally retain a certain note

of confidence. On balance, this array of data suggests a moderate slowdown of the economy in the

first six months of 2005.

Total economic production in the euro zone is again expected to grow by 2.0% in 2005. Unem-

ployment seems to have bottomed out. There are signs that the recovery trend in the euro zone will

continue in 2006, with growth in gross domestic product expected to reach around 2.2%.

Germany set to remain lackluster

Germany’s economic development continues to be driven by exports. Although the growth in German

exports has eased since the middle of last year, the trend is expected to continue to point upward.

However, a strong euro may cause headwinds.

The vast majority of economic analysts do not anticipate private consumption to emerge from

stagnation. The desperate situation in the labor market, low wage growth and consumer fears will

continue as the dominating factors responsible for restrained demand this year.

Inflationary pressures in Germany will remain low. Compared with the previous year, consumer prices

in January increased by a mere 1.6%. This was due in particular to the baseline effect of the health

service reforms, which came into force at the beginning of 2004. Core inflation also points to further

price stability (+1.4% in January).

Most forecasts put Germany’s GDP growth at around one percent for the current year. Growth is

expected to accelerate slightly in 2006.

Report on Expected Developments

110

105

100

95

90

01 02 03 04 05

General economic

development

Total Europe USA Germany

Global economy

OECD early indicators

Source: OECD

/096 _AR 2004 *Report on Expected DevelopmentsManagement Report *

Above-average growth prospects for logistics

The prospects for the logistics market over the coming years remain considerably better than those

for the economy as a whole. Studies are predicting growth rates of 5–6% per year for the logistics

services market.

However, the individual segments will benefit to different degrees. A growth rate of 2–5% is

expected for the transport, handling and warehousing services segment; by contrast, 10–15% growth

is expected for the mid-segment of contract logistics. The most buoyant performance is expected for

complex logistics services in the upper segment of systems integration and supply chain management,

where growth rates of 15–20% are forecast.

Outlook for the current fiscal year

On March 3, 2005, D.Logistics published its guidance for the current fiscal year. The D.Logistics Group

expects sales of between € 301 and € 310 million; 95% of this amount is based on existing business,

and the balance will be generated by organic growth. The operating result (EBITA) is expected to reach

between € 9.6 and € 11.0 million, which represents a margin of between 3.2% and 3.5%. This means

that D.Logistics is well on the way toward meeting its medium-term target margin of 4%.

The following consolidated forecast for the D.Logistics Group was prepared using a bottom-up

approach; it reflects the planned target corridors.

Negative impact of the strong euro

The forecast for 2005 is based on the assumption that economic development in Germany will be

restrained and growth of the US economy will slow down, while on balance economic development

in the rest of Europe will be stable. The forecast for 2005 is based on a USD/€ exchange rate of

1.34 USD/€ (average in 2004: 1.24 USD/€). This exchange rate will cause forecast sales to be almost

€ 5 million lower.

Changes in the companies included in consolidation

The forecast for 2005 also includes planned changes in the companies included in consolidation (dis-

posal of Deutsche Tailleur Bielefeld GmbH & Co. KG), which will reduce the sales forecast by around

€ 3.5 million.

Investments slightly up on last year

Investments in property, plant and equipment are budgeted at a level of € 8.1 million for the current

year; this represents an investment-to-sales ratio of 2.6% of sales. This represents a constant devel-

opment compared with 2004 (€ 8.5 million, ratio 2.7%). The investment budget does not currently

include the possible cost of rebuilding the warehouse in Italy.

2005 Forecast Sales in € millions Change in % EBITA in € millions Change in %

Consumer Goods Packaging 127.7 – 131.6 (0.2) – 2.9 3.99 – 4.33 12.2 – 21.9

Industrial Goods Packaging 92.0 – 94.8 (7.4) – (4.6) 4.53 – 4.93 8.9 – 18.4

Warehouse Logistics 81.2 – 83.6 (4.5) – (1.5) 4.76 – 5.18 4.4 – 13.4

Holding company 0.24 – 0.25 (2.9) – (6.1) (3.73) – (3.45) (17.5) – (8.8)

D.Logistics Group 301.1 – 310.3 (3.6) – (0.7) 9.55 – 10.98 7.4 – 23.4

Outlook for the

logistics sector

Prospects

for the Company

AR 2004_ page 039/096*Report on Expected Developments Management Report *

Financing

The budgeted investments will be financed from net cash provided by operating activities. On bal-

ance, there are no plans to incur financial liabilities for the existing investment budget. On the con-

trary, the expected cash inflows as a result of the decision in the Infraserv case will further reduce

financial liabilities, have a positive impact on the Group’s creditworthiness, and enhance its business

opportunities.

Procurement

The organization of procurement in the Group has proved successful. No major changes are planned.

Further price increases for materials are currently not anticipated; most recently these have been con-

stant at a high level.

Personnel

No significant changes are planned in the area of personnel or social benefits.

Optimization of Group structure completed

The streamlining of the legal and organizational structure of the Group was largely completed in 2004.

Some smaller companies are still being wound down, and we are driving this process toward com-

pletion. No additional impact is expected on earnings.

Dividend

Due to the high loss carried forward, no dividend payments are planned for the foreseeable future.

Medium-term prospects

The D.Logistics Group, in whose services portfolio the transport, handling and warehousing services

segment is clearly underrepresented, is a well-qualified service provider that should be able to achieve

average organic growth rates of around 5% over the coming years. This confidence is supported by

its many years of experience in logistics outsourcing, a market segment that is fairly saturated in the

transport area, but offers further dynamic growth potential in the areas of warehousing, value-added

services and packaging and coordination logistics.

Extension of the services portfolio

The most important signal for extending the logistics chain comes from the customer. Customers

require us to develop an understanding of the process that integrates upstream procurement servic-

es and distribution management into an end-to-end logistics services package. Based on our main

sales drivers, consumer and industrial goods packaging and warehouse logistics, we will therefore

further extend our services portfolio. At the customer production end, production planning, parts

procurement and input control will increasingly become elements of our logistics management, while

at the consumer end, distribution will gain in importance in the same way as the establishment of

effective distribution networks.

/096 _AR 2004 *Risk ReportManagement Report *

Macroeconomic risks

Global economic growth is expected to slow to around 4% in 2005. The world economy will there-

fore lose some of its momentum. In Europe, where growth of up to 2% is expected, the prospects

have also deteriorated somewhat. In Germany, the economy is expected to continue its sluggish per-

formance. Economic growth is not expected to be much above one percent.

Risks arise from the development of commodity prices, particularly the oil price. A further increase

would probably lead to a noticeable slowdown in global economic growth. On the procurement side,

this could lead to cost increases, and on the sales side, there could be a negative impact on demand

in important customer markets of our Group, such as the export-focused machine and plant engi-

neering industry.

Developments in the currency markets may also give rise to risks. Any sustained strengthening

of the euro against the dollar would hamper the export prospects of European companies. Since

D.Logistics generates almost 17% of Group sales in the dollar area, a further strengthening of the

euro would also have a negative exchange-rate effect on sales and results.

Sector-specific risks

In view of higher expectations on the part of the customer, companies are being forced to increase

the efficiency of each and every process. As a result, the supply management function will further

gain in importance. The resulting demands on the logistics systems will also be subject to a rapid

reordering of priorities. The demands on logistics concepts and on logistics providers are increasing,

and there are many logistics providers competing in the marketplace.

The market for innovative, comprehensive logistics solutions will grow by 10–15% over the next

few years. To maintain its position in this market, the Group was resegmented in 2003.

It is possible that these measures may be insufficient to cope with the changing priorities in logis-

tics (and the trend toward comprehensive systems suppliers). However, this risk can be reduced by

having a more flexible structure for the D.Logistics Group. Such a structure was implemented in the

past fiscal years.

The subsidiaries were given greater freedom, and central control over individual companies by

D.Logistics AG was abandoned. D.Logistics AG is now better able to perform its supervisory func-

tions as a holding company.

The D.Logistics Group with its cross-industry business segments has minimized the risk that cycli-

cal fluctuations in any particular sector could threaten the existence of the Company.

Being independent of its own freight systems gives the D.Logistics Group great flexibility which

not only keeps down the cost risk, but also lets the Group respond to special customer requirements

without any drawbacks from the underutilization of its own capacity.

Risks from operations

Sales and earnings trends are primarily determined by the business relationships maintained with a

limited number of large customers. A risk-reducing factor is that these customers represent different

market sectors (e.g. Gillette for consumer goods packaging, VW for the automotive industry).

Risk Report

Individual risks

AR 2004_ page 041/096*Risk Report Management Report *

The aim is to strengthen customer loyalty to the D.Logistics Group. This will be accomplished for

example by extending the identification and improvement of processes (including risk assessment, if

required) and having a strong customer focus (e.g. by means of customer surveys). The customer sur-

veys conducted produced positive results for the sites of the D.Logistics Group. Actions were identified

on the basis of the survey results in order to increase customer satisfaction. One of these actions is

to intensify employee training and information.

Other risks may arise from the design of the services contracts. It is not always possible to guaran-

tee that, under the Inhouse-Outsourcing® concept of some of the companies in the D.Logistics Group,

the customer will take over the assets and employees after termination of the contract. In many cas-

es, the asset risk has been kept to a minimum, so that such transfers are normally limited to leasing

or employment contracts. In the packaging business, some of the assets that are no longer of use

beyond the end of the contract can be sold without risk.

Personnel risks

A major part of the business success of the D.Logistics Group is based on the skills and qualifications

of its employees. Continuing employee training, which includes an introduction to risk management,

is intended to protect the Company from possible losses.

Financing risks

The strategy of the D.Logistics Group is directed toward profitable growth. A decisive factor in this

strategy is having access to the capital and credit markets to obtain adequate funding.

The Company’s earnings position and the impending provisions of Basel II have made it difficult to

obtain debt financing in recent fiscal years. This will not change significantly in the coming years.

Net assets, the financial position and the results of operations, liquidity, and the business outlook of

the Company will be critical factors in this regard.

On June 30, 2003, D.Logistics AG concluded a syndicated loan agreement with the funding banks.

That agreement replaced the pool of banks that had existed up to that date. Initially, the syndicated

loan agreement had a fixed maturity through June 30, 2004. It had also stipulated a partial repay-

ment of € 2 million on March 31, 2004, although this requirement was temporarily suspended due

to the extraordinary events in Italy. The loan agreements were extended through March 31, 2005, with

an obligation to make the suspended repayment of € 2 million in several installments by December 31,

2004. The repayment deadlines were met. Verbal approval of a new credit line from a modified syn-

dicate has already been given. Once the relevant collateral has been provided, this credit line will ini-

tially mature on March 31, 2006. This will provide a credit line of € 13.6 million, thus securing the

financing of the holding company up to that date.

In addition, D.Logistics expects further cash inflows of around € 14.1 million after winning its dis-

pute with Infraserv. As a result, the financing situation should improve considerably.

Interest rate derivatives were concluded in connection with medium-term financing measures to

manage and limit interest rate risk. These interest rate swaps are directly allocated to certain loans in

the form of cash flow hedges (see also the section entitled ”Contingent Liabilities and Other Finan-

cial Liabilities“).


Legal risks

Legal risks relate primarily to the pending legal disputes from the disposal of the CSC Group in 2002.

As part of that transaction, an amount of € 4 million for guarantee claims to be admitted was orig-

inally paid into a trust account. The period for registering guarantee claims ended on April 15, 2004.

In addition to the claims for damages asserted amounting to around € 1.5 million, the buyer filed

another suit, which could exceed that amount. It relates to a claim registered in 2002 concerning an

accident involving a forklift in the United States. Based on the currently known facts, any possible

claim may fall within the insured risk, but on the other hand it would lead to D.Logistics AG exercis-

ing its right of recourse. No final decision has been made on any claims.

Another claim registered in previous years related to a theft, which was disclosed and explained

during the closing procedures for the sale of CSC. The original claim was registered for around € 4.5

million. According to the latest information, the claim has been reduced to € 0.7 million. In addition,

management currently believes it is an unwarranted claim on the part of the buyer because all noti-

fications and disclosures relevant to the contract of sale had been made.

In a writ dated November 28, 2004, the insolvency administrator of Logistikzentrum Talhaus

GmbH & Co. KG is suing D.Logistics AG for payment of € 1.0 million plus interest accrued since August

1999. This relates to the alleged non-payment of the purchase price in connection with the acquisi-

tion of real estate at the Hofheim administration site. The Company does not believe that the action

has any chance of success.

There are other risks in our operating subsidiaries related to pending liability cases which have not

yet been finalized, some with pending legal disputes.

The possibility of losing all legal disputes could adversely affect the net assets, financial position and

results of operations of D.Logistics AG.

IT risks

The steps initiated in past years to improve data communications were continued and implemented in

fiscal year 2004. As a result, employees can now access internal data irrespective of location. Encryp-

tion and filtering mechanisms are used to keep the risk of unauthorized access to an absolute mini-

mum. Further, a centrally managed virus protection concept has been deployed. The e-mail system’s

virus signatures, for example, are automatically updated on a daily basis.


If a system that has high security requirements were to fail despite the measures that have been

implemented, an emergency and recovery plan goes into effect to minimize down time. Because of

the distributed storage of backup copies and of the software packages to be used, this plan has a

99.99% availability after a crash.

A data backup for critical, centrally stored data is performed several times a day. This minimizes

the risk of data loss.

Management risks

The Executive Board of D.Logistics AG has consisted of co-founder and CEO, Detlef W. Hübner,

Andreas Bargende (COO), and Thomas Schwinger-Caspari (CFO) since September 2002. This provides

a level of management continuity that offers organizational stability for the Company’s operations.

The restructuring of the management of the AG was accompanied by the appointment of new

managers in several subsidiaries. This new focus benefited the Group in fiscal year 2004, so that

there is no significant management risk to report.

Other risks

The number of safety management personnel has been increased. All facilities are constantly moni-

tored for safety to prevent accidents in the workplace. The safety monitoring cycles are performed

according to regulations approved by the occupational health and safety agency. The operational

processes (handling, storage of goods) are in themselves not critical. Continuing employee training

is intended to keep any potential risks to a minimum.

Environmental management forms part of site management. There is no expected risk in this area

because most sites are used only for non-critical products and processes. In some cases, environmen-

tally relevant processes are managed by customer-owned systems, which ensure that business trans-

actions are processed with minimal risk.

Hazardous materials at some sites are handled according to applicable regulations. Hazardous

goods officers ensure continuous compliance monitoring and in doing so limit the potential risk.

Risk-prone processes are identified and, depending on location, modified in agreement with the

customer. Accidents involving hazardous goods can be minimized, but not eliminated, by process

optimization.


In summary, it may be concluded that the continued existence of D.Logistics AG is currently not seri-

ously threatened in terms of operating activity or cash-flow considerations. The evaluated risks and

those risks that could threaten the Company’s continued existence are matched by measures designed

to minimize the probability of occurrence.

In summary, the following facts can be used to support the minimization of business risk:

The D.Logistics Group has a significant percentage of large customers. These large customers rep-

resent various industries and different business sectors (reducing the risk).

The bad debt charges during this fiscal year amount to a moderate 0.6%. This is due to regular

invoicing (at least monthly).

In fiscal year 2004, branch offices were closed or actions initiated to close them in the event they

did not perform satisfactorily and appeared unable to survive a possible impending recession. Much of

the closure cost was already incurred in 2004. All impairment losses were also recognized in that year.

Risks from business activities are covered by liability insurance. There are no product liability

obligations.

The risk management system has long been an integral part of the management tools of the

D.Logistics Group. The system was completely reworked and brought up to international standards

after the middle of 2002. The aim is to include in its scope as many companies within the Group as

possible and to establish an operating routine based on constant risk minimization. According to the

risk inventory as of December 31, 2004, based on the new standards as measured against Group sales,

the system covers around 90% of the risks in subsidiaries. The Executive Board performs additional

risk monitoring functions locally by regularly visiting Company sites. Furthermore, risk management

entails a defined organizational structure, an internal control system and risk hedging (e.g. through

insurance).

The auditors audited the risk management system when they audited the annual financial state-

ments. Their advice regarding potential for improvement has been implemented.

Since it was founded in 1998, D.Logistics AG has been certified according to the applicable DIN

EN ISO standards. Since July 2004, the D.Logistics Group has been certified according to the latest

DIN EN ISO 9001:2000 standard.

Risk identification

Risks are identified by the managing directors or site managers on the basis of the following ten risk

categories: strategy /planning, market / sales, procurement, service provision, finance, personnel, IT,

contracts / law, communication and other. The persons responsible continually document the risks iden-

tified in risk maps.

Aggregate

Risk management


Risk analysis and risk assessment

The Company’s managing directors or site managers responsible rate the risks identified on the risk

maps by probability of occurrence and probable amount of loss. The results are entered in the fol-

lowing matrix. Risks with a rating of 5 or higher are paired with actions. An estimate of how much

the risk can be reduced by taking the agreed actions is made in a similar table.

Risk measurement

Risk measurement is standardized throughout the Group. In order to implement this in the Group,

the amount of loss was shown as a percentage of sales and the probability of occurrence as a per-

centage of possible cases /events. The following table shows the parameters defined in the Group:

Rating Amount of loss Probability / frequency

qualitative quantitative (% of sales) qualitative quantitative (% of sales)

1 insignificant up to 0,5 improbable under 5

2 small > 0,5 to 1,5 very rare 5 to 10

3 noticeable > 1,5 to 5 rare 11 to 30

4 critical > 5 to 10 possible 31 to 80

5 mission-critical > 10 almost certain over 80

Risk monitoring/risk control

Risk control is used regularly to monitor the suitability of measures and their implementation. This is

increasingly carried out as part of internal audits in the course of the fiscal year. In addition, the

Executive Board performs additional risk monitoring functions in the individual subsidiaries during

regular site visits.

Probability

almost certain 5 10 15 20 25

possible 4 8 12 16 20

rare 3 6 9 12 15

very rare 2 4 6 8 10

improbable 1 2 3 4 5

insignificant small noticeable critical mission-critical

Amount of loss

Warehouse Logistics

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

Market capitalization (€m)**

54.13

Cons

olida

ted Fi

nanc

ial S

tatem

ents

*

Consolidated Financial Statements*

/096 _AR 2004 *Consolidated Income StatementConsolidated Financial Statements*

Consolidated Income

Statement (US GAAP)

The symbols are explained on the bookmark at the back of this Annual Report

* following retrospective adjustments; see section on adjustments

Earnings per share in € 2004 2003* Note / Pagerestated

from continuing operations (0,017) (0,931) 12 / 67

from discontinued operations (0,028) (0,151) 12 / 67

from consolidated net income (0,045) (1,082) 12 / 67

Average number of shares outstanding 39,475,315 35,102,507 12 / 67

in € thousands 2004 2003* Note / Pagerestated

Sales 312,470 303,495 01 / 64

Cost of sales (272,734) (263,146) 02 / 64

Gross profit 39,736 40,349

Selling expenses (5,047) (5,704) 03 / 64

General and administrative expenses (26,762) (30,321) 04 / 64

Other operating revenue 7,047 10,751 05 / 65

Other operating expenses (6,068) (10,204) 06 / 65

EBITA 8,906 4,871

Impairment of goodwill 0 (24,596)

EBIT 8,906 (19,725)

Interest and similar income 858 1,506

Interest and similar expenses (6,500) (8,272)

Income (loss) from investments 59 135 07 / 66

Other financing costs, net (251) (412) 08 / 66

Income (loss) before income taxesand minority interests 3,072 (26,768)

Income taxes (1,648) (3,736) 09 / 66

Income (loss) from continuing operationsbefore minority interests 1,424 (30,504)

Minority interests (2,106) (2,189) 10 / 67

Income (loss) from continuing operations (682) (32,693)

Income (loss) from discontinued operations (after taxes) (1,111) (5,298) 11 / 54, 62

Net income (loss) (1,793) (37,991)

AR 2004_ page 049/096*Consolidated Balance Sheet Consolidated Financial Statements*

Consolidated Balance

Sheet (US GAAP)


Assets in € thousands Dec. 31, 2004 Dec. 31, 2003* Note / Pagerestated

Current assets 99,185 86,466

Cash and cash equivalents 16,340 14,944 13 / 68

Trade accounts receivable 45,458 45,770 14 / 68

Inventories 11,865 10,235 15 / 68

Other receivables and other current assets 23,055 13,442 16 / 68

Deferred tax assets, current 1,471 695 9, 17 / 66, 69

Prepaid expenses 996 1,380

Noncurrent assets 131,053 150,295

Property, plant and equipment 77,054 86,080 18 / 69

Goodwill 38,266 42,928 19 / 70, 83

Other intangible assets 2,593 6,370 19 / 70

Financial assets 3,777 2,831 20 / 70

Other receivables and other noncurrent assets 3,549 5,084 16 / 68

Deferred tax assets, noncurrent 5,814 7,002 9, 17 / 66, 69

Assets held for sale 330 286 11 / 54, 62

Total assets 230,568 237,047

Liabilities and shareholders’ equity in € thousands Dec. 31, 2004 Dec. 31, 2003* Note / Pagerestated

Current liabilities 112,754 120,293

Bank loans and overdrafts 40,607 40,755 21 / 71

Other financial liabilities 8,434 7,638 21 / 71

Trade accounts payable 36,557 37,226 22 / 72

Other liabilities 9,586 11,793 23 / 73

Other accrued expenses 16,813 22,430 24 / 73

Deferred tax liabilities 480 235 09, 17 / 66, 69

Deferred income 277 216

Noncurrent liabilities 48,852 60,002

Long-term borrowings 29,383 37,889 21 / 71

Other financial liabilities 13,893 15,286 21 / 71

Accrued pension benefits 783 989 25 / 73

Deferred tax liabilities 4,381 5,210 09, 17 / 66, 69

Deferred income 412 628

Minority interests 5,772 3,725

Shareholders’ equity 61,873 51,832

Capital stock 42,292 38,528 26 / 74

Unpaid contributions (2,280) 0

Additional paid-in capital 190,467 177,011 27 / 74

Accumulated losses (147,365) (145,572)

Treasury stock 0 (473) 28 / 75

Accumulated other comprehensive income (21,241) (17,662) 29 / 75

Liabilities in connection with assets held for sale 1,317 1,195 11 / 54, 62

Total liabilities and shareholders’ equity 230,568 237,047

/096 _AR 2004 *Consolidated Cash Flow StatementConsolidated Financial Statements*

Consolidated Cash Flow Statement

* Following retrospective adjustments; see section on adjustments

in € thousands 2004 2003* Note / Pagerestated

Net loss before minority interests 313 (35,803)

Adjustments to reconcile net loss to cash flows from operating activities

Minority interests (2,106) (2,189)

Deferred taxes (172) 1,115

Income from equity-accounted affiliates (60) 0

Gain from sale of discontinued operations 710 977

Gain (loss) from sale of investments (740) 4,322

Gain (loss) from disposal of property, plant and equipment 170 (1,513)

Other depreciation and amortization charges 13,915 39,244

Changes in working capital

Change in trade accounts receivable (372) 4,307

Change in inventories (1,630) 1,342

Change in other receivables and other assets 1,911 10,299

Change in trade accounts payable (433) 607

Change in other liabilities (114) (10,384)

Change in accrued expenses (5,473) (1,741)

Change in other assets / liabilities 2,260 143

Net cash provided by (used in) operating activities 8,179 10,726 30 / 77

Purchase of intangible assets and property, plant and equipment (6,738) (12,150)

Proceeds from sale of intangible assets and property, plant and equipment 4,946 6,790

Purchase of investments (43) (203)

Proceeds from sale of investments 1,258 14,25

Change in cash and cash equivalents from the disposal of investments (24) (713)

Net cash provided by (used in) investing activities (601) 8,149 31 / 77

Proceeds from short- or long-term borrowings 4,841 6,995

Repayments of borrowings (13,323) (27,921)

Proceeds from sale of treasury stock 202 0

Dividends paid to minority shareholders (59) (432)

Net change in other financial liabilities 2,222 (1,537)

Net cash provided by (used in) financing activities (6,117) (22,895) 32 / 77

Effect of exchange rate on cash and cash equivalents (65) (272)

Change 1,396 (4,292) 33 / 77

Cash and cash equivalents at the beginning of the period 14,944 19,236

Cash and cash equivalents at the end of the period 16,340 14,944

AR 2004_ page 051/096*Statement of Changes in Consolidated Shareholders’ Equity Consolidated Financial Statements*

Statement of Changes in Consolidated Shareholders’ Equity

Cap

ital

sto

ck

Un

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on

trib

uti

on

s

Co

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ibu

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Ad

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-in

cap

ital

Acc

um

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ted

lo

sses

Accumulated other comprehensive

income (loss)

Tota

l sh

areh

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ers’

equ

ity

in € thousands Cu

mu

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ve

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ion

ad

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) fr

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Balance at Dec. 31, 2002 35,025 0 657 174,875 (106,931) (7,358) (214) (109) (616) 95,329

Adjustments — — (656) — (650) — — — — (1,306)

Balance at Dec. 31, 2002 (adjusted) 35,025 0 1 174,875 (107,581) (7,358) (214) (109) (616) 94,023

Net income (loss)for the year — — — — (37,001) — — — — (37,001)

Other comprehensive income (loss) — — — — — (10,110) 104 25 — (9,981)

Total comprehensive income — — — — — — — — — (46,982)

Capital increases 3,503 — (1) 2,136 — — — — — 5,638

Treasury stock — — — — — — — — 143 143

Balance at Dec. 31, 2003 38,528 0 0 177,011 (144,582) (17,468) (110) (84) (473) 52,822

Adjustments — — — — (990) — — — — (990)

Balance at Dec. 31, 2003(adjusted) 38,528 0 0 177,011 (145,572) (17,468) (110) (84) (473) 51,832

Net income (loss)for the year — — — — (1,793) — — — — (1,793)

Other comprehensiveincome (loss) — — — — — (3,654) 14 61 — (3,579)

Total comprehensiveincome — — — — — — — — — (5,372)

Capital increases 3,764 — — 13,559 — — — — — 17,323

Treasury stock — — — (103) — — — — 473 370

Unpaid contribution — (2,280) — — — — — — — (2,280)

Balance at Dec. 31, 2004 42,292 (2,280) 0 190,467 (147,365) (21,122) (96) (23) 0 61,873

/096 _AR 2004 *Accounting PoliciesConsolidated Financial Statements*

Notes to the Consolidated Financial Statements

Consolidation

Accounting Policies

The consolidated financial statements of D.Logistics AG and its subsidiaries (hereinafter referred to

as D.Logistics or the Group) have been prepared according to United States Generally Accepted

Accounting Principles (US GAAP).

These consolidated financial statements have an exempting effect under section 292a of the

Handelsgesetzbuch (HGB – German Commercial Code), whereby consolidated financial statements

do not have to be prepared under German law if financial statements prepared under internationally

recognized standards are presented instead. The material differences between accounting under

German law and US GAAP are explained in the notes.

All major subsidiaries over which D.Logistics AG has legal or constructive control are included in

the consolidated financial statements.

In addition to D.Logistics AG, the consolidated financial statements include 29 (previous year: 33)

fully consolidated subsidiaries in Germany and 15 (previous year: 17) in other countries. The number

of fully consolidated companies fell by six in 2004; the disposal of two of these was due to intra-

group mergers.

Consolidation uses the purchase method of accounting, under which the cost of the shares

acquired is eliminated against the parent company’s interest in equity at the time of acquisition. Any

unallocated amount is capitalized as goodwill. Under SFAS 142, “Goodwill and Other Intangible

Assets”, goodwill is no longer amortized over its useful life, but tested for impairment at least annu-

ally (according to the requirements of SFAS 142).

Intercompany receivables and liabilities, sales, expenses, income and profits are eliminated as part

of consolidation.

AR 2004_ page 053/096*Accounting Policies Consolidated Financial Statements*

The following adjustments were made for previous periods:

Customer contract in Italy

In the year under review, the accounting treatment of a significant customer contract in Italy was

reviewed. This relates to the purchase and sale of merchandise and how these transactions are treated.

Since the customer bears the main risks from this deal, these transactions are no longer included in

the 2004 figures. The previous year’s figures have therefore been adjusted accordingly.

Capital leases

In fiscal year 2004, a number of leases previously classified as operating leases were identified as

finance leases. This relates to one long-term real estate lease and a number of equipment leases,

particularly for industrial trucks. The previous year’s figures have been adjusted accordingly.

Other adjustments

In the statement of changes in shareholders’ equity, an amount of € 1,584 thousand carried forward

as of December 31, 2001 was reclassified in the ending balance from accumulated other compre-

hensive income (loss) to accumulated losses. This is due to the fair-value measurement of securities

in 2000, which was reported as other comprehensive income (loss) due to the classification of the

securities as “available for sale”. As a result of an accounting error, this amount was not reclassified

to accumulated gains/losses in the 2001 financial statements. This adjustment does not affect the

amount of shareholders’ equity, as it only relates to a reclassification within the components of

shareholders’ equity.

The € 656 thousand contributed to implement a capital increase from authorized capital that

was reported under shareholders’ equity as of December 31, 2002 was reclassified to the “Other

liabilities” item. At the same time, the contribution of € 656 thousand was reduced to € 109 thou-

sand due to an adjustment of the agreements in the first quarter of 2004. On May 21, 2004, this

capital increase was entered in the commercial register. As a result, the capital stock increased by

€ 109,294 from € 38,527,717 to € 38,637,011.

As a result of misjudgment of an accounting matter, an accrual of € 1.4 million was not recog-

nized in 2003. To correct this, the shareholders’ equity was adjusted as of December 31, 2003 in

the interim financial statements as of September 30, 2004, in accordance with the requirements of

US GAAP. An accrual had to be recognized in the prior year’s balance sheet and the corresponding

expense item recognized in income. The resulting effect on income was € 892 thousand after tax.

The loss carried forward therefore increased by the same amount. The 2003 income statement has

been adjusted accordingly.

A receivable of € 1,350 thousand previously reported under “Other current assets” has been

reclassified to “Noncurrent assets” because it is not expected to be realized within one year. The

previous year’s figures have been adjusted accordingly.

Funds of € 1,028 thousand pledged as collateral for loans were no longer reported under “Cash

and cash equivalents” in 2004, but instead as a noncurrent asset. The previous year’s figures have

been adjusted accordingly.

Adjustments to correct

errors and

reflect reclassifications


11 Other adjustments to

prior-year figures

Equity-accounted

affiliates

Droppoint Holdings Ltd.

On the basis of a decision to dispose of Droppoint Holdings Ltd. taken during the fiscal year, that

company’s assets and liabilities were reclassified to “Assets held for sale” and “Liabilities in con-

nection with assets held for sale.” The previous year’s figures have been adjusted accordingly.

The following table shows the effects of the adjustments on the income statement and balance

sheet:

Significant 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 business and financial policies

of the investment. This is always the case if it holds between 20% and 50% of the voting rights

(equity-accounted affiliates).

in € thousands 2003 Customer Drop- Capital Other 2003(original) contract point leases restated

in Italy

Income statement

Sales 320,265 (16,379) (391) 0 0 303,495

Gross profit 41,233 0 209 329 (1,422) 40,349

EBITA 5,144 0 820 329 (1,422) 4,871

EBIT (19,452) 0 820 329 (1,422) (19,725)

EBT (26,012) 0 824 (158) (1,422) (26,768)

Income taxes (4,326) 0 0 60 530 (3,736)

Income (loss) from continuingoperations (32,010) 0 307 (98) (892) (32,693)

Income (loss) fromdiscontinued operations (4,991) 0 (307) 0 0 (5,298)

Net income (loss) (37,001) 0 0 (98) (892) (37,991)

Earnings per share from consolidated net income (1.054) 0 0 (0.003) (0.025) (1.082)

Balance sheet

Current assets 98,329 (9,437) (226) 178 (2,378) 86,466

Noncurrent assets 140,840 0 (60) 6,607 2,908 150,295

Assets held for sale 0 0 286 0 0 286

Total assets 239,169 (9,437) 0 6,785 530 237,047

Current liabilities 127,553 (9,437) (591) 690 2,078 120,293

Noncurrent liabilities 53,159 0 0 6,843 0 60,002

Minority interests 4,329 0 (604) 0 0 3,725

Shareholders’ equity 54,128 0 0 (748) (1,548) 51,832

Liabilities in connection with assets held for sale 0 0 1,195 0 0 1,195


Currency translation

Revenue recognition

At the time of acquisition of an investment accounted for using the equity method, the difference

between cost and proportionate equity is initially allocated to the assets and liabilities of this invest-

ment by making certain adjustments to the fair values. Any unallocated amount is recognized as

goodwill, rather than amortized.

If the fair value of an investment in an equity-accounted affiliate falls below its carrying amount

more than temporarily, 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.

All other investments are carried at cost less accumulated impairment losses.

The annual financial statements of foreign subsidiaries included in consolidation whose functional

currency is not the euro are translated into euros, the Group currency, using the functional currency

method. Financial statements are translated according to the closing rate method, i.e. balance

sheets are translated from the functional 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.

Adjustments resulting from the translation of assets and liabilities compared with the translation

of the previous year and currency translation adjustments between the income statement and the

balance sheet are taken directly to equity and are reported under “Accumulated other comprehen-

sive income”.

The exchange rates for the translation of key currencies that are not part of the European Monetary

Union developed as follows:

foreign currency per € Middle rate as of the Average rate for the yearbalance sheet date

2004 2003 2004 2003

US dollar 1.3621 1.2630 1.2439 1.1312

Pound sterling 0.70505 0.7048 0.67866 0.69199

Sales are primarily generated on the basis of services, products and rental agreements. These sales

are recognized once they can be regarded as realized or realizable and earned under US GAAP. This

is normally the case when there is persuasive evidence of an arrangement, the products or the serv-

ices have been provided to the customer, the sales price is fixed or determinable, and collectibility is

reasonably assured. Sales are realized net of purchase price reductions such as cash and sales dis-

counts and rebates.

Sales from long-term construction contracts are recognized using the percentage-of-completion

method, based on reaching contractually agreed milestones or project progress. Long-term construc-

tion contracts are those that run for a period of at least twelve months, calculated from the inception

of the contract until it is largely completed. Sales from long-term construction contracts play a minor

role in the D.Logistics Group.


Research & Development

expenses

Product-related expenses

Earnings per share

Intangible assets

and goodwill

Property, plant and

equipment

Costs relating to research and development in the Company’s core business are expensed as

incurred.

Costs for advertising, sales promotion and other sales-related items are expensed as incurred.

Earnings per share (EPS) are calculated according to Statement of Financial Accounting Standards

(SFAS) 128, “Earnings per Share”. The basic earnings per share are calculated by dividing consolidated

net income by the weighted average number of common shares outstanding. Stock newly issued or

repurchased during a period is included pro rata for the time it is outstanding. Diluted earnings per

share are calculated by dividing consolidated net income by the weighted average number of shares

outstanding and the weighted average number of securities convertible into common stock.

Purchased intangible assets with finite useful lives are capitalized at cost and amortized on a straight-

line basis over their useful lives.

The Group regularly tests its intangible assets with finite useful lives for impairment. If there is

evidence that the carrying amount of an asset no longer represents its fair value, an impairment is

recognized according to SFAS 142.

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 five years.

Goodwill and intangible assets with indeterminable or indefinite useful lives are no longer amor-

tized over their estimated useful lives. Instead, the Group tests the goodwill and the intangible

assets for impairment regularly once a year, as well as between reporting dates if there are signs of

impairment.

Property, plant and equipment is carried at cost less accumulated depreciation. Depreciation based

exclusively on tax regulations and special tax-allowable reserves are not recognized.

Depreciable assets are depreciated on a straight-line basis over useful lives that are customary for

the industry.

Assets are removed from the balance sheet on disposal or scrapping; any disposal gains or losses

are recognized in income.


Leasing

Financial assets

Cash and cash

equivalents

Receivables and

other current assets

Inventories

Deferred tax assets

and liabilities

The following useful lives are used for depreciation:

Leasing transactions must be classified as either capital leases or operating leases. Transactions under

which the Group as lessee controls all substantial risks and rewards from the use of the leased asset,

and therefore is considered to be the economic owner, are treated as capital leases. Accordingly, the

lessee recognizes the leased asset and the corresponding liability in its balance sheet.

All other leases under which the Group is the lessee are treated as operating leases, which means

that the lease payments are recognized in income as incurred.

Financial assets are measured according to SFAS 115 or using the equity method. Shares in non-con-

solidated affiliates are carried at cost.

Cash and cash equivalents are cash on hand, checks, and sight deposits with an original maturity of

up to three months.

These are recognized at nominal values less cash and sales discounts and specific bad debt allowances

(net realizable value). Specific bad debt allowances are recognized when receivables are uncollectible

or uncollectibility is probable. The amount of the allowance must be determinable with reasonable

accuracy.

Inventories are carried at the lower of cost or market; they are generally measured using the weight-

ed average-cost method.

In addition to direct material and production costs, production costs also include production-relat-

ed material and production overheads.

Deferred tax assets and liabilities are recognized for all temporary differences between the carrying

amounts in the consolidated financial statements and the tax base, and for tax loss carryforwards

(liability method). This concept requires the use of the currently enacted future tax rates that will

apply when the temporary differences are expected to reverse. The effects of changes in tax law on

deferred tax assets and liabilities are recognized in income in the period in which the law takes effect.

Deferred tax assets are recognized only if it is probable that the associated tax benefits will be realized.

Useful lives of property, plant and equipment

Factory and office buildings 15 – 33 years

Operating and office equipment 5 – 13 years

Machinery and equipment 5 – 10 years

Vehicle fleet 4 – 5 years

Leasehold improvements 10 years


Accumulated

other comprehensive

income (loss)

Accrued pension

benefits and similar

obligations

Financial instruments

Disposal groups and

discontinued operations

Other comprehensive income or loss is reported under this item, unless it results from capital trans-

actions with shareholders, such as capital increases or dividend payments. This item includes cumu-

lative currency translation adjustments and unrealized gains or losses from fair value measurement

of securities and derivative financial instruments.

Under US GAAP, accrued pension benefits are measured according to the projected unit credit

method specified in SFAS 87.

Tax and other accruals are recognized if a liability exists to third parties, the obligation is probable,

and the amount to be accrued can be reliably estimated.

The Group uses derivative financial instruments to hedge foreign currency risks and to limit the risk

of interest rate increases. They are accounted for under SFAS 133, “Accounting for Derivative Instru-

ments and Hedging Activities”, and carried as assets or accrued liabilities at their fair values as of the

balance sheet date. Pursuant to SFAS 133, gains and losses resulting from changes in the fair value

of all derivative financial instruments are recognized in income.

Changes in the value of foreign currency derivatives that are entered into to hedge future cash

flows from uncompleted transactions or planned transactions and that meet the requirements of the

Standard are recognized in an equity account (Accumulated other comprehensive income) until the

gains or losses from the hedged underlying are realized. The amounts in this account are recognized

in income in the period in which the hedged transactions are recognized in income. Those portions

of the fair-value change of the derivative regarded as ineffective with regard to the hedged risk are

recognized immediately in the income statement. This type of treatment is the result of the method

used by the Group to measure the effectiveness of the hedging relationship between the underlying

and the hedging transaction. Under this method, the fair-value changes of foreign exchange deriva-

tives that are due to timing effects, i.e. the differences between spot rate and forward rate measure-

ment, are not taken into account when measuring effectiveness, but are immediately recognized in

income.

The Group reports a disposal group if a group of long-lived assets are to be disposed of by sale

together with other assets and liabilities in a single transaction and the group meets the criteria laid

down in SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. The assets

and liabilities of a disposal group are reported separately in the balance sheet under “Assets held for

sale” and “Liabilities in connection with assets held for sale”. Until disposal, income and expenses

relating to a disposal group are included in income or loss from continuing operations, unless the

disposal group qualifies for reporting under discontinued operations. The Group reports the results

of a disposal group that meets the requirements of a so-called component of the group as discon-

tinued operations if its cash flows can be clearly separated from the Group’s other activities, both

operationally and from a financial reporting point of view, and the Group will have no significant

Deferred taxes on companies in Germany were calculated using a tax rate of 39% (previous year:

39%), taking into account corporate income tax of 25%, the solidarity surcharge of 5.5% and the

average trade tax rate in the Group. For companies outside Germany, the applicable local tax rate

was used.


Cash flow statement

Segment reporting

Use of estimates

New accounting

further engagement in the activity after disposal. Income or loss from discontinued operations is

recognized in the period in which it is incurred. It is reported separately in the income statement

under “Income (loss) from discontinued operations (after taxes)”. The income statement of the

previous period is adjusted accordingly by stating the income or loss of the component of the Group

under discontinued operations.

The cash flow statement shows changes in cash and cash equivalents in the year under review as a

result of cash inflows and outflows. It is prepared in accordance with SFAS 95 (“Statement of Cash

Flows”). A distinction is made between cash provided by or used in operating activities, investing

activities, and financing activities.

Segment reporting is based on Statement of Financial Accounting Standards SFAS 131, “Disclosures

about Segments of an Enterprise and Related Information”. It requires the Group to define its oper-

ating segments in line with the internal reporting structure and to report information about the seg-

ment profit or loss. The Standard also requires information to be provided on products, services and

regions.

The preparation of the consolidated financial statements requires management to make estimates

and assumptions that can affect the assets and liabilities, the disclosure of contingent liabilities as of

the balance sheet date, and the income and expenses for the period. Actual amounts may differ

from these estimates.

In March 2004, the Emerging Issues Task Force (EITF) reached a consensus on EITF 03-1, “The Meaning

of Other-Than-Temporary Impairment and its Application to Certain Investments”. EITF 03-01 defines

the meaning of other-than-temporary impairment and its application to investments in debt and

equity securities accounted for under SFAS 115, “Accounting for Certain Investments in Debt and

Equity Securities”, as well as to investments accounted for at cost. The consensus reached in March

2004 requires certain disclosures on unrealized losses on investments that fall within the scope of

EITF 03-1. EITF 03-1 also requires additional disclosures if the fair values of investments measured at

cost cannot currently be determined. The application of the guidance on recognition and measure-

ment rules contained in EITF 03-1 has been postponed until additional application guidance is pub-

lished. This is not expected to have a material effect on the Group’s net assets, financial position and

results of operations.

/096 _AR 2004 *Scope of ConsolidationConsolidated Financial Statements*

* attributable to the relevant parent

As of the reporting date, December 31, 2004, the scope of consolidation of D.Logistics consisted

of 29 fully consolidated subsidiaries in Germany and 15 in other countries.

Two (German) companies were deconsolidated as a result of an intragroup merger. Three compa-

nies are no longer fully consolidated but are rather included at equity because the Company’s equity

interest in them was reduced. One (foreign) company was sold in the year under review.

The following table shows the companies fully consolidated as of December 31, 2004:

Fully consolidated

companies

Scope of Consolidation

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 constructive control.

Fully consolidated companies Germany Abroad Total

At Dec. 31, 2003 33 17 50

Additions 0 0 0

Disposals 4 2 6

At Dec. 31, 2004 29 15 44

Companies fully consolidated as of December 31, 2004 Country Share ofcapital (%)*

Aircon Airfreight Container Maintenance GmbH, Mörfelden-Walldorf Germany 56.7

Baumann Technologie GmbH, Oberhausen Germany 51.0

D.Logistics Airport Services GmbH, Raunheim Germany 100.0

D.Services GmbH, Hofheim Germany 94.8

Dönne+Hellwig Logistics GmbH, Hofheim Germany 100.0

Dualogis GmbH, Obernburg Germany 51.0

Deufol Tailleur GmbH, Oberhausen (including subsidiaries) Germany 55.0

Alltrans Exportverpackung GmbH, Hamburg Germany 65.5

APL /Techno-Pack Verpackungs GmbH, Nuremberg Germany 100.0

BVU Automotive GmbH & Co. KG, Regensburg Germany 100.0

BVU Automotive Beteiligungs GmbH, Neutraublingen Germany 100.0

BVU Bayerisches Verpackungsunternehmen GmbH, Munich Germany 100.0

Deufol Exportverpackung GmbH, Oberhausen Germany 100.0

Deutsche Tailleur Bielefeld GmbH & Co. KG, Bielefeld Germany 50.0

Deutsche Tailleur Industrie-Service GmbH, Frankenthal Germany 100.0

DTG Eggemann Industrieverpackung GmbH, Bochum Germany 100.0

DTG Madlener Verpackungslogistik GmbH & Co. KG, Remshalden Germany 75.0

DTG Mannheim GmbH, Mannheim Germany 100.0

DTG Verpackungslogistik GmbH, Stuttgart Germany 60.0

GGZ Gefahrgutzentrum Frankenthal GmbH, Frankenthal Germany 100.0

GTV Logistik GmbH, Philippsburg Germany 100.0

AR 2004_ page 061/096*Scope of Consolidation Consolidated Financial Statements*

The following companies were included at equity: SIV Siegerländer Industrieverpackung GmbH

(equity interest 50%), Abresch Industrieverpackung GmbH (50%), D.Logistics France SAS (24%),

Aescudata GmbH (43.7%) and GHX Europe GmbH (50%). As of December 31, 2004, the net carry-

ing amount of these companies was € 3,456 thousand, their share of current profit was € 60 thou-

sand (previous year: € 235 thousand).

In addition, D.Logistics does not consolidate nine subsidiaries, because they do not have a material

influence on the net assets, financial positions and results of operations of the Group. The sales

and total assets of each of these companies amount to less than 0.1% of the corresponding Group

figures. They are reported under financial assets as investments in affiliates.

Companies included

at equity

Non-consolidated

companies


Companies fully consolidated as of December 31, 2004 Country Share ofcapital (%)*

Günter Baumann Transport+Verpackung GmbH, Oberhausen Germany 100.0

Horst Lange GmbH, Hamburg Germany 56.7

IAD Industrieanlagen-Dienst GmbH, Munich Germany 100.0

L+L Lager und Logistik GmbH & Co. KG, Frankenthal Germany 100.0

L+L Lager und Logistik Verwaltungs GmbH, Frankenthal Germany 100.0

Schumacher Dienstleistung und Logistik GmbH, Ennigerloh Germany 51.0

Tailleur & Topp GmbH, Berlin Germany 100.0

D.Logistics North America Inc., Sunman, Indiana(including subsidiaries) USA 100.0

Franks Industries Inc., Sunman, Indiana USA 85.0

J+J Packaging Inc., Brookville, Indiana USA 85.0

Droppoint Holdings Ltd., London (including subsidiaries) UK 51.0

PickPoint AG, Darmstadt Germany 85.0

Droppoint Australia Ltd., Sydney, Victoria Australia 100.0

Droppoint New Zealand Ltd., Wellington New Zealand 100.0

D.Logistics Packing N.V., Tienen Belgium 100.0

D.Logistics Tienen N.V., Tienen Belgium 100.0

D.Logistics Services N.V., Tienen (including subsidiaries) Belgium 100.0

Arcus Installation N.V., Houthalen Belgium 100.0

AT+S N.V., Houthalen Belgium 100.0

T-D.Logistics N.V., Waremme Belgium 97.5

D.Logistics Services Italia S.p.A., Verona Italy 90.0

Local_log.S.R.L., Vallese di Oppeano Italy 99.97

So.Ge.Ma. S.p.A., Rho Italy 100.0

/096 _AR 2004 *Scope of ConsolidationConsolidated Financial Statements*

Acquisitions

Disposals

11 Discontinued

operations

In January 2004, D.Logistics AG and Global Healthcare Exchange, LLC, resolved the merger of their

subsidiaries PLC GmbH and GHX B.V.B.A. D.Logistics AG and GHX, LLC, each hold 50% of the

shares in the new company, which is called “Global Healthcare Exchange Europe (GHX) GmbH”.

PLC GmbH was fully consolidated for the last time in the consolidated financial statements as of

December 31, 2003.

The equity interest in Aescudata GmbH, Winsen (Luhe), was reduced to 43.7% by way of agree-

ments dated November 27, 2003 and December 30, 2003. The shares were transferred with effect

from December 31, 2003. Aescudata GmbH was fully consolidated for the last time in the consoli-

dated financial statements as of December 31, 2003, and has been consolidated at equity as of

January 1, 2004.

Dexters B.V.B.A. was sold in January 2004. It was deconsolidated as of December 31, 2003 as

its sales of € 0.6 million and total assets of € 0.5 million were not material.

D.Services & Logistics GmbH, Austria, was sold by way of a notarial contract dated March 31,

2004. The company was deconsolidated during the fiscal year.

The investments in Logmed Dienstleistungsgesellschaft mbH and Logmed Vertriebsgesellschaft

mbH were sold by way of a notarial contract dated December 29, 2004. The companies had

already been deconsolidated as of December 31, 2003. This did not have any material impact on

the consolidated financial statements in the year under review.

A part of its portfolio streamlining activities, D.Logistics started proceedings to dispose of the Drop-

point Holdings Ltd. subgroup in 2004. As a result, the subgroup had to be classified as discontinued

operations under SFAS 144. This requires that current income and the gain or loss from the sale of

the discontinued operations be reported separately under “Income (loss) from discontinued opera-

tions (after taxes)”. The figures for comparable prior periods have been adjusted accordingly. The

assets and liabilities of those units intended for sale but whose sale had not been completed by

December 31, 2004, are reported separately under “Assets held for sale” and “Liabilities in connec-

tion with assets held for sale” in the balance sheet of the current reporting period.

The sale of Droppoint Holdings Ltd., London, was resolved in November 2004. Droppoint, which

had previously been assigned to the Warehouse Logistics segment, offers what are known as last-

mile solutions for delivering parcels to their final destinations.

AR 2004_ page 063/096*Scope of Consolidation Consolidated Financial Statements*

The following table shows the assets and liabilities of the discontinued Droppoint Holdings Ltd.:

The loss from discontinued operations, which in addition to Droppoint Holdings Ltd. also includes a

loss of € 0.25 million recorded by D.Services & Logistics GmbH, Austria (Warehouse Logistics seg-

ment), which was sold in 2004, is as follows:

The loss from discontinued operations of € 1.11 million can be broken down into losses from ordi-

nary activities (€ 0.4 million) and losses on disposal (€ 0.71 million).

in € thousands 2004 2003

Sales 779 1.540

Cost of sales (1,155) (1,274)

Gross profit (376) (266)

Selling expenses 0 (975)

General and administrative expenses (703) (597)

Other operating revenue 0 43

Other operating expenses 0 (203)

Gain (loss) from sale (710) (4,322)

Operating income (loss) (1,789) (5,788)

Net interest expense (42) (24)

Income (loss) from investments 0 0

Other financing costs, net 0 0

Income (loss) from discontinued operations (1,831) (5,812)

Minority interests 720 514

Income taxes 0 0

Income (loss) from discontinued operations (1,111) (5,298)

Assets in € thousands Dec. 31, 2004 Dec. 31, 2003

Cash and cash equivalents 130 97

Trade accounts receivable 0 28

Other receivables and other current assets 87 101

Property, plant and equipment 37 12

Intangible assets 76 48

Assets held for sale 330 286

Liabilities and shareholders’ equity in € thousands

Trade accounts payable 153 39

Other liabilities 1,202 480

Other accrued expenses 81 72

Minority interests (119) 604

Liabilities in connection with assets held for sale 1,317 1,195

/096 _AR 2004 *Notes to the Consolidated Income StatementConsolidated Financial Statements*

01 Sales

02 Cost of sales

03 Selling expenses

04 Administrative

expenses

Notes to the Consolidated Income Statement

For further details on our sales please, refer to the segment reporting.

The following expenses are included in cost of sales:

The “Other” item primarily includes vehicle fleet costs (€ 1,665 thousand), expenses for loss or dam-

age incurred (€ 1,313 thousand), as well as maintenance and forklift costs (€ 4,440 thousand).

The following expenses are included in selling expenses:

The following expenses are included in administrative expenses:

Other administrative expenses primarily include legal and consulting expenses (€ 2,278 thousand),

vehicle fleet costs (€ 547 thousand) and other office space costs (€ 470 thousand).


Personnel expenses 91,094 97,265

Cost of materials 61,120 54,501

Cost of purchased services 69,303 62,317

Depreciation and amortization 10,954 10,695

Warehouse rents 21,213 19,806

Insurance premiums 3,292 3,341

Other 15,758 15,221

Total 272,734 263,146



Cost of purchased services 102 121

Advertising costs 137 309

Travel expenses 343 274

Depreciation and amortization 137 122

Other selling expenses 1,010 994

Total 5,047 5,704



Cost of purchased services 4,055 3,819

Advertising expenses 242 346

Travel expenses 487 679

Rental and lease expenses 574 844

Depreciation and amortization 1,625 2,106

Other administrative expenses 6,767 7,182

Total 26,762 30,321

AR 2004_ page 065/096*Notes to the Consolidated Income Statement Consolidated Financial Statements*

The following personnel expenses have been allocated to expense items of the income statement:Personnel expenses

Advertising expenses

05 Other operating

revenue

06 Other operating

expenses


Wages and salaries 93,928 98,021

Social security 13,496 18,473

Total 107,424 116,494

As of the reporting date, December 31, 2004, the Group had 3,364 employees (previous year: 3,543).

The following advertising expenses have been allocated to expense items of the income statement:

The following table shows the breakdown of other operating revenue:

The “Other” item primarily comprises loss compensation (€ 662 thousand), the reversal of allowances

(€ 832 thousand) and rental and lease income (€ 365 thousand).

The following table shows the breakdown of other operating expenses:

The “Other” item primarily comprises vacancy and restructuring costs (€ 857 thousand), other rentals

(€ 341 thousand), damage incurred (€ 132 thousand) and other taxes (€ 266 thousand).


Reversal of accrued expenses 1,991 1,407

Insurance compensation 231 390

Income from the disposal of property, plant and equipment 261 1,755

Income from other goods and services 610 255

Exchange rate gains 38 315

Other 3,916 6,629

Total 7,047 10,751


Bad debts and doubtful account allowances 1,757 3,817

Prior-period expenses 146 517

Loss from the disposal of property, plant and equipment 431 243

Exchange rate losses 104 279

Other 3,630 5,348

Total 6,068 10,204


Advertising expenses 379 657

/096 _AR 2004 *Notes to the Consolidated Income StatementConsolidated Financial Statements*

07 Income (loss) from

investments

08 Other financing

income (cost)

09 Income taxes

As of December 31, 2004, deferred taxes for companies in Germany were calculated using a total

tax rate of 39%. The relevant local tax rates were used to calculate the deferred taxes of foreign

companies.

Other financing income (cost) can be broken down as follows:

The prior-period expenses do not require any restatement of prior-year figures because they relate to

changes in estimates.

The following table shows the breakdown of income (loss) from investments:

The Group’s income taxes can be broken down as follows:


Loss from investments (1) (100)

Income from companies included at equity 60 235

Total 59 135


Impairment losses on financial assets (70) 0

Measurement of foreign currency derivatives at reporting date 0 (412)

Other (181) 0

Total (251) (412)


Current taxes

Germany 899 647

Abroad 921 1,974

Deferred taxes

Germany 354 1,041

Abroad (526) 74

Total 1,648 3,736

AR 2004_ page 067/096*Notes to the Consolidated Income Statement Consolidated Financial Statements*

10 Minority interests

12 Earnings per share

The following table shows the reconciliation of the expected to the reported tax expense. The

expected tax expense is calculated by multiplying earnings before taxes by the assumed total tax

rate of 39%.

The minority interests in consolidated net loss primarily relate to losses attributable to companies in

the Deufol Tailleur Group and US subsidiaries.

Basic earnings per share are calculated as follows:

Earnings per share are determined by dividing the consolidated net income/ loss by the average num-

ber of outstanding shares. Newly issued stock is included pro rata for the period in which it is out-

standing. The weighted average increased due to new stock issued as part of the non-cash capital

increases in May and September 2004. There were no dilution effects in the reporting periods.


Expected tax expense 1,198 (10,440)

Non-deductible goodwill amortization 0 9,592

Effect of different tax rates 59 0

Valuation allowances on deferred tax assets for loss carryforwards 5,442 1,950

Other (5,051) 2,634

Income taxes 1,648 3,736

Income in € thousands 2004 2003

from continuing operations (682) (32,693)

from discontinued operations (1,111) (5,298)

Consolidated net income (loss) (1,793) (37,991)

Outstanding shares number

Weighted average 39,475,315 35,102,507

Earnings per share in €

from continuing operations (0,017) (0,931)

from discontinued operations (0,028) (0,151)

from consolidated net income (0,045) (1,082)

/096 _AR 2004 *Notes to the Consolidated Balance SheetConsolidated Financial Statements*

13 Cash and cash equivalents

14 Trade accounts receivable

15 Inventories

16 Other receivables

and other current assets

Notes to the Consolidated Balance Sheet

As of the balance sheet date, the Group had cash and cash equivalents of € 16,340 thousand (previ-

ous year: € 14,944 thousand), which consisted of cash on hand of € 87 thousand and current

account balances of € 16,253 thousand.

All trade accounts receivable have remaining maturities of less than one year.

The following table shows the breakdown of receivables:

The following table gives the breakdown for “Other receivables and other current assets”:

“Other receivables and other current assets" include receivables from associated companies of

€ 2,417 thousand, plus guarantees and pledged bank accounts in the amount of € 1,798 thousand.


Trade accounts receivable 47,071 47,178

Allowances (1,613) (1,408)

Trade accounts receivable, net 45,458 45,770


Raw materials, consumables and supplies 9,359 6,713

Work in process 709 852

Finished products and merchandise 1,797 2,670

Total 11,865 10,235


Taxes receivable 1,561 1,627

Receivables from employees 224 324

Security deposits 72 1,325

Advance payments made 0 125

Infraserv receivable 11,642 2,709

CSC purchase price receivable 3,800 3,800

Other assets and other receivables 9,305 8,616

Total 26,604 18,526

AR 2004_ page 069/096*Notes to the Consolidated Balance Sheet Consolidated Financial Statements*

The deferred tax assets can be broken down as follows:

The deferred tax assets include € 13,597 thousand (previous year: € 13,966 thousand) for consolidated

companies in Germany. Cumulative valuation allowances of € 13,392 thousand (previous year: € 7,950

thousand) on total deferred tax assets of € 20,677 thousand (previous year: € 15,647 thousand) were

recognized in income. In Germany, tax losses can be carried forward indefinitely, although domestic

income is subject to minimum taxation.

The deferred tax liabilities can be broken down as follows:


Property, plant and equipment 4,861 5,445

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 from the use of the leased assets are transferred (capital leases).

The following amounts are attributable to the “Machinery and equipment” asset class:


Tax loss carryforward 4,763 4,574

Financial liabilities from capital leases 2,056 2,674

Current liabilities 466 449

Total 7,285 7,697

The following amounts are attributable to “Land and buildings”:


Cost 9,459 6,696

Accumulated depreciation and amortization (4,093) (2,577)

Net carrying amount 5,366 4,119


Cost 4,678 4,678

Accumulated depreciation and amortization (2,389) (2,197)

Net carrying amount 2,289 2,481

17 Deferred taxes

18 Property, plant

and equipment


Intangible assets primarily consist of the goodwill recognized on consolidating acquired investments.

The currency translation adjustments result from the translation of the US-dollar-denominated finan-

cial statements of the US subsidiaries.

For other intangible assets, the following amortization amounts have been estimated for the

next five years, taking estimated capital spending into account: € 1.7 million in 2005, € 1.6 million

in 2006, € 1.8 million in 2007, € 2.0 million in 2008 and € 2.1 million in 2009.

The “Investments in equity-accounted affiliates” subitem of the “Financial assets” item contains those

investments belonging to D.Logistics AG that are consolidated at equity. The “Financial assets” item

also includes other investments and investment securities.

19 Intangible assets

20 Financial assets

in € thousands Gross amounts

Dec. 31, Currency Changes in Additions Disposals Reclassifi- Dec. 31, 2003 translation the compa- cations 2004

adjustments nies inclu-ded in con-

solidation

Property, plant and equipment

Land, land rights and buildings 43,861 (994) (96) 764 (4,156) 821 40,200

Machinery and equipment 43,880 (1,938) (378) 1,842 (1,191) 2,714 44,929

Operating and office equipment 43,858 (137) (172) 2,625 (2,011) (3,305) 40,858

Advance payments madeand assets under construction 4,941 (32) 0 495 (473) (275) 4,656

Capitalized leased tangible assets 11,374 0 0 2,774 (11) 0 14,137

Total property, plant and equipment 147,914 (3,101) (646) 8,500 (7,842) (45) 144,780

Intangible assets

Patents, licenses, trademarksand similar rights and assets 14,483 0 (1,991) 1,088 (376) (1,281) 11,923

Goodwill 156,776 (2,037) 0 27 (4,769) 0 149,997

Total intangible assets 171,259 (2,037) (1,991) 1,115 (5,145) (1,281) 161,920

Financial assets

Investments in affiliated companies 597 0 0 26 0 (591) 32

Investments in equity-accounted affiliates 1,828 0 0 1,863 (235) 0 3,456

Other investments 94 0 0 17 0 0 111

Investment securities 312 (19) 0 3 (49) 0 247

Total financial assets 2,831 (19) 0 1,909 (284) (591) 3,846

Summe 322,004 (5,157) (2,637) 11,524 (13,271) (1,917) 310,546


The following table gives a summary of the financial liabilities of the D.Logistics Group:21 Financial liabilities


thereof with a remaining maturity of thereof with a remaining maturity of

Total up to 1 to 5 years over Total up to 1 to 5 years over 1 year 5 years 1 year 5 years

Banks 69,990 40,607 15,182 14,201 78,644 40,755 20,156 17,733

Convertible bonds 7,268 68 7,200 0 68 0 68 0

Liabilities from capital leases 6,314 1,389 3,385 1,540 6,291 898 3,496 1,897

Miscellaneousfinancial liabilities 8,745 6,977 1,768 0 16,565 6,740 9,825 0

Total other financial liabilities 22,327 8,434 12,353 1,540 22,924 7,638 13,389 1,897

Financial liabilities 92,317 49,042 27,535 15,741 101,568 48,393 33,545 19,630

Depreciation, amortization and impairment Net amounts

Dec. 31, Currency Changes in Additions Disposals Reclassifi- Dec. 31, Dec. 31, Dec. 31,2003 translation the compa- cations 2004 2003 2004

adjustments nies included in consoli-

dation

11,967 (295) (96) 2,488 (1,183) (39) 12,842 31,894 27,358

27,392 (1,130) (315) 3,640 (718) 1,182 30,051 16,488 14,878

17,701 (104) (107) 3,598 (1,218) (1,519) 18,351 26,157 22,507

0 0 4,941 4,656

4,774 0 0 1,753 (3) (42) 6,482 6,600 7,655

61,834 (1,529) (518) 11,479 (3,122) (418) 67,726 86,080 77,054

8,113 0 (609) 2,366 (157) (383) 9,330 6,370 2,593

113,848 0 0 0 (2,117) 0 111,731 42,928 38,266

121,961 0 (609) 2,366 (2,274) (383) 121,061 49,298 40,859

0 0 0 0 0 0 0 597 32

0 0 0 0 0 0 0 1,828 3,456

0 0 0 70 0 (1) 69 94 42

0 0 0 0 0 0 0 312 247

0 0 0 70 0 (1) 69 2,831 3,777

183,795 (1,529) (1,127) 13,915 (5,396) (802) 188,856 138,209 121,690


The Group’s long-term borrowings of € 37.5 million consist of loans for real estate, capital spend-

ing and acquisitions, which are subject to regular repayment agreements and are secured by land

charges in the amount of € 30.5 million. In addition, the Group has agreed credit lines with various

banks amounting to € 36.7 million. As of December 31, 2004, € 30.7 million of this amount had been

utilized. Long-term borrowings also include € 1.7 million of liabilities from capital leases.

On December 8, 2004, D.Logistics AG placed a convertible bond in the principal amount of

€ 7.20 million with shareholders and institutional investors in Germany and abroad. It issued a total

of 72,000 individual bonds with a face value of € 100.00 each at an issue price of 100%. The indi-

vidual bonds have a maturity of five years and bear interest of 7.00% per year. The bond can be con-

verted into up to 4.00 million new shares from the Company’s contingent capital at a conversion

price of € 1.80. The conversion right can be exercised on business days after the 2005 Annual Gen-

eral Meeting until December 8, 2009, except for the non-exercise periods detailed in section 6.2.2

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 includes the Company’s

right to repayment in the event of a change of control over the Company as defined. 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 freely

tradable on the Frankfurt Stock Exchange.

The total future minimum lease payments under capital leases as of December 31, 2004 as

follows:

Of these minimum lease payments, an amount of € 1,651 thousand relates to bank liabilities and

€ 6,314 thousand to miscellaneous financial liabilities.

The “Miscellaneous financial liabilities” item can be broken down as follows:

in € thousands 2004

2005 2,218

2006 1,779

2007 1,517

2008 1,043

2009 812

Thereafter 3,093

Total minimum lease payments 10,462

Less interest portion (2,497)

Present value of minimum lease payments 7,965


Shareholder loans 6,294 3,550

Purchase price liabilities from acquisition of companies 385 121

Other 2,066 12,894

Total 8,745 16,565


Trade accounts payable amounting to € 36,557 thousand (previous year: € 37,226 thousand) all

have remaining maturities of less than one year.

All “Other liabilities” are current. The following table provides a breakdown:

The other liabilities include € 261 thousand to equity-accounted affiliates.

The following table shows the other accrued expenses:

Other accrued expenses primarily consist of accruals for liability risks (€ 1.1 million), year-end closing and

audit costs (€ 0.6 million) and other operating risks (€ 1.5 million).

Since pension commitments are not normally made within the Group, there are no such commitments

for members of the Executive Board. The pension obligations in the balance sheet relate to commit-

ments transferred as part of acquisitions.

This item can be broken down as follows:

22 Trade accounts

payable

23 Other liabilities

24 Other accrued expenses

25 Accrued pension benefits


Taxes payable 3,453 2,434

Social security liabilities 2,091 2,218

Personnel liabilities 2,405 4,376

Other 1,637 2,765

Total 9,586 11,793



Unbilled contracts 664 604

Tax accruals 1,386 3,480

CSC warranty accrual 3,800 4,800

Other 3,213 6,808

Total 16,813 22,430


Accrued pension benefits under SFAS 87 431 375

Other pension and similar obligations 352 614

Total 783 989


All benefit obligations are measured according to the projected unit credit method specified in SFAS 87.

This method also takes into account future expected salary increases.

In addition to amounts required under SFAS 87, the accrued pension benefits include healthcare

obligations in the United States.

Since pension obligations are of such minor importance for the Group as a whole (less than 0.3%

of total assets), the Group has elected not to disclose details of entitlements, interest, gains/losses,

payments and cover as permitted by SFAS 87 (211) and SFAS 132 (A51).

As of December 31, 2004, the capital stock was € 42,292,011 (previous year: € 38,527,717), com-

posed of the same number of no-par-value bearer shares. Last fiscal year, the capital stock increased

by € 3,764,294 as a result of a total of three non-cash capital increases against authorized capital.

The nominal amount of € 2,280 thousand of the cash contribution payable by Infraserv GmbH &

Co. Höchst KG as a result of the arbitration tribunal decision is reported as an unpaid contribution

under capital stock.

As of December 31, 2004, an amount of € 19,263,858 (December 31, 2003: € 17,512,690) was

available as authorized capital for issuing new shares against cash or non-cash contributions.

The Annual General Meeting held on July 29, 2003 resolved to authorize the Company to issue

shares for up to a total of € 17,512,690. The Annual General Meeting held on June 29, 2004

reversed this resolution with regard to the remaining authorized capital that had not been utilized

and authorized the Company to increase its capital stock by up to € 19,263,858 until May 31, 2009.

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 capital stock by a

nominal amount of € 15,000,000 until May 31, 2009. The total nominal amount of bonds must not

exceed € 500,000,000.

The Annual General Meeting held on July 29, 2003 resolved to authorize the Company to pur-

chase up to 3,389,737 shares of treasury stock. This resolution was reversed at the Annual General

Meeting held on June 29, 2004 and the Company was authorized to purchase up to 3,852,771

shares (10% of capital stock) in the period between June 30, 2004 and November 30, 2005.

Additional paid-in capital increased from € 177,011 thousand to € 190,467 thousand in the year

under review. In 2004, several non-cash capital increases were implemented from authorized capital

2003/I, thus increasing additional paid-in capital by a total of € 2,726 thousand. The subject of the

capital increases was the contribution of receivables and loan receivables payable by the Company.

In addition, as a result of partial rulings issued by the arbitration tribunal on September 29, 2004

and March 8, 2005, Infrasserv GmbH & Co. Höchst KG was obliged to make a cash contribution of

€ 13,433,623.30. Of this amount, € 12,782,296.30 relates to 1,628,318 no-par-value shares. The

amount of these shares in excess of par totaling €11,153,978.30 was transferred to additional paid-

in capital. € 651,327.00 of the cash contribution is attributable to 651,327 no-par-value shares.

26 Capital stock

27 Additional paid-in capital


Treasury stock developed as follows:

As of December 31, 2004, the Company no longer held any treasury stock.

The following table shows the changes in the components of other comprehensive income, includ-

ing tax effects:

28 Treasury stock

29 Accumulated

other comprehensive

income


Number of shares 0 369,789

Carrying amount 0 473,051


Before Tax After Before Tax Aftertaxes effect taxes taxes effect taxes

Cumulative currency translation adjustment

Change in unrealized gains (losses) (3,654) 0 (3,654) (10,110) 0 (10,110)

Realized gains (losses) 0 0 0 0 0 0

Total unrealized gains (losses) (3,654) 0 (3,654) (10,110) 0 (10,110)

Unrealized gains (losses) the fair-value measurement of securities

Change in unrealized gains (losses) 1 0 1 88 (27) 61

Realized gains (losses) 21 (8) 13 53 (10) 43

Total unrealized gains (losses) 22 (8) 14 141 (37) 104

Unrealized gains (losses)from derivative financial instruments

Change in unrealized gains (losses) 98 (37) 61 31 (6) 25

Realized gains (losses) 0 0 0 0 0 0

Total unrealized gains (losses) 98 (37) 61 31 (6) 25

Other comprehensive income (loss) (3,534) (45) (3,579) (9,938) (43) (9,981)

/096 _AR 2004 *Stock-Based CompensationConsolidated Financial Statements*

Stock-Based Compensation

90% of the tranche of 68,000 convertible bonds were issued to commercial employees, members

of the Executive Board and the managing directors of the investees. The conversion ratio was adjusted

following the capital increase from retained earnings in 2000. Holders are entitled to convert each

nominal amount of € 1 into seven D.Logistics shares. The exercise of the convertible bonds is tied to

hurdles. The term of the convertible bonds is six years, ending on April 22, 2005.

A stock option plan with a volume of up to € 2,141,993 was approved for employees at the Extra-

ordinary 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 2000.

348,490 options from this tranche are still in circulation. Half of the transferred options may be

exercised after a lock-up period of three years at the earliest and the remaining half after five years.

The term of the options is six years and ends on October 27, 2006.

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 2001. 32,500 options from this tranche are

still in circulation. Half of the transferred options may be exercised after a lock-up period of three years

at the earliest and the remaining half after five years. The term of the options is six years and ends on

September 20, 2007.

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. The issue period is limited to twelve days after the publication of quar-

terly or annual financial statements. The subscription price is calculated from the average price after

such a publication, plus 25%. Subscription rights 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 subscription rights may be issued on one or several occasions up to August 12, 2007

and have a term of three years. In 2004, 100,000 subscription rights were issued from the Stock Option

Plan August 2002.

The changes in the options issued to eligible employees are summarized in the following table:

Convertible Bond

Program 1999

Stock Option Plan

September 2000

Stock Option Plan

August 2002

As a result of the current share price performance, the value of the options issued before 2002 can

be designated permanently as zero. The lock-up period for the options from the Option Plan 2002

has not yet fully expired; further details and pro-forma information have not been provided for

reasons of immateriality.

in € thousands 2004 2003 2002 2001 2000 1999

Options granted 100,000 33,334 0 75,000 350,000 476,000

Exercised 0 0 0 0 0 0

Outstanding 100,000 33,334 0 32,500 348,490 476,000

AR 2004_ page 077/096*Notes to the Consolidated Cash Flow Statement Consolidated Financial Statements*

Notes to the Consolidated Cash Flow Statement

The cash flow statement presents the origin and utilization of the cash flows in fiscal years 2004

and 2003. As a result, it is of material importance for assessing the financial position of the

D.Logistics Group.

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, checks, and immediately available

bank balances with an original maturity of up to three months.

Net cash used in investing activities and net cash used in financing activities are each determined

on the basis of cash flows. However, net cash provided by operating activities is calculated using the

indirect method.

Net cash provided by operating activities amounted to € 8.2 million in fiscal year 2004. It should be

noted that the change in other receivables and other current assets was adjusted for the non-cash

increase in the receivable from Infraserv (€ +8.55 million). The non-cash decrease in other liabilities

relating to non-cash capital increases was also adjusted (€ +1.7 million). Effects from the change in

the scope of consolidation were also adjusted.

Net cash provided by operating activities includes the following payments:

The past fiscal year saw net cash used in investing activities of € 0.6 million, compared with net cash

provided by investing activities of € 8.15 million in 2003.

The main non-cash investing activities comprise the disposal of noncurrent assets relating to the

deconsolidation of companies (€ 0.13 million) and the non-cash addition of assets under capital

leases (€ 2.8 million).

In the past fiscal year, net cash used in financing activities totaled € 6.1 million, compared with

€ 22.9 million in 2003.

The main non-cash financing activities comprise the non-cash capital increase against the contri-

bution of shareholder loans (€ 5.3 million), the non-cash capital increase against a receivable (€ 1.1

million), the non-cash repayment of a stock loan (€ 0.3 million), and the addition of financial liabilities

from capital leases (€ 2.8 million).

The change in cash and cash equivalents of € –65 thousand is due to exchange rate effects relating

to the US dollar rate, which fell again in the past fiscal year.

Overall, cash and cash equivalents increased by € 1.4 million. Net debt, which is defined as the dif-

ference between the Group’s financial liabilities and cash and cash equivalents, fell by € 10.65 million.

30 Net cash provided by

operating activities

31 Net cash used in

investing activities

32 Net cash used in

financing activities

33 Change in

cash and cash

equivalents


Interest payments 6,267 6,981

Income tax payments 3,253 1,752

/096 _AR 2004 *Contingent Liabilities and Other Financial LiabilitiesConsolidated Financial Statements*

Contingent Liabilities and Other Financial Liabilities

Within the Group, guaranties have been granted to third parties only for items reported on the bal-

ance sheet or reciprocal rental payment guaranties within the Group. The Company has guaranties

to associates totaling a maximum of € 1,416 thousand.

Expenses amounting to € 19,562 thousand (previous year: € 19,001 thousand) arose in the income

statement due to rental agreements and leases that do not qualify as capital leases under US GAAP

(operating leases).

The future (undiscounted) minimum lease payments from such non-cancelable leases that had an

original or remaining maturity of more than one year as of December 31, 2004 are as follows:

Additional financial liabilities could result from the sale of the CSC Group in 2002 if the funds made

available are not sufficient to satisfy notified and as yet unrecognized guarantee claims. The maxi-

mum liability is contractually limited to € 17.5 million. Two main cases have been filed by the buyer

in this respect:

One claim notified in the last two years relates to an accident involving a forklift truck. Legal

claims for damages by the injured party amount to USD 50 million. Based on the currently

known facts, any possible claim will fall within the insured risk, and would in turn lead to the

activation of rights of recourse on the part of the Company.

Claims amounting to € 1.0 million (previous year: € 4.5 million) relating to a theft which was

disclosed and explained during the closing procedures of the sale. Management currently

believes it is an unwarranted claim on the part of the buyer because all notifications and dis-

closures had been made in line with to the contract of sale.

In 2000, the Company acquired 85% of the shares in Franks Industries Inc. and J&J Packaging. As a

result of a put option, the Company could be obliged to acquire the remaining 15% of the shares from

the existing shareholders as well. The purchase price for this 15% would currently be around € 1.7 mil-

lion. The put option was not exercised in 2004 and may not be exercised again until June 30, 2005.

Contingent liabilities

Other financial liabilities

in € thousands 2004

2005 18,131

2006 14,618

2007 11,909

2008 11,525

2009 10,673

After 2009 32,052

Total minimum lease payments 98,908

AR 2004_ page 079/096*Contingent Liabilities and Other Financial Liabilities Consolidated Financial Statements*

In 2000, the Company also acquired 51% of the shares in Schumacher GmbH from the legal prede-

cessor, Deufol Tailleur GmbH. As a result of put options, the Company could be obliged to acquire

the 24.5% interest each held by the two minority shareholders. The put options were not exercised

in 2004. The purchase price for the total outstanding interest of 49% would currently be around

€ 0.6 million.

To partially secure the syndicated loan agreement dated June 30, 2003, as supplemented on August

19, 2004, 3,080,000 D.Logistics shares were pledged by Mr. Detlef W. Hübner to the banks. If this

pledge is enforced, D.Logistics AG is obliged to replace these shares for Mr. Hübner.

Until last year, foreign currency derivatives were used within the D.Logistics Group to hedge currency

risks. There were no foreign currency derivatives as of December 31, 2004. Income of around € 50

thousand was recorded in the past fiscal year from the USD derivatives that expired in 2004.

Interest rate derivatives were concluded in connection with medium-term financing measures to

manage and limit interest rate risk. In September 2002, five interest rate hedging transactions were

concluded in dollars, one of which expired in 2003 and one in 2004. 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 recorded in accumulated other comprehensive income. The fair values

are based on market prices for comparable instruments. The following table shows the underlying

notional values and maturities:

The notional amount as of December 31, 2004 is USD 6,335,769 (December 31, 2003: USD

7,386,538); other comprehensive income after taxes amounts to USD 133,838 (December 31, 2003:

other comprehensive loss of USD 146,909).

Interest rate derivatives Maturity

Currency Notional amount Beginning End

US dollar 4,234,231 Oct. 1, 2002 Sep. 1,2007

US dollar 1,050,769 Oct. 1, 2002 Oct. 1, 2006

US dollar 1,050,769 Oct. 1, 2002 Oct. 1, 2005

US dollar 1,050,769 Oct. 1, 2002 Oct. 1, 2004

/096 _AR 2004 *Segment Information by Business Area and RegionConsolidated Financial Statements*

Segment Information by Business Area and Region

Under SFAS 131, “Disclosures about Segments of an Enterprise and Related Information”, segment

reporting must reflect the Group’s internal organizational and reporting structure.

Based on its products and services, the Group’s structure consists of the following segments:

Consumer Goods Packaging, Industrial Goods Packaging and Warehouse Logistics. D.Logistics still

operated the Value-Added Services segment during the period under review, but discontinued it at

the end of 2003.

The Consumer Goods Packaging segment comprises logistics services for consumer goods. The

activities consolidated under this area include the design and production of packaging, primary

packaging, secondary packaging (display construction), warehouse planning and management, dis-

tribution logistics, transport coordination, document management and value-added services.

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.

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 holding company comprises the Group administration and, in addition to Group management

functions, includes support functions such as key account management and corporate communica-

tions.

Consumer Goods

Packaging

Industrial Goods

Packaging

Warehouse Logistics

Holding company

AR 2004_ page 081/096*Segment Reporting Consolidated Financial Statements*

01 Segment information

by division

Market prices are used as the basis for the elimination of intragroup services.

A single customer accounts for more than 10% (€ 62.6 million) of consolidated sales generated in

the Consumer Goods Packaging segment.

in € thousands Consumer Industrial Ware- Holding Consoli- GroupGoods Goods house company dation

Packaging Packaging Logistics

2004

External sales 127,965 99,319 84,950 236 0 312,470

Intragroup sales 7,070 15,963 2,446 1,132 (26,611) 0

Total sales 135,035 115,282 87,396 1,368 (26,611) 312,470

Gross profit 17,291 11,670 11,287 1,368 (1,880) 39,736

EBITA 3,553 4,163 4,563 (3,173) (200) 8,906

Interest income 275 365 95 2,484 (2,361) 858

Interest expense (2,835) (2,278) (1,759) (1,825) 2,197 (6,500)

Income (loss) from investments 1,069 2,984 1 442 (4,437) 59

EBTA 1,901 3,597 1,604 (21,092) 17,062 3,072

EBT 1,901 3,597 1,604 (21,092) 17,062 3,072

Taxes (309) 130 (1,498) 29 0 (1,648)

Assets 106,160 80,731 51,840 206,049 (214,212) 230,568

Financial liabilities 16,883 32,989 17,369 25,076 0 92,317

Depreciationand amortization 5,283 3,464 4,208 960 0 13,915

Investments 3,245 3,965 2,618 1,696 0 11,524

Employees 1,039 894 1,418 13 0 3,364

2003*

External sales 128,092 92,762 82,502 139 0 303,495

Intragroup sales 1,607 19,019 4,047 746 (25,419) 0

Total sales 129,699 111,781 86,549 885 (25,419) 303,495

Gross profit 19,185 10,444 12,732 885 (2,897) 40,349

EBITA 1,495 3,218 2,797 (2,639) 0 4,871

Interest income 323 719 104 2,628 (2,268) 1,506


EBTA (1,802) 1,348 677 (2,395) 0 (2,172)

EBT (17,559) (1,452) (5,362) (2,395) 0 (26,768)

Taxes (1,624) 924 (1,882) (1,154) 0 (3,736)

Assets 109,980 78,185 59,770 223,903 (234,791) 237,047


Depreciationand amortization 21,536 7,043 9,584 1,081 0 39,244

Investments 4,612 2,022 4,606 6,836 0 18,076

Employees 1,111 829 1,589 14 0 3,543


/096 _AR 2004 *Segment ReportingConsolidated Financial Statements*

Segment information

by region

in € thousands Germany Rest of USA/Rest Holding Consoli- GroupEurope of the company dation

world

2004

External sales 167,505 92,220 52,509 236 0 312,470

Intragroup sales 18,369 1,089 6,021 1,132 (26,611) 0

Total sales 185,874 93,309 58,530 1,368 (26,611) 312,470

Gross profit 19,446 15,558 5,244 1,368 (1,880) 39,736

EBITA 8,308 2,148 1,823 (3,173) (200) 8,906

Interest income 452 262 21 2,484 (2,361) 858


EBTA 7,120 (1,271) 1,253 (21,092) 17,062 3,072

EBT 7,120 (1,271) 1,253 (21,092) 17,062 3,072

Taxes (1,281) (539) 143 29 0 (1,648)

Assets 110,949 61,334 66,448 206,049 (214,212) 230,568


Depreciation and amortization 5,705 4,375 2,875 960 0 13,915

Investments 5,413 3,121 1,294 1,696 0 11,524

Employees 2,122 568 661 13 0 3,364

2003*

External sales 158,617 92,473 52,266 139 0 303,495

Intragroup sales 23,013 1,660 0 746 (25,419) 0

Total sales 181,630 94,133 52,266 885 (25,419) 303,495

Gross profit 19,886 15,141 7,334 885 (2,897) 40,349

EBITA 5,233 (95) 2,372 (2,639) 0 4,871

Interest income 809 336 1 2,628 (2,268) 1,506


EBTA 2,119 (2,284) 388 (2,395) 0 (2,172)

EBT (3,245) (15,417) (5,711) (2,395) 0 (26,768)

Taxes (534) (1,734) (314) (1,154) 0 (3,736)

Assets 114,024 67,822 66,089 223,903 (234,791) 237,047


Depreciation and amortization 11,794 17,028 9,341 1,081 0 39,244

Investments 4,573 5,744 923 6,836 0 18,076

Employees 2,230 593 706 14 0 3,543


AR 2004_ page 083/096*Segment Reporting Consolidated Financial Statements*

19 Goodwill by segment

Impairment test

The following table provides a breakdown of goodwill by segment:

D.Logistics AG performed the annual impairment test of its segments on the basis of segment-spe-

cific forecasts. At the same time, comprehensive market analyses were performed to identify devel-

opments on the financial and capital markets affecting the measurement factors as well as macro-

economic developments. A discounted cash flow model was used for measurement.

No impairment was established for the individual segments after the first stage of the impair-

ment test.

Events After the Balance Sheet Date

Report on post-balance sheet date events

In March 2005, the arbitration tribunal issued a second partial ruling in the arbitration proceedings

against Infraserv GmbH & Co. Höchst KG. As a result of this partial ruling, Infraserv GmbH & Co.

Höchst KG is obliged to make a cash contribution of € 12.8 million against delivery of 1.6 million

shares and a cash contribution of € 0.65 million against delivery of 0.65 million shares. In addition,

interest of around € 0.5 million is payable.

in € thousands Consumer Industrial Warehouse TotalGoods Goods Logistics

Packaging Packaging

Net carrying amount as of Dec. 31, 2003 11,305 24,383 7,240 42,928

Additions 27 0 0 27

Currency translation adjustments (2,037) 0 0 (2,037)

Impairment losses 0 0 0 0

Disposals (821) (546) (1,285) (2,652)

Reclassifications 0 0 0 0

Net carrying amount as of Dec. 31, 2004 8,474 23,837 5,955 38,266

/096 _AR 2004 *Summary of Material Differences Between HGB and US GAAPConsolidated Financial Statements*

Summary of Material Differences Between HGB and US GAAP

The consolidated financial statements of D.Logistics AG were prepared in accordance with United

States Generally Accepted Accounting Principles (US GAAP) and exempt the Company from preparing

HGB financial statements in accordance with section 292a of the HGB (Handelsgesetzbuch – German

Commercial Code).

There are material differences between the accounting principles in Germany (HGB) and the United

States (US GAAP). These differences could be relevant when assessing the consolidated financial

statements of D.Logistics AG. To aid understanding, these material differences are presented below.

Purchased intangible assets must be capitalized in accordance with both HGB and US GAAP. In con-

trast, HGB prohibits recognition of non-purchased or internally generated intangible assets.

US GAAP provides for the optional capitalization of external costs directly allocable to the gener-

ation of intangible assets; for example, the incidental costs of obtaining patents and legally protected

intellectual property can be capitalized in accordance with this rule. In addition, expenses arising

directly from in-house development of computer software for the Company’s own use must be cap-

italized.

The US GAAP requirements for calculating goodwill from the acquisition of a company are sub-

stantially stricter than in accordance with HGB. Intangible assets not classified as goodwill must be

reported separately and amortized as a general rule. Amortization is not charged on any remaining

goodwill – instead, the goodwill is subject to a mandatory impairment test at least once a year and

an impairment loss charged if necessary. In contrast, HGB permits goodwill to be capitalized and

subsequently amortized, or taken to equity and offset against retained earnings.

HGB does not lay down explicit rules concerning the treatment of leasing transactions. In general,

therefore, the pronouncements on leasing issued by the tax authorities are used to determine the

treatment of these transactions in the financial statements. As a rule, leasing contracts are structured

in line with tax regulations so that the leased assets are included in the financial statements of the

lessor.

US GAAP lays down extensive rules for reporting leasing transactions (particularly SFAS 13). In

general, US GAAP differentiates between “capital leases” and “operating leases” depending on

who bears the material risks and rewards from the use of the leased asset and is therefore deemed

to be the beneficial owner. In the case of a capital lease, the lessee is deemed to be the beneficial

owner and must capitalize the leasing asset, whereas in an operating lease the lessor capitalizes the

leasing asset.

If an asset is written down to fair value, the latter may not be retained if the reasons for the write-

down no longer exist at a later reporting date (requirement to reverse write-downs when the rea-

sons for them no longer exist as per section 280 of the HGB). According to SFAS 121 and 142,

reversals of write-downs for which the reasons no longer exist are prohibited.

Basis of preparation

Intangible assets

Leasing

Reversal of write-downs

AR 2004_ page 085/096*Summary of Material Differences Between HGB and US GAAP Consolidated Financial Statements*

Lower of cost or market test

According to HGB, inventories are measured at the reporting date in accordance with the strict lower

of cost or market principle at cost or at the lower market or fair value. Fair value is calculated as the

replacement cost for raw materials and consumables, the retroactively calculated net selling proceeds

for finished goods and work in progress, and the lower of the replacement cost or the retroactively cal-

culated net selling proceeds for merchandise held for resale.

In line with ARB 43 (US GAAP), inventories are also measured at the strict lower of cost or mar-

ket, although in contrast to HGB both the replacement cost and the realizable net selling proceeds

are considered when calculating the carrying amount for all types of inventory. If the replacement

cost is less than the historical cost, then the inventories are reported at the average of the replace-

ment cost, the net selling proceeds and the net selling proceeds less the normal profit margin. In

this case, the realizable net selling proceeds less the normal profit margin represent the lower value,

even if the replacement cost falls below this amount.

In accordance with the imparity principle applicable under HGB only unrealized losses may be recog-

nized, while US GAAP requires recognition of unrealized gains as well. This applies to the following

items:

Receivables and liabilities denominated in foreign currency: Whereas HGB prescribes measuring

unhedged receivables and liabilities denominated in foreign currency at the rate at the transaction

date or at the less favorable closing rate, US GAAP (SFAS 52) requires that all receivables and liabili-

ties denominated in foreign currency be translated at the exchange rate on the reporting date. The

consequence is that unrealized exchange rate gains are recognized in income.

Marketable and investment securities: According to HGB, securities are carried at amortized cost

or the lower fair value at the reporting date. US GAAP (SFAS 115), on the other hand, determines

the value of securities on the basis of their assignment to specific categories. Available-for-sale secu-

rities are always reported at their fair value as of the reporting date – this results in unrealized gains

also being recognized. Temporary impairments in value must be taken directly to equity.

Under HGB, deferred taxes must be calculated for all temporary differences arising between the tax

bases of assets or liabilities and their reported amounts in the consolidated financial statements

(timing concept). This calculation is based on the current tax rate. Deferred taxes may not be

recognized for quasi-permanent differences that reverse only after a very long period of time or

through sale or liquidation.

According to US GAAP (SFAS 109), deferred taxes must be reported for all temporary differences

arising between the tax bases of assets or liabilities and their reported amounts in the consolidated

financial statements; quasi-permanent differences are also deemed to be temporary differences

(temporary concept). In addition, deferred taxes are recognized for tax loss carryforwards. The

enacted tax rate as of the reporting date is used to calculate taxes. Capitalized deferred tax assets

must be tested on each reporting date to determine if they are realizable and, if necessary, a valuation

allowance recognized.

Inventory measurement

Unrealized gains:

reporting date valuation/

market rate valuation

Deferred taxes

/096 _AR 2004 *Summary of Material Differences Between HGB and US GAAPConsolidated Financial Statements*

Both HGB and US GAAP require that expenses be accrued for pension obligations on the basis of

the anticipated amount of the discounted projected future benefits. Under HGB, various actuarial

methods may be applied; the “Teilwertverfahren” (entry-age normal method) in accordance with

section 6a of the EStG (German Income Tax Act) is the standard approach used in financial state-

ments prepared under HGB rules, but by no means the only permissible one. Due to the flexibility in

choice of methods provided for by the HGB, the projected unit credit method in accordance with

SFAS 87 can also be applied to HGB financial statements.

According to SFAS 87, in the case of funded plans, certain qualifying assets must be deducted

from the total amount of the obligation or must be capitalized if the assets exceed the amount of

the obligation. Due to the optional recognition as a liability of indirect pension obligations provided

for under HGB (section 28 of the EGHGB – Introductory Act to the German Commercial Code), fund

assets may also be offset under HGB. Pension fund assets are not deemed a qualifying asset within

the meaning of SFAS 87, and as a result, the full amount of pension fund obligations must generally

be carried as a liability according to US GAAP. The amount of the minimum obligation to be recog-

nized as a liability in accordance with SFAS 87 meets the accrual requirement under HGB. However,

additions to the accrual do not always have to be expensed. Instead, the full amount of the obligation

may also be represented by reporting an intangible asset or by taking it to equity. This is not per-

mitted under HGB. In certain cases, income and expenses arising from changes in the value of the

obligation or the assets accrued to cover the pension obligation may not be recognized under SFAS 87.

This is not permitted under HGB.

According to HGB, in addition to the recognizable accruals for liabilities and contingent losses, accru-

als for certain expenses are permitted, although they do not represent an obligation to a third party

(accruals for expenses). These accruals are measured in accordance with the principle of prudence

in line with standard commercial practice. The US GAAP rules on accruals are considerably more

restrictive. Accruals are permitted only if a company has an obligation to a third party, the likelihood

of utilization is probable and the amount of the accrual can be reliably measured. Accruals for expens-

es are not permitted. The accrual is measured at the most probable value; within a range of equally

probable values, the lowest value is applied. Reporting of accruals is governed mainly by CON 6

and SFAS 5.

Pursuant to section 246 (2) of the HGB, no offsetting of expenses against income, or assets against

liabilities, is permitted. The result is that the items attributable to discontinued operations may not

be reported separately. In contrast, US GAAP (specifically SFAS 144) permits income statement items

relating to discontinued operations to be offset and reported in a separate item in the income state-

ment.

Subsidiaries may not be consolidated in accordance with section 295 of the HGB if their activities

are so different from the activities of other consolidated companies that their inclusion in the con-

solidated financial statements would prevent a true and fair presentation of the financial position

and results of operations of the Group. Under US GAAP, these companies must be consolidated. The

D.Logistics Group does not include any companies that it would be prohibited from consolidating in

accordance with section 295 of the HGB.

Accruals for pensions and

similar post-employment

obligations

Other accrued expenses

Discontinued operations

Scope of consolidation

AR 2004_ page 087/096*Summary of Material Differences Between HGB and US GAAP Consolidated Financial Statements*

In the case of business combinations initiated by June 30, 2001, historical book values could be

carried forward in accordance with the pooling-of-interests method under both section 302 of the

HGB and under APB 16.45 ff. However, the preconditions for application of the pooling-of-interests

method are substantially stricter under US GAAP than under HGB.

In contrast to HGB, US GAAP stipulates that business combinations taking place after June 30,

2001 be reported in line with purchase accounting rules (SFAS 141).

HGB rules follow the entity concept, which requires that minority interests be classified as a com-

ponent of equity and reported in net income or loss. US GAAP subscribes to the parent company

concept according to which minority interests are deemed to be debt and are therefore not classi-

fied as a component of equity, but instead in a separate balance sheet item above equity. The

income or loss attributable to minority interests is reported in the income statement as income or

expense, respectively.

If the fair value of net assets acquired exceeds the acquisition cost of the investment, this results in a

negative consolidation difference. In accordance with section 309 (2) HGB, this difference may not be

reversed to income unless it reflects an expected unfavorable change in future earnings and it is clear

that it corresponds to a realized gain. SFAS 141 stipulates that negative goodwill initially be offset

against acquired noncurrent assets. Any remaining amount must be recognized in income.

Purchase accounting

Minority interests

Negative goodwill

/096 _AR 2004 *Supplementary DisclosuresConsolidated Financial Statements*

Supplementary Disclosures

The following persons were appointed to the Executive Board during the reporting period:

The following persons were appointed to the Supervisory Board during the reporting period:

Disclosures concerning

the executive bodies

No loans or advances were granted to members of the executive bodies. In addition, no contingent

liabilities were assumed in favor of the members of the executive bodies.

Name, Position Other board positions held

Dr. Wolfgang Friedrich No other board positions held Ministerialrat (retired)Chairman of the Supervisory BoardAppointed until 2007 GM

Helmut Olivier No other board positions heldMember of the Executive Board of Lehman Brothers AGDeputy ChairmanAppointed until 2007 GM

Georg Melzer Member of the Supervisory Board of Ffynnon 23. Lawyer in independent practice Vermögensverwaltungs AG, HofheimMember of the Supervisory BoardAppointed until 2005 GM

Name, Position Other board positions held

Detlef W. Hübner Deputy Supervisory Board Chairman Businessman of Neue Sentimental Film AG, CEO Frankfurt (since May 28, 2004)Appointed until July 31, 2009

Andreas Bargende Group positionsLawyer Chairman of the Supervisory Board of PickPoint AG,COO (since January 14, 2003)Appointed until Member of the Board of Droppoint Holdings Ltd., London, UKAugust 31, 2009 (since April 30, 2003)

Managing Director of Dönne+Hellwig Logistics GmbH, Hofheim(Wallau) (until September 20, 2004)Member of the Supervisory Board of Local_log S.R.L., Vallese di Oppeano, Italy (since November 18, 2003)Member of the Supervisory Board of So.Ge.Ma. S.p.A., Rho, Italy (since December 3, 2003)

Member of the Supervisory Board of So.Ge.Ma. Real estate S.R.L.Milan, Italy (since December 1, 2004)

Thomas Schwinger- Group positions:Caspari Member of the Supervisory Board of D.Logistics Services S.p.A.,Diplom-Betriebswirt Rho, ItalyCFO Member of the Supervisory Board of PickPoint AG, Darmstadt Appointed until (January 14, 2003)August 31, 2009 Managing Director of Dönne+Hellwig Logistics GmbH, Hofheim

(Wallau) (until September 20, 2004)Member of the Supervisory Board of Local_log S.R.L., Vallese di Oppeano, Italy (since November 18, 2003)Member of the Supervisory Board of So.Ge.Ma. S.p.A., RhoItaly (since December 3, 2003)

Member of the Supervisory Board of So.Ge.Ma. Real estate S.R.L., Milan, Italy (since December 1, 2004)

AR 2004_ page 089/096*Supplementary Disclosures Consolidated Financial Statements*

Total remuneration of the Executive Board in the year under review was € 1,151 thousand (previous

year: € 954 thousand). This includes variable remuneration in the amount of € 350 thousand. In

addition, 100,000 options were granted. Members of the Executive Board have contractually agreed

rights to 100,000 options for the past financial year. In addition, € 313 thousand in severance pay-

ments were made to former members of the Executive Board in the year under review.

Total remuneration of the Supervisory Board in 2004 amounted to € 60 thousand. This amount

can be broken down across the individual members as follows: Dr. Wolfgang Friedrich € 30 thousand,

Helmut Olivier € 15 thousand, Georg Melzer € 15 thousand.

The number of shares held by members of the Executive Board amounted to 14,115,847 no-par

value shares as of December 31, 2003. The number of options held by members of the Executive

Board as of December 31, 2003 amounted to 143,334. The members of the Supervisory Board do

not hold any shares or options on shares of D.Logistics AG.

The shareholdings can be broken down as follows:

Remuneration of

executive body members

Shareholdings of

executive body members

Directors’ dealings

Declaration of conformity

in accordance with

section 161 AktG

Related parties

No-par value No-par value Options Optionsshares as of shares as of as of as of

Dec. 31, 2004 Dec. 31, 2003 Dec. 31, 2004 Dec. 31, 2003

Executive Board

Detlef W. Hübner 13,349,181 13,424,062 10,000 10,000

Andreas Bargende 383,333 333,333 66,667 16,667

Thomas Schwinger-Caspari 383,333 333,333 66,667 16,667

Total 14,115,847 14,090,728 143,334 43,334

In addition, Mr. Andreas Bargende holds D.Logistics AG convertible bonds with a principal amount

of € 50 thousand, and Mr. Schwinger-Caspari with a principal amount of € 35 thousand.

Directors’ dealings in D.Logistics AG’s financial instruments are published in a timely manner in accor-

dance with the legal requirements. An overview of transactions is also provided on the D.Logistics AG

homepage (www.dlogistics.com) under “Shares” in the Investor & Public Relations section.

The declaration of conformity regarding the recommendations of the Government Commission on

the German Corporate Governance Code required by section 161 of the Aktiengesetz (AktG –

German Stock Corporation Act) was submitted in 2004 and made permanently available to share-

holders on the Internet.

Detlef Hübner Foundation

On October 21, 2001, the Company entered into a securities lending contract with the non-profit

Detlef Hübner Stiftung (Detlef Hübner Foundation), of which Detlef Hübner is the chairman. On the

basis of this contract, the Detlef Hübner Foundation transferred 582,959 shares of D.Logistics stock to

the Company. The loan was fully redeemed as of December 31, 2004 (previous year: 231,410 shares).

/096 _AR 2004 *Supplementary DisclosuresConsolidated Financial Statements*

The Detlef Hübner Foundation has granted the Company a loan via a trustee, which was valued at

€ 8,883,449 as of December 31, 2003 and bears interest at 5.8% per annum. In 2004, a portion of

the loan amounting to € 4,702,202.13 was converted into equity via a non-cash capital increase. In

December 2004, the remaining loan amount was fully redeemed from the proceeds of the convert-

ible bond issued. As collateral for the loan, the trustee was granted a senior lien on the Company’s

equity interests in Deufol Tailleur GmbH, Oberhausen.

Mr. Detlef W. Hübner, personally

Mr. Detlef W. Hübner has granted loans to D.Logistics AG in the past on the basis of a number of

contracts. In 2004, a loan of € 580,800 was converted into equity via a non-cash capital increase.

Mr. Hübner received 350,175 no-par value shares (share price € 1.66) in return.

By way of a contract signed on April 18, 2002, Mr. Detlef W. Hübner transferred an additional

3,080,000 shares of D.Logistics stock to West LB as collateral for a line of credit in the amount of

€ 38,571,318. The stocks now serve as partial collateral for the syndicated loan agreement dated

June 30, 2003, concerning a line of credit for the consortium. Mr. Hübner is to be paid a guarantee

commission in the amount of € 49,280 per year as compensation.

Mr. Hübner has also extended loans to the Group. These loans totaling € 597 thousand were

made available as of December 31, 2004 and bear interest of 6%.

In addition, the Group enters into transactions for the delivery of services with companies in which

Mr. Hübner holds an interest; these transactions resulted in expenses of € 86.4 thousand and income

of € 63.5 thousand in the fiscal year. As of December 31, 2004, the Group had liabilities to these

companies of € 1 thousand and receivables of € 66 thousand.

The services transactions were settled exclusively on an arm’s length basis.

Ffynnon 23. Vermögensverwaltung AG

In the shareholders’ meeting on December 10, 2004, Ffynnon 23. Vermögensverwaltung AG

acquired a 5% interest in So.Ge.Ma. S.p.A. via a capital increase. Mr. Detlef W. Hübner is the sole

shareholder of Ffynnon 23. Vermögensverwaltung AG.

Mr. Manfred Wagner, personally

Mr. Manfred Wagner has made loans to Deufol Tailleur GmbH and Günter Baumann Transport+Ver-

packung GmbH. These loans are valued at € 5,365 thousand as of December 31, 2004, and bear inter-

est at 6%. Mr. Wagner is the managing director of Deufol Tailleur GmbH and holds an indirect inter-

est in the Deufol Tailleur subgroup. As of December 31, 2004, the Group had loan receivables

amounting to € 1,145 thousand against companies in which Mr. Wagner holds an interest.

In addition, relationships with these companies relating to goods and services deliveries resulted

in expenses amounting to € 2,048 thousand in the year under review. As of December 31, 2004, the

Group reported liabilities amounting to € 80 thousand and receivables amounting to € 105 thousand.

Services were provided at arm’s length conditions in all cases. € 1,283 thousand of the sum con-

cerned relates to rental agreements, € 507 thousand to purchased materials and € 257 thousand to

other services.

AR 2004_ page 091/096* Independent Auditors’ Opinion Consolidated Financial Statements*

We have audited the consolidated financial statements prepared by D.Logistics AG, Hofheim am

Taunus, comprising the consolidated balance sheet, income statement, statement of cash flows,

statement of changes in shareholders’ equity and the notes to the consolidated financial state-

ments for the fiscal year from January 1 to December 31, 2004. The preparation and content of

the consolidated financial statements are the responsibility of the Executive Board of D.Logistics

AG. Our responsibility is to express an opinion on whether the consolidated financial statements

are in accordance with United States Generally Accepted Accounting Principles (US GAAP), based

on our audit.

We conducted our audit of the consolidated financial statements in accordance with German

auditing requirements and German generally accepted standards for the audit of financial state-

ments promulgated by the Institut der Wirtschaftsprüfer (IDW). Those standards require that we

plan and perform the audit such that it can be assessed with reasonable assurance whether the

consolidated financial statements are free of material misstatements. The evidence supporting the

amounts and disclosures in the consolidated financial statements are examined on a test basis

within the framework of the audit. The audit includes assessing the accounting principles used and

significant estimates made by management, as well as evaluating the overall presentation of the

financial statements. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements give a true and fair view of the net assets,

financial position, results of operations and cash flows of the Group in accordance with US Generally

Accepted Accounting Principles.

Our audit, which also extends to the Group management report prepared by the Executive Board

for the fiscal year from January 1 to December 31, 2004, has not led to any reservations. In our

opinion, on the whole the combined management report provides a suitable understanding of the

Group’s position and suitably presents the risks of future development. In addition, we confirm

that the consolidated financial statements and the combined management report for the fiscal

year from January 1 to December 31, 2004 satisfy the conditions required for the Company’s

exemption from its obligation to prepare consolidated financial statements and a Group manage-

ment report under German law.

Eschborn/Frankfurt am Main, April 15, 2005

Ernst & Young AG

Wirtschaftsprüfungsgesellschaft

Hanft Vöhl

Wirtschaftsprüfer Wirtschaftsprüfer

Independent Auditors’ Opinion

/096 _AR 2004 *Consolidated Income StatementConsolidated Financial Statements*

D.Logistics AG

Income Statement


1. Sales 1,420.9 925.2

2. Other operating income 3,049.4 8,394.3

3. Personnel costsa) Wages and salaries (2,177.3) (2,015.1)b) Social security and pension costs (117.4) (132.4)

4. Depreciation and amortizationa) on intangible assets and tangible assets (872.1) (1,041.5)b) on current assets 0 0

5. Other operating expenses (7,080.2) (17,631.0)

6. Income from investments 442.3 129.9

7. Other interest and similar incomethereof from affiliated companies: € 2,247 thousand(PY: € 1,971.9 thousand) 2,483.9 2,627.6

8. Write-downs of financial and current assets (16,959.7) (17,618.7)

9 Interest and similar expensesthereof from affiliated companies € 111.9 thousand (PY: €15.6 thousand) (1,808.3) (2,161.2)

10. Income (loss) from ordinary activities (21,618.6) (28,523.0)

11. Income taxes 7.4 347.4

12. Other taxes 2.6 (56.0)

13. Net income (loss) (21,608.7) (28,231.6)

14. Accumulated losses (52,634.8) (24,553.9)

15. Withdrawals from revenue reservesReserve for own shares 257.6 150.7

16. Net accumulated losses (73,985.9) (52,634.8)

Information on D.Logistics AG

AR 2004_ page 093/096*D.Logistics AG Balance Sheet Consolidated Financial Statements*

D.Logistics

AG Balance Sheet

Equity and liabilities in € thousands Dec. 31, 2004 Dec. 31, 2003

A. Equity 80,305.5 84,222.7

I. Subscribed capital 42,292.0 38,527.7

III. Capital reserves 111,953.1 98,025.9

IV. Revenue reserves 46.3 303.91. Legal reserve 46.3 46.32. Reserve for own shares 0 257.6

V. Net accumulated losses (73,985.7) (52,634.8)

B. Contributions paid in to implement the resolved capital increase 0 655,8

C. Provisions

Other provisions 5,672.1 6,624.1

D. Liabilities 30,044.1 36,089.5

1. Bondsthereof convertible: € 68.0 thousand (PY: € 68.0 thousand) 7,268.0 68.0

2. Liabilities to banks 17,094.4 18,293.7

3. Trade payables 570.3 1,975.7

4. Liabilities to affiliated companies 3,001.6 4,985.9

5. Other liabilitiesthereof taxes: € 824.9 thousand (PY: € 114.7 thousand)thereof social security: € 14.5 thousand (PY: € 17.0 thousand) 2,109.8 10,766.2

Total equity and liabilities 116,021.7 127,592.0

Assets in € thousands Dec. 31, 2004 Dec. 31, 2003

A. Unpaid contributions to subscribed capital 2,279.6 0

B. Fixed assets 83,419.3 88,216.9

I. Intangible assetsConcessions, industrial and similar rights and assets and licenses in such rights and assets 675.7 1,116.1

II. Tangible assets 8,992.9 9,371.31. Land, land rights and buildings

including buildings on third-party land 8,423.1 8,669.32. Other equipment, operating and office equipment 569.8 702.0

III. Financial assets 73,750.7 77,729.51. Shares in affiliated companies 68,866.0 75,023.72. Loans to affiliated companies 2,382.4 03. Participations 2,502.3 04. Payments on account 0 2,705.8

C. Current assets 30,223.8 39,333.6

I. Receivables and other assets 30,076.5 38,826.51. Trade receivables 98.9 130.82. Receivables from affiliated companies 12,555.8 33,553.4 3. Receivables from participations 1,382.2 04. Other assets 16,039.6 5,142.3

II. SecuritiesOwn shares 0 257.6

III. Cash in hand, bank balances 147.3 249.5

D. Prepaid expenses 98.9 41.5

Total assets 116,021.7 127,592.0

/096 _AR 2004 *Key Subsidiaries and AffiliatesConsolidated Financial Statements*

D.Logistics AG

Key Subsidiaries

and Affiliates


Equity Subscribed Sales Employeesinterest, % capital (€ thousands)

(€ thousands)


D.Logistics Packing N.V., Tienen, Belgium 100.0 74 10,107 189

D.Logistics Services N.V., Tienen, Belgium 100.0 15,000 27,940 17

Franks Industries Inc., Sunman,Indiana, USA 85.0 1 13,838 122

J+J Packaging Inc., Brookville, Indiana, USA 85,0 1 44,692 539

So.Ge.Ma. S.p.A., Rho, Italy 95,0 530 37,198 148


BVU Bayerisches Verpackungsunter-nehmen GmbH, Munich 100.0 767 6,243 59

Deufol Exportverpackung GmbH,Oberhausen 100.0 1,279 37,251 260

Deutsche Tailleur Industrie-ServiceGmbH, Frankenthal 100.0 280 28,328 227

DTG Eggemann IndustrieverpackungGmbH, Bochum 100.0 818 5,035 43

DTG Madlener VerpackungslogistikGmbH & Co. KG, Remshalden 45.0 50 4,186 15

Günter Baumann Transport + Verpackung GmbH, Oberhausen 100.0 100 9,982 52

Tailleur & Topp GmbH, Berlin 100.0 255 5,590 53

Warehouse Logistics

D.Logistics Airport Services GmbH,Raunheim 100.0 26 12,128 315

D.Logistics Tienen N.V., Tienen, Belgium 100.0 149 9,676 157

Dönne+Hellwig Logistics GmbH,Hofheim 100.0 588 19,254 497

Dualogis GmbH, Obernburg 51.0 400 4,106 57

Schumacher Dienstleistung und Logistik GmbH, Ennigerloh 51.0 750 29,859 373

T-D.Logistics N.V., Waremme, Belgium 60.0 2,000 6,694 33

Published by: D.Logistics AG

Concept and Design: FIRST RABBIT GmbH, Cologne

Photography: Horst Gerlach, Cologne

This report is available in German and English. Both versions are available on the Internet at www.dlogistics.com.

Basis of Preparation

Scope of Consolidation

Notes to the Income Statement

Notes to the Balance Sheet

Share-based Payment

Notes to the Consolidated Cash Flow Statement

Contingent Liabilities and other Financial Liabilities

Segment Information by Division and Region

Summary of Major Differences HGB/US GAAP

Publication Details

Imprint

det

ach

her

e

D.Logistics AG

Rainer Monetha

Head of Investor & Public Relations

Johannes-Gutenberg-Straße 3–5

D-65719 Hofheim (Wallau)

Germany

Phone: + 49 (0) 61 22 50-12 38

Fax: + 49 (0) 61 22 50-13 06

E-mail: [email protected]

April 20 2005 *Annual Report 2004

May 19 2005 *Interim Report I/2005

July 26 2005 *Annual General MeetingLocation: Kurfürstliches Schloss, Mainz

August 18 2005 *Interim Report II/2005

November 17 2005 *Interim Report III/2005

April 27 2006 *Annual Report 2005

ITEM: 0655 PC6698/011/3254 NR.05-GZTR.212

Contact

Financial Calendar*

Accounts receivable days outstanding

Acid test (%)

Asset cover ratio I

Asset cover ratio II

Asset depreciation ratio

Capital employed

Cash ratio (%)

Current ratio (%)

Days sales in inventory

EBIT

EBITA

EBITDA

EBT

EBTA

Enterprise value

Free cash flow

Interest cover

Inventory turnover

Investment ratio

Net carrying amount per share

Net debt

Operating cash flow

Personnel cost ratio

Price-earnings ratio

Property, plant and equipment ratio

Working capital

* Ratio of trade accounts receivable to sales

* Ratio of cash and cash equivalents plus current receivables to current liabilities

* Ratio of shareholders’ equity to non-current assets

* Ratio of shareholders’ equity plus non-current liabilities to non-current assets

* Ratio of the accumulated depreciation of property, plant and equipment to the his-torical acquisition costs

* Operating capital that is tied up in the operation of a company. It is the total ofworking capital, the net carrying amount of property, plant and equipment andother noncurrent assets (offset against other noncurrent, non-interest bearingliabilities).

* Ratio of cash and cash equivalents to current liabilities

* Ratio of cash and cash equivalents plus current receivables and inventories tocurrent liabilities

* Turnover of inventories, expressed in days

* Earnings before interest, taxes, and minority interests

* Earnings before interest, taxes, amortization of goodwill, and minority interests

* Earnings before interest, taxes, depreciation, amortization of goodwill, and minority interests

* Earnings before taxes and minority interests

* Earnings before taxes and amortization of goodwill

* The enterprise value is the value (price) of a company if it were to be purchasedand subsequently freed of debt (including the sale of non-operating assets such asfinancial assets). It is calculated as the sum of the company’s market capitalizationand net liabilities.

* The net amount of cash flow from ordinary operating activities and cash flow frominvesting activities

* The total of EBITA and interest income divided by interest costs

* Ratio of production costs to inventories

* Ratio of purchase of property, plant and equipment to sales

* Ratio of shareholders’ equity adjusted for deferred tax assets to the number ofshares in circulation

* Financial liabilities less cash and cash equivalents

* Cash flow from operating activities

* Ratio of personnel costs to sales

* Ratio of share price to earnings per share

* Ratio of property, plant and equipment to total assets

* Working capital is the difference between current assets and current non-interestbearing liabilities

Facts & Figures

Glossar

Key Group Figures – Five-Year Overview

Results of operations 2004 2003 2002 2001 2000

Gross margin (%) 12.7 13.3 12.8 14.5 17.1

EBITDA margin (%) 7.3 6.4 1.6 8.7 9.2

EBITA margin (%) 2.9 1.6 (1.8) 5.1 6.3

EBIT margin (%) 2.9 (6.5) (1.8) 2.6 6.1

EBIT margin (%) 1.0 (8.8) (4.8) 0.3 4.9

Net profit margin (%) (0.6) (12.5) (26.8) (5.3) 2.5

Operating cash flow margin (%) 2.6 3.5 1.7 (0.1) 4.9

Free cash flow margin (%) 2.4 6.2 11.6 (25.4) (70.9)

Net assets 2004 2003 2002 2001 2000

Current assets (€ thousand) 99,515 86,752 130,257 187,650 144,208

as % of total assets 43.2 36.6 40.9 33.6 32.7

Noncurrent assets (€ thousand) 131,053 150,295 188,106 370,340 297,431


Total assets (€ thousand) 230,568 237,047 318,363 557,990 441,639

Change as against previous year (%) (2.7) (25.5) (42.9) 26.3 748.7

Liabilities (€ thousand) 168,695 185,215 223,034 363,248 220,081


Shareholders’ equity (€ thousand) 61,873 51,832 95,329 194,742 221,558


Working capital (€ thousand) 35,472 14,566 35,278 67,099 30,239


Capital employed (€ thousand) 163,548 163,194 223,061 432,116 315,582


Noncurrent/current assets 1.32 1.73 1.44 1.97 2.06

Shareholders’ equity/liabilities 0.37 0.28 0.43 0.54 1.01

Property, plant and equipment ratio 0.33 0.36 0.31 0.28 0.20

Asset depreciation ratio (%) 46.8 41.9 36.2 30.2 n/a

Inventory turnover 23.0 25.7 15.3 22.8 21.5

Days sales in inventory 15.9 14.2 23.9 16.0 17.0

Inventories /sales (%) 3.8 3.4 5.6 3.8 3.9

Receivables turnover 6.9 6.6 6.6 5.3 4.8

Day sales outstanding 53.1 55.0 55.3 68.9 75.3

Key investment ratios 2004 2003 2002 2001 2000

Market capitalization/sales 0.17 0.27 0.14 0.61 3.43

Enterprise value/sales 0.40 0.54 0.42 0.92 3.62

Enterprise value/EBITDA 5.5 8.3 25.5 10.5 39.6

Enterprise value/EBITA 13.9 33.4 n/m 18.2 57.1

Enterprise value/EBIT 13.9 n/m n/m 35.9 59.3

Enterprise value/operating cash flow 15.2 15.2 24.2 n/m 74.2

Enterprise value/free cash flow 16.4 8.6 3.6 n/m n/m

Key share ratios 2004 2003 2002 2001 2000

Earnings per share (before impairment of goodwill) (€) (0.05) (0.38) (0.44) (0.48) 0.40

Earnings per share (€) (0.05) (1.08) (2.68) (0.90) 0.36

PER (before impairment of goodwill) n/m n/m n/m n/m 121.9

Price earnings ratio (PER) n/m n/m n/m n/m 132.9

Dividend per share (€) 0.00 0.00 0.00 0.00 0.00

Dividend yield (%) 0.00 0.00 0.00 0.00 0.00

Net carrying amount per share (€) 1.41 1.30 2.66 5.92 8.17

Price/net carrying amount 0.9 1.7 0.5 1.5 5.9

Net carrying amount per share (less goodwill) (€) 0.50 0.17 0.54 0.06 10.6

Price/net carrying amount (less goodwill) 2.6 12.3 2.6 153.2 45.5

Key productivity ratios 2004 2003 2002 2001 2000

Sales per employee (€) 92,365 85,060 91,185 73,969 124,802

EBITDA per employee (€) 6,727 5,471 1,487 6,472 11,421

EBITA per employee (€) 2,633 1,365 (1,652) 3,737 7,913

Operating cash flow per employee (€) 2,418 3,006 1,565 (61) 6,096

Personnel costs per employee (€) 31,754 32,650 34,298 29,833 45,018

Personnel cost ratio (%) 34.4 38.4 37.6 40.3 36.1

Financial and liquidity position 2004 2003 2002 2001 2000

Capital employed/sales (%) 52.3 53.8 65.1 89.2 82.5

Investment ratio (%) 2.7 3.0 7.0 6.6 6.5

Operating cash flow/investments 85.3 88.3 22.5 (1.1) 75.2

Asset cover ratio I (%) 50.8 37.5 53.0 53.6 74.5

Asset cover ratio II (%) 91.0 80.9 90.6 89.4 99.6

Interest cover 1.5 0.8 (0.4) 2.3 4.4

Cash ratio (%) 14.5 12.4 12.7 15.1 14.4

Acid test (%) 76.1 62.8 72.6 73.1 92.9

Current ratio (%) 86.7 71.3 85.3 80.97 103.6

Financial liabilities/shareholders' equity (%) 155.3 204.9 130.8 120.6 43.3

Financial liabilities/capital employed (%) 56.4 62.2 53.7 54.3 30.5

Net debt/market capitalization (%) 140.4 105.6 209.9 67.8 5.8

D.Logistics AG

Johannes-Gutenberg-Straße 3–5

65719 Hofheim (Wallau)

Germany

Phone: + 49 (0) 61 22 50 - 00

Fax: + 49 (0) 61 22 50 - 1300

Internet: www.dlogistics.com

consumer goods packaging - deufol - … in property, plant and equipment 8,500 9,163 23,865 31,956...

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