With the exception of matters reserved for the annual general shareholders’ meeting, the board of directors is Logista’s highest decision-making body. Its role is to represent the Company by carrying out all of the duties included in its corporate purpose, as set out in the articles of association.
It is the board’s policy to delegate the everyday management of Logista to the executive bodies and senior management team, focusing its own efforts on its overarching role in determining company strategy and overseeing the work of the senior management team. At the same time, the board must duly attend to those matters which, pursuant to the law or to the Company’s articles of association or regulations, cannot be delegated to other bodies.
Logista’s board of directors includes an audit and control committee and an appointments and remuneration committee, tasked with carrying out the duties required by law. The majority of these committees comprise independent directors.
In accordance with the recommendations contained in the Code of Good Governance for Listed Companies, the board and its committees are evaluated on an annual basis to assess the quality and efficacy of their performance. The chairman of the board, CEO and board secretary are also evaluated as part of this exercise. Every three years, this evaluation is reviewed by an external advisor.
In financial year 2022, Deloitte carried out this evaluation for the Company.
When determining its remuneration policy, the Company considers both the relevant regulations (particularly those applicable to listed companies) and to the objectives set out in its business plan, which in turn conforms to the principles and recommendations of good corporate governance, market best practices and the guidelines issued by institutional investors and proxy advisors.
Every year, the Company publishes information on board member remuneration in its integrated annual report, annual accounts and annual report on board remuneration.
Board members receive a fixed monthly salary plus an attendance allowance paid at a flat rate. They also receive an additional attendance allowance for any committees on which they sit. The proprietary directors waive the right to receive any remuneration as directors of the Company. Only executive board members receive performance-related pay.
The current remuneration policy, which was drafted with external advice, was approved at the annual general shareholders’ meeting on 4 February 2022. The results of the vote were as follows:
| Number of shares | Percentage of share capital in attendance |
| In favour: 99,801,362 | 97.5841% |
| Against: 845,370 | 0.83% |
| Blank ballots: 0 | 0.00% |
| Abstentions: 1,625,371 | 1.59% |
In line with the board skills matrix, the board has been particularly careful to ensure it upholds its commitment to diversity when considering procedures for board member reappointment this year. In particular, when reappointing members, it has ensured female representation on the board remains at 42% and has strengthened profiles in investor relations and sustainability.
Throughout the financial year the board of directors has carried out its regular duties to establish the Company’s general policies and strategies, boost operations and business plans, and monitor the performance of the business areas and their economic and financial situation. In this regard, the board is proud to report the Company’s excellent results and Logista’s steadfast commitment to growth and improving its positioning across its various businesses via the acquisition of third-party companies this financial year.
Logista has monitored the impact of COVID-19 across all its businesses, with findings showing both the resilience of the Company’s business model and the excellent performance of its businesses. The health of the workforce has also been monitored, particularly during the first few months of the financial year, to ensure that the Company’s operations did not suffer any significant disruptions.
The board of directors has been extremely active over the course of the year across its varied remit.
Firmly committed to transparency and good governance, the board of directors has approved a new remuneration policy for 2022-2024, with the main aim of bringing the current policy into line with the new requirements introduced by the Spanish Companies Act.
It has also updated the policies governing the whistleblower channel in a bid to increase its compliance with best market practices. Its internal auditing guidelines have also been updated, with the internal audit department taking on the responsibility of matters relating to conflicts of interest as per the provisions of the updated code of conduct and in its capacity as the risk control and management unit.
The board has also pressed ahead with developing a group compliance model. This has been managed primarily by the audit and control committee and the corresponding compliance units. In this regard, the criminal risk prevention model has been enhanced, various ethic and compliance training initiatives have been launched and the audit and control committee has continued its supervisory role. More information about trainings programmes is available in the people development chapter.
During the 2022 financial year, the board has continued to roll out its inorganic growth strategy already presented to the market, assessing and approving a number of acquisitions that will allow Logista to consolidate its position as one Spain’s leading logistics companies, become one of the leading companies in full load and temperature-controlled transport companies in Spain and break into the time-critical courier service market in the Netherlands.
The following acquisitions were approved by the board:
the acquisition of 70% of Speedlink Worldwide Express, with an agreement to acquire the remaining 30% over the course of the next three years. Speedlink Worldwide Express is a Netherlands-based company specialising in express deliveries. This acquisition furthers the international expansion of Nacex (a Logista subsidiary) and guarantees the Company a strong foothold in Europe.
the acquisition of 60% of Transportes El Mosca, with an agreement to acquire the remaining 40% over the course of the next three years. Transportes El Mosca is a Spanish company with a large global footprint that offers domestic and international intermodal shipping, road and air transport, as well as transport services for refrigerated and frozen goods. The acquisition of the 60% of Transportes El Mosca has been closed at the beginning of 2023 financial year (28 October, 2022).
the acquisition of 100% of Carbó Collbatallé, Spanish company specialised in cold transport and logistics in the food sector. The transaction has been closed at the beginning of 2023 financial year (1 October, 2022).
The Company has also continued to work on other inorganic growth opportunities that it expects to see take shape in the near future.
This year, the frequency with which risks are monitored by the audit and control committee and the board has been increased.
Logista has adjusted its 2021 board member remuneration policy to comply with the amendments introduced by Spanish Companies Act 5 of 12 April 2021 relating to the approval of remuneration policies. Accordingly, it has approved a new policy that broadly retains the approach taken in the version approved by the annual general shareholders’ meeting in the last financial year, but that also introduces the changes required by the new legislation.
The new remuneration policy for 2022-2024 is therefore clearer and more transparent about executive directors’ remuneration and goes into greater detail about how it aligns with best practices in corporate governance.
The specific changes introduced are as follows:
including the new wording required by the Law, in particular by more closely defining the objectives for variable remuneration and the related weighting.
adapting executive directors’ fixed remuneration in line with the latest inflation forecasts applicable to the group’s senior managers.
setting out measures to align corporate governance with best practices, such as introducing caps on severance payments for executive directors, in line with shareholders’ expectations. With regard to this final point, we would note that although it was not explicitly stated in its policy, the Company was already complying with these caps.
External advisers have worked with the Company to draft this remuneration policy.
Examination and approval of the annual accounts (balance sheet, income statement, statement of changes in equity, cash flow statement and notes to the accounts) and management report of Compañía de Distribución Integral Logista Holdings, S.A. and the consolidated group, for the financial year ended 30 September 2021.
– Approval of the individual annual accounts and management report of Compañía de Distribución Integral Logista Holdings, S.A., for the financial year ended 30 September 2021.
– Approval of the consolidated annual accounts and management report of Compañía de Distribución Integral Logista Holdings, S.A., for the financial year ended 30 September 2021.
Examination and approval of the consolidated non-financial information reporting statement, included in the Integrated Report of Compañía de Distribución Integral Logista Holdings, S.A. and its consolidated group, for the financial year ended 30 September 2021.
Examination and approval of the board of directors’ management during the financial year ended 30 September 2021.
Examination and approval of the board of directors’ application of the result for the financial year ended 30 September 2021 of Compañía de Distribución Integral Logista Holdings, S.A.
Ratification, appointment and re-election of directors.
– Ratification and appointment of Lillian Alice Blohm as a proprietary director.
– Ratification and appointment of Murray Henry McGowan as a proprietary director.
– Reappointment of Cristina Garmendia Mendizábal as an independent director.
– Reappointment of Alain Minc as an independent director.
Examination and approval of Logista’s board member remuneration policy for 2022–2024.
Advisory vote on the annual report on Company directors’ remuneration for the financial year ended 30 September 2021.
Information for the general shareholders’ meeting on the amendment of article 33.2 of the board of directors’ regulations.
Delegation of powers to the board of directors to interpret, complete, correct, pursue, enforce, execute and register the above-mentioned agreements and record them in a public document, as well as substitute the powers granted by the general shareholders’ meeting.
Logista has put in place a number of corporate policies and an internal control system aimed at preventing any conduct falling into the “criminal risks” category, whether on the part of managers, directors or any other employee. Examples of such criminal conduct include corruption, bribery and money laundering.
For the Company, issues relating to ethics and the fight against corruption are material concerns, and as such the board of directors is committed to fulfilling its social responsibilities by adopting all necessary measures to coordinate, oversee and monitor action in response to potential crimes or criminal risks, including those listed below.
The mandatory Company’s code of conduct is available on the group’s Intranet and corporate website (www.logista.com). Among other provisions, the code sets out the procedures to be followed when working with civil servants or government representatives. This document expressly forbids offering, giving or receiving payments, gifts or preferential treatment contrary to the law, which may have an influence on the normal course of business, governance or professional relationships or secure an undue advantage for Logista.
The Company’s criminal risk prevention handbook, which was updated in 2020, is available on Logista’s Intranet. This handbook sets out Logista’s principles and objectives concerning criminal risk prevention, and the main internal processes established to prevent and mitigate any action that could bring a risk of criminal liability.
It outlines an anti-corruption policy that establishes general principles for preventing corruption, guidelines on behaviour with third parties – whether they be public or private officials – and the rules concerning gifts, hospitality, promotional events and donations.
In addition, the handbook for the prevention of money laundering and terrorist financing complements and expands on obligations that apply to all Logista Companies in Spain regarding such matters.
The Company’s compliance committee, which reports to the audit and control committee, oversees the operation of and compliance with Logista’s organisational model and its regulatory compliance system. The Committee is built around three core pillars: the code of conduct, the criminal risk prevention model and the whistleblower channel. The Committee is formed of representatives from the following corporate areas: the legal department, internal control, resources and human resources.
Logista employees at all levels are informed of the importance of following the criminal risk prevention handbook, adopting the principles set out in the code of conduct and carrying out their professional tasks in an ethical and diligent manner.
In the event of a breach of Logista’s code of conduct, the relevant employee(s) will be subject to a disciplinary process and possible sanctions. Any incident involving the bribery of a public or private body or the failure to comply with the established collection and payments management policy will be treated as very grave misconduct.
There is a whistleblower channel that all directors, employees and authorised third parties (suppliers, clients, subcontractors, etc.) can use to submit an anonymous, confidential complaint about any form of irregular practice, breach or behaviour whatsoever that is contrary to Logista’s ethical values or internal policies, the code of conduct or the law.
The compliance committee reports any complaints received, and any investigative action taken, or procedures conducted by Logista, to the Audit and Control Committee on a regular basis.
No reports in relation to crimes of bribery, corruption or money laundering were received during the 2022 financial year.
Logista’s supervisory departments also carry out regular checks on any processes or activities that could potentially be affected by any of the criminal risks listed above, and the model is revised as necessary and checked to ensure it complies with the established Regulatory Compliance System
During the financial year, the Company did not detect any risks relating to corruption and/ or bribery that would require putting contingency plans or other measures in place.
Logista conducts its business based on ethical values, transparency and active communication. These core values are at the heart of its corporate governance model. Its commitments include:
Promoting best corporate governance practices through ethical, responsible and honest management of the business.
Encouraging transparency and communication with its different stakeholders.
Implementing the principles of the United Nations Global Compact into its business operations. It also promotes and complies with the provisions set out in the fundamental conventions of the International Bill of Human Rights, the International Labour Organization (ILO), the UN Guiding Principles (UNGP) on Business and Human Rights (UNGP) and the European Social Charter.
All Logista employees have signed updated contracts and are represented by works councils and union officials, whom they may freely approach at any time. Various independent unions are active within the Company and frequently exercise their right to hold a meeting. The Company ensures that employees are fully aware of their right to collective association, which is fundamental for compliance with ILO provisions.
In addition to monitoring activities carried out by the compliance committee, employees can report any act, conduct or omission that could amount to a human rights violation to the whistleblower channel. All complaints received are also reported to the board of director’s audit and control committee. However, given the nature and geographical range of our operations and the robust regulatory framework in place, Logista does not tend to encounter any risks such as those potentially associated with forced and/ or child labour.
During the 2022 financial year, the Company did not receive any reports of incidents relating to respect for freedom of association and the right to collective bargaining, job discrimination, forced or child labour or any other human rights violation or concern in any country in which Logista operates.
Respect for human rights is a material concern for Logista.
Logista’s commitment to complying with the provisions of fundamental ILO conventions and the United Nations Global Compact is reflected in the following procedures and the monitoring activities carried out by the compliance committee and the other supervisory bodies:
This document establishes that Logista is committed to protecting and respecting human rights in everything it does, recognising the need to avoid violating the human rights of others and to appropriately addressing any adverse human rights impact that may be caused by its operations. It is expressly stated in the code that:
Everyone at Logista must respect the dignity and human rights of all other colleagues and of any third parties with whom they come into contact in the course of their work.
Logista fully respects the fundamental right to form and/or join unions and manages relationships with workers’ representatives and the unions in a flexible and transparent way. All Logista employees are entitled to decide whether they wish to join a union or to have recognised representation in accordance with applicable law.
Logista will never use, or permit the use of, forced labour or human trafficking. It will never employ anyone under the age of 16, or minors under the local minimum employment age or the minimum school leaving age (whichever is higher), nor will it employ anyone under the age of 18 to perform work that is considered to be dangerous or potentially damaging to health and/or safety.
Logista requires suppliers to comply with their employment obligations, to respect their employees’ employment qand trade union rights and to pay salaries that are in line with the higher of the legal minimum wage or the amount specified in the applicable collective bargaining agreements. Human trafficking and forced labour are expressly prohibited. Logista also requires its suppliers to promote integrity, teamwork, diversity and trust, guaranteeing a fair, respectful workplace that is free from any kind of harassment, discrimination or any other form of degrading behaviour. Suppliers must also promote a positive health and safety culture, prohibiting unacceptable or potentially dangerous behaviour in the workplace.
General recruitment protocol, internal selection guide and employee competence guidelines.
Logista promotes gender equality in candidate selection, including as standard practices that the shortlist of candidates for any post should include at least as many women as men.
This document stipulates the minimum standards and requirements for everyday conduct that suppliers must observe at all times, both in their dealings with Logista and with respect to their own employees and any third parties involved in their operations.
All suppliers must understand and accept these standards of conduct, which are contractually binding on all suppliers who enter into an agreement with a Logista company. The Company may terminate its contractual or business relationship with any supplier that fails to either comply with the standards of conduct or, in the event of an accidental breach, not taking the necessary measures to resolve the situation.
This document establishes that all suppliers must be duly authorised and have demonstrable financial and technical capacity. Furthermore, all contractual relationships are governed by the principles of ethical and professional conduct (among others), which states that employees must behave ethically and professionally at all times.
Logista’s corporate risk management system is an ongoing and integrated risk management system designed to help the company achieve its objectives and the goals set out in its strategy. It applies to every business area, department and country of operation, thus providing a global overview of all risks that Logista may encounter.
Logista’s corporate risk management system is outlined in its generalLogista’s corporate risk management system is outlined in its general risk management policy and procedures – approved and last updated by the board of directors on 22 September 2021 – and in its procedures, which are based on the 2017 COSO ERM Framework.
The policy’s overarching objective is to support the board of directors and management in their efforts to optimise results and ultimately enhance the Company’s capacity to create, sustain and realise value.
This policy sets out the general protocols for controlling and managing all forms of internal and external risk to which Logista may be exposed, at any point in time, in the pursuit of its objectives:
Identifying and managing risk across the group.
Determining risk profile and appetite.
Setting out planned risk management measures (risk mitigation).
Regularly monitoring the risk management model.
Facilitating efficient resource allocation.
Ensuring the reliability of financial and non financial information.
Setting guidelines for transparency and good corporate governance.
Assigning responsibilities to participants.
Expanding the range of available opportunities.
Considering general predefined risk types.
The corporate bodies responsible for devising and implementing the risk control and management system are as follows:
Board of directors
Determining the risk control and management policy, including fiscal risks.
Overseeing the internal reporting and monitoring systems.
Determining the risk level to be assumed by Logista.
Audit and control committee
Overseeing and evaluating financial and non-financial risk control and management systems.
Directly overseeing the risk management and control unit.
Management committee
Establishing a risk strategy and ensuring correct implementation of the Company’s risk management systems.
Informing risk managers of the guidelines established.
Overseeing key risks and making decisions about major risks.
Encouraging a risk-awareness culture among its employees.
Advising the risk management and control unit on any material issues.
Draw up a risk appetite and risk tolerance proposal when required for its approval.
Risk management and control unit (carried out by the internal audit department)
Coordinates the process for identifying and assessing risks for Logista, helping risk managers with this process and ensuring the main risks are identified, evaluated and managed so that they remain within an acceptable level of risk and ensure that the risk management system operates properly.
Keeps Logista’s risk map up to date.
Works with the management committee to define Logista’s risk strategy, providing support when it must make important decisions relating to risk management.
Ensures the measures set out in the risk management system to mitigate risks are in line with Logista’s risk strategy.
Regularly updates the management committee on the status and development of the main risks, as well as on the progress made in updating and assessing risks, ahead of reporting to the audit and control committee and, if required, to Logista’s board of directors.
Risk and process manager
Executes the risk strategy defined by the management committee and ensures compliance with the risk-related guidelines defined by Logista’s business units.
Identifies any potential risks and opportunities that could affect Logista’s ability to achieve its objectives within its area of responsibility.
Informs of risks by taking part in the established risk reporting process and by using the tools available, flagging any new risks, and informing on the mitigation and action plans proposed, as well as on their implementation and progress.
Analyses and evaluates the identified risks that the Company faces in the process of achieving its objectives, according to the method available.
Defines the most appropriate response for each risk, identifying and/or, designing and defining the control activities and internal regulations required to manage these risks.
Ensures and promotes that the control activities designed for each identified risk are implemented appropriately.
Oversees the various action plans and corrective risk mitigation measures introduced.
In line with our commitment to digitalisation and the use of technology, the installation of the “SAP GRC Risk Management” system has been rolled out in the 2022 financial year. The aim is for the integrated risk management system to be up and running in the 2023 financial year.
This tool will contain Logista’s entire risk management model via a set of features that will allow it execute the different risk management phases (from identification, analysis and assessment to mitigation and monitoring).
Logista’s risk management process is based on the following framework:
Logista determines its strategic objectives and operational scope, both internally and externally, with due regard to stakeholder interests. In turn, this perspective has an influence on its risk management approach. The Company also defines its risk appetite, i.e. the level of risk it is willing to accept in the course of its operations and its risk tolerance. Broadly speaking, risk appetite is categorised as follows:
Low risk tolerance profile
Logista seeks to comply with all laws, regulations, standards and tax rules to which it is subject.
Moderate risk tolerance profile
Towards risks that allows:
– achieve its strategic objectives while limiting uncertainty;
– maintain the strongest possible shareholder guarantee;
– protect group’s results and reputation;
– defend the interests of shareholders, clients and manufacturers
Higher risk tolerance profile
Towards plausible technological risks, that could arise as part of Logista’s strategic framework of providing high value-add logistics services and, therefore, involving advanced technological solutions.
These baselines for risk appetite and tolerance are a tool for achieving the optimum balance between risk and opportunity.
During Q1 FY2022, the management committee presented its risk appetite proposal, based on both quantitative (economic-financial) and qualitative (non-financial) criteria to the board of directors, after having presented it to the audit and control committee for prior consideration. This risk appetite proposal was approved and validated by the board of directors.
Risk detection refers to the identification of future events that could potentially pose a threat to Logista’s objectives, whether through interviews or self-assessment questionnaires.
All risks must be recorded in such a way that they can be readily understood and, especially, used to facilitate decision-making. Each risk should be defined by reference to its causes and contributing factors, as well as the consequences for Logista were it to materialise.
During this stage, the severity of each risk is assessed in order to prioritise those of greatest concern. The criteria used to explore potential impacts on Logista are: regulatory compliance, economic/financial, health and safety, impact on operations, reputation and strategic context.
A parallel assessment looks at the mitigation measures adopted by Logista in response to the identified risks, to derive what is referred to as the “residual risk”. This exercise also evaluates the speed with which the risk could potentially materialise, which determines its ranking in the overall risk appetite and risk tolerance framework.
Logista’s response to the risk is analysed and categorised according to the following five response types:
Eliminate: take all possible measures to negate the likelihood of the risk occurring and/or its impact, so that the risk effectively disappears or is eliminated.
Mitigate: take any necessary action to lessen the potential consequences should the risk materialise.
Transfer: assign the consequences associated with the risk, should it materialise, to a third party.
Accept: take no action, absorbing the potential consequences should the risk materialise.
Pursue: accept a greater degree of risk where this is offset by a greater performance gain. When choosing to pursue a risk, managers must understand the nature and scope of any changes required to achieve the desired performance gain without exceeding the acceptable limits of tolerance.
Action plans should also be put in place.
The risk management process is continuously monitored and revised, with a particular focus on emerging risks, the ongoing development of known risks, obsolete risks and materialised risks.
The material information relating to risks, and concerning all parties involved in risk management at Logista, are managed via the risk management tool.
It fosters an appropriate setting and philosophy for risk management, through targeted communication with both senior management and the management committee, as well as the audit and control committee and the board of directors.
In this regard, the management committee has met each quarter to discuss the main risks and the Company’s response strategies, and to also identify the most material risks for each business area, irrespective of its position on the corporate risk map, in order to facilitate lower-level decision-making. The committee has also approved Logista’s risk map. It has drawn up a risk strategy and risk appetite proposal – both at Company level and in terms of each business line – which has been approved by the audit and control committee.
Four times a year, the audit and control committee also carries out a review of material risks, response strategies and mitigation plans, including those relating to fiscal and reputational matters, before approving and distributing Logista’s updated risk map.
Twice a year, the board of directors receives additional information regarding the areas it is responsible for from the risk management and control unit regarding Logista’s main risks.
This year, the frequency with which risks are monitored by the audit and control committee and the board has been increased.
The corporate risk map (among other documents) identifies the following risks, which are categorised as per the framework set out in the general risk management policy.
It also includes other risks that remain relevant, even though they may be at an acceptable level, such as specific financial risks and other non-financial (environment + climate change, etc.) risks.
Below, we detail the following risks and its mitigation measures:
Environment, social and business-related risks
Macro-economic, political and social context and changing consumer habits
Aspects such as inflationary pressures, supply chain disruptions and a negative performance of the main macroeconomic indicators affect how Logista’s businesses perform, subjecting them to new regulations, rising costs, changes in consumer habits and even events such as sector specific or general strikes, all of which impact on the Company’s operations and/or its need to restructure.
Logista continuously monitors the performance of its various businesses and any developments in the regulatory, social and political environment, adapting its strategy and objectives to changing conditions in the countries where it operates.
Logista continuously monitors the performance of its various businesses and any developments in the regulatory, social and political environment, adapting its strategy and objectives to changing conditions in the countries where it operates.
Logista manages the potential shortfall in stock by signing agreements with its suppliers and ensuring adequate safety stock levels.
Development of other businesses
Risks inherent in the successful expansion of Logista’s different businesses – to offset a possible faster rate of decline in the traditional tobacco market – together with a misalignment with the market with regard to sustainability policies.
The main measure is the rollout of the expansion plan, as established in Logista’s strategic plan and implemented via the recent acquisition of SpeedLink Worldwide Express, and the agreement of acquisition of Transportes El Mosca and Carbó Collbatallé.
General situation in transport sector and lack of drivers
The transport sector is currently a very competitive environment, one which is being exacerbated by the worsening economic climate and the potential increase in costs (fuel prices, tolls, distribution costs, salaries...), which could push prices up further, affecting the costs structure and as a result the product mix and profitability.
The lack of drivers, the difficulty that Logista is having in finding new drivers that meet its requirements is another factor that affects costs and could even affect the operations of the transport businesses.
Logista specialises in providing its clients with value add services and in the transport of high-value goods, guaranteeing the highest standards of service, making it less susceptible to potential price drops from its competitors and increasing its customer loyalty. In addition, it also has cost recovery mechanisms (transport tariffs indexed to fuel prices) and cost reduction measures in place.
The lack of drivers is dealt with by offering new drivers and transport companies approved long-term agreements that meet the standards established for all Logista’s businesses – a process that is carried out by specialist departments.
Market liberalisation in countries where Logista operates
Market liberalisation of the main markets in which Logista acts as an authorised distributor of tobacco products within the context of a state retail monopoly could have an impact on the group’s results if it fails to take certain measures, which have already been identified. However, the current trend in these countries is for greater regulation of the tobacco market.
The consequences of market liberalisation in the main markets in which Logista acts as an authorised distributor for tobacco products within the context of a state retail monopoly, may adversely affect its profits. However, such effects would be mitigated by the Company’s capacity to distribute tobacco through an extensive network of outlets and an effective diversification strategy.
Operational and technological risks
Cybersecurity
Systems damage from deliberate third-party attacks. Logista is exposed to various threats and vulnerabilities due to its use of technology and information systems across all of its daily operations. This presents a risk to information security and to system continuity, and may lead to privacy breaches, information loss or the theft or fraudulent use of data.
Logista has a specific budget allocated to security area that has been activated in the further development and updating of the cybersecurity plan, which sets out measures such as external and internal intrusion testing, a cyber threat monitoring system, an incident response model and checks on the level of service delivered by the supplier contracted to manage and administer Logista’s IT infrastructure among others. The budget is also used to offer a specific cybersecurity training plan.
Digital disruption and disruption to the business model
Aside from benefits and opportunities, digitalisation brings risks associated with having an unsuitable strategy for defining and implementing technology, which could affect the viability of our business models, as well as our competitiveness, due to costs associated with lost opportunities. The rapid increase in the use of new technologies in our operations, together with the inherent risks associated with such a change, impacts on organisational models and our control framework.
Digital transformation forms an integral part of Logista’s strategy and is reflected in our new approach to client relationships, competition, data, innovation and values.
Risk of theft
Theft of tobacco from the Company’s facilities or during transport may result in higher insurance premiums.
Adopting the most rigorous security standards possible and taking out insurance policies reduce both the likelihood of theft and the impact on tolerable risk levels.
Availability of information systems, safeguarding assets and business continuity
There is a risk that a shock event could bring the company’s operations to a standstill, or that the business continuity plans designed to ensure a timely and appropriate disaster response fail to assure the continued availability of information systems, the level of service and safeguarding of assets.
Contingency plans in place are regularly tested to assess their effectiveness and the group continuously monitors the levels of service promised by Logista, allowing us to assess the need to invest in essential assets for the Company and ensure its stocks, among other things, are protected.
Committed to the environment and climate change
Growing concern in Logista and among stakeholders regarding the impact and consequences of climate change. Consequently, there is a risk Logista will not be able to fulfil its commitment to developing best practices with regard to quality and the environment. These practices are designed to reduce the impact our activities have on the environment, optimise the use of resources and prevent pollution in business processes, in accordance with strict regulation compliance (reducing our carbon footprint, using renewable energy sources, waste management, collaborating with environmental bodies and institutions and complying with energy efficiency standards).
Logista has developed a quality and environment master plan and a quality, environment and energy efficiency policy that establish guidelines and best practices for optimising the use of resources and preventing pollution throughout its business processes. CDP has included Logista in its prestigious “A List” group as one of the global leaders in the fight against climate change. Logista calculates its carbon footprint pursuant to the ISO 14064 standard (via the method set out in the GHG Protocol).
Ethical business conduct
Ethical business conduct
Logista has established general principles for ensuring an ethical business conduct, which must be followed both internally and externally. These general principles of conduct are all contained within its code of conduct.
Logista has several mechanisms in place to ensure that this code of conduct is duly observed. These include compliance training courses, the publication of these standards on the corporate intranet and supervisory measures within the Company’s general internal control management system.
Regulatory compliance risks
Competition risk
Given the specific nature of its business and more precisely, the fact it operates in regulated markets in which it holds a significant share of the market, Logista is monitored by the respective national authorities in terms of competition. In this regard, the resolution of several proceedings and/or processes that are currently underway are yet to be announced.
Logista has support from third-party specialists in the event that it needs to defend the Company’s position, which is always the strictest compliance with the Law.
Regulatory risk
Logista’s business operations must be compliant with numerous laws and regulations, both general and sectoral. These may apply at the European, national, regional and local levels in any country of operation. This exposes Logista to risks arising from potential breaches and associated sanctions.
Logista continuously monitors the regulatory and legislative environment for changes that may affect its activities, aiming to anticipate such changes as early as possible to allow for effective management. The group has also produced various specific standards and procedures to govern its framework for action, in addition to criminal risk prevention models. These measures reflect a “zero-tolerance” approach to fraud and corruption.
Legal proceedings
In the normal course of its business, Logista may become involved in legal disputes, either as the claimant or as the defendant. These may arise from differences in the interpretation of laws, regulations or contracts or as the result of legal action brought against it, the outcomes of which are uncertain by nature.
Establishment of specific standards and procedures to govern the group’s framework for action, in addition to criminal risk prevention models for each of Logista’s companies.
Legal defence and procedures for managing and monitoring legal actions, with external expert advice as appropriate.
The corporate legal advice department coordinates a centralised review of the most significant contracts to ensure strict legal compliance.
Financial and tax risks
Annual accounts subject to audits and inspections
The group’s primary activity is the distribution of tobacco, and as such it is subject to a specific fiscal model that can be complex due to its extensive geographical presence. In this respect, the group has various tax disputes pending resolution requiring value judgements as to the probability of being obliged to settle certain liabilities. Logista has made provisions for these risks based on expert legal advice and the potential for transferring them to third parties. Logista’s returns from a number of financial years are currently subject to inspection with respect to certain taxes.
In discharging its fiscal obligations, the Company advocates strict compliance with all applicable tax requirements. It adopts a centralised approach to monitoring and verification, ensuring that all fiscal obligations across Logista are met. To this end, it draws on support from highly reputable tax advisors and law firms when preparing its tax reports and settling taxes owed. Such advice is also sought in the event of any special transactions and when mounting a legal defence of the Company’s position, should this be necessary.
Changes to Logista’s payment cycles or to fiscal policies.
Like any other wholesale business, Logista’s purchasing and revenue cycles are staggered. This means that outgoings to tobacco manufacturers and incomings from retail outlets may not always balance out. Moreover, Logista’s tax obligations must be settled according to a different cycle again. Changes to the tax payment cycle or significant increases in tax (primarily in excise duties) could have a negative impact on the business by weakening the financial outlook, thus affecting the Company’s operating profit and cash management.
Changes to Logista’s payment cycles could force it to seek external financing in order to meet its obligations.
The businesses are developing more robust mechanisms for debt collection, with a view to shortening collection periods in business areas most exposed to client credit risk. In addition, they are lowering credit limits, monitoring credit lines more closely and seeking bank guarantees.
Impairment losses on fair value of assets, investments, goodwill and asset provisions.
One of Logista’s basic objectives is to preserve the value of its assets by analysing and preventing risks and optimising the management of the main claims. Nevertheless, there is a risk that the fair value of assets may deteriorate, particularly with respect to the carrying value of goodwill, which is high. This is because Logista has a significant volume of assets and investments that have a substantial impact on its income statement.
The finance department analyses potential accidental risks which Logista may be exposed to, both in terms of its assets and its business operations. Accordingly, it ensures that external insurance policies are in place as appropriate and commissions property valuations. With respect to the high carrying value of goodwill, Logista carries out impairment testing in accordance with International Accounting Standards.
Credit, liquidity and exchange rate risk
It is Logista’s general practice to use only institutions with a high credit rating when depositing cash and equivalent liquid assets. Furthermore, Logista has a credit or counterparty risk exposure with Imperial Brands, by virtue of the signed agreements to transfer liquidity.
With regard to liquidity risk, Logista has sufficient reserves of cash and equivalent assets to cover payments arising in the normal course of its business operations.
Meanwhile, the exposure of Logista’s equity and income statement to future changes in prevailing exchange rates is relatively slight, since so few of its transactions are carried out in currencies other than the euro.
If necessary, Logista has a number of credit lines available to it.
With regard to the credit risk represented by Imperial Brands, loan agreements are in place with recovery safeguards. Imperial’s credit rating (investment grade), which has remained stable during the financial year, is regularly monitored.
Insolvency and default risk
When dealing with clients in the ordinary course of its operations, Logista is exposed to commercial credit risk.
Logista seeks to minimise insolvency and default risk by setting credit limits and imposing strict conditions with respect to collection periods. As Logista’s main clients are licensed tobacconists, this commercial risk is spread over a large number of clients with fairly short collection periods. Consequently, the Company’s exposure to third-party credit risk is not particularly significant. Where deemed necessary, insurance policies are in place to mitigate the impact of defaults on payments, although, historically, default rates in geographical regions where Logista operates have been consistently very low.
Logista’s risk management system supports a comprehensive analysis of the group’s business environment (its relationships and other factors with a bearing on current or future strategy or on company objectives). In turn, this has allowed the following opportunities to be identified:
Logista’s growth strategy depends, among other factors, on its ability to expand its business areas such as transport and pharmaceuticals. This strategy will allow Logista to address one of the risks to which it is exposed, namely, the decline in traditional tobacco consumption in countries where it operates, in line with the market’s focus on sustainability.
Certain market trends observed in these sectors present opportunities for sustainable and profitable growth. These include the significant increase in the volume of pharmaceuticals dispensed by hospital pharmacies, the relative rise in demand for OTC and personal care products, as well as medicines for veterinary use in pharmacies, and the growing demand for value-add transport services, such as time-critical deliveries or the transportation of goods requiring temperature-controlled conditions (more information available in strategy chapter, business outlook and strategic goals).
The pharmaceutical sector is developing a new generation of bespoke medicines and direct-to patient delivery services which are an excellent opportunity for Logista given the Company’s existing high quality distribution network.
New tobacco products are also emerging, with many more choices available to consumers than just a few years ago. Logista offers manufacturers the fastest and most effective route to consumers in southern Europe, thanks to its extensive presence in each of its national markets and its expert market knowledge.
Logista actively participates in and supports the strategic transformation of the sector by offering consumers alternatives to traditional tobacco products, potentially with fewer health impacts. In its capacity as the preferred distribution partner for these kinds of products, Logista also works to foster a responsible approach to how they are sold.
Due to the regulatory context in the pharmaceutical and tobacco sectors, there are increasingly exhaustive checks on the distribution of these products, and companies therefore need to be able to comply with those requirements if they wish to continue operating in the future. Logista not only acts in compliance with these requirements, but anticipates them by offering new services in each of its distribution sectors. The group also has the benefit of significant financial capacity and extensive market experience, that helps foster client loyalty and presents a barrier to entry for new competitors – due to, for example, the high investment costs involved in ensuring compliance with regulatory requirements.
Sustainability is a key element of Logista’s strategy. This is evidenced by the fact that Logista has been recognised as a global leader in fighting climate change by CDP for the sixth consecutive year, and is included on its “A-list”.
Logista includes opportunities arising from climate change among its risks and its environmental plan, for example, optimising routes, using sustainable vehicles and energy, and reusing packaging for its product distribution business.
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