KWS Group Annual Report 2009

← All annual reports

FY2009 Annual Report · KWS Group

Loading PDF…

Annual Report
2009 I 2010

KWS Sa at aG

Key Figures of the KWS Group
Figures in € millions, unless otherwise specified (IFRS)

Fiscal year

Net sales

Operating income (= EBIT)

as a % of net sales (= ROS)

Net income

as a % of net sales

Operative cash flow

Net cash from investing activities

Equity

Equity ratio in %

Balance sheet total

Return on equity in %

Return on assets in %

Fixed assets

Capital expenditure

Depreciation

Average number of employees

Personnel costs

Performance of KWS shares in €

Dividend per share

Earnings per share

Operative cash flow per share

Equity per share

2009/10

754.1

82.4

10.9

51.5

6.8

27.4

– 55.4

492.9

57.5

857.4

12.2

7.1

2008/09

717.2

77.9

10.9

50.1

7.0

82.0

– 59.4

434.5

57.5

756.0

13.0

7.8

275.2

231.9

58.4

22.0

3,492

147.2

1.90

7.51

4.15

74.68

61.1

23.3

3,215

135.0

1.80

6.98

12.42

65.83

2007/08

599.1

70.1

11.7

54.6

9.1

74.6

– 18.1

398.0

59.3

671.1

15.3

9.2

197.1

30.4

17.0

2,856

119.0

1.70

7.74

11.30

60.31

2006/07

537.9

63.9

11.9

38.2

7.1

51.1

– 26.7

366.1

60.0

609.8

11.6

6.8

189.4

27.2

16.1

2,739

111.3

1.40

5.61

7.74

55.47

Segments of the KWS Group

Sugarbeet
KWS SAAT AG
As well as 15 subsidiaries and affiliated companies*
Net sales € 247.4 million
Operating income € 34.8 million

Corn
KWS MAIS GMBH
As well as 14 subsidiaries and affiliated companies
Net sales € 413.4 million
Operating income € 31.7 million

Cereals
KWS LOCHOW GMBH
As well as 7 subsidiaries and affiliated companies
Net sales € 70.0 million
Operating income € 10.5 million

Breeding & Services
KWS SAAT AG
As well as 15 subsidiaries and affiliated companies
Net sales € 152.0 million
(net sales of third parties € 23.3 million)
Operating income € 5.4 million

* Subsidiaries and affiliated companies see page 85

Table of contents

A tribute to Carl-Ernst Büchting

Foreword of the Executive Board

Spotlight topic: China – a growing giant

Report of the Supervisory Board

Corporate Governance Report

Compliance declaration in accordance with Section 161 AktG
(German Stock Corporation Act)

Compensation Report

The KWS share

Agenda of the Annual Shareholders’ Meeting/Financial calendar

Management Report of the KWS Group

• Sugarbeet Segment

• Corn Segment

• Cereals Segment

• Breeding & Services Segment

• Outlook for the fiscal year 2010/2011

• Employees

• Risks and chances for future development

• Disclosures in accordance with Section 315 (4) HGB (German Commercial Code)

Annual Financial Statements of the KWS Group

Auditors’ Report

Table of contents I 5

A tribute to Carl-Ernst Büchting

Dr. Carl-Ernst Büchting, Honorary Chairman of our Supervisory Board, died aged 95 on May 1, 2010.

We commemorate the outstanding personality of the fifth generation of businessmen in the founding

families of our company, the families Rabbethge and Giesecke, with great gratitude and respect.

Born in the home of his grandfather Ernst Giesecke in
Klein Wanzleben in the Magdeburger Börde plain in Anhalt,
Carl-Ernst Büchting eagerly fulfilled the professional expec-
tations of his family. After completing his school education,
he went on to study sugar technology at the University of
Berlin in preparation for future duties at the company and
earned his doctoral degree in agriculture while recovering
from a war wound.

Carl-Ernst Büchting returned to Klein Wanzleben in June
1945, on the very day that large parts of the family busi-
ness were being relocated to Einbeck at the initiative of
British troops.

The young businessman had hardly arrived there when he
energetically and purposefully set about rebuilding the
company’s business – true to his life motto: “You have to
turn obstacles into springboards!” Together with his father
Karl Büchting and father-in-law Oscar Rabbethge, Carl-Ernst
Büchting led the company from its very small beginnings,
transforming it into a leading international plant breeding
enterprise.

For almost 50 years – from 1945 to 1993 – Carl-Ernst
Büchting played a key part in the company’s development
as Chairman of the Executive Board and Chairman of the
Supervisory Board. The rapid expansion of our business
activities in international markets, in particular in Anglo-
American markets, is due to his efforts. All his life he was
the embodiment of a value-oriented entrepreneur of the
old school, one who established a clear sense of direction
in the company’s strategy and also tended to the interests
and concerns of the steadily growing workforce. Under his
leadership, the government retirement pension was sup-
plemented by a company pension for KWS employees as
early as 1961, for example.

Plant breeders have his creativity and personal commit-
ment to thank for the fact that international protection of
intellectual property rights for new plant varieties was esta-
blished 50 years ago. Carl-Ernst Büchting also kept up the
family tradition of promoting the networking of the worlds
of science and breeding practice. As a contributing mem-
ber of the Max Planck Society and Chairman of the Board
of Trustees of the Max Planck Institute for Plant Breeding
Research, he helped initiate many a collaboration between
basic research and application-oriented plant breeding. In
addition, in his many years as Chairman of the Association
for the Promotion of Private Plant Breeding in Germany
(GFP), he was also responsible for creating an industry-
specific research community, as a result of which close
contacts were established with universities and other
institutes conducting research in selected fields.

Carl-Ernst Büchting received many honors and awards in
acknowledgement of his diverse activities, achievements
and life’s work at and outside KWS. One of them moved
him very greatly: In 1995 Klein Wanzleben made him an
Honorary Citizen of the town, as a token of its thanks for
his assistance in word and deed throughout the difficult
process of change following German reunification, which
he regarded as a great blessing.

The AKB Foundation, which Carl-Ernst Büchting established
and named after his parents Annemarie and Karl Büchting,
has promoted social, church and cultural institutions and
projects for many years, mainly in Klein Wanzleben and his
second home Einbeck.

Carl-Ernst Büchting was a businessman and responsible
citizen of the world with all his heart. He played a great part
in building and shaping KWS.

Tribute I 7

Dr. Carl-Ernst Büchting

* September 6, 1915 † May 1, 2010

• Honorary Fellow of the Georg August University of Göttingen

• Honorary Citizen of Klein Wanzleben

• Bearer of the Grand Order of Merit of the Federal Republic of Germany

• Bearer of the Order of Merit, First Class, of the Federal State of Lower Saxony

• Honorary President of ASSINSEL

(Association Internationale des Sélectionneurs pour la Protection des Obtentions Végétales)

• Honorary Chairman of the Association for the Promotion of Private Plant Breeding in Germany (GFP)

• Honorary Member of the International Seed Federation

• Honorary Member of the German Plant Breeders’ Association

We honor the memory of one of the great men in the field of plant breeding.

Foreword of the Executive Board

Dr. Hagen Duenbostel

Dr. Christoph Amberger

Dr. Léon Broers

Philip von dem Bussche (CEO)

Finance, Controlling, Legal,

Corn, Cereals, Marketing

Research and Breeding,

Corporate Affairs, Sugarbeet,

Information Technology

Energy plants

Human Resources

We are pleased to report on another successful fiscal
year. KWS has met its targets and in some cases even
surpassed them. We have been growing in solid fashion
for years, largely unaffected by economic fluctuations.
Net sales rose again in fiscal 2009/2010 by just over 5%
to €754 million. Operating income (EBIT) improved by
about 6% to €82 million, despite a sharp intensification of
our research and development activities. That work ena-
bles our agricultural customers to achieve progress in
yields of 1– 2% a year.

This positive performance is due largely to our employees.
KWS SAAT AG and its 53 subsidiaries and associated
companies in 70 countries employ some 3,500 people
world-wide, almost 9% more than a year ago. Our rapid
growth over the past few years means that we have to adapt
administrative processes, above all for our international
business. We are pooling central administrative functions
at regionally responsible Service Centers and strengthening
them to create the capacities needed for future growth.
That will also divert workloads from our core activities –
developing varieties and producing and selling seed. The
objective of this reorganization is to improve the quality of
our internal services and secure further growth through
cost-effective means.

Corn business developed extremely well again in the year
under review, largely as a result of the good varietal per-
formance. We won market share in both Europe and North
America. One of the contributing factors to this strong
showing was the approximately 20% increase in sales of
energy corn in Germany. KWS already generates a total of
17% of its consolidated net sales with seed for energy
production. The high world market prices for sugar bol-
stered sales of sugarbeet seed. Business stabilized in the
countries covered by the European Sugar Market Regime,
despite a slight decline in cultivation areas, and picked up
sharply outside the EU 27. Sales of herbicide-tolerant sug-
arbeet (Roundup Ready®) in the U.S. remained positive, for
example. Farmers there already plant these genetically im-
proved varieties on 95% of all sugarbeet acreage. How-
ever, official approval for them was revoked by a court
ruling in August 2010, due to the fact that an environ-
mental impact statement (EIS) had not been prepared
for the original approval process conducted by the U.S.
Department of Agriculture.

Nevertheless, the USDA has announced that continued
production of Roundup Ready® sugarbeet will be possible
under certain conditions until the EIS has been completed.

The Cereals Segment was not able to match its net sales
for the exceptional previous year due to low world market
prices at the time of the fall 2009 sowing season. It never-
theless again made a gratifying contribution to the KWS
Group’s income for the year.

Our research and breeding activities focus on traditional
methods and cutting-edge biotechnology and genetic
engineering. Since the latter is controversial in Europe and
especially in Germany, we endeavor to foster intensive social
dialogue on this topic, guided by our maxim of creating the
greatest possible transparency.

One reflection of this is the fact that our CEO of many years
and the current Chairman of the Supervisory Board,
Dr. Dr. h.c. Andreas J. Büchting, was awarded the prestig-
ious Arthur Burkhardt Prize for his achievements in modern
plant breeding in conjunction with his transparent commu-
nication of the related findings to society. The foundation’s
Board of Trustees especially emphasized Büchting’s com-
mitment in establishing and successfully steering the
German plant genome research program GABI.

We thank our customers and shareholders for their trust in
the performance of our products. The personal contribu-
tions made by our employees and the relationship of trust
and cooperation with our business partners were crucial to
KWS’ success in the past fiscal year.

With best regards from Einbeck on behalf of the entire
Executive Board,

Philip von dem Bussche
Chief Executive Officer

Foreword of the Executive Board I 9

Spotlight topic:
China – a growing giant

Chinese farmers cultivate an average of eight mu of arable land, or half a hectare each. Farming on this very

finely-structured basis, China, the most populous country in the world, has now become self-sufficient.

If this self-sufficiency is to be maintained in the face of a growing population and shrinking cultivation areas,

progress in Chinese agriculture is essential – and the potential is enormous.

China – since 2010 the world’s second-largest economy
The Chinese economy is growing dynamically – and with
it China’s prosperity. The standards of living in the major
cities of this vast country are catching up with those in the
Western world. One key indicator of this is the growing
demand for secondary food commodities and processed
food, such as meat and sugar. The German Sugar Asso-
ciation (WVZ) notes that per-capita sugar consumption in
China has increased from 9 kg to 11 kg per annum in the
space of three years – and there is still enormous potential
for growth. The figure for Germany has been constant at
an annual 39 kg per person for years. China thus faces an
immense challenge in satisfying its population of 1.3 billion:
It has around 10 percent of the globally available agricul-
tural land but has to feed some 20 percent of the world’s
population. Given that the development of further culti-
vation areas is possible to a very limited extent, the only
solution is to increase the yield per unit area. Since China
laid the foundation for a freer market economy by joining
the WTO in 2001, foreign companies can operate in the
agricultural sector with an eye to a longer-term future.

With its more than 30 years of experience in China, KWS
already has crucial know-how in the market there. As a
plant breeder that focuses on the moderate climatic zone,
we can help strengthen the country’s agriculture with our
high-yielding varieties.

Great potential for increasing yields:
China’s agricultural sector
Apart from various types of vegetables, corn and rice
are the most important crops grown in China. Production
conditions there are unique worldwide: Although there is
an extreme shortage of land, there is a vast pool of labor
– some 44% of the workforce is employed in agriculture.

That means that labor-intensive crops such as fruit and
vegetables can be produced at a very low cost, resulting in
a competitive advantage on the world market.

Cereals, corn and oil seed are gaining ground in China.
According to the Food and Agriculture Organization of
the United Nations (FAO), the country’s meat produc-
tion has more than doubled in the past 20 years. That
trend is accompanied by growing demand for corn, the
country’s most important fodder crop. In addition, the
Chinese government has declared corn, rice and cereals
to be “strategic crops” and has since promoted cultivation
of them more intensively in order to secure the food supply
for its people.

Thanks to the large labor force engaged in agriculture,
China achieves yields in excess of the global average.
Nevertheless, there is huge potential to increase them:
According to the FAO, the 2009 corn harvest in China was
just 5 tons per hectare, while yields twice as high have been
achieved in highly productive corn cultivation countries in
recent years.

A growing market for high-yield seed
Plant breeding can make a major contribution to increasing
productivity in agriculture in China. Farmers there are still
trying to counter their seed’s lower yield potential with
higher sowing densities. However, demand for high-quality,
certified seed is growing gradually. Consequently, all plant
breeding technologies are now in use in China. “Green
genetic engineering” is also used, especially in cotton.
Genetically modified plants are cultivated on over 3.7 million
ha, making China one of the world’s largest growers of
these crops.

Left: Wang Sanyun, Governor of Anhui Province, talking to Chief Financial Officer Dr. Hagen Duenbostel during his visit to Einbeck.

Right: Corn harvest, Chinese-style: KWS employees in Heilongjiang Province.

KWS in China – many years of market experience,
reliable partnerships
China’s seed market has not yet undergone consolidation.
In particular, no single player in the corn market has a
share of more than three percent. Breeding companies
usually sell their products through wholesalers or directly
to private “seed shops” – very small dealers with their own
farming operations and local demonstrations. KWS’ first
contacts with China were at the end of the 1970s. Together
with the local firms we now partner with, we have estab-
lished ourselves in the sugarbeet sector and now have a
market share of 40% in that field.

China is a key market of the future for KWS. The People’s
Republic has a corn cultivation area of 30 million ha, second
only to the U.S., and that figure is on the rise. More than
80% of the area is in the moderate climatic zone and thus a
potential target for corn varieties from KWS’ portfolio. Some
of our varieties have already been awarded sales approval
and are distributed through our longstanding partners.

In order to adapt our corn varieties even better to conditions
in China, in 2009 we founded a service company charged
with conducting research in Lower Saxony’s partner province
of Anhui. There are good conditions there for establishing
research partnerships with local universities and creating the
basis for KWS to advise Chinese farmers. In addition, work
has been started on setting up a trial location for corn in Anhui.

We also aim to establish the KWS brand permanently in
China. Consequently, we will begin selling corn under the
typical KWS name and logo in fiscal 2010/2011.

Seed shops in Harbin

Intellectual property rights

The People’s Republic has national plant variety protection laws and
conducts official variety testing in the provinces. China is a member of
the International Union for the Protection of New Varieties of Plants
(UPOV) and joined the WTO in 2001.

Although the number of legal proceedings relating to intellectual prop-
erty rights is relatively low in the People’s Republic, it should be noted
that the Chinese legal system has a strong culture of mediation and
out-of-court settlement. There is steadily growing legal security regard-
ing protection of intellectual property.

It’s not enough to want something.
You also have to be able to do it.«

Paul Gauselmann, inventor and entrepreneur

Before you can reap the harvest you need seed – and that means the development of high-

yielding varieties. Over the last ten years, we have increased our investments in research

and development by about 6% per year to the current level of about 98 million euros.

Report of the Supervisory Board

relevant information on planning, the business perform-
ance and situation of the company and the KWS Group,
including the risk situation, risk management and compli-
ance. Following thorough deliberations, the Supervisory
Board approved the submitted measures and business
transactions requiring its consent. Its detailed discussions
focused on corporate policy, corporate and financial plan-
ning, large individual projects, the competitive situation,
product development, risk management, the general de-
velopment of the various businesses and profitability. The
Chairman of the Supervisory Board was also in close bilat-
eral contact with the CEO and the individual members of
the Executive Board outside of the meetings of the Super-
visory Board. In addition, there were monthly meetings
between the Chairman of the Supervisory Board and the
Executive Board as a whole, where special occurrences
and developments and the general development of the
various businesses were discussed.

The full Supervisory Board held five regular meetings in
fiscal 2009/2010. Its members participated in all of the
meetings, with the exception of one member who was
unable to attend two meetings due to illness.

Focal areas of deliberations
The focus of the meeting of the Supervisory Board to dis-
cuss the financial statements on October 28, 2009, was
to examine and approve the financial statements of KWS
SAAT AG and the consolidated financial statements as of
June 30, 2009. The Supervisory Board also discussed
measures to expand our activities in China. It adopted the
resolution proposing an adjustment to the Supervisory
Board’s compensation to the Annual Shareholders’ Meet-
ing and discussed the results of its efficiency review, which
was conducted for fiscal 2008/2009 using a questionnaire.
At this meeting, the Supervisory Board also extended the
contract of employment of Dr. Hagen Duenbostel for a term
of five years as of July 1, 2010, at the proposal of the Com-
mittee for Executive Board Affairs.

At its meeting on December 16, 2009, the Supervisory
Board dealt with the key strategic question of identifying,
acquiring, encouraging and retaining qualified employees.
The Supervisory Board also heard reports on the current
performance of our cereals and rapeseed breeding work.
It was then given an overview of sugarbeet and corn breed-
ing on March 10, 2010. In addition, the March meeting is
regularly used to discuss research and development issues
and, every second year, the KWS Group’s strategic plan-
ning, which covers a timescale of ten years.

Dr. Dr. h. c. Andreas J. Büchting, Chairman of the Supervisory Board

The gratifying annual financial statements of the KWS Group
prove once again that KWS is able to achieve sustainable
operational growth despite increasing volatility in global
agricultural markets. This can be explained by the fact that
the quality of seed is a key factor with a major impact on
yields and thus on farmers’ potential income. The success
of the farmer and that of the plant breeder are closely inter-
twined. Steady increases in yield require long-term and
future-oriented measures. Consequently, in view of the good
annual financial statements in the past, the Supervisory
Board sees its role not just in exercising its control function,
but also and especially in constantly accompanying the
Executive Board in strategic affairs.

This constructive relationship of trust means that one of the
main tasks of the Supervisory Board is to provide stimuli
and fresh ideas to the Executive Board. Moreover, it exten-
sively discusses the Executive Board’s corporate strategy.
In this spirit, the Supervisory Board carefully accompanied,
advised and monitored the management of KWS SAAT AG
in accordance with the law and the company’s Articles of
Association throughout fiscal 2009/2010. It was involved at
an early stage of all key decisions of strategic and funda-
mental importance for the company and was provided by
the Executive Board with regular, prompt and extensive
information in written and oral form. The reports by the
Executive Board to the Supervisory Board contained all

The focus of the final meeting in fiscal 2009/2010 on
June 23, 2010, was corporate planning and approval of
the budgets for fiscal 2010/2011, as well as further options
for developing our cereals business. At this meeting, the
Supervisory Board also adopted the new compensation
system for the Executive Board, which had been presented
by the Committee for Executive Board Affairs at the March
meeting, and the resultant specific modifications to all con-
tracts with Executive Board members effective July 1, 2010.

Annual and consolidated financial statements
and auditing
Deloitte & Touche GmbH Wirtschaftsprüfungsgesellschaft,
Hanover, the independent auditor chosen at the Sharehold-
ers’ Meeting on December 17, 2009, and commissioned by
the Audit Committee, has audited the financial statements of
KWS SAAT AG that were presented by the Executive Board
and prepared in accordance with the provisions of the
German Commercial Code (HGB) for fiscal 2009/2010 and
the financial statements of the KWS Group (IFRS consoli-
dated financial statements), as well as the Management
Report of KWS SAAT AG and the KWS Group Management
Report, including the accounting reports, and awarded them
its unqualified audit certificate. In addition, the auditor con-
cluded that the audit of the financial statements did not reveal
any facts that might indicate a misstatement in the declara-
tion of compliance with the German Corporate Governance
Code issued by the Executive Board and Supervisory Board
(cf. Clause 7.2.3 of the German Corporate Governance Code).

The Supervisory Board received and discussed the finan-
cial statements and Management Reports of KWS SAAT
AG and the KWS Group, along with the report by the in-
dependent auditor of KWS SAAT AG and the KWS Group
and the proposal on utilization of the net profit for the year
made by KWS SAAT AG, in due time. The financial state-
ments, Management Reports and audit reports by the in-
dependent auditors were submitted to all members of the
Supervisory Board. It also held detailed discussions of ques-
tions on the agenda at its meeting to discuss the financial
statements on October 27, 2010. The auditor took part in
the meeting and reported on the main results of the audit
and was also available to answer additional questions and
provide further information for the Supervisory Board. Ac-
cording to the report of the independent auditor, there were
no material weaknesses in the internal control and risk
management system in relation to the accounting process.
There were also no circumstances that might indicate a
lack of impartiality on the part of the independent auditor.
The small extent of services additionally provided by the
independent auditor can be seen from the Notes.

In accordance with the final results of its own examination,
the Supervisory Board endorsed the results of the audit
with no objections, among other things as a result of the
vote by the Audit Committee. It approved the annual finan-
cial statements of KWS SAAT AG and the consolidated
financial statements of the KWS Group, as well as the Man-
agement Report of KWS SAAT AG and the KWS Group
Management Report. It also endorses the proposal by the
Executive Board to the Annual Shareholders’ Meeting on
the appropriation of the profits of KWS SAAT AG after hav-
ing examined it.

Corporate Governance
One focal issue in further development of the Corporate
Governance Standards was implementation of the recom-
mendations in the German Corporate Governance Code
on remuneration of the Supervisory Board and Executive
Board. While the new compensation system for the Super-
visory Board was adopted by the Annual Shareholders’
Meeting on December 17, 2009, the new system for Exec-
utive Board compensation is to be submitted to the Share-
holders’ Meeting on December 16, 2010, for approval. The
system is described in detail in this year’s Compensation
Report (page 20).

The Supervisory Board conducted its efficiency review for
fiscal 2009/2010 with external assistance from the Deut-
sche Agentur für Aufsichtsräte, a company that advises
supervisory boards. As part of this, individual meetings
were held with all members of the Supervisory Board and
two members of the Executive Board. The results of these
interviews were incorporated in a report on the efficiency
review, which the Supervisory Board discussed at its meet-
ing on October 27, 2010.

At their meeting on October 27, 2010, the Executive Board
and Supervisory Board discussed updating the declaration
of compliance with the German Corporate Governance
Code and issued a new declaration in accordance with
Section 161 AktG (German Stock Corporation Act). It is
permanently available to the public on KWS SAAT AG’s
Website, www.kws.com. There were no conflicts of interest
on the part of Supervisory Board members in the period
under review.

Supervisory Board Committees
In order to ensure that it discharges its duties efficiently, the
Supervisory Board has established a Committee for Ex-
ecutive Board Affairs, an Audit Committee and a Nominat-
ing Committee.

Report of the Supervisory Board I 15

Supervisory Board

Dr. Dr. h. c. Andreas J. Büchting
Einbeck
Chairman

Dr. Arend Oetker
Berlin
Deputy Chairman

Hubertus von Baumbach
Ingelheim

Cathrina Claas-Mühlhäuser
Frankfurt am Main

Jürgen Bolduan
Einbeck
Chairman of the Central Works
Committee of KWS SAAT AG

Dr. Dietmar Stahl
Einbeck
Employee Representative

The Committee for Executive Board Affairs convened
on September 14, 2010, and also corresponded in writing
on several occasions. The various options for adjusting the
Executive Board’s compensation in accordance with the
German Appropriateness of Management Board Compen-
sation Act (VorstAG) were discussed at the meeting and
the full Supervisory Board adopted a proposed resolution.
The meeting also discussed renewing the contract of em-
ployment with Dr. Hagen Duenbostel and recommended to
the Supervisory Board that it be extended from July 1, 2010,
until June 30, 2015.

The Audit Committee held three meetings and three tele-
phone conferences in fiscal year 2009 / 2010, in which it
discussed the interim reports to be published, among other
things. The Audit Committee also initiated extensive meas-
ures to expand the risk and compliance management sys-
tems in fiscal 2009/2010. These systems now comply with
the more stringent requirements of the German Accounting
Law Modernization Act (BilMoG) and are presented in this
year’s Management Report beginning on page 49. In its
meeting in the new fiscal year on October 7, 2010, the fi-
nancial statements and accounting were discussed in the
presence of the independent auditor. The independent au-
ditor reported in detail on all findings and occurrences that
were of importance to the Supervisory Board in discharg-
ing its duties and that had arisen in the course of its audit
of the financial statements; the auditor was also available
to answer additional questions and provide further informa-
tion for the Supervisory Board. The independent auditor
also presented the results of this year’s special audits to
the Audit Committee. According to the report of the inde-
pendent auditor, there were no material weaknesses of the
internal control and risk management system with regard
to the accounting process.

In addition, the Audit Committee obtained the statement of
independence from the auditor in accordance with Clause
7.2.1 of the German Corporate Governance Code and
monitored the auditor’s independence. The Audit Committee
also satisfied itself that the regulations on internal rotation

pursuant to Section 319 a (1) No. 4 HGB were observed by
the independent auditor.

Composition of the Supervisory Board
The composition of the Supervisory Board did not change
in fiscal year 2009/2010. Its composition and that of the
Audit Committee already comply with the requirements of
the amended Sections 100 (5) and 107 (4) of the AktG
(German Stock Corporation Act), under which at least one
independent member must have expertise in the fields of
accounting and auditing of financial statements.

The Supervisory Board expresses its thanks to the Execu-
tive Board and all employees of KWS SAAT AG and its
subsidiaries once more for their successful contributions
and their commitment in fiscal 2009/2010.

Dr. Carl-Ernst Büchting
Dr. Carl-Ernst Büchting, the Honorary Chairman of our Su-
pervisory Board, passed away at the age of 94 on May 1,
2010. As a representative of the fifth generation of the found-
ing families of the “Zuckerfabrik Kleinwanzleben, vormals
Rabbethge & Giesecke AG”, Carl-Ernst Büchting joined the
Executive Board of what is now KWS SAAT AG in 1951. In
his capacity as Chief Executive Officer from 1952 to 1978
and as Chairman of the Supervisory Board from 1978 to
1994, he played a major role at the helm of the company.
Our company is largely what it is today thanks to his achieve-
ments, to which we pay tribute on pages 6-7.

We will honor and cherish his memory with deep gratitude.

Einbeck, October 27, 2010
KWS SAAT AG

Dr. Dr. h. c. Andreas J. Büchting
Chairman of the Supervisory Board

Corporate Governance Report

The focus of good corporate governance and control at
KWS SAAT AG is respect for people’s interests: for that of
our customers, business partners, shareholders, employees
and fellow human beings in general. Our actions are guided
by the values of an international agricultural company with
a tradition of family ownership. Reliability, team spirit, sus-
tainability, foresight and independence are vital elements of
this. We comply with, among other things, the relevant legal
requirements regarding managing and supervising German
stock corporations and the internationally and nationally
acknowledged standards of good and responsible corpo-
rate governance (German Corporate Governance Code).

The complete declaration on corporate governance in ac-
cordance with Section 289 a of the German Commercial
Code (HGB), which also contains the compliance declara-
tion in accordance with Section 161 AktG (German Stock
Corporation Act), has been published in the Internet at
www.kws.com > Investor Relations > Corporate Governance.

The following principles of corporate governance are of es-
pecial importance to the Executive and Supervisory Boards:
• A relationship of trust and cooperation between the
Executive Board and the Supervisory Board
• Observance of all statutory and internal regulations,
policies and guidelines (compliance)
• The greatest possible transparency in our business
activities – from research and development to account-

ing as well as risk management

• Open, regular and consistent communication with all

stakeholders

• Performance-related compensation
• Responsibility for the environment and society

The Executive and Supervisory Boards have complied in
the past with nationally and internationally acknowledged
standards of value-oriented corporate governance and
control. The development of important new content and
tasks was discussed as part of corporate governance, in
particular in the wake of the German Accounting Law
Modernization Act (BilMoG).

The Annual Shareholders’ Meeting – the top
decision-making body
The Annual Shareholders’ Meeting is the highest-level
decision-making body of KWS SAAT AG. All shareholders
are given a written invitation at least once a year through
their depositary bank. It is traditionally held at the company’s
headquarters in Einbeck. Shareholders can exercise their
rights to speak and obtain information there, as well as

vote on important company matters. Each share entitles
its holder to one vote. To make it easier for shareholders to
cast their votes, they can choose to be represented by a
proxy who is named by the company and who votes in
accordance with the shareholders’ instructions. KWS also
publishes the Notice of the Annual Shareholders’ Meeting,
the power of attorney and voting instruction forms for prox-
ies and the annual financial statements in the Internet.

Executive and Supervisory Boards – value-oriented
collaboration
The Executive Board develops the company’s strategy,
coordinates it with the Supervisory Board and ensures that
it is implemented (the company’s Articles of Association
and the bylaws of the Executive Board, Supervisory Board
and Audit Committee are published on our homepage at
www.kws.de). The members of the Executive Board bear
joint responsibility for managing the company.

Compliance with statutory regulations and the company’s
ethical principles are governed at KWS by the Code of
Business Ethics, an abridged version of which is likewise
published on the homepage. It offers employees a clear
guideline as to what they are allowed to do in all their busi-
ness activities. The issue of compliance has increased in
complexity as a result of KWS’ strong international growth
and greater statutory requirements. That is why we have
established a separate corporate function in Einbeck to pro-
vide legal advice for the operating units throughout the
KWS Group. For example, a Compliance Officer assists
the Executive Board and all the company’s units in apply-
ing laws and regulations and implementing suitable moni-
toring and control instruments.

Career – men and women have equal opportunities
The Executive Board is careful to ensure diversity in filling
management posts. Teams are made up of persons with a
wide range of different skills, talents and inclinations. At the
KWS Group, women have the same career opportunities
as men and hold important functions, for example in Corpo-
rate Controlling, Corporate Law, Human Resources, Corpo-
rate Marketing and Compliance Management. In addition,
many female scientists occupy key positions in Product
Development. By contrast, few women choose to work in
seed production and sales.

Report of the Supervisory Board I Corporate Governance Report I 17

Compliance declaration in
accordance with Section
161 AktG (German Stock
Corporation Act)

The Executive Board and Supervisory Board of KWS SAAT
AG declare in compliance with Section 161 AktG (German
Stock Corporation Act) that – with the following exceptions –
the company has complied with the recommendations of
the German Corporate Governance Code in the version
dated June 18, 2009, since the last compliance declaration
on October 28, 2009, and has complied, does now comply,
and will comply in the future with the recommendations of
the German Corporate Governance Code in the version dat-
ed May 26, 2010.

KWS SAAT AG publishes its consolidated financial state-
ments and interim reports within the period of time defined
in the regulations for the Prime Standard of the German
Stock Exchange. It does not comply with the recommended
deadlines of 90 and 45 days respectively in Clause 7.1.2 of
the German Corporate Governance Code because of the
seasonal course of its business.

KWS SAAT AG’s Articles of Association do not foresee
shareholders casting their ballots without taking part in the
Annual Shareholders’ Meeting, either by postal ballot or in
the form of electronic communications (postal ballot, DCGK,
see Section 2.3). To exercise their voting rights at the Annual
Shareholders’ Meeting on December 16, 2010, sharehold-
ers who will not attend in person can have their votes cast
by a proxy of the company.

Einbeck, October 2010

The Supervisory Board

The Executive Board

The Supervisory Board – a blend of diverse skills
and experience
The Supervisory Board appoints, supervises and advises
the Executive Board and is directly involved in decisions
that are of fundamental importance for the company. This
body, which was elected for five years in December 2007,
consists of six members: two employee representatives,
who are elected by the workforce, and four shareholder
representatives chosen by the Annual Shareholders’ Meet-
ing. The composition of the Supervisory Board aims to
reflect as broad a range of skills and experience as possi-
ble. At least one quarter of the members of the Supervisory
Board elected by the Annual Shareholders’ Meeting should
be female. The current board fulfills these objectives.

Strengthening trust – transparent communication
We aim to strengthen the trust of our shareholders, busi-
ness partners, employees and the public through open-
ness and transparency. We provide regular information on
KWS’ business situation in the form of quarterly reports.
We present the company to domestic and foreign investors
at many roadshows. We regularly publish the latest presen-
tations on our homepage so that all shareholders receive
the same information at the same time. The financial calen-
dar gives information on the most important dates in the
year. In addition, all legally prescribed notifications and press
releases are published immediately in the Internet. Manage-
ment regularly takes part in various information events in
order to inform the public about KWS’ responsible use of
modern plant breeding methods and biotechnology.

Compensation Report

The Supervisory Board’s compensation was set by the
Annual Shareholders’ Meeting on December 17, 2009, at the
proposal of the Executive Board and Supervisory Board.
It is based on the size of the company, the duties and respon-
sibilities of the members of the Supervisory Board and the
company’s economic situation. The remuneration includes
not only a fixed payment, but also a performance-related
component. Accordingly, Supervisory Board members re-
ceive fixed compensation of €28,000 and a performance-
related payment of €400 for each full €0.10 by which the
average consolidated net income per share for the past three
fiscal years exceeds €4.00.

The Chairman of the Supervisory Board receives three
times and his or her deputy one-and-a-half times the total

compensation of an ordinary member. There is currently
no extra compensation for them for work on committees.
The Chairman of the Audit Committee receives €25,000.
Ordinary members of the Supervisory Board receive
€5,000 for their work on the Committee for Executive Board
Affairs and €10,000 for their work on the Audit Committee.
The members of the Supervisory Board are reimbursed for
all expenses – including value-added tax – that they incur
while carrying out the duties of their position.

The total compensation for members of Supervisory Board
therefore amounts to €407 thousand (€360 thousand), ex-
cluding value-added tax. In all, 32% (80%) or €129 thousand
(€288 thousand) of the total compensation is perform-
ance-related.

Supervisory Board compensation 2009 / 10 in €

Dr. Andreas J. Büchting*

Dr. Arend Oetker**

Hubertus v. Baumbach***

Jürgen Bolduan

Cathrina Claas-Mühlhäuser

Dr. Dietmar Stahl

Fixe d

84,000.00

42,000.00

28,000.00

mittees

W ork o n
c o m

P erfor m ance-
relate d

Total

0.00

25,000.00

0.00

15,000.00

0.00

45,600.00

129,600.00

22,800.00

15,200.00

64,800.00

68,200.00

43,200.00

58,200.00

43,200.00

238,000.00

40,000.00

129,200.00

407,200.00

* Chairman ** Deputy Chairman *** Chairman of the Audit Committee

The company has also taken out a D&O policy covering the
members of the Supervisory Board. The deductible arranged
amounts to 1.5 times the total of fixed compensation.

for management board members at comparable compa-
nies. It is made up of a fixed and a performance-related
component.

The compensation of members of the Executive Board
has been set by the Supervisory Board and is based on
the size and activity of the company, its economic and
financial situation and the level and structure of compensation

The basic compensation is paid as a monthly salary. Apart
from these salaries, there is also non-monetary compensa-
tion, such as a company car or a phone.

Executive Board compensation 2009 / 10 in €

Philip von dem Bussche*

Dr. Christoph Amberger

Dr. Léon Broers

Dr. Hagen Duenbostel

* Chief Executive Officer

B asic c o m -
p ensatio n

B enefits in
kin d

P erfor m ance-
relate d

Total

225,000.00

23,451.38

546,548.62

795,000.00

180,000.00

22,115.87

547,884.13

750,000.00

180,000.00

17,918.80

318,225.14

516,143.94

180,000.00

15,454.98

554,545.02

750,000.00

765,000.00

78,941.03

1,967,202.91

2,811,143.94

Corporate Governance Report I Compensation Report I 19

There are also accident insurance policies for the mem-
bers of the Executive Board. The performance-related
compensation is calculated on the basis of an individual
percentage of the net profit for the year for the KWS Group.
Payments for duties performed in subsidiaries and associ-
ated companies were €24 thousand (€33 thousand) and
are offset against the performance-related payment. There
is an absolute upper limit for the variable compensation.

Pension commitments in €

Dr. Christoph Amberger

Dr. Hagen Duenbostel

Pension obligations are granted in the form of a direct obliga-
tion to provide benefits and a defined contribution plan, with
the annual anticipated pensions ranging between €130
thousand and €140 thousand. In fiscal 2009/2010, €64
thousand (€121 thousand) was allocated to the pension
provisions in accordance with IAS 19 for pension obligations
to members of the Executive Board. Pension provisions
totaling €1,203 thousand (€1,139 thousand) were formed for
the members of the Executive Board of KWS SAAT AG:

07 / 01 / 2009

P erso n nel
ex p enses

ex p enses
Interest

06/ 30 / 2010

851,690.00

50,897.00

54,232.00

956,819.00

287,418.00

-54,976.00

13,911.00

246,353.00

1,139,108.00

-4,079.00

68,143.00

1,203,172.00

The change in the pension agreement from a direct obliga-
tion to a defined contribution plan effective July 1, 2010,
resulted in reversal of part of the pension provisions. Com-
pensation of former members of the Executive Board and
their surviving dependents amounted to €1,003 thousand
(€1,029 thousand). Pension provisions recognized for this

group of persons amounted to €2,100 thousand (€2,414
thousand) as of June 30, 2010.

No loans were granted to members of the Executive Board
and Supervisory Board in the year under review.

Greater emphasis on long-term, performance-related
components for the Executive Board

The German Appropriateness of Management Board
Compensation Act (VorstAG), a law that specifies guide-
lines for reasonable remuneration of board members of
stock corporations, came into effect on August 5, 2009.
The Supervisory Board adopted the necessary changes
to the compensation structure effective July 1, 2010. The
new compensation system for KWS SAAT AG’s Executive
Board aims to promote sustainable development of the
company. It is characterized by a high degree of depend-
ence on the KWS Group’s earnings (net income for the
year) and return on sales (ROS), as well as the Executive
Board’s performance. The system and the level of Execu-
tive Board compensation are regularly reviewed and ad-
justed by the Supervisory Board.

This compensation system was adopted by the Supervisory
Board at its meeting on June 23, 2010, at the proposal of
the Committee for Executive Board Affairs and applies to
all Executive Board members as of July 1, 2010.

It comprises the following components
(“total compensation”):
1. A basic fixed annual salary
2. A variable payment in the form of a performance-related bonus

3. A variable payment in the form of a long-term incentive
based on the KWS stock price
4. Any special payments
5. Benefits in kind, other compensation components
and pension commitments.

The basic annual salary, bonus payment and other
remuneration, including any special payments, are also
jointly termed “cash compensation” in the following.

The cash compensation is limited to €750,000 per fiscal
year. If the company generates sustainable average net
income of more than €70 million a year in two successive
fiscal years, this limit will be subsequently increased to
€800,000 and, in the case of sustainable average net in-
come of more than €100 million a year in two successive
fiscal years, to €900,000.

1. Basic annual salary
The basic gross annual salary is €216,000. The Chief
Executive Officer receives an extra “CEO bonus” of 25%
on top of the basic annual salary. This CEO bonus is
not taken into account in assessing whether the cash com-
pensation limit has been exceeded.

The LTI payment cannot exceed a maximum of two-and-a-
half times the payments made to acquire the shares in ques-
tion (“LTI cap”). Members of the Executive Board are also
obligated to reinvest a third of their gross LTI payment in
KWS stock.

4. Special payments
At its discretion, the Supervisory Board can award individ-
ual members of the Executive Board a voluntary one-time
“special payment” for exceptional services and achieve-
ments after the end of a fiscal year. This special payment
is limited to the amount of one annual basic salary.

5. Other compensation components
Members of the Executive Board are provided with means
of transport and communication. The company pays the
premiums for an accident insurance policy. Members of the
Executive Board are also covered by a D&O insurance
policy taken out by the company to protect against damage
and risks from their professional activity. The deductible
payable by Executive Board members under the D&O in-
surance has also been adjusted in line with new statutory
provisions and is now 10% of the amount of loss or damage,
up to a maximum of 1.5 times the basic salary. Premiums
for any reinsurance policies of Executive Board members
are borne by the members themselves. In addition, mem-
bers of the Executive Board receive payments to discharge
the employer’s contribution to social insurance as well as
various pension commitments, which are disclosed in the
annual Compensation Report.

Severance payment cap, commitments in the event
of a change of control
Severance pay if an Executive Board member’s activity is
terminated prematurely for a reason other than for good
cause and commitments due to premature termination
of an Executive Board member’s activity as a result of a
change of control are capped at the maximum limits speci-
fied in the German Corporate Governance Code under new
contracts of employment with Executive Board members.

A corresponding compensation system based on the
company’s long-term success has also been introduced in
parallel for KWS’ second-tier management.

2. Performance-related bonus payment
The “performance-related bonus payment” depends on
the KWS Group’s earnings. It is calculated on the basis of
the “average sustained net income for the year,” i.e. the
average for the sustainable net incomes for the past three
fiscal years. The sustainable net income for the year is KWS’
net income for the year according to the IFRS before deduc-
tion of the share of minority interests in the net income for
the year as reported in the KWS Group’s Annual Report and
before deduction of performance-related bonus payments
and the LTI payments for all Executive Board members, with
adjustment for any special effects.

If the average sustained net income achieved for the year
is up to and including €45 million, the gross performance-
related bonus payment is 0.9% of the figure achieved; if
the average sustained net income achieved for the year is
up to and including €65 million, 0.6% of the amount ex-
ceeding €45 million is additionally paid; and if the average
sustained net income achieved for the year is more than
€65 million, 0.3% of the amount exceeding €65 million is
additionally paid.

3. Long-term incentive based on the KWS stock price
Members of the Executive Board are obligated to acquire
shares in KWS SAAT AG every year corresponding to in a
freely selectable percentage ranging between 20% and
50% of the gross performance-related bonus payment.
Members may sell these shares at the earliest after a regular
holding period of five years as of the time they are acquired.
When the holding period ends, the members of the Executive
Board receive a payment (“LTI payment”) calculated on
the basis of the performance of KWS SAAT AG’s stock and
the KWS Group’s return on sales over the holding period.
The following formula is used for this:

(LTI average stock price x number of shares acquired)
./. ROS markdown

The “LTI average stock price” is determined on the ba-
sis of the average closing prices of the KWS share on the
Frankfurt Stock Exchange at the end of each quarter dur-
ing the regular holding period.

The LTI payment may be reduced if the average return on
sales (ROS), i.e. the KWS Group’s operating income di-
vided by net sales, falls below 10% in the holding period.

The markdown is then
25% if the average ROS is less than 10%,
50% if the average ROS is less than 9%,
75% if the average ROS is less than 8%,
100% if the average ROS is less than 7%.

Compensation Report I 21

The KWS share

KWS has grown continuously in the past five years, with its
net sales increasing by an average of more than ten per-
cent a year. In the same period, operating income (EBIT)
has risen above-proportionately by an average of about
15%. Negative weather influences, diseases and pests, the
growing importance of water and a rise in worldwide de-
mand for energy, in conjunction with a culti-vation area that
can hardly be increased further, constitute a major chal-
lenge to plant breeding, one that can only be overcome by
considerable research and development efforts.

More than 150 years of experience in breeding plants, our
independence as a medium-sized company with a long
tradition of family ownership and a solid equity base enable
us to conduct intensive research. As a result, we have
managed to double sugar yield per hectare to its current
level of twelve tons in the past 50 years, for example. Our
objective is to increase this figure to 20 tons by 2020.

As a publicly listed plant breeding company in Germany,
KWS attracts considerable attention from national and in-
ternational investors and analysts. We have won the great
trust of many players in the capital markets thanks to our
regular and open communication. It was no coincidence
that our investor relations work was acknowledged with the
2010 German Investor Relations Award, the winner of
which was chosen by 815 financial market experts from
19 countries. This is all the more gratifying given the fact
that KWS’ share fell almost 6% in fiscal 2009/2010, under-
performing the SDAX, which tends to reflect cyclical trends.
It seems that capital market players have a high regard for
KWS’ strategy and its long-term orientation. In an analysis
conducted over several years, Hauck & Aufhäuser found
that companies characterized by family ownership perform

Shareholder structure
on June 30, 2010

Families Büchting/
Arend Oetker/
Giesecke
56.1%

Tessner
Beteiligungs
GmbH
11.5%

Free float
32.4%

significantly better over the long term. The bank’s experts
regard one key reason for this as being that such compa-
nies usually focus on their established core business, are
often the market leader and have earned their position
through a successful blend of tradition and innovation.

In addition, a capital expense analysis by A.T. Kearney dem-
onstrates that enterprises that operate in sustainable fashion
typically have better medium-term economic prospects and
run less commercial risk. This is confirmed by a study by
the business consultants Mercer: Most scientific research
reveals positive interconnections between compliance with
environmental, social and governance aspects and the fi-
nancial performance of capital investments. KWS is a fitting
example of that.

Net sales of the KWS Group (5 years)
in millions of €

EBIT of the KWS Group (5 years)
in millions of €

+ ø 1 0 . 5 % p . a .

800

600

400

200

+ ø 1 5 . 3 % p . a .

6
0
/
5
0
0
2

7
0
/
6
0
0
2

8
0
/
7
0
0
2

9
0
/
8
0
0
2

0
1
/
9
0
0
2

6
0
/
5
0
0
2

7
0
/
6
0
0
2

8
0
/
7
0
0
2

9
0
/
8
0
0
2

0
1
/
9
0
0
2

Agenda of the Annual Shareholders’ Meeting
on December 16, 2010

The Company’s Executive Board hereby invites you to the

Annual Shareholders’ Meeting on Thursday, December 16, 2010, at 11 a.m.,
at the Company’s premises in 37574 Einbeck, Grimsehlstraße 31, Germany.

A G E N D A

1. Presentation of the approved financial statements of KWS SAAT AG, the financial statements of the KWS Group (con-
solidated financial statements) approved by the Supervisory Board, the Management Reports for KWS SAAT AG and
the KWS Group for the fiscal year from July 1, 2009, to June 30, 2010, the Report of the Supervisory Board and the Ex-
planatory Report by the Executive Board on the disclosures in accordance with Section 289 (4) and (5) and Section 315
(4) German Commercial Code (HGB)

2. Resolution on the appropriation of the net retained profit

3. Resolution on the ratification of the acts of the Executive Board

4. Resolution on the ratification of the acts of the Supervisory Board

5. Election of the external auditors of the financial statements of KWS SAAT AG and the consolidated financial

statements for the fiscal year 2010/2011

6. Resolution on the approval of the compensation system for members of the Executive Board

Financial calender

November 26, 2010
December 16, 2010
February 25, 2011
May 27, 2011
October 27, 2011

November 25, 2011
December 14, 2011

Key data of KWS SAAT AG

Securities identification number
ISIN
Stock exchange identifier
Transparency level
Index
Share class
Number of shares
Capital stock at June 30, 2010
Share price high January 4, 2010 (Xetra)
Share price low November 3, 2009 (Xetra)
Average number of shares traded
– in Xetra
– in floor trading in Frankfurt

Report on the 1st quarter of 2010/2011
Annual Shareholders’ Meeting in Einbeck
Report on the 2nd quarter of 2010/2011
Report on the 3rd quarter of 2010/2011
Annual press conference in Frankfurt;
Analyst conference in Frankfurt
Report on the 1st quarter of 2011/2012
Annual Shareholders’ Meeting in Einbeck

707400
DE0007074007
KWS
Prime Standard
SDAX, GEX
Individual share certificates
6,600,000
€19,800,000
€129.50
€110.00

4,567
337

KWS share I Agenda I Financial calendar I 23

Coming together is a beginning;
keeping together is progress;
working together is success.«

Henry Ford, American entrepreneur

1,000 colleagues work hand-in-hand at our headquarters in Einbeck, coordinating our

activities in 70 countries around the world.

KWS headquarters in Einbeck:

1 Foil greenhouses
2 Office building
3 Elite storehouse (corn/rapeseed)

4 Forum (Visitors’ Center)
5 Elite storehouse (sugarbeet)
6 Biotechnology Center

7 Greenhouse complex
8 Office and institute building
9 Power plant

10 Equipment hall
11 Workshop and Staff Rooms
12 Seed processing sugarbeet

Management Report of the KWS Group

Around the world, the agricultural industry is expected to produce continuous progress in yields, yet cultivation

area is limited to around 1.5 billion hectares – or just over 2,000 m2 per person to provide the food, fodder and

regenerative raw materials we need. However, approximately 50 % of the world’s harvests are destroyed by

disease, insect pests, negative weather influences and losses in transit and storage. Plant breeding, with its

high-yielding and also resistant varieties, has thus become a key factor in the agricultural production process.

Progress made in breeding lead to annual yield increases in agriculture of 1–2%.

KWS is tackling this challenge. Yet we are also aware
that nothing happens overnight in plant breeding. The
development cycle of a single variety lasts around
10 years. That means in terms of strategy that we have
to keep our product development efforts at as high
a level as possible. Consequently, we have increased
our investments in product development over the last
ten years by about 6% per year, so that they now
amount to almost 98 million euros. If we want to keep
our earnings at a constantly high level, we have to
meet additional R&D expenditure from organic growth
in the market. We again succeeded in doing that in
fiscal 2009/2010.

KWS keeps on growing
The KWS Group again increased its net sales in fiscal
2009/2010, growing them to €754.1 (717.2) million or
by 5.1% over the previous outstanding year. Net foreign
sales rose by 6.1% to €565.3 (533.0) million or 75% (74%)
of total revenues. On top of another good season in
North America, sales figures were also up in Southeastern
and Eastern Europe. Sharp increases were also posted
in Africa and the Middle East. Net sales in Germany rose
by 2.6% to €188.9 (184.2) million.

This growth in net sales was generated in the Corn and
Sugarbeet Segments. Corn increased its net sales by 8.4%
to €413.4 (381.5) million and now contributes 55% (53%) to
our total figure. The Sugarbeet Segment likewise grew its net
sales by 8.5% to €247.4 (228.0) million, accounting for 33%
(32%) of our total business volume. In contrast, net sales in
the Cereals Segment fell by 17% to €70.0 (84.3) million, or
9% of the KWS Group’s total net sales, as a result of poorer
winter cereals business. In the Breeding & Services Seg-
ment, external sales were €23.3 million, on a par with the
previous year’s €23.4 million.

Steady expansion of breeding and distribution
The expanding business volume is reflected in the develop-
ment of the cost of sales and functional costs. The cost of
sales rose by 6.6% to €406.1 (381.0) million on the back
of increased sales volumes, with gross profit increasing
to €348.0 (336.2) million. Selling expenses rose by 11.8%
to €128.6 (115.0) million, mainly due to expansion of our
distribution organization. Quantity-based sales commissions
and expenditures to strengthen our brand profile also con-
tributed to this increase. The share of selling expenses rel-
ative to net sales consequently increased to 17.1% (16.0%).
Research and development expenses were raised by 8.9%
to €97.5 (89.5) million to enhance product performance.
We also intend to expand our breeding activities successively
to safeguard the KWS Group’s high level of innovation.
Administrative expenses rose by 7.1% to €49.6 (46.3) million,
or 6.6% (6.5%) of net sales.

The balance of other operating income and other operating
expenses was €10.1 (– 7.5) million in the year under review.
The main factors in this were the reversal of provisions and
the positive performance of currencies in our growth markets
of Eastern and Southeastern Europe.

Operating income increases again
The KWS Group’s operating income rose by 5.8% to
€82.4 (77.9) million. Operating income at the Corn Seg-
ment improved to €31.7 (25.2) million as a result of the
increase in net sales in conjunction with positive economies
of scale and the reversal of provisions. Its contribution to
group income was 38.5% (32.3%). Income in the Sugar-
beet Segment surpassed our expectations, increasing by
50.0% to €34.8 (23.2) million and accounting for 42.2%
(29.8%) of group income. The Cereals Segment’s earnings
were impacted above all this year by weaker winter rye
business compared to the previous year. Operating income

New offices for 120 employees: Our old storehouse was converted into one of the most energy-efficient buildings in Germany – for which

it won an award from the German Ministry of Economics and Technology.

consequently fell to €10.5 (12.0) million, accounting for
12.7% (15.4%) of consolidated income. Our Breeding &
Services Segment posted virtually constant net sales,
but had to shoulder all the costs involved in expanding
our R&D activities and was also impacted by a decline
in internal royalties. The segment’s income therefore fell to
€5.4 (17.5) million and now accounts for 6.6% (22.5%) of
group income.

Net income remains constant
Net financial income/expense fell by €2.2 million to
€ – 4.9 (– 2.7) million. This was attributable to the
sharp decline in interest income as a result of the low
level of interest rates for financial assets and higher
interest expense for the greater funding required for

investments in expanding our capacities. The result from
ordinary activities rose to €77.5 (75.2) million. Total tax ex-
penditures were slightly higher at €26.0 (25.1) million, mean-
ing that the tax rate for the Group increased from 33.3% in
the previous year to 33.6%. Net income was €51.5 million,
slightly up over the previous year (€50.1 million). The return
on net sales after tax was 6.8% (7.0%).

Investments in research and development
As in the previous year, the KWS Group made large invest-
ments in assets to meet the high standards of seed produc-
tion and quality and to create the conditions for expanding
its breeding activities. Most of the capital spending was at
Einbeck, where a large greenhouse complex and a new of-
fice building for research and development were completed.

Management Report I KWS Group I 27

Commissioned in mid-2010, the energy-efficient greenhouse complex in Einbeck offers cutting-edge conditions for trials over an area the

size of a soccer field.

New production plants were also established in Europe
and the U.S. and a new breeding station was opened in
Russia. The KWS Group invested a total of €58.4 (61.1)
million in the year under review. Depreciation and amor-
tization was €22.0 (23.3) million, meaning that, once again,
investments exceeded depreciation by a significant margin.
Of the total investments by the KWS Group, 57.5% went to
Germany, 27.9% to the rest of Europe, 13.0% to North and
South America and 1.6% to other countries. More than half
of the investments were made in the Breeding & Services
Segment and more than a quarter in the Corn Segment.

Assets backed by solid funding
Total assets increased in fiscal 2009/2010 by €101.4 mil-
lion to €857.4 (756.0) million. Equity rose by €58.4 million
as a result of higher income and currency translation. The
KWS Group still has solid financing, with an equity ratio of
57.5% (57.5%).

Net working capital at the Group level increased in the past
fiscal year by 25.1% to €179.7 (143.7) million. Inventories in
the Corn Segment rose by €20.6 million, while receivables
increased by €11.5 million as a result of the growth in sales.
The Sugarbeet Segment was able to reduce its inventories
by €9.2 million thanks to good business, but its receivables
rose sharply by €32.2 million. Inventories and receivables

increased only slightly in the Cereals and Breeding &
Services Segments.

Totaling €398.9 (338.4) million, inventories and trade
receivables accounted for around 47% (45%) of total
assets. On the balance sheet date, cash and cash
equivalents were €113.7 (125.6) million and, after de-
duction of financial borrowings, net liquidity was €81.4
(117.0) million.

Equity rose to €492.9 (434.5) million and, as in the previ-
ous year, fully covered noncurrent assets and inventories.
Debt capital increased by a total of €43 million to €364.5
(321.5) million, in particular as a result of a loan raised for
long-term funding of new buildings and the rise in short-
term provisions.

Business expansion strains net cash from
operating activities
While €55.4 (59.4) million were used for investments, the
KWS Group received €11.2 (– 9.6) million from investing
activities. Further expansion of operations, especially in our
growth markets of Eastern and Southeastern Europe, led
to a sharp increase in working capital, and net cash from
operating activities fell from €82.0 million to €27.4 million.

Single-entity financial statements of KWS SAAT AG
KWS SAAT AG profited in fiscal 2009/2010 from good sug-
arbeet business and expanded its R&D activities as planned.
Its net income was therefore €12.7 million, slightly up from
the previous year’s €11.3 million. Aided by improved net
financial income/expense, net income pursuant to the ac-
counting regulations of the German Commercial Code (HGB)
was €12.2 (11.5) million. Including the profit of €0.4 million
carried forward from the previous year, the net retained
profit was €12.6 million.

Proposed appropriation of profits
The KWS Group’s earnings-oriented dividend policy is to
be continued in fiscal 2009/2010. Its net income for the
year and operating income (EBIT) are taken as indicators
of its earnings performance. In fiscal 2009/2010, net in-
come rose by 2.8% to €51.5 million and operating income
by 5.8% to €82.4 million. The Executive and Supervisory
Boards will therefore propose payment of a dividend of
€1.90 (1.80) for each of the 6,600,000 shares to the Annual
Shareholders’ Meeting. This 5.6% increase in the dividend
reflects the KWS Group’s improved earnings situation.
A total of €12.5 (11.9) million from KWS SAAT AG’s net
retained profit will then be distributed to shareholders in
December 2010.

Creation of value added

Value added
29%

Total output
€800.4 Mio.

Raw materials and
supplies, purchased
goods and services
41%

Other third-party goods
and services
27%

Depreciation, amortization,
impairment losses
3%

Distribution of value added

Minority interest 1%

Company
16%

Shareholders
5%

Public sector
12%

Lenders
3%

Value added
€233.3 Mio.

Employees
63%

Management Report I KWS Group I 29

Experience is the seed from which
wisdom sprouts.«

Konrad Adenauer, first German Chancellor

And our experience has taught us that there is more potential hidden in plants than we

suspect. That is the reason for our unflagging research work.

Sugarbeet Segment

The tremendous pace of economic development in Asia has been accompanied by a steady rise in glo-

bal sugar consumption. At the same time, more and more plants with sugar content are being processed

into ethanol and biogas in the drive to expand the use of renewable energies. As a result, the global culti-

vation area for sugarbeet rose again after years of consolidation.

Net sales in the Sugarbeet Segment reached a new high of
€247.4 million in fiscal 2009/2010, up almost 9% over the
previous year (€228.0 million). This growth is due to the
rise in global sugarbeet cultivation area of around 10% to
4.6 million ha and to higher prices for increasingly higher-
yielding varieties. Net sales outside the EU 27 increased by
15.8% to €134.7 (116.3) million. Despite a slight decline in
cultivation area, net sales in the EU 27 stabilized at €112.7
(111.7) million.

The regions
Roundup Ready® sugarbeet has won the confidence of just
about all U.S. farmers in a very short space of time. 95% of
cultivation area is already being used to grow these genetically
modified varieties. The only place where conventionally de-
veloped seed is still used is California. Through its subsidiary
Betaseed, KWS was able to retain its market share at 60%
in North America. Betaseed contributed 30% of the segment’s
net sales in the year under review.

The economic and financial crisis also had a negative im-
pact on the segment’s earnings last year due to a greater
need for allowances on receivables and inventories. There
were also considerable risks in Eastern Europe in the year
under review, again necessitating allowances on receiva-
bles. Nevertheless, the earnings situation improved sharply
in fiscal 2009/2010. Expansion of our business volume and
an increase in technology licenses for herbicide-tolerant
Roundup Ready® sugarbeet varieties in the U.S. helped the
segment improve its income to €34.8 (23.2) million, 50%
higher year-on-year. With that performance, our sugarbeet
business has regained its former earnings strength.

In the EU 27, the record harvest of the previous year 2008/
2009 resulted – due to the restrictions imposed by the
Sugar Market Regime – in a slight decline in cultivation area
in individual markets in the 2010 sowing season. The area
for quota sugar fell by 4% to 1.30 (1.35) million ha, a figure
that would have been higher if the European Commission
had not allowed additional quantities to be exported out-
side the EU as a result of high demand for sugar on the
world market. Some of the surplus was able to be reduced
thanks to this measure. In contrast, sugarbeet cultivation
area in the EU 27 that is not covered by the regulations of
the EU Sugar Market Regime rose by more than 13% to
almost 260 thousand ha. Cultivation area in the still young
biogas sector almost doubled.

Sugarbeet Segment sales in millions of €

39.1

188.9

38.7

208.7

36.5

158.3

194.8

228.0

247.4

Sugarbeet is growing in importance as a substrate for biogas plants. Since the soil clinging to beet has a negative impact on the

fermentation process, KWS has developed a mobile beet washing machine for use in the field during harvesting.

Cultivation area in Germany was also restricted due to the
record harvest in 2009. However, we were able to win market
share thanks to our good variety performance and almost
match our net sales of the previous year. In France, on the
other hand, we lost market share.

The high world market price for sugar at the beginning of
2010 led to in some cases significant expansion of cultivation
area after two years of decline in Eastern Europe, the Middle
East and North Africa. There was a huge expansion in area
in Eastern Europe following largish reductions in the previous
years, with the Russian Federation recording an increase of
some 32% and Ukraine approximately 30%. KWS benefited
from this with higher net sales. However, business in Eastern
Europe harbors considerable risks. Despite rigorous re-
ceivables management, we were not quite able to achieve
our targets for market share.

There were positive trends in Central and Northern Europe.
We were able to grow our net sales in just about all mar-
kets, even though cultivation area remained constant year-
on-year. We improved on our position again in Poland and
Belarus, countries where we suffered sharp losses last
year. We also considerably increased our market share
in Scandinavia with our new generation of varieties. We
grew in the regions of Southern and Southeastern Europe
as well. Despite an almost 20% reduction in cultivation area
as a result of poor weather conditions, we matched our net
sales of the previous year in Southern Europe.

In the rest of the world, the Sugarbeet Segment grew its
net sales by more than 40%. This was aided by a number
of special effects, as well as an expansion in cultivation areas
in Egypt and China and increased market shares in Turkey
and Morocco.

Domestic sales
Foreign sales
Total sales

2007/2008

2008/2009

2009/2010

Management Report I Sugarbeet Segment I 33

Corn Segment

Corn is the all-rounder among our agricultural crops. It is grown on some 160 million ha all over the world –

as food, feed or to supply regenerative raw materials for producing starch and energy. KWS now supplies

hybrid varieties that offer maximum yields to all core markets in the moderate climatic zone and for a wide

range of uses.

Corn seed business flourished as a whole and we were
able to keep up our dynamic growth of the past years in
fiscal 2009/2010. Net sales in the segment surpassed the
€400 million mark for the first time, rising by 8.4% to
€413.4 (381.5) million. Moreover, the segment’s income
surged above-proportionately by some 26% to €31.7 (25.2)
million. This higher profitability is mainly due to positive
economies of scale linked to the expansion of business
volume, as well as to the reversal of provisions.

The regions
Despite comparatively weak prices for corn for consump-
tion in fiscal 2009/2010, demand for corn continued to rise.
In particular, more corn was required for bioethanol produc-
tion in the U.S., which led to a slight increase in corn culti-
vation area there to almost 36 million ha (+ 2%). In North
America, sales of our corn company AgReliant – a joint
venture with the French breeding company Vilmorin – grew
more strongly than the market in general. Net sales, of
which 50% is consolidated in the Corn Segment, increased
year-on-year by 11.6% to €318 (285) million. AgReliant
succeeded in strengthening its position as the fourth-larg-
est vendor in North America.

In Europe, weak consumer prices in the traditional grain
corn cultivation regions, e.g. France or the countries of
Southern and Southeastern Europe, tended to result in a
decline in areas. In contrast, silage corn production in-
creased. The sharpest rise in areas – almost 10% – was
in Germany and was mainly attributable to the constantly
growing demand for plant biomass to supply the increasing
number of biogas production facilities. The number of
these plants is expected to increase in 2010 by 16% to
some 5,800 (5,000) in Germany alone. The installed electri-
cal capacity of all these plants will then be 2,300 (1,900)
megawatts, corresponding to the average output of two
atomic reactors.

Corn cultivation area in Europe increased slightly to 12.9
(12.7) million ha in the 2010 growing season. We were able
to further expand our position as the second-largest corn
seed supplier and leader in the silage corn segment in all
major markets. Our market share again increased by a per-
centage point to just over 16%.

Corn Segment sales in millions of €

94.8

286.7

108.7

304.7

77.2

251.7

328.9

381.5

413.4

A master of photosynthesis: Corn is especially efficient in converting solar energy and can produce a relatively large amount of biomass,

even under extremely hot conditions. That makes it an important substrate for biogas.

However, seed availability is a particular problem in the
EU. Supposed traces of genetic modifications in conventional
seed repeatedly demonstrate that threshold values for
seed are urgently needed. As a matter of principle, corn
breeders have their seed examined for genetic changes
by certified laboratories before shipping it. Affected seed
stocks are immediately withdrawn. However, zero tolerance
or 100% purity is not feasible in an open production proc-
ess – nor is it necessary, given that the genetic modifica-
tions in question are approved as food and fodder in the
EU and millions of tons of such food and feed are import-
ed, processed and consumed. Only the introduction of
thresholds above the technical detection limit can ensure
meaningful information and legal certainty at all levels of
the production chain.

The value of corn seed for farmers is also determined
by extensive dressing. However, sufficiently effective
insecticidal seed dressings have been available to corn
breeders only in few countries up to now. The national
approval authorities have adopted a very restrictive policy
toward new active substances. Farmers in many regions
have suffered yield loss as a result of pests. KWS backs
all official measures that help improve the use of dressings.
Among other things, KWS promotes certification of all
seed dressers.

Oil seed accounted for 12.2% of the Corn Segment’s net
sales, down slightly from the previous year (13.6%). The
main contributors were soybean in the U.S. and rapeseed
and sunflower in Europe.

Domestic sales
Foreign sales
Total sales

2007/2008

2008/2009

2009/2010

Management Report I Corn Segment I 35

Cereals Segment

Rye has been the economically most important crop at our cereal specialist KWS LOCHOW for years

now. The difficult price situation on the market for cereals for consumption at the time of the 2009 fall

sowing season did nothing to change that. Hybrid rye varieties are still a good alternative, especially in

light and dry soils, and they offer advantages over other cereals in terms of yield.

In 2009/2010, KWS’ cereals business was able to follow up
on its past successes in the face of a tough market environ-
ment. Despite much weaker hybrid rye business, we were
also to post good net sales and income in the past fiscal
year. Net sales totaled €70.0 (84.3) million. The segment’s
profit exceeded the expectations we had during the year, in
particular thanks to strong licensing business.

The cereal harvest in 2009 produced a high yield similar to
that of the record year 2008. That resulted in high supply
and thus a low level of prices on the market for cereals for
consumption at the time of the 2009 fall sowing season.
The price for wheat on the commodity futures exchanges
fell to around €120 a ton in the fall of 2009. At that time,
the earnings prospects for European farmers were at their
lowest level. Some therefore decided to keep their materials
costs as low as possible. The result was they increasingly
used their own farm saved seed for cereals instead of buying
high-quality, certified seed. This also hit our hybrid rye
business and almost completely accounted for the segment’s
decline in net sales. Yet despite the low prices for cereals
for consumption, rye was still the mainstay, contributing
50% of KWS LOCHOW’s net sales.

Hybrid rye business declined in both Germany and Poland
in the past fiscal year. In contrast, KWS LOCHOW was able
to increase its royalty revenues significantly in the key markets
of Germany, the UK, France and Denmark, even as the
market as a whole declined. Business with our own wheat
varieties in the UK again surpassed our expectations.

The segment’s operating income also turned out to be better
than anticipated in the course of the year. Higher royalties
had a positive effect. Our sales organization had to be
expanded to enable KWS LOCHOW to achieve its market
objectives, and that resulted in a slight increase in selling
expenses. The Cereals Segment´s income at June 30,
2010, was €10.5 (12.0) million, a drop that was less in
percentage terms than that in net sales (17%). One-time
amortization of goodwill had strained the previous year´s
figure. The segment´s return on net sales increased sharply
to 15.0% (14.2%).

Unlike with rye, no progress in yields can currently be
achieved by breeding hybrids of wheat and other cereals,
for which farmers can use their own farm saved seed. The
use of farm saved seed for growing wheat varies greatly in

Cereals Segment sales in millions of €

44.3

33.0

36.1

34.4

67.4

40.0

84.3

33.9

70.0

2007/2008

2008/2009

2009/2010

Domestic sales
Foreign sales
Total sales

KWS LOCHOW – the world’s leading rye breeder: Grown on an area of about 6 million hectares worldwide, rye is a niche product with a wide

range of uses. It is used to make bread, for fodder and as a regenerative raw material.

Europe. For example, around 40% to 60% of the wheat
cultivated annually in Western Europe is grown with this
seed, and that figure ranges as high as 90% in some
Eastern European countries.

European law stipulates that a royalty must be paid to the
plant breeder for the use of farm saved seed. However, the
fact is that royalties are paid for only some of it. Recording
its use is laborious and costly. As a result, plant breeders
lose revenue, while their R&D budgets remain comparatively
low and little progress is made in yields.

The complaints by progressive farmers in Europe that the
increase in wheat yields has slowed in the past ten years
should be seen against this backdrop. The international
competiveness of wheat cultivation in Europe depends to a
major extent on the yield per unit area, and KWS is therefore
committed to marketing top-quality, certified seed. At the
same time, we call for an international approach to an effective
system governing the use of farm saved seed and suitable
statutory regulations in Europe. Only in this way can we create
a climate that encourages innovation and the further deve-
lopment of cereal varieties suitable for farm saved seed – so-
mething that will ultimately benefit our customer, the farmer.

Management Report I Cereals Segment I 37

A journey of a thousand miles
begins with a single step.«

Lao Tze, Chinese philosopher

We have already taken the first step on the journey into the world of the plant genome

– and we’re sure we’ll make many discoveries.

Breeding & Services Segment

The Breeding & Services Segment comprises breeding, variety development and research work. It also

includes the central corporate functions, seed potato activities and farming.

The total net sales of €152.0 (154.2) million were generated
largely from royalties for the varieties it develops and
licenses to KWS’ product segments. The segment’s external
net sales of €23.3 (23.4) million comprise revenue from our
seed potato business, breeding services for third parties
and our farms. The segment’s income is largely impacted
by expenditures for product development, which we
increased by 8.9% to €97.5 (89.5) million in the past fiscal
year. At the same time, we reduced the internal royalty
rates for individual products to reflect conditions customary
in the market, as a result of which the segment’s income
fell overall by almost 70% to €5.4 (17.5) million. The quanti-
tative success of our breeding work is demonstrated by the
274 (318) new sales approvals granted worldwide to KWS’
new varieties in fiscal 2009/2010.

Progress in breeding grain corn varieties
The progress made in the past ten years in the breeding
programs for grain corn varieties that we have established
and expanded is very gratifying. Grain corn is mainly grown
in the more southern regions of Europe and accounts for a
total of some 60% of the continent’s corn market. New,

competitive hybrids with very good results are in approval
testing in France, Southeastern Europe and Italy. These
varieties will improve our competitiveness in these key corn
cultivation regions as of 2011. We have also made further
good breeding progress in North America, the world’s
most important corn market, where our new commercial
varieties are outstanding performers in key market segments.

Yield genes in sugarbeet: Cooperation with BASF
Plant Science
A cooperation agreement on investigating yield genes in
sugarbeet was signed with BASF Plant Science (BPS) in
January 2010. BPS will contribute selected candidate
genes from its program exclusively to enable examination
of the effect they have on sugarbeet yield. The work in mo-
lecular biology involved in this collaboration has been car-
ried out since February 2010 in a new workgroup that was
established for this purpose at our research company
PLANTA. Field trials with transgenic varieties are to be con-
ducted at BETASEED’s stations in the U.S. starting in 2012.
The project’s objective is to increase the yield of sugarbeet
by at least 15% and thus secure its long-term competitiveness

Marketing approval from new varieties

137

114

120

266

318

274

115

109

2007/2008

2008/2009

2009/2010

Sugarbeet
Corn
Cereals
Others
Total

Leading-edge biotechnology methods are used in hybrid breeding. Marker analysis significantly speeds up and enhances the precision

of variety development, for example.

in agriculture. If everything goes as planned, varieties from
this project will be marketed for the first time in about 15
years. Under the agreement, the marketing concept and
marketing itself will be solely in the hands of KWS.

tolerance or nematode resistance, the trait of Rhizoctonia
tolerance is difficult to develop because of the complex in-
heritance process involved.

Fungus tolerance in sugarbeet: The start has been made
This fiscal year saw a particularly pleasing development in
the field of fungus tolerance in sugarbeet: The intensifica-
tion of our breeding work on tolerance to Rhizoctonia has
led for the first time to promising approvals for KWS varie-
ties in this difficult segment. Sugarbeet infestation by the
pathogenic fungus Rhizoctonia solani is aided by damp,
warm weather conditions and is currently on the increase
worldwide. The consequence is yield loss or infested sug-
arbeet that can no longer be processed. Unlike rhizomania

In the field of genome research, the sugarbeet’s genome
has now been completely sequenced in a national initiative
that is sponsored by the German Ministry of Education and
Research and in which KWS is involved. The findings from
this genome analysis are used in developing markers for a
wide range of breeding objectives, and they enable a com-
parative investigation of potentially useful genes.

Management Report I Breeding & Services Segment I 41

New building for research and breeding
Growth in our research and breeding workforce compelled
us to expand our office and laboratory facilities. The office
and institute building “BIG” was completed at the end of
2009 to increase our capacities. Employees, various central
service groups and the institute’s management moved into
the former machine hall in January 2010. It offers modern
office workplaces and conference rooms for approximately
120 people.

Construction of the “LEO” greenhouse complex, with its
total area of around 6,800 m2, increased the undercover
cultivation area at Einbeck by 50%. It was put into operation
in March 2010 and, with its cutting-edge technology, offers
ideal conditions for growing all the types of plants bred by
the KWS Group. We also attached great importance to
having an eco-friendly energy supply, which is provided for
the most part by block-type thermal power stations that
use renewable sources of energy.

Van Rijn – KWS B.V. in a tough market climate
The KWS Group’s seed potato operations have been con-
ducted by a joint venture with the Van Rijn Group from the
Netherlands for two years now. Unfortunately, we were not
able to achieve our growth objectives for the 2009/2010 fis-
cal year. Net sales, of which 50% are consolidated in the
KWS Group’s Breeding & Services Segment, rose only
slightly to €25.4 (24.8) million, despite a higher sales vol-
ume. Seed potato business is highly dependent on con-
sumer prices, which fluctuate considerably because the
potato harvest can be seriously impacted by disease. Nev-
ertheless, the potato is of interest to plant breeding com-
panies. Vigorous and successful varieties can be marketed
longer than other types of plants, for example. That is why
we have continued to invest in research and development
and pressed ahead with establishing new distribution
structures. The relatively high prices for early potatoes in
2010 are a good indicator of a better price level in the cur-
rent fiscal year.

Outlook for the fiscal year 2010/2011

Good growth opportunities in the Corn and Cereals Segments and stable business in the Sugarbeet

Segment are anticipated for the current fiscal year 2010/2011. We will again use our good earnings

situation to continue strategic expansion of our product development activities while sticking to our target

of a double-digit return on sales. Overall, we aim to grow the KWS Group’s net sales by 5% and in-

crease income at least proportionally.

The individual segments
We expect net sales at the Corn Segment to grow again
by about 5%, largely on the back of higher sales volumes
in Southern and Southeastern Europe and the U.S. The
current signs of a recovery in prices will tend to result in
greater use of multiple-resistant special hybrids in North
America. After years of building up structures in South
America, we expect a positive contribution to the segment’s
income from that region for the first time. Our extensive
investments in seed production over the past years will
help improve contribution margins, as will the economies
of scale stemming from expansion of our business activity.
Overall, this should enable us to post a further increase in
income in the Corn Segment.

We will probably be able to maintain the good performance
of 2009/2010 in the Sugarbeet Segment in the current
fiscal year. At present we do not see any further positive
impulses for an expansion in area in the EU 27 and Eastern
Europe since the sharp rise in the price of cereals will
probably make them an interesting alternative for farmers.
That is especially true in the Russian Federation, where
large-scale fires destroyed major parts of the land used to
grow cereals. However, there may be opportunities for
Germany, where there are signs of some increase in the
cultivation area for beet for biogas production.

The situation governing the planting of our Roundup Ready®
sugarbeet in North America will be of great importance to
our sugarbeet seed business. In the action brought by a

number of environmental associations against the USDA,
the presiding judge issued a ruling at the beginning of August
2010 prohibiting the sale and production of herbicide-tolerant
sugarbeet in the U.S. until a more extensive environmental
impact statement is submitted. This rescission of approval
for Roundup Ready® sugarbeet was expected since the
judge had clearly indicated beforehand that he regarded a
more extensive environmental impact statement as a vital
prerequisite for approval. However, the suspension of the
sales and production approval is not a permanent ban. The
petitioners clearly failed with this petition. Instead, the presiding
judge referred the decision on subsequent measures until
the EIS is completed (around mid-2012) back to the USDA.
We assume that the USDA will grant appropriate approvals
and thus enable commercial cultivation and seed production
for Roundup Ready® sugarbeet for the coming season under
certain conditions. Legal action will likely be initiated against
these approvals as well. As far as can be seen at present,
however, we expect to achieve the good net sales and income
figures of the previous year in 2010/2011.

We believe there will again be good opportunities for our
cereals business in the current fiscal year. The weak cere-
al harvests in the 2010 growing season have driven consu-
mer prices up sharply. We therefore anticipate a percepti-
ble switch to high-quality, certified seed when the sowing
season for winter cereal varieties comes around. Assu-
ming that, we expect the segment’s net sales and income
to rise slightly.

Sorting is a vital aspect in seed potato multiplication: Tubers that

are as small and uniform as possible make transportation and

planting easier.

Management Report I Breeding & Services Segment I Outlook I 43

Pleasure in the job puts perfection
in the work.”«

Aristotle, Greek philosopher

It is precisely the pleasure they derive from agriculture and working with nature that

attracts many talented employees to KWS.

Employees

Trust creates bonds between people and helps business ventures succeed. KWS and its employees

have won and nurtured the trust of farmers for generations by being close at hand to help them, taking

their concerns and commercial ambitions seriously and proving time and again to be a reliable partner.

We at KWS also cultivate a climate of trust and cooperation at the company, in our laboratories and

offices and in the field. This spirit at our company with its tradition of family ownership is the foundation for

our good market position. We practice it regardless of culture, gender, discipline and hierarchy as a firm

part of our corporate culture.

There are 3,500 reasons for KWS’ success – the people
who day after day devote their skills, know-how and hard
work to increasing the company’s value. What sets us
apart from other companies is the culture in which we live
and work together, one that is defined by trust, continuity,
fairness, respect and ample freedom. KWS is a company
that boasts a more than 150-year tradition of seed devel-
opment. We think sustainably and in terms of generations.
This mindset is reflected in our corporate structures. We
rigorously pursue a policy of qualitative growth and stability.
Consequently, we greatly value the fact that our employees
are so loyal to our company. Respect, appreciation and
fairness – toward customers, among colleagues or between
employer and employees – are permanent parts of our
corporate culture.

The Strategy Meeting of KWS’ managers in Buenos Aires in 2010.

Encouraging innovations – seeding the future
KWS spent around €98 million on research and develop-
ment in 2009/2010 to secure its future growth. In this re-
gard we attach great importance to giving our employees
the freedom to “sow the seeds of the future” successfully
by developing their own ideas and contributing them to their
work for the company. Interdisciplinary dialogue and the
possibility of working in international teams, independence
in their activity and flexible hours support all KWS employees
in continuing to enhance their skills. We offer them the flexi-
bility to shape the future – the future of agriculture, custom-
ers and the company and, of course, their own.

Developing our employees’ personal potential – i.e. both
their professional and social skills – is a key element of our
personnel development. In agreement with them, we offer
a selection of suitable further training and continuing edu-
cation measures from a range currently comprising 43
seminars. As an internal service provider, Personnel Devel-
opment offers employees advice to help identify all their
potential at the content-related, methodological and struc-
tural levels.

Head of KWS Personnel Development awarded the
title “Chief Learning Officer”
Our outstanding achievements were acknowledged when
our head of Personnel Development was awarded the title of
“Chief Learning Officer” for further developing and success-
fully implementing the innovative method “Learning Journey.”
In a “Learning Journey,” a group of managers visits several
other companies to gain inspiration on how to solve strategic
challenges. As a result of these measures, five innovation
initiatives have been launched at KWS SAAT AG.

Employee satisfaction at KWS has been constantly high for years. As an employer committed to promoting continuity, trust, freedom,

fairness and respect, KWS aims to keep things that way.

The jury rated this means of “looking outside the box” as
original and innovative, noting that it would have a great
impact on the company’s development and that the culture
of communication among managers would be strength-
ened lastingly.

Good training is the foundation for success
Good training is the foundation for people’s future and
KWS’ continued success. One focus of our company’s
HR strategy is on training and continuing education, and –
as one of the region’s largest employers – we also take
our social responsibility seriously. Year after year, we
therefore train more young people than we actually need
for our own requirements: 84 in fiscal 2009/2010, the
same number as the year before. The fact that one of our
junior staffers captured the title of Germany’s Best Trainee
as a laboratory technician in the field of agricultural re-
search in November 2009 is testimony to the high quality
of training offered at KWS.

KWS Group employees by functions

Administration
15%

Research & development
35%

Production
19%

Sales & marketing
31%

Management Report I Employees I 47

We make large investments to maintain and improve this
high standard. At the end of July 2010, we inaugurated the
new training workshop for electronics technicians and in-
dustrial mechanics. 20 new rooms where they can work
and learn were built: Spacious, bathed in light, cutting-
edge and functional, they offer 650 m2 of space for a total
of 20 trainees and their instructors. The requirements made
of training in industrial electrical, electronic and metalwork-
ing vocations have changed greatly in the past years. Proc-
ess-oriented forms of work, networked thinking and ac-
tions and greater customer orientation are all growing in
importance. KWS takes this trend into account and was
prompt to begin adapting and reorganizing its industrial
training activities.

In fiscal 2009/2010 we increased the number of trainees
from 15 to 28. KWS offers career starters the possibility
of assuming professional responsibility in a focal area
as part of a two-year program. They get to know different
departments in Germany and abroad by means of work
shadowing. As an international company, we face the
great challenge of enabling cooperation among all em-
ployees across countries and borders. That is why we
encourage our junior personnel to gain international
experience at an early stage. We give business admin-
istration apprentices and trainees the chance to spend
several weeks working at subsidiaries abroad.

Plant breeding demands know-how in a wide range
of disciplines
We offer junior staffers a special introductory and ad-
vancement program in the field of plant breeding – the
“Breeders Academy.” Plant breeding calls for a broad un-
derstanding of different disciplines, for example agriculture,
genetics and mathematics. A university education does
not impart all the skills a good plant breeder requires. To
plug this gap, KWS offers a two-year phase of on-the-job
training specifically tailored to the participant in question.
Our “Young Professional Program” is aimed at former train-
ees and university graduates. Junior employees develop
their knowledge – and their personality – in the core disci-
plines of project work, change management and business
administration, and in particular in an intercultural, learning
organization. As part of international teams, they attend
workshops lasting several days, where they tackle interdis-
ciplinary projects in small groups.

Employees in numbers
In the fiscal year 2009/2010, the KWS Group employed
3,492 (3,215) people worldwide, of whom 929 (913) were
at KWS SAAT AG. Personnel expenses at the KWS Group
rose to €147.2 (135.0) million; KWS SAAT AG accounted
for €50.2 (47.3) million of this. In the fiscal year 2009/2010,
84 (84) trainees were employed in Germany, 75 of them
in Einbeck.

Average workforce growth over the last 10 years: about 6% per year

2,106

+ 127

+ 103

+ 180

+ 34

+ 102

+ 87

+ 117

+ 359

3,492

2001 / 2002

2003 / 2004

2005 / 2006

2007 / 2008

2009 / 2010

Risks and chances for future development

KWS’ strategic objective is to strengthen and build respon-
sibly on its leading market position as an earnings-oriented
seed company. To do that, we have to identify opportuni-
ties, assess them and – if they are worthwhile – pursue
them vigorously. Planning, implementation and control are
the key commercial measures for ensuring successful busi-
ness operations. That always includes taking certain risks
– our actions are geared to the future, and what that future
holds is impossible to tell, even given the most careful plan-
ning and conscientious implementation. KWS has estab-
lished an effective risk management system to be ready for
any such uncertain – yet predictable – eventualities.

Identifying commercial opportunities and pursuing
them with energy
The individual business segments are responsible for iden-
tifying and leveraging commercial opportunities. They are
recorded in the rolling operational plan and tracked by
means of regular reporting. Longer-term strategic objec-
tives and measures are also included in the decision-mak-
ing process. You can find detailed explanations on the an-
ticipated course of business in the “Outlook” Section on
page 43.

We practice a culture of trust
KWS’ risk management system is founded on trust in
its employees and the many years of experience that
show that every one of them acts responsibly toward
themselves, their colleagues and the whole company.
It is based on strategic planning and investment control-
ling, continuous operational controlling and the quality and
process monitoring systems. External auditing by expe-
rienced auditors is conducted at KWS and is a key
component of risk management in ensuring that internal
controls work. Several audits are held each year, covering
processes and organizational units.

In addition to the existing system, the internal control
system, which enables central coordination and docu-
mentation of the individual risks, associated controls and
responsible employees, was expanded in the last fiscal
year. The refined internal control system, in conjunction
with Internal Audit and Compliance, was established to
relieve the workload on employees and sensitize them to
making their own checks and controls. The Executive
Board is responsible for the risk management system,

which meets legal requirements by ensuring that all signifi-
cant risks are systematically identified every year, exam-
ined, assessed as to their likelihood of their occurring and
potential impact, documented, controlled and monitored.

More than 100 significant risks and ways of controlling
them are described in the system implemented at KWS.
They are assessed with their individual likelihood of occur-
rence and potential level of damage. Their significance is
evaluated on the basis of their effect on operating income
(EBIT) or specific qualitative indicators. The individual risks
or process Sections are assigned to persons who conduct
controls and persons responsible for controls. In addition,
manual and automated controls are set up for the identified
risks. The persons who conduct controls and are responsi-
ble for them use a newly established workflow to report to
the risk manager on the controls and their results and, if
applicable, on the measures that have been initiated. If in-
dividual points in the rules and regulations are not complied
with, the situation is described.

The risk management system means advantages for
corporate controlling
A pragmatic risk management approach that reflects KWS’
organization was chosen and is used to monitor, control
and document the main risks. KWS’ continuous striving for
greater transparency is also always aimed at creating ben-
efits for corporate controlling. KWS has firmly established
risk management in its corporate planning and controlling
and in its reporting system. The efficiency of the risk man-
agement system is ensured by a clear assignment of re-
sponsibilities and internal control. The operation of the early-
warning system for risks was examined as part of the
audit of the annual financial statements.

The control and risk management system in the
accounting process
KWS’ risk management system also extends to the account-
ing process, with the same systematic approach, objec-
tives and features. It comprises all the measures, structures
and processes designed to make sure that all business
events and transactions are included in accounting prompt-
ly, consistently and correctly. It ensures compliance with
the statutory standards, accounting regulations and inter-
nal accounting control policies that are binding on all con-
solidated companies. The system consists of principles,

Management Report I Employees I Risks and chances I 49

procedures and controls to reveal irregularities. There are
policies for accounting and reporting, a standardized IT
system and a uniform chart of accounts. Among other
things, we regularly examine the completeness of financial
reporting, the Group’s consistent accounting, measure-
ment and account allocation stipulations, the authorization
and access regulations for IT systems used in accounting,
and proper, complete elimination of intra-Group transac-
tions as part of consolidation. The effectiveness of the con-
trols is assessed by means of regular tests using random
samples. They form the basis that lets us assess whether
our controls are adequate and effective. The results are
documented and communicated internally. Identified weak-
nesses are eliminated. The Executive Board and the Audit
Committee of the Supervisory Board are informed regularly
of the risk situation, the results of the controls and the ef-
fectiveness of the risk management system and all its con-
trol functions.

Significant risks
The KWS Group is subject to the usual economic and po-
litical risks in the countries in which it and its subsidiaries
operate. In addition, the risks described below may signifi-
cantly impair KWS’ net sales, financial position and perform-
ance. These risks have either been identified or are regard-
ed as likely to occur. However, other risks that have not yet
been recognized or have been underestimated may also
influence its business. No risks that pose a threat to the
company’s existence have been identified to date. There
was no significant change in the risk situation in fiscal 2009 /
2010 compared with the previous year.

Operational risks
The medium-term sales risk depends on product perform-
ance and the competitive situation. KWS addresses this
challenge with systematic analyses of the market and the
competition and by constantly developing higher-quality
seed for innovative, high-yielding plants. Procurement risks
are combated by international diversification of seed pro-
duction locations and sufficient stockpiling. KWS counters
the risk of a decline in cultivation areas with its efforts
to win market share and grow sales in other markets or
with new products. A wide-ranging product portfolio
contributes to sensible diversification of risks. The company
ensures the high quality of its products through strict

internal quality standards and monitoring. KWS tackles
the risks involved in investing in research and construction
projects by means of efficient controlling and professional
project management. It also addresses the liquidity risk
with professional cash management, sufficient long-term,
syndicated credit lines – full use of which was not made in
the year under review – and an equity ratio of 57.5%. Our
loan agreements include financial covenants, compliance
with which has been ensured at all times to date. KWS
uses extensive trade credit insurance to counter the risk
of losing receivables in risky regions and business seg-
ments. The risk of interest rate changes and currency
risks are addressed through the usual standardized hedg-
ing instruments.

Political risks
In the strongly regulated agricultural industry, political risks
have a significant impact on business development. The
lack of statutory regulations may also represent a risk, for
example in the case of very slight traces of genetic modifi-
cations in conventional seed. In the absence of a standard-
ized legal threshold value, German authorities in particular
practice a policy of zero tolerance in this matter; as a result,
farmers who had planted our competitors’ seed were again
ordered to plow up already sown areas in 2010. In view of
the simultaneous imports of millions of tons of genetically
modified feed and food from transatlantic markets, there is
absolutely no reason for this administrative practice, which
only Germany enforces with such stringency.

It is not only direct legislative procedures or official actions
that impact our commercial operations. Reservations on
the part of the populace can also influence opportunities
for business development. In the United States, the use of
genetic engineering has become standard procedure.
Genetically improved varieties have been in use there for
more than 10 years, and they are planted today on an area
of more than 60 million ha. The acceptance of genetically
improved products is high, and misgivings exist only here
and there – in states such as California, for example. No
particular risks for the environment or animal or human
organism have been scientifically identified. Nevertheless,
opponents of genetic engineering have been able to obtain
a temporary revocation of approval for genetically modified
sugarbeet (Roundup Ready®) from a District Court in

In breeding, it is vital to know who the parents are. Isolation tents offer the necessary shielding and so enable selective test crossing.

Weather-related risks
The agricultural production process of breeding and multi-
plying seed depends to a large extent on the weather. KWS
counteracts the risk of production losses stemming from
bad weather by distributing seed multiplication over various
locations in Europe and North America. Contra-seasonal
multiplication is carried out in the winter half-year in Chile
and Argentina if there are bottlenecks in seed availability.

Overall, the KWS Group’s risk management systems
did not reveal any risks that jeopardized the company’s
existence in the year under review.

California, although these varieties have almost completely
penetrated the market (see page 43). Worldwide, on the
other hand, genetically modified crops are cultivated on
more than 130 million hectares a year, with remarkable
economic and ecological advantages.

Demand for high-yielding energy plants is dependent on
the price of fossil fuels and on general regulatory condi-
tions, such as government market incentive programs for
startup financing for the investments needed for bioenergy
production and admixture ratios for biofuels.

As part of the winding-up of our former Moldavian distribu-
tion joint venture, which filed for insolvency in 2005, claims
were also asserted and legal action taken against KWS
SAAT AG. This joint venture was at no time included in the
companies consolidated in the KWS Group due to its mi-
nor impact on presentation of our assets, financial position
and earnings. The legal disputes have already passed
through two instances and are now to be ruled on by the
court of last resort. Adequate provisions have been made
to cover potential litigation risks.

Management Report I Risks and chances I 51

Annual Financial Statements of the KWS Group
2009 / 2010

Disclosures in accordance with Section 315 (4) HGB
(German Commercial Code)

The Executive Board provides the following explanations
of the information in accordance with Section 315 (4)
HGB (German Commercial Code) in the Group Manage-
ment Report:

Hans-Joachim Tessner, Goslar
Tessner Holding KG, Goslar
Tessner Beteiligungs GmbH, Goslar

Shares with special rights that grant powers of control have
not been issued by the company.

There is no special type of voting control for the participating
interests of employees. Employees who have an interest in
the company’s capital exercise their control rights in the
same way as other shareholders.

At KWS SAAT AG, members of the Executive Board are
appointed and removed as provided for in Section 84 AktG;
analogously to Section 84 AktG, the company’s Articles of
Association also stipulate that members of the Executive
Board are appointed by the Supervisory Board. In compli-
ance with Sections 179 ff. AktG, amendments to the Articles
of Association of KWS SAAT AG require a resolution to be
adopted by the Annual Shareholders’ Meeting, by a majority
of at least three quarters of the capital stock represented in
adopting the resolution. The power to make amendments
to the Articles of Association that only affect the wording
(Section 179 (1) Sentence 2 AktG), has been conferred on
the Supervisory Board in accordance with Section 22 of the
Articles of Association of KWS SAAT AG.

The Executive Board is not now authorized to issue or buy
back shares.

Significant agreements subject to the condition of a change
in control pursuant to a takeover bid have not been conclud-
ed. The compensation agreements between the company
and members of the Executive Board and governing the
case of a change in control stipulate that any such compen-
sation will be limited to the applicable maximum amounts
specified by the German Corporate Governance Code.

Einbeck, October 8, 2010

KWS SAAT AG
THE EXECUTIVE BOARD

The subscribed capital of KWS SAAT AG is €19,800,000.
It is divided into 6,600,000 no-par bearer shares. Each
share grants the holder one vote at the Annual Share-
holders’ Meeting.

There may be limitations on the voting rights for the shares
under the provisions of the German Stock Corporation Act
(AktG). For example, shareholders are barred from voting
under certain conditions (Section 136 AktG). In addition,
no voting rights accrue to the company on the basis of the
shares it holds (Section 71b AktG). The Executive Board is
not aware of any contractual restrictions relating to voting
rights or transfer of shares.

The following direct or indirect participating interests
in the capital of KWS SAAT AG in excess of 10 % of
the voting rights have been reported to the company
in keeping with Sections 21 and 22 of the German
Securities Trading Law (WpHG):

• The voting shares, including mutual allocations, of the
members, foundations and companies of the families
Büchting/Giesecke and Arend Oetker listed below
each exceed 10% and total 56.1%.

Dr. Dr. h.c. Andreas J. Büchting, Einbeck
Christiane Stratmann, Meerbusch
Dorothea Schuppert, Berlin
Michael C.-E. Büchting, Einbeck
Annette Büchting, Bremen
Stephan O. Büchting-Hansing, Ammerbuch-Entringen
Elke Giesecke, Altenberge
Christa Nagel, Hanover
AKB Stiftung, Hanover
Zukunftsstiftung Jugend, Umwelt und Kultur, Einbeck
Büchting Beteiligungsgesellschaft mbH, Hanover
Dr. Arend Oetker, Berlin
Kommanditgesellschaft Dr. Arend Oetker Vermögens-
verwaltungsgesellschaft mbH & Co., Berlin

• The voting shares, including mutual allocations, of the

shareholders stated below each exceed 10% and total

11.5%.

Balance
sheet

of the KWS Group
at June 30, 2010,
figures in € thou-
sands, unless other-
wise specified

ASSETS

Intangible assets

Property, plant and equipment

Other financial assets

Noncurrent tax assets

Deferred tax assets

Noncurrent assets

Inventories and biological assets

Trade receivables

Securities

Cash and cash equivalents

Current tax assets

Other current assets

Current assets

Total assets

EQUITY AND LIABILITIES

Subscribed capital

Capital reserve

Retained earnings

Minority interest

Equity

Long-term provisions

Long-term borrowings

Trade payables

Deferred tax liabilities

Other long-term liabilities

Noncurrent liabilities

Short-term provisions

Short-term borrowings

Trade payables

Current tax payables

Other liabilities

Current liabilities

Liabilities

N ote n o.

06/30/2010

Previo us
year

Statement of comprehensive income
from July 1, 2009, through June 30, 2010; figures in € thousands,
unless otherwise specified

49,616

47,881

220,591

180,731

4,987

5,920

3,248

6,365

26,056

16,922

307,170

255,147

136,786

121,533

262,176

216,868

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

13,077

(10)

100,593

16,925

20,654

(8)

14,116

111,515

15,493

21,280

550,211

500,805

857,381

755,952

19,800

5,530

19,800

5,530

448,849

391,838

18,768

17,318

(11)

492,947

434,486

61,464

21,556

2,265

18,638

10,209

(12)

114,132

62,037

1,926

6,429

18,075

10,274

98,741

129,546

112,696

10,730

57,472

22,785

29,769

6,691

55,152

18,251

29,935

(13)

250,302

222,725

I. Income statement

Net sales

Cost of sales

Gross profit on sales

Selling expenses

Research and development expenses

General and administrative expenses

Other operating income

Other operating expenses

Operating income

Interest and similar income

Interest and other expenses

Net income from equity investments

Net financial income/expenses

Result of ordinary activities

Income taxes

Net income for the year

II. Other comprehensive income

Financial instruments

Currency translation difference for economically independent
foreign units

Other comprehensive income after tax

III. Comprehensive income

Comprehensive income

Shares of other minority interests

Comprehensive income after shares of minority interests

Net income for the year

Shares of other minority interests

364,434

321,466

Net income after shares of other minority interests

N ote n o.

(18)

2009/ 10

754,154

406,143

348,011

Previo us
year

717,165

381,052

336,113

128,621

114,961

(19)

(20)

(21)

(22)

(24)

97,510

49,598

44,589

34,440

82,431

1,602

6,582

– 4,977

77,454

25,997

51,457

19,435

19,453

70,910

2,019

68,891

51,457

1,898

49,559

89,456

46,291

31,920

39,446

77,879

3,665

6,570

183

– 2,722

75,157

25,055

50,102

– 18

2,147

2,129

52,231

3,334

48,897

50,102

4,007

46,095

Total equity and liabilities

857,381

755,952

Earnings per share (in €)

7.51

6.98

Annual Financial Statements I Balance sheet I Income statement I 55

Statement of changes in fixed assets of the
KWS Group 2009/2010 and 2008/2009
Figures in € thousands, unless otherwise specified

translatio n
C urrency

C han g es in the
c o nsol. gro u p

A d ditio ns

Gross values

Disp osals

Transfers

translatio n
C urrency

A d ditio ns

Disp osals

Transfers

Amortization/depreciation

Net book values

Patents, industrial property rights
and software

Goodwill

Intangible assets

Land and buildings

Technical equipment
and machinery

Operating and office equipment

Payments on account

Balance
07/01/2009

37,621

28,298

65,919

260

1,572

1,832

164,003

4,545

129,978

57,433

14,741

4,170

2,028

340

Property, plant and equipment

366,155

11,083

Financial assets

3,418

Assets

435,492

12,917

Patents, industrial property rights
and software

Goodwill

Intangible assets

Land and buildings

Technical equipment
and machinery

Operating and office equipment

Payments on account

Balance
07/01/2008

21,634

24,183

45,817

120

928

1,048

152,231

531

120,771

53,377

5,971

– 596

226

– 350

– 189

Property, plant and equipment

332,350

Financial assets

6,006

– 4

Assets

384,173

855

– 9

2,866

358

3,224

378

388

Balance
06/30/2010

40,373

30,218

70,591

Balance
07/01/2009

13,666

4,372

18,038

168

140

308

3,006

3,007

20,092

403

8,703

196,940

53,356

1,588

4,815

10,870

9,899

14,270

55,131

5,797

2,683

7,296

146,517

652

67,329

12,169

527

– 16,655

90,040

42,028

2,971

1,574

8,232

5,988

9,410

– 4

422,955

185,424

6,133

19,035

8,228

273

1,898

5,054

170

103

58,364

10,071

1,898

498,600

203,632

6,441

22,042

8,709

15,954

3,187

19,141

Balance
06/30/2009

37,621

28,298

65,919

Balance
07/01/2008

10,679

667

11,346

– 3

2,985

3,708

6,693

368

378

311

5,122

2,795

Balance
06/30/2010

Previous
year

16,472

4,503

20,975

23,901

25,715

49,616

23,955

23,926

47,881

– 9

59,439

137,501

110,647

– 18

96,148

46,777

50,369

20,552

12,169

39,938

15,405

14,741

202,364

220,591

180,731

4,987

3,248

223,406

275,194

231,860

Balance
06/30/2009

Previous
year

13,666

4,372

18,038

23,955

23,926

47,881

10,955

23,516

34,471

6,435

805

5,611

164,003

49,409

394

4,221

682

53,356

110,647

102,822

11,574

5,260

18,570

41,839

4,368

2,042

625

7,840

2,597

129,978

612

– 8,825

57,433

14,741

– 5

366,155

87,322

38,533

175,264

– 283

185

296

7,304

5,090

4,290

1,779

16,615

6,751

166

4,395

1,654

3,418

475

305

61,146

12,327

1,654

435,492

187,085

338

23,308

7,099

– 13

– 1

90,040

42,028

39,938

15,405

14,741

33,449

14,844

5,971

185,424

180,731

157,086

170

3,248

5,531

203,632

231,860

197,088

Annual Financial Statements I Statement of changes in fixed assets I 57

Statement of changes in equity
Figures in € thousands, unless otherwise specified

e q uity fro m earnin gs
A ccu m ulate d gro u p
currency translatio n
A djust m ents fro m
R evaluatio n
reserve

C a pital reserve

Other transactio ns

E q uity

S u bscrib e d
ca pital

Parent company

Comprehensive other
group income

Balance as at June 30, 2008

19,800

5,530

370,679

– 19,559

594

377,107

Dividends paid

Changes in the
consolidated group

Other changes

Net income for the year

Other comprehensive
income after tax

Total consolidated gains (losses)

– 11,220

2,384

46,095

– 11,220

2,384

46,095

2,802

48,897

2,820

– 18

Balance as at June 30, 2009

19,800

5,530

407,938

– 16,739

594

417,168

Dividends paid

Changes in the
consolidated group

Other changes

Net income for the year

Other comprehensive
income after tax

Total consolidated gains (losses)

– 11,880

49,559

19,314

Balance as at June 30, 2010

19,800

5,530

445,617

2,575

– 11,880

49,559

19,332

68,891

594

474,179

M in ority interest

currency translatio n
A djust m ents fro m

Other transactio ns

E q uity

Minority interest

Comprehensive other
group income

192

– 4

20,911

20,723

– 594

– 6,384

4,007

17,803

– 569

1,898

19,132

– 673

– 481

121

– 360

– 4

Group equity

398,018

– 11,814

– 4,000

50,102

2,129

52,231

434,486

– 12,449

51,457

19,453

70,910

– 594

– 6,384

4,007

– 673

3,334

17,318

– 569

1,898

121

2,019

18,768

492,947

Annual Financial Statements I Statement of changes in equity I 59

Cash flow statement
Figures in € thousands, unless otherwise specified

Notes to the cash flow statement for the KWS Group
Figures in € thousands, unless otherwise specified; previous-year figures in parentheses

Net income for the year

Depreciation/reversal of impairment losses (–) on property, plant, and equipment

Increase/decrease (–) in long-term provisions

Other noncash expenses/income (–)

Cash earnings

Increase/decrease (–) in short-term provisions

Net gain (–)/loss from the disposal of assets

N ote

2009 / 10

Previo us
year

51,457

22,042

– 677

– 7,213

65,609

15,501

– 71

50,102

23,308

– 479

1,627

74,558

23,878

– 387

Increase (–)/decrease in inventories, trade receivables, and other assets not attributable
to investing or financing activities

– 49,343

– 44,201

Increase/decrease (–) in trade payables and other liabilities not attributable to investing
or financing activities

Net cash from operating activities

– 4,315

27,381

28,110

81,958

(A)

Proceeds from disposals of property, plant, and equipment

Payments (–) for capital expenditure on property, plant, and equipment

Proceeds from disposals of intangible assets

Payments (–) for capital expenditure on intangible assets

Proceeds from disposals of financial assets

Payments (–) for capital expenditure on financial assets

1,253

1,477

– 52,147

– 41,720

– 3,225

– 19,141

171

– 1,445

– 166

Net cash from investing activities

(B)

– 55,383

– 59,412

Equity capital increase with no effect on profits

Dividend payments (–) to shareholders parent and minority

Cash proceeds from issuance of bonds and from short- or long-term borrowings

Net cash from financing activities

– 12,449

– 11,814

23,669

11,220

2,146

– 9,617

(C)

Net cash changes in cash and cash equivalents

– 16,782

12,929

Changes in cash and cash equivalents due to exchange rate, consolidated group,
and measurement changes

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

4,821

– 229

125,631

112,931

(D)

113,670

125,631

The cash flow statement, which has been prepared
according to IAS 7 (indirect method), shows the changes
in cash and cash equivalents of the KWS Group in the
three categories of operating activities, investing activities,
and financing activities. The effects of exchange rate
changes and changes in the consolidated group have
been eliminated from the respective balance sheet items,
except those affecting cash and cash equivalents.

(A) Cash flows from operating activities
The cash proceeds from operating activities are prima
rily determined by cash earnings. They were €65,609
thousand, €8,949 thousand lower than the previous
year. The proportion of cash earnings included in sales
was 8.7% (10.4%). Higher inventories and receivables,
an increase in current provisions and largely unchanged
liabilities resulted in cash outflows of €38,228 thou-
sand (€ – 7,400 thousand). The net funds used in opera-
ting activities also include interest income of €1,208
thousand (€3,861 thousand) and dividend income of €3
thousand (€90 thousand) as well as interest expense of
€2,967 thousand (€2,453 thousand). €682 thousand
(€501 thousand) was paid out for the external financing of
pension commitments. Income tax payments amounted to
€28,175 thousand (€27,384 thousand).

(B) Cash flows from investing activities
A net total of €55,383 thousand (€59,412 thousand) was
required to finance investing activities. An amount of €55,372
thousand (€60,861 thousand) was paid for intangible and tan-
gible assets and an amount of €1,445 thousand (€166 thou-
sand) for financial assets. There were total cash receipts of
€1,434 thousand (€1,615 thousand) for disposals of assets.

(C) Cash flows from financing activities
Financing activities resulted in cash proceeds of €11,220
thousand (€– 9,617 thousand). The dividend payments to
shareholders parent and minority related to the dividends of
€11,880 thousand (€11,220 thousand) paid to the share-
holders of KWS SAAT AG, as well as profit distributions paid
to other shareholders of and at fully consolidated subsidiaries
of €569 thousand (€594 thousand). In addition, borrowings
of €23,669 thousand (€2,146 thousand) were raised.

(D) Supplementary information on the cash
flow statement
As in previous years, cash and cash equivalents are
composed of cash (on hand and balances with banks)
and current available-for-sale securities.

Cash and cash equivalents includes €28,906 thousand
(€21,747 thousand) from partially consolidated companies.

Annual Financial Statements I Cash flow statement I Notes to the cash flow statement I 61

Segment reporting for the KWS Group
Figures in € thousands, unless otherwise specified; previous-year figures in parentheses

Segment information

In accordance with its internal reporting system, the KWS
Group is primarily organized according to the following
business segments:
• Sugarbeet
• Corn
• Cereals
• Breeding & Services

The research and development function is contained in the
Breeding & Services Segment. Because of their minor im-
portance within the KWS Group, the distribution and pro-
duction of oil and field seed are reported in the Cereals and
Corn Segments, in keeping with the legal entities involved.

Description of segments

Sugarbeet
The results of the multiplication, processing and distribution
activities for sugarbeet seed are reported under the Sugar-
beet Segment. Under the leadership of KWS SAAT AG,
fourteen foreign subsidiaries and affiliated companies and
one subsidiary in Germany are active in this segment, as
in the previous fiscal year.

Corn
KWS MAIS GMBH is the lead company for the Corn Seg-
ment. In addition to KWS MAIS GMBH, business activities
are conducted by one German company (as in the previous
year) and thirteen (fourteen) foreign companies of the KWS
Group. The production and distribution activities of this
segment relate to corn for grain and silage corn, and to oil
and field seed.

Cereals
The lead company of this segment, which essentially con-
cerns the production and distribution of hybrid rye, wheat,
and barley, as well as oil and field seed, is KWS LOCHOW
GMBH, an 81 %-owned subsidiary of KWS SAAT AG, with
– as in the previous year – its seven foreign subsidiaries and
affiliated companies in France, Great Britain, and Poland.

Breeding & Services
This segment includes the centrally controlled corporate func-
tions of research and breeding, as well as services for the
KWS product segments of Sugarbeet, Corn and Cereals and
consulting services for the KWS Group and other customers.

Considered a core competency for the KWS Group’s entire
product range, plant breeding, including the related
biotechnology research, is essentially concentrated at the
parent company in Einbeck. All the breeding material, includ-
ing the relevant information and expertise about how to use
it, is owned by KWS SAAT AG with respect to sugarbeet and
corn and by KWS LOCHOW GMBH with respect to cereals.
Research and breeding are also performed by the wholly-
owned German subsidiary PLANTA ANGEWANDTE PFLAN-
ZENGENETIK UND BIOTECHNOLOGIE GMBH and breeding
activities are conducted by six (five) other German and
foreign subsidiaries and affiliated companies.

Potato activities are pooled in our joint venture VAN RIJN
– KWS B.V. with its four foreign subsidiaries.

Consulting services include the systems business of KWS
SAAT AG and its agricultural operations, KWS KLOSTERGUT
WIEBRECHTSHAUSEN GMBH, KWS SAATFINANZ GMBH,
which mainly handles insurance for KWS, and EURO-HY-
BRID GESELLSCHAFT FÜR GETREIDEZÜCHTUNG MBH.

The other services performed for the KWS product
segments essentially include all the management services
of KWS SAAT AG, such as holding company and ad-
ministrative functions, including strategic development
projects, which are not directly charged to the product
segments or indirectly allocated to them by means of
an appropriate cost formula.

Segment sales contains both sales from third parties (ex-
ternal sales) and sales between the segments (intersegment
sales). The prices for intersegment sales are determined on
an arm’s-length basis. Uniform royalty rates per segment for
breeding genetics are used as the basis. Since this year,
technology revenue from genetically modified properties

(“tech fees”) have no longer been split between the product
segment and the Breeding & Services Segment in the sim-
plified ratio of 1:3, but instead paid as a per-unit royalty on
the basis of the number of units sold, due to their growing
competitive importance.

2009 / 10

Previo us
year

2009 / 10

Previo us
year

2009 / 10

Previo us
year

Segment sales

Internal sales

External sales

247,732

414,485

72,126

228,074

382,546

86,684

330

1,050

2,131

152,016

154,231

128,694

886,359

851,535

132,205

1,074

2,380

130,866

134,370

247,402

413,435

69,995

23,322

228,024

381,472

84,304

23,365

754,154

717,165

Sugarbeet

Corn

Cereals

Breeding & Services

KWS Group

External sales by region

2009 / 10

Previo us
year

Germany

188,891

184,179

Europe (excluding Germany)

291,114

284,660

Americas

Rest of world

KWS Group

236,381

220,533

37,768

27,793

754,154

717,165

The Breeding & Services Segment generates 84.7%
(84.9%) of its sales from the other segments. The sales
figure of this segment represents 3.1% (3.3%) of the
Group’s external sales. The Corn Segment is the largest
contributor of external sales, accounting for 54.8% (53.1%)
of external sales, followed by Sugarbeet with 32.8% (31.8%)
and Cereals with 9.3% (11.8%).

63.7% (65.4%) of total sales are recorded in Europe
(including Germany).

2009 / 10

Previo us
year

2009 / 10

Previo us
year

2009 / 10

Previo us
year

Segment earnings

Depreciation
and amortization

Other noncash items

34,806

31,668

10,543

5,414

82,431

23,223

25,150

12,032

17,474

77,879

3,806

4,312

2,406

11,518

22,042

3,735

3,406

3,886

12,281

23,308

20,896

30,687

2,077

2,978

25,239

27,900

2,427

1,772

56,638

57,338

82,431

77,879

22,042

23,308

56,638

57,338

Sugarbeet

Corn

Cereals

Breeding & Services

Total segments

Others

KWS Group

The operating income of each segment is reported as
the segment result. The segment results are presented
on a consolidated basis and include all directly attributable

income and expenses. Items that are not directly attrib-
utable are allocated to the segments by means of an
appropriate formula.

Annual Financial Statements I Segment reporting I 63

Depreciation and amortization charges of €22,042
thousand (€23,308 thousand) allocated to the segments
relate exclusively to intangible assets and property, plant,
and equipment. No goodwill had to be amortized this

fiscal year, compared with €2,009 thousand at the Cereals
Segment and €1,697 thousand at the Breeding & Services
Segment last year.

Notes for the KWS Group 2009/2010
Figures in € thousands, unless otherwise specified; previous-year figures in parentheses

Sugarbeet

Corn

Cereals

Breeding & Services

Total segments

Others

KWS Group

The other noncash items recognized in the income
statement relate to noncash changes in the allowances
on inventories and receivables, and in provisions.

The operating assets of the segments are composed of
intangible assets, property, plant, and equipment, inventories
and all receivables, other assets, and prepaid expenses that
can be charged directly to the segments or indirectly allocated
to them by means of an appropriate formula.

Cash and cash equivalents and / or current available-for-sale
securities are allocated to the segments only to the extent
that the allocation of operating liabilities makes it necessary
to increase operating assets by a corresponding amount.

The operating liabilities attributable to the segments include
the borrowings reported on the balance sheet, less provi-
sions for taxes and the portion of other liabilities that cannot
be charged directly to the segments or indirectly allocated to
them by means of an appropriate formula. Borrowings are
added to operating liabilities only when they exceed the avail-
able cash. Assets or liabilities that have not been allocated to
the segments are reported as “Others.”

Capital expenditure on assets was mainly attributable to
the Breeding & Services Segment, where it amounted
to €31,997 thousand (€27,043 thousand), and the Corn
Segment, where it amounted to €15,018 thousand (€17,357
thousand). 28% (60%) of capital expenditure was made in
Europe (excluding Germany) and 57% (24%) in Germany,
mainly in Einbeck.

2009 / 10

Previo us
year

2009 / 10

Previo us
year

Assets

Liabilities

163,165

300,833

40,104

138,329

254,882

35,115

208,865

179,693

48,020

53,543

165,082

144,960

9,436

67,882

8,791

67,643

712,967

608,019

290,420

274,937

144,414

147,933

74,014

46,529

857,381

755,952

364,434

321,466

Investments in long-term assets by segment

Sugarbeet

Corn

Cereals

Breeding & Services

KWS Group

2009 / 10

Previo us
year

8,266

15,018

3,074

7,702

17,357

8,878

31,997

27,043

58,355

60,980

Investments in long-term assets by region

Germany

Europe (excluding Germany)

North and South America

Rest of world

KWS Group

Operating assets by region

2009 / 10

Previo us
year

33,565

16,292

7,560

938

14,326

36,710

6,865

3,079

58,355

60,980

2009 / 10

Previo us
year

Germany

268,281

229,931

Europe (excluding Germany)

215,365

195,456

North and South America

212,212

169,827

Rest of world

KWS Group

17,109

12,805

712,967

608,019

The KWS Group (KWS Konzern) is a consolidated group
as defined in the International Financial Reporting Stand-
ards (IFRS) published by the International Accounting
Standards Board (IASB), London, taking into account the
interpretations of the International Financial Reporting Inter-
pretations Committee (IFRIC) and in addition the commercial
law regulations to be applied pursuant to section 315 a (1)
of the HGB (German Commercial Code). The consolidated
financial statements discharge the obligations of KWS
LOCHOW GMBH, Bergen, and KWS MAIS GMBH, Ein-
beck, to produce their own financial statements. The fol-
lowing standards and interpretations have already been
published, but have not yet been applied: Amendments to
IAS 1, 7, 17, 24, 32, 36, 39, IFRS 1, 2, 5, 8, 9 and IFRIC 14,
15, 17, 18, 19 and the Improvement Project 2010. To the
extent that these relate to supplementary disclosure obliga-
tions, there will be no effects on the balance sheet or state-
ment of comprehensive income. The possible effects of the
other changes are currently being examined. The statements
were prepared under the assumption that the operations of
the company will be continued.

General disclosures

Companies consolidated in the KWS Group
The consolidated financial statements of the KWS Group
include the single-entity financial statements of KWS SAAT
AG and its subsidiaries in Germany and other countries in
which it directly or indirectly controls more than 50 % of the
voting rights. In addition, joint ventures are proportionately
consolidated according to the percentage of equity held in
those companies. Subsidiaries and joint ventures that are
considered immaterial for the presentation and evaluation
of the financial position and performance of the Group are
not included.

Consolidation methods
The single-entity financial statements of the individual
subsidiaries and joint ventures included in the consolidated
financial statements were uniformly prepared on the basis
of the accounting and measurement methods applied at
KWS SAAT AG; they were audited by independent auditors.

For fully or proportionately consolidated units acquired
before July 1, 2003, the Group exercised the option al-
lowed by IFRS 1 to maintain the consolidation procedures
chosen to date. The goodwill reported in the HGB financial
statements as of June 30, 2003, was therefore transferred
unchanged at its carrying amount to the opening IFRS
balance sheet. For acquisitions made after June 30, 2003,
capital consolidation follows the purchase method by allo-
cating the cost of acquisition to the Group’s interest in the
subsidiary’s equity at the time of acquisition. Any excess of
interest in equity over cost is recognized as an asset, up to
the amount by which fair value exceeds the carrying amount.
Any goodwill remaining after first-time consolidation is re-
cognized under intangible assets. According to IFRS 3,
goodwill is not amortized, but tested for impairment at least
once a year (impairment-only approach). Investments in
non-consolidated companies are carried at cost. Goodwill
is reported under intangible assets.

Joint ventures are carried according to the percentage of
equity held in the companies concerned using IAS 31.

Subsidiaries and joint ventures are consolidated and asso-
ciated companies measured at equity only if such recogni-
tion is considered material for the fair presentation of the
financial position and results of operations of the KWS
Group. As part of the elimination of intra-Group balances,
borrowings, receivables, liabilities, and provisions are net-
ted between the consolidated companies. Intercompany
profits not realized at Group level are eliminated from intra-
Group transactions. Sales, income, and expenses are net-
ted between consolidated companies, and intra-group
distributions of profit are eliminated.

Deferred taxes on consolidation transactions recog-
nized in income are calculated at the tax rate applicable
to the company concerned. These deferred taxes are
aggregated with the deferred taxes recognized in the
separate financial statements.

Minority interests are recognized in the amount of the im-
puted percentage of equity in the consolidated companies.

Annual Financial Statements I Segment reporting I Notes I General disclosures I 65

Currency translation
Under IAS 21, the financial statements of the consolidated
foreign subsidiaries and joint ventures that conduct their
business as financially, economically, and organizationally
independent entities are translated into euros using the
functional currency method as follows:

• Income statement items at the average exchange rate

for the year.

• Balance sheet items at the exchange rate on the balance

sheet date.

The difference resulting from the application of annual
average rates to the net profit for the period in the income
statement is taken directly to equity.

Classification of the balance sheet and the income
statement
The costs for the functions include all directly attributable
costs, including other taxes. Research and development ex-
penses are reported separately for reasons of transparency.
Research grants are not deducted from the costs to which
they relate, but reported gross under other operating income.

Accounting policies

Consistency of accounting policies
The accounting policies are largely unchanged from the
previous year. All estimates and assessments as part of
accounting and measurement are continually reviewed;
they are based on historical patterns and expectations
about the future regarded as reasonable in the particular
circumstances.

Intangible assets
Purchased intangible assets are carried at cost less
straight-line amortization over a useful life of three to twenty
years. Impairment losses on intangible assets with finite
useful lives are recognized according to IAS 36. Goodwill
with an indefinite useful life is not amortized, but tested for

impairment at least once a year. The procedure for the im-
pairment test is explained in the notes to the balance sheet.
Intangible assets acquired as part of business combinations
are carried separately from goodwill if they are separable
according to the definition in IAS 38 or result from a con-
tractual or legal right, and fair value can be reliably meas-
ured. Straight-line amortization of these separated intangi-
ble assets is applied over their individual useful life.

Property, plant, and equipment
Property, plant, and equipment is measured at cost
less straight-line depreciation. A loss is recognized for
an impairment expected to be permanent. In addition
to directly attributable costs, the cost of self-produced
plant or equipment also includes a proportion of the
overheads and depreciation/amortization. Depreciation
of buildings is based on a useful life of 50 years. The
useful lives of technical equipment and machinery
range from five to 15 years, and for operating and office
equipment from three to ten years. Low-value assets are
fully expensed in the year of purchase; they are reported
as additions and disposals in the year of purchase in
the statement of changes in noncurrent assets. Impairment
losses on property, plant, and equipment are recognized
according to IAS 36 whenever the recoverable amount
of the asset is less than its carrying amount. The recov-
erable amount is the higher of the asset’s net realizable
value and its value in use (value of future cash flows
expected to be derived from the asset).

Financial instruments
Financial instruments are in particular financial assets and
financial liabilities. The financial assets consist primarily of
bank balances and cash on hand, trade receivables, other
receivables, and securities. The credit risk mainly com-
prises trade receivables. The amount recognized in the
balance sheet is net of allowances for receivables expec-
ted to be uncollectible, estimated on the basis of historical
patterns and the current economic environment. The credit
risk on cash and derivative financial instruments is limited
because they are kept with banks that have been given a
good credit rating by international rating agencies.

There is no significant concentration of credit risks, be-
cause the risks are spread over a large number of contract
partners and customers. The entire credit risk is limited to
the respective carrying amount. Comments on the risk ma-
nagement system can be found in the Management Report.

Investments are measured at cost. The cost of equity-
accounted investments is increased or decreased by
proportionate changes in equity. Assets available for
sale are carried at market value if this can be reliably
measured. Unrealized gains and losses, including de-
ferred taxes, are recognized directly in the revaluation
reserve under equity. Permanent impairment losses are
recognized immediately through the income statement.
Borrowings are carried at amortized cost.

The financial liabilities comprise in particular trade payables,
borrowings and other liabilities.

The fair value of financial instruments is determined on the
basis of the market information available on the balance
sheet date and in accordance with the measurement
methods applied.

The other noncurrent financial assets are essentially
available for sale and are carried at market value where
possible. If a market value cannot be determined, the
amortized costs are carried as an alternative.

The carrying amount of receivables, fixed-income securities
and cash is assumed as the fair value due to their short
term and the fixed-interest structure of the investments.

Derivative instruments are carried at market values in ac-
cordance with IAS 39 and may have a positive or negative
value. This relates essentially to common derivative financial
instruments that are used to hedge interest rate and foreign
currency risks. In particular, the derivative financial instruments
are measured using recognized mathematical models, such
as present value or Black-Scholes, to calculate option values,
taking their volatility, remaining maturity, and capital market
interest rates into account.

The fair value of financial liabilities with a long-term fixed in-
terest rate is determined as present values of the payments
related to the liabilities, using a yield curve applicable on the
balance sheet date.

The fair values of the financial instruments are generally
determined on the basis of the market information avail-
able on the balance sheet date and must be assigned
to a level in the fair value hierarchy.

Financial instruments in level 1 are measured using quoted
prices in active markets for identical assets or liabilities.
In level 2, they are measured by directly observable market
inputs or derived indirectly on the basis of prices for
similar instruments. Finally, input factors not based on
observable market data are used to calculate the value
of level 3 financial instruments.

Subsequent measurement of the financial instruments
depends on their classification in one of the following
categories defined in IAS 39:

• Loans and receivables
This category mainly comprises trade receivables, other
receivables, loans and cash, including fixed-income
short-term securities. Loans are measured at cost. Loans
that carry no interest or only low interest are measured
at their present value. Discernable risks are taken into
account by recognition of an impairment loss. After their
initial recognition, the other financial assets in this category
are measured at amortized cost using the effective interest
method, minus impairments. Receivables that carry no
interest or only low interest and with a term of more than
twelve months are discounted. Necessary value impairments
are based on the expected credit risk and are carried in
separate impairment accounts. Receivables are derecognized
if they are settled or uncollectible. Other assets are
derecognized at the time they are disposed of or if they
have no value.

Annual Financial Statements I Notes I General disclosures I 67

• Financial assets at fair value
Held-for-trading securities acquired with the intention of
being sold in the short term are assigned to this category.
Derivate financial instruments with a positive market value
are also categorized as held for trading, unless they are
designated hedging instruments in accordance with IAS
39. They are measured at fair value. Changes in value are
recognized in income. Securities are derecognized after
being sold on the settlement date.
• Available-for-sale financial assets
This category covers all financial assets that have not been
assigned to one of the above categories. In principle, securi-
ties are classed as available for sale, unless a different clas-
sification is required due to the fact that they have an explicit
purpose. Equity instruments, such as shares in (unconsoli-
dated) affiliated companies and shares held in listed compa-
nies, are also included in this category. In principle, financial
instruments in this category are measured at their fair value
in subsequent recognition. The changes to their fair value in
subsequent recognition are recognized as unrealized gains
and losses directly in equity in the revaluation reserve.
The realized gains or losses are not recognized as profit or
loss until they are disposed of. If there is objective evidence
of permanent impairment on the balance sheet date, the
instruments are written down to the lower value. The
amount carried in the revaluation reserve is derecognized
in equity. Any subsequent decreases in the impairment
loss are recognized directly in equity.
• Financial liabilities measured at amortized cost
All financial liabilities, with the exception of derivative financial
instruments, are measured at amortized cost using the effec-
tive interest method. The liabilities are derecognized at the
time they are settled or when the reason why they were
formed no longer exists.
• Financial liabilities at fair value
This category covers derivative financial instruments that
have a negative market value and are categorized in prin-
ciple as held for trading. They are measured at fair value.
Changes in value are recognized in income. Derivatives
that are designated hedging instruments in accordance
with IAS 39 are excluded from this provision.

Derivatives
Derivatives cannot be designated as hedging instruments
pursuant to the regulations of IAS 39. They are measured

at their market value. The changes in their market value are
recognized in the income statement. Derivatives are dere-
cognized on their day of settlement.

Borrowing costs
In accordance with IAS 23, borrowing costs are capitalized if
they can be classified as qualifying assets.

Consolidated group and changes in the
consolidated group

Inventories and biological assets
Inventories are carried at cost less an allowance for obso-
lescent or slow-moving items. In addition to directly attri-
butable costs, the cost of sales also includes indirect labor
and materials including depreciation under IAS 2. Under
IAS 41, biological assets are measured at the expected
sales proceeds, less costs to sell. The measurement pro-
cedure used is based on standard industry value tables.

Deferred taxes
Deferred taxes are calculated on differences between the
IFRS carrying amounts of assets and liabilities and their
tax base, and on loss carryforwards; they are reported on
a gross basis. Under IAS 12, deferred taxes are calculated
on the basis of the applicable local income tax.

Provisions for pensions and other employee benefits
Under IAS 19, obligations from direct pension commit-
ments are measured using actuarial principles under the
accrued benefit valuation method. Gains or losses from
unplanned changes in accrued benefits and from changes
in actuarial assumptions are disregarded if the change
moves within a 10% corridor of the accrued benefits. Only
if the gains or losses exceed this threshold will they be re-
cognized as income and distributed over the remaining
working lives and included in the provision.

Other provisions
Tax and other provisions account for all discernible risks
and contingent liabilities. Depending on circumstances,
they are measured at the most probable amount or at the
expected value.

Contingent liabilities
The contingent liabilities result from debt obligations
where outflow of the resource is not probable or from
obligations for loan amounts drawn down by third parties
as of the balance sheet date.

Discretionary decisions and estimates
Noncurrent intangible assets, tangible assets and real estate
held as financial investments are carried in the balance
sheet at amortized or depreciated cost. The permissible
option of measuring them at their fair value is not used.

Securities are generally classified as available for sale,
which is why changes in their fair values that require
reporting are taken directly to equity. If securities are
carried at their fair value and have to be recognized in
income, changes to the fair values are direct included
in the net income for the period.

The measurement approaches and amounts to be carried
in these IFRS financial statements are partly based on esti-
mates and specifically defined specifications. This approach
is mainly used for the following points:

• Determination of the useful life of the depreciable asset
• Definition of measurement assumptions and future re-
sults in connection with impairment tests, above all for

goodwill that is carried
• Determination of the net selling price for inventories
• Definition of the parameters required for measuring pen-
sion provisions (future development of wages/salaries
and pensions, expected return on the planned assets,
assumed rate of interest)
• Selection of parameters for the model-based measure-
ment of derivatives (e.g. assumptions as regards volatility
and interest rate)
• Determination whether tax losses carried forward can
be used
• Determination of the fair value of intangible assets, tan-
gible assets and liabilities acquired as part of a business
combination and determination of the service lives of the
purchased intangible assets and tangible assets
• Measurement of other provisions

Number of companies including KWS SAAT AG

D o m estic

F oreig n

Total

D o m estic

Total

06 / 30 / 2010

Previous year

Consolidated

Consolidated
at quota

Total

The companies are listed under item number (31).

Effective July 1, 2009, the number of companies consoli-
dated in the KWS Group fell by one fully consolidated com-
pany with the merger of KWS Seminte S.R.L., Romania,
with Dunasem S.R.L.. The Chinese service company KWS
R&D China Ltd., which conducts research, was included in
the consolidated companies effective January 1, 2010, with
the result that their number remained constant overall.

The financial position and results of operations of propor-
tionately consolidated companies are as follows:

2009 / 10

Previo us
year

Proportionately
consolidated companies

Noncurrent assets

52,495

47,458

Current assets

Total assets

Equity

Noncurrent liabilities

Current liabilities

125,798

104,756

178,293

152,214

94,693

4,346

79,254

81,313

4,166

66,735

Total equity and liabilities

178,293

152,214

Net sales

180,756

164,519

Net profit for the year

11,126

13,799

Annual Financial Statements I Notes I Notes to the balance sheet I 69

Notes to the Balance Sheet
Figures in € thousands, unless otherwise specified; previous-year figures in parentheses

(1) Assets
The statement of changes in noncurrent assets contains a
breakdown of assets summarized in the balance sheet and
shows how they changed in 2009/10. Capital expenditure on
assets was €58,364 thousand (€61,146 thousand). The
Management Report describes the significant additions to
assets. Depreciation and amortization amounted to €22,042
thousand (€23,308 thousand).

(2) Intangible assets
This item includes purchased varieties, rights to varieties
and distribution rights, software licenses for electronic data
processing, and goodwill. Additions amounting to €3,224
thousand (€19,141 thousand) mainly comprise the acquisi-
tion of software licenses and patents. Amortization of intan-
gible assets amounted to €3,007 thousand (€6,693 thou-
sand); this charge is included in the relevant functional costs
and the other operating expenses, depending on the opera-
tional use of the intangible assets.

The goodwill recognized as an asset relates mainly to the
company AGRELIANT GENETICS LLC. – €18,222 thousand
(€16,532 thousand) – in the Corn Segment, the company
KWS UK LTD. – €1,693 thousand (€1,693 thousand) – in
the Cereals Segment and the joint venture VAN RIJN –
KWS B.V. – €3,187 thousand (€3,187 thousand) – in the
Services & Breeding Segment.

In order to meet the requirements of IFRS 3 in combination
with IAS 36 and to determine any impairment of goodwill,
cash-generating units have been defined in line with internal
reporting guidelines. In the KWS Group, these units are the
legal entities. To test for impairment, the carrying amount
of each entity is determined by allocating the assets and
liabilities, including attributable goodwill and intangible
assets. An impairment loss is recognized if the recoverable
amount of an entity is less than its carrying amount.
The recoverable amount is the higher of the entity’s net
realizable value and its value in use (value of future cash
flows expected to be derived from the entity). In principle,
the impairment test uses the expected future cash flows on
which the medium-term plans of the companies are based;

these plans, which cover a period of four years, have
been approved by the Executive Board. They are based
on historical patterns and expectations about future
market development.

For the European and American markets, the key assump-
tions on which corporate planning is based include as-
sumptions about price trends for seed, in addition to the
development of market shares and the regulatory framework.
Company-internal projections take the assumptions of
industry-specific market analyses and company-related
growth perspectives into account.

A standard discount rate of 6.1% (7.6%) has been assumed
to calculate present values. A growth rate of 1.5% (1.5%)
has been assumed beyond the detailed planning horizon
in order to allow for extrapolation in line with the expected
inflation rate. Tests provided evidence that the goodwill
recognized in the consolidated balance sheet and
determined for the cash-generating units is not impaired.

(3) Property, plant, and equipment
Capital expenditure amounted to €55,131 thousand
(€41,839 thousand) and depreciation amounted to
€19,035 thousand (€16,615 thousand). The Management
Report describes the significant capital expenditure.

(4) Financial assets
Investments in non-consolidated subsidiaries and shares in
cooperatives and GmbHs that are of minor significance,
with an amortized cost totaling €884 thousand (€982 thou-
sand), are reported in this account since a market value
cannot be reliably determined. Listed shares are carried at
market value of €88 thousand (€86 thousand). This account
also includes interest-bearing homebuilding loans to
employees and other interest-bearing loans totaling €463
thousand (€526 thousand). In addition, the balance of
€3,552 thousand (€1,654 thousand) after netting off benefit
obligations is carried. Amortization of financial assets
amounted to €0 thousand (€0 thousand).

(8) Current receivables

Trade receivables

Current tax assets

Other current assets

06/30/2010

Previo us
year

262,176

216,868

16,925

20,654

15,493

21,280

299,755

253,641

Trade receivables amounted to €262,176 thousand, an
increase of + 20.9% over the figure of €216,868 thousand
for the previous year; this amount includes €1,596 thou-
sand (€948 thousand) receivables from related parties.
The item “Other current assets” includes prepaid expenses
totaling €4,577 thousand (€3,941 thousand) in addition to
other receivables of €16,077 thousand (€17,312) thousand.

(5) Noncurrent tax receivables
This relates to the present value of the corporate in-
come tax credit balance, which was last determined
at December 31, 2006, and has been paid in ten equal
annual amounts since September 30, 2008.

(6) Deferred tax assets
Under IAS 12, deferred tax assets are calculated as the
difference between the IFRS balance sheet amount and
the tax base. They are reported on a gross basis and total
€26,056 thousand (€16,922 thousand), of which €2,491
thousand (€1,734 thousand) will be carried forward for the
future use of tax losses.

(7) Inventories and biological assets

06 / 30 / 2010

Previo us
year

Raw materials and consumables

20,539

26,713

Work in process

35,979

30,469

Immature biological assets

6,670

6,337

Finished goods

73,598

58,014

136,786

121,533

Inventories increased by €15,253 thousand, or 12.6%,
net of writedowns totaling €63,251 thousand (€44,095
thousand). Immature biological assets relate to living
plants in the process of growing (before harvest). The
field inventories of the previous year have been harvested
in full and the fields have been newly tilled in the year
under review. Public subsidies of €1,492 thousand (€1,533
thousand), for which all the requirements were met at the
balance sheet date, were granted for the total area under
cultivation of 4,116 (4,082) ha and were recognized in income.
Future subsidies depend on the further development of
European agricultural policy.

Annual Financial Statements I Notes I Notes to the balance sheet I 71

≤ 60 d ays

61 – 120 d ays

121 – 180 d ays

> 180 d ays

(12) Noncurrent liabilities
The trade payables are due for payment in between one
and five years and the due dates for the other long-term
liabilities extend through 2017.

Long-term provisions

Long-term financial borrowings

Trade payables

Deferred tax liabilities

Other long-term liabilities

06/30/2010

Previo us
year

61,464

21,556

2,265

18,638

10,209

62,037

1,926

6,429

18,075

10,274

114,132

98,741

06 / 30 / 2010

Trade receivables

Other receivables

Previous year

Trade receivables

Other receivables

Carrying
amount

262,176

16,077

278,253

216,868

17,313

234,181

Of which: neither
written down nor
overdue on the
balance sheet
date

Of which: not written down on the
balance sheet date and overdue in the
following time frames

Of which: written
down and not
overdue on the
balance sheet
date

227,243

18,317

5,602

14,617

200

241,860

18,517

5,602

738

4,206

915

5,121

176,946

23,085

4,995

1,032

2,882

15,288

1,287

272

192,234

24,372

5,267

1,032

2,894

3,577

343

3,920

3,004

343

3,347

(9) Securities
Securities amounting to €13,077 thousand (€14,116
thousand) relate primarily to short-term liabilities
securities and fund shares.

(10) Cash
Cash of €100,593 thousand (€111,515 thousand) consists
of balances with banks and cash on hand. The cash flow
statement explains the change in this item compared with
the previous year, together with the change in securities.

(11) Equity
The fully paid-up subscribed capital of KWS SAAT AG
is still €19,800,000.00. The no-par bearer shares are
certificated by a global certificate for 6,600,000 shares.
The company does not hold any shares of its own.

Equity (including minority interest) increased by €58,461
thousand, from €434,486 thousand to €492,947 thousand.
For details, see the statement of changes in equity.

The already overdue trade receivables that have not been
written down fully amount to €2,493 thousand (€4,924
thousand). There are trade receivables for which contractual
conditions were changed in the year under review and that
otherwise would have been written down or overdue in par-
ticular in Eastern and Southeastern Europe, as a result
of the economic situation.

There are no indications on the balance sheet date that
customers who owe trade receivables that have not been
written down and are not overdue will not meet their
payment obligations.

The following allowances have mainly been made for pos-
sible risks of non-payment of trade receivables:

Allowances for receivables

07 / 01

A d ditio n

Disp osal

R eversal

06 / 30

2009/10

21,312

16,149

2,472

4,985

30,004

2008/09

14,358

8,868

538

1,376

21,312

Current financing receivables include an amount of €0
thousand (€1 thousand) receivable from related parties.

Current receivables include an amount of €1,009 thousand
(€1,128 thousand) due after more than one year.

Long-term provisions

Pension provisions

Other provisions

07/01/2009

currency, etc.
C han g es in
the c o nsol.
gro u p,

A d ditio n

56,936

5,101

62,037

1,796

1,871

4,314

288

4,602

C o nsu m ptio n

6,774

192

6,966

R eversal

06 / 30 / 2010

56,192

5,272

61,464

The pension provisions are based on defined benefit
obligations, determined by years of service and pen-
sionable compensation. They are measured using the
accrued benefit method under IAS 19, on the basis of
assumptions about future development. The assumptions
in detail are that wages and salaries will increase by 2.80%
(2.80%) annually and pensions by 2.00% (2.00%) annually.

The discount rate was 4.75%, compared with 5.80%
the year before.

No income or expenses were recognized as a result of
changes in retirement obligations or benefits payable or
from the adjustment to assumptions. For benefit obligations
backed by a guarantee by an insurance company, the
planned assets of €7,932 thousand (€7,728 thousand)
correspond to the present value of the obligation. In accor-
dance with IAS 19, the pension provisions are netted off
against the corresponding assets. Pension funds were
invested in to cover foreign pension commitments.

The accrued benefit is reconciled to the provisions reported in the consolidated financial
statements as follows:

Accrued benefit entitlements at beginning of fiscal year

Cost of additional benefit entitlements

Interest expenses on benefit entitlements acquired in previous years

Changes in consolidated group and currency

Changes in actuarial gains / losses

Pension payments

Accrued benefit entitlements at end of fiscal year

Present value of planned assets

Planned assets carried as assets

Actuarial gains/losses not included

Pension provisions at end of fiscal year

2009 / 10

Previo us
year

71,100

68,372

452

3,257

– 119

11,458

5,405

80,743

16,721

3,552

997

3,315

3,725

5,402

71,100

12,948

1,654

– 11,382

– 2,870

56,192

56,936

Annual Financial Statements I Notes I Notes to the balance sheet I 73

The planned assets changed as follows during the fiscal year:

Present value of planned assets at the start of the fiscal year

Expected gains from planned assets

Changes in actuarial gains / losses

Employer's contribution to external social security bodies

Payments from external social security bodies

Currency difference from foreign planned assets

2009 / 10

Previo us
year

12,948

13,577

900

936

2,035

– 878

780

890

– 1,136

1,168

753

– 798

Present value of planned assets at the end of the fiscal year

16,721

12,948

The pension obligations and planned assets have changed
over time as follows:

Accrued benefit entitlements on 06 / 30

Planned assets on 06 / 30

Shortage (+) / surplus (-)

Empirical gains (+) / losses (-) from pension commitments

Empirical gains (+) / losses (-) from planned assets

The table below shows a breakdown of the pension costs
for the defined benefit obligations:

Costs for additional benefit entitlements

Interest expense

Repayment of actuarial losses

Anticipated income from the planned assets

Pension costs

06 / 30 / 2010

06 / 30 / 2009

06 / 30 /2008

06 / 30 / 2007

80,743

16,721

64,022

990

161

71,100

12,948

58,152

68,372

13,577

61,718

8,174

54,795

53,544

201

1,042

– 1,551

– 1,028

682

2009 / 10

Previo us
year

698

4,142

154

– 885

4,109

997

4,240

– 924

4,313

The pension costs are included in the functional costs with the exception of the interest expense and the anticipated
income from planned assets which are reported under the net financial income/expenses.

As part of the company old-age pension program for
KWS SAAT AG and German subsidiaries, subsequent
benefits will be provided by a provident fund backed by a
guarantee and based on a defined contribution plan. The
costs for contribution to this pension scheme were €682
thousand (€501 thousand).

The return and income from the planned assets depend
on the reinsurance policy, which yields guaranteed in-
terest of 2.25%. For the next year, income totaling
€260 thousand is expected.

In addition, the benefit obligation from salary conversion
was backed by a guarantee that exactly matches the
present value of the obligation of €4,796 thousand
(€3,976 thousand) (defined contribution plan).

The long-term financial borrowings include loans from banks
amounting to €21,556 thousand (€1,926 thousand). They
have remaining maturities through 2017.

Under IAS 12, deferred tax liabilities are calculated as the
difference between the IFRS balance sheet amount and
the tax base. They are reported on a gross basis and total
€18,638 thousand (€18,075 thousand).

(13) Current liabilities

Short-term provisions

Current liabilities to banks

Current liabilities to affiliates

Other current financial liabilities

Short-term borrowings

Trade payables to affiliates

Other trade payables

Trade payables

Tax liabilities

Other liabilities

06 / 30 / 2010

Previo us
year

129,546

112,696

10,345

6,367

119

266

255

10,730

6,691

57,472

55,085

57,472

55,152

22,785

18,251

29,769

29,935

250,302

222,725

Current liabilities increased by a total of €27,577 thousand to €250,302 thousand and are due in less than one year.

Short-term provisions

Obligations from
sales transaction

Obligations from
purchase transaction

Other obligations

07 / 01 / 2009

currency, etc.
C han g es in
the c o nsol.
gro u p,

A d ditio n

C o nsu m ptio n

R eversal

06 / 30 / 2010

88,525

8,124

98,906

87,042

8,784

99,729

2,330

21,841

112,696

1,515

9,678

3,271

18,902

1,845

15,294

121,079

104,181

456

486

9,726

3,339

26,478

129,546

The tax liabilities of €22,785 thousand (€18,251 thousand) include amounts for the year under review and the period not
yet concluded by the external tax audit.

(14) Derivative instruments

N o minal
volu m e

C arryin g
a m o u nts

M arket
values

06 / 30 / 2010

Currency hedges

Interest-rate hedges

Commodity hedges

32,903

28,400

7,111

497

– 319

497

– 319

Of the currency hedges, €3,497 thousand have remaining
maturities of more than one year. Of the interest-rate de-
rivatives, hedges with a nominal volume of €28,400 thou-
sand will mature within one to five years. The commodity
hedges have remaining maturities of less than one year.

Annual Financial Statements I Notes I Notes to the balance sheet I 75

(15) Financial instruments
The table below presents the net gains / losses carried in the income statement for financial instruments
in each measurement category.

The carrying amounts and fair values of the financial instruments are as follows:

Available-for-sale financial assets

Financial assets at fair value

Loans and receivables

Financial liabilities measured at amortized cost

Financial liabilities at fair value

2009 / 10

690

Previo us
year

183

246

– 9,606

– 3,795

– 2,933

– 2,546

– 2,464

2,823

The net income from financial assets includes income and
expenses from financial assets and also the income from
disposal of the associated companies in the previous year.
The net gain / loss from loans and receivables mainly includes
effects from changes in the allowances for impairment.

The average exchange rate in the fiscal year was 1.39
USD/€. If the US dollar depreciated by 10%, the financial
instruments would lose 5% in value. If the US dollar ap-
preciated by 10%, the financial instruments would gain
5% in value.

The net gains/losses from financial assets at fair value and
financial liabilities at fair value mainly include changes in the
market value of derivative financial instruments.

The net losses from financial liabilities measured at amortized
cost mainly consist of interest expense.

Interest income from financial assets that are not measured at
fair value and recognized in the income statement was €1,558
thousand (€3,742 thousand). Interest expenses for financial
borrowings were €2,933 thousand (€2,546 thousand).

In order to assess the risk of exchange rate changes, the
sensitivity of a currency to fluctuations was determined. After
the euro, the US dollar is the most important currency in
the KWS Group. All other currencies are of minor importance.

In order to assess the risk of interest rate changes, the
sensitivity of interest rates to fluctuations was determined.
The average rate of interest in the fiscal year was 0.6%.
A one percentage point increase in the rate of interest
would add a further €0.1 million to the interest result; a
reduction to zero percentage points would reduce it by
€0.1 million. Equity would change by up to €0.1 million in
the event of such a change in the rate of interest.

In order to assess the risk of changes in commodity
prices, the sensitivity of commodity prices to fluctuations
was determined. A 10% increase in commodity prices
would increase the cost of sales by around €0.7 million;
a decrease would reduce it by around €0.7 million.
In the Management Report possible risks resulting from
agreements to financial dependancies are commented.

L o ans an d
receiva bles

Financial assets
at fair value

A vaila ble-for-sale
financial assets

Total carryin g
a m o u nt

Financial instruments

Fair values

Carrying amounts

1,435

262,176

13,077

100,593

20,654

(1,366)

262,176

13,077

100,593

19,288

(0)

1,366

(1,366)

1,366

1,435

(0)

1,435

262,176

13,077

100,593

20,654

(1,366)

397,935

06 / 30 / 2010
Financial assets

Financial assets

Trade receivables

Securities

Cash and cash equivalents

Other current assets

Of which derivative financial instruments

Total

397,935

395,134

Financial lia bilities
a m ortize d c ost
m easure d at

Financial lia bilities
at fair value

Total carryin g
a m o u nt

Financial instruments

Fair values

Carrying amounts

22,826

2,265

10,209

10,730

57,472

29,769

(1,188)

21,556

2,265

10,209

10,730

57,472

28,581

(0)

1,188

(1,188)

1,188

21,556

2,265

10,209

10,730

57,472

29,769

(1,188)

132,001

06 / 30 / 2010
Financial liabilities

Long-term borrowings

Long-term trade payables

Other noncurrent liabilities

Short-term borrowings

Short-term trade payables

Other current liabilities

Of which derivative financial instruments

Total

133,271

130,813

Annual Financial Statements I Notes I Notes to the balance sheet I 77

L o ans an d
receiva bles

Financial assets
at fair value

A vaila ble-for-sale
financial assets

Total carryin g
a m o u nt

Financial instruments

Notes to the income statement
Figures in € thousands, unless otherwise specified; previous-year figures in parentheses

Fair values

Carrying amounts

Income statement for the period July 1, 2009 through June 30, 2010

Previous year
Financial assets

Financial assets

Trade receivables

Securities

Cash and cash equivalents

Other current assets

Of which derivative financial instruments

Total

365,373

363,050

1,594

216,868

14,116

111,515

21,280

(729)

14,116

111,515

20,551

(0)

729

(729)

729

3,248

(0)

3,248

216,868

14,116

111,515

21,280

(729)

367,027

Financial lia bilities
a m ortize d c ost
m easure d at

Financial lia bilities
at fair value

Financial instruments

Total carryin g
a m o u nt

Fair values

Carrying amounts

Previous year
Financial liabilities

Long-term borrowings

Long-term trade payables

Other noncurrent liabilities

Short-term borrowings

Short-term trade payables

Other current liabilities

Of which derivative financial instruments

1,926

6,429

10,274

6,691

55,152

29,935

(1,761)

1,926

6,429

10,274

6,691

55,152

28,174

(0)

Total

110,407

108,646

None of the reported financial instruments will be held to maturity.

Securities classified within level 1 of the fair value hierarchy
totaled €13,076 thousand at June 30, 2010. Financial assets
held for trading (€1,366 thousand) and financial liabilities
held for trading (€1,188 thousand) are categorized in level
2. There are no financial instruments in level 3.

Obligations under rental
agreements and leases

Due within one year

Due between 1 and 5 years

Due after 5 years

1,761

(1,761)

1,761

1,926

6,429

10,274

6,691

55,152

29,935

(1,761)

110,407

06 / 30 / 2010

8,983

9,220

2,701

Previo us
year

6,599

7,382

1,596

20,904

15,577

(16) Contingent liabilities
As in the previous year, there are no contingent liabilities to
report apart from the employer’s statutory secondary liability
for direct pension commitments.

(17) Other financial obligations
There was a €7,064 thousand (€6,120 thousand) obligation
from uncompleted capital expenditure projects.

The leases relate primarily to full-service agreements for IT
equipment and fleet vehicles, which also include services
for which a total of €2,222 thousand (€1,932 thousand) was
paid in the year under review. The main leasehold obligations
relate to land under cultivation.

Net sales

Cost of sales

Gross profit on sales

Selling expenses

Research and development expenses

General and administrative expenses

Other operating income

Other operating expenses

Operating income

Net financial income / expenses

Result of ordinary activities

Income taxes

Net income for the year

Shares of minority interest

Net income after minority interest

€ millio ns

% of sales

€ millio ns

% of sales

2009 / 10

Previous year

754.1

406.1

348.0

128.6

97.5

49.6

44.5

34.4

82.4

– 4.9

77.5

26.0

51.5

1.9

49.6

100.0

53.9

46.1

17.1

12.9

6.6

6.0

4.6

10.9

– 0.6

10.3

3.5

6.8

0.2

6.6

717.2

381.0

336.2

115.0

89.5

46.3

31.9

39.4

77.9

– 2.7

75.2

25.1

50.1

4.0

46.1

100.0

53.1

46.9

16.0

12.5

6.5

4.5

5.5

10.9

– 0.4

10.5

3.5

7.0

0.6

6.4

(18) Net sales

By product category

2009 / 10

Previo us
year

Certified seed sales

687,273

650,855

Royalties income

Basic seed sales

Services fee income

Other sales

By region

Germany

Europe

Americas

Rest of world

34,852

11,875

4,281

15,873

33,988

11,001

4,085

17,236

754,154

717,165

188,890

184,179

291,114

284,660

236,382

220,533

37,768

27,793

754,154

717,165

For further details of sales, see segment reporting.

Sales are recognized when the agreed goods or services
have been supplied and risk and title pass to the buyer.
Any rebates or discounts are taken into account.

The cost of sales increased by €25,091 thousand to
€406,143 thousand, or 53.9% (53.1%) of sales. The
total cost of goods sold was €212,040 thousand
(€198,358 thousand).

Allowances on inventories totaling €19,156 thousand more
than the previous year’s €13,834 thousand, were required.
They were charged to segment results as follows: Sugarbeet
€5,657 thousand (€6,046 thousand), to Corn €13,801
thousand (€6,022 thousand), to Cereals € – 188 thousand
(€1,664 thousand) and to Breeding & Services € – 114
thousand (€102 thousand).

The €13,660 thousand increase in selling expenses to
€128,621 thousand is mainly due to the expansion of dis-
tribution structures in North America and Southern/South-
eastern Europe. This is 17.1% of sales, up from 16.0% the
year before.

Annual Financial Statements I Notes I Notes to the balance sheet I Notes to the income statement I 79

Legal form expenses

2009 / 10

Previo us
year

976

873

Allowances on receivables

16,149

8,868

Counterparty default

499

673

Exchange rate losses
and losses on currency
and interest rate hedges

10,646

14,449

Losses from sales of fixed assets

201

243

Expenses relating to previous
periods

Amortization on goodwill

Other expenses

356

5,613

668

3,706

9,966

34,440

39,446

(21) Net financial income/expenses

2009 / 10

Previo us
year

Interest income

Interest expenses

1,558

3,148

Income from other financial assets

3,565

3,026

100

Interest expenses on donation
of pension provisions

Interest expense for other
long-term provisions

Interest expense for finance leasing

3,257

3,315

165

166

Net interest expense

– 4,980

– 2,905

Net income from subsidiaries
and joint ventures

Net income from participations

Net income from equity
investments

100

183

Net financial income/expenses

– 4,977

– 2,722

The net financial result fell by a total €2,255 thousand
to € – 4,977 thousand. Net interest expense was € – 4,980
thousand (€ – 2,905 thousand), while net income from
equity investments fell by €180 thousand to €3 thousand.
The interest effects from pension provisions comprise
interest expenses (compounding) and the planned income.

Research and development is recognized as an expense
in the year it is incurred; in the year under review, this
amounted to €97,510 thousand (€89,456 thousand the
year before). Development costs for new varieties are not
recognized as an asset because evidence of future economic
benefit can only be provided after the variety has been
officially certified.

General and administrative expenses increased by
€3,307 thousand to €49,598 thousand, representing
6.6% of sales, after 6.5% the year before.

(19) Other operating income

2009 / 10

Previo us
year

Income from sales of fixed assets

272

630

Income from the reversal
of provisions

Exchange rate gains and
gains from currency and
interest rate hedges

Income from recoveries
on receivables written off

Income from reversal
of allowances of receivables

Grants

Income relating to previous periods

Income from loss compensation
received

Miscellaneous other
operating income

9,806

6,062

13,843

7,888

4,985

5,074

3,156

1,376

4,936

2,400

162

190

7,248

8,418

44,589

31,920

Income from foreign exchange transactions, reversals of
provisions and allowances for receivables that were no
longer required, together with book profits from disposals
of property, plant and equipment and grants received,
resulted in other operating income totaling €44,589 thousand,
compared with €31,920 thousand the year before.

(20) Other operating expenses
The other operating expenses are indicative of the after-
effects of the financial crisis, in particular the greater risk of
counterparty defaults. In the year under review, allowances
for receivables of €8,300 thousand (€5,398 thousand)
were recognized as an expense at the Corn Segment,
€7,622 thousand (€3,191 thousand) at the Sugarbeet
Segment, €107 thousand (€279 thousand) at the Cereals
Segment and €120 thousand (€0 thousand) at the
Breeding & Services Segment.

(22) Income taxes
Income tax expense is computed as follows:

2009 / 10

Previo us
year

Income taxes, Germany

Income taxes, other countries

18,452

15,158

8,583

15,323

Current expenses
from income taxes

33,610

23,906

Thereof from previous years

(– 228)

Deferred taxes, Germany

– 4,052

Deferred taxes, other countries

– 3,561

Deferred tax income/expense

– 7,613

(118)

1,081

1,149

Reported income tax
expense

25,997

25,055

Adjusted for tax relating to previous periods, KWS pays tax
in Germany at a rate of 29.1%. Corporate income tax of
15.0% (15.0%) and solidarity tax of 5.5% (5.5%) are applied
uniformly to distributed and retained profits. In addition,
municipal trade income tax is payable on profits generated
in Germany. Trade income tax is applied at a weighted
average rate of 13.3% (13.3%), resulting in a total tax rate
of 29.1% (29.1%).

The “Law on Tax Measures Accompanying Introduction of
the Societas Europaea and Amending Further Tax Regula-
tions” (SEStEG), which was passed at the end of 2006,
means that the corporate income tax credit balance at
December 31, 2006, can be realized. It will be paid out in
ten equal annual amounts from 2008 to 2017. The German
Group companies carried these claims as assets at their
present value totaling €6,812 thousand (€7,279 thousand)
at June 30, 2010. €901 thousand was recovered in the
year under review and recognized directly in equity.

Under German tax law, both German and foreign dividends
are 95% tax exempt.

The profits generated by Group companies outside
Germany are taxed at the rates applicable in the country
in which they are based.

For the German Group companies, deferred tax was cal-
culated at 29.1% (29.1%). For foreign Group companies,
deferred tax was calculated using the tax rates applicable
in the country in which they are based.

Deferred taxes are calculated on the basis of the following temporary differences between the carrying amount of an asset
or liability in the balance sheet and its tax base:

2009 / 10

Previo us
year

C han g e

Deferred
tax assets

2009/10

Previo us
year

Deferred
tax liabilities

C han g e

Intangible assets

Property, plant and equipment

Financial assets

Inventories

Current assets

Noncurrent liabilities

Current liabilities

Tax loss carryforward

Other consolidation transactions

Deferred taxes recognized

3,896

4,010

12,277

11,342

118

6,076

6,857

11,144

4,626

– 781

6,518

3,636

1,751

1,885

404

1,780

2,491

403

407

1,082

1,734

394

– 3

698

757

149

1,042

1,254

– 114

935

– 75

224

1,799

– 757

567

128

687

– 113

– 1

26,056

16,922

9,134

18,638

18,075

563

Annual Financial Statements I Notes I Notes to the income statement I 81

In the year under review, deferred taxes of €958 thousand
(€3,047 thousand), mainly resulting from currency transla-
tion, were directly credited to equity, without recognition in
profit or loss. Tax loss carryforwards of €3,251 thousand
(€4,509 thousand) were regarded as not being able to be
utilized, with the result that no deferred tax assets were able
to be recognized as an asset for them. The anticipated tax-
able profits projected in the medium-term plans of the com-
panies were used for this in principle; these plans, which
cover a period of four years, have been approved by the
Executive Board. They are based on historical patterns
and expectations about future market development.

The following schedule reconciles the expected income tax
expense to the reported income tax expense. The calculation
assumes an expected tax expense, applying the German
tax rate to the profit before tax of the entire Group:

2009 / 10

Previo us
year

Earnings before income taxes

77,454

75,175

Expected income tax expense *)

22,539

21,871

Difference in income tax liability
outside Germany

1,356

1,216

Tax portion for:

Tax-free income

Expenses not deductible
for tax purposes

Temporary differences and
losses for which no deferred
taxes have been recognized

Tax credits

Taxes relating to previous years

Other tax effects

1,947

1,913

848

– 330

– 228

215

131

– 418

118

240

Reported income tax expense

25,997

25,055

Effective tax rate

33.6 %

33.3 %

*) Tax rate in Germany: 29.1 (29.1)%

Other taxes, primarily real estate tax, are allocated to the
relevant functions.

(23) Personnel costs / employees

2009 / 10

Previo us
year

Wages and salaries

117,150

108,333

Social security contributions,
expenses for pension plans
and benefits

30,041

26,685

147,191

135,018

Personnel costs went up by €12,173 thousand to
€147,191 thousand, an increase of 9.0%. The number of
employees (including trainees and interns) increased by
277 (or 8.6%) to 3,492.

Compensation increased by 8.1% to €117,150 thousand.
Social security contributions, expenses for pension plans
and benefits were €3,356 thousand higher than in the
previous year. An amount of €8,282 thousand (€6,074
thousand) was recognized as an expense for defined
contribution plans, including state pension insurance, in
the year under review.

Rest of Europe (without Germany)

888

782

Americas

Rest of world

Total

* Annual average

1,070

1,002

108

3,492

3,215

Of the above number, 662 (630) employees are included
according to the percentage of equity held in the companies
that employ them. 1,325 (1,262) employees are employed
by now 12 proportionately consolidated investees. If
these persons are included in full, the workforce total is
4,155 (3,848). The reported number of employees is
greatly influenced by seasonal labor.

– 350

– 16

Germany

Employees*

2009 / 10

Previo us
year

1,426

1,357

(24) Net income for the year
Net income for the year increased by €1,355 thousand to
€51,457 thousand, representing a return on sales of 6.8%,
down from 7.0% in the previous year. The net profit for the
period after minority interest is €49,559 thousand, and
€7.51 (€6.98) for each of the 6,600,000 shares on issue.
The objective of KWS’ capital management activities is to
pursue the interests of shareholders, employees and other
stakeholders in accordance with the corporate strategy. The
dividend distributed is geared to the earnings strength of the
KWS Group in order to ensure adequate internal financing of
further business expansion in the long term. The equity ratio
is currently 57.5%, following 57.5% in the previous year.

(25) Total remuneration of the Supervisory Board and
Executive Board and of former members of the Super-
visory Board and Executive Board of KWS SAAT AG
The members of the Supervisory Board receive fixed com-
pensation and variable compensation. The total compensa-
tion for members of Supervisory Board amounts to €407
thousand (€360 thousand), excluding value-added tax.
€129 thousand (€288 thousand) of the total compensation
is performance-related.

In fiscal year 2009/10, total Executive Board compensation
amounted to €2,811 thousand (€2,787 thousand). Variable
compensation of €1,967 thousand (€1,970 thousand), cal-
culated on the basis of the net profit for the period of the
KWS Group, includes compensation of €24 thousand (€33
thousand) for duties performed in subsidiaries. The fixed
compensation includes not only the agreed salaries, but also
non-monetary compensation granted by KWS SAAT AG.

Compensation of former members of the Executive Board
and their surviving dependents amounted to €1,003 thou-
sand (€1,029 thousand). Pension provisions recognized
for this group of persons amounted to €2,100 thousand
(€2,414 thousand) as of June 30, 2010.

(26) Shareholdings of members of the Supervisory
Board and Executive Board
Dr. Arend Oetker indirectly holds a total of 1,650,010 shares
and Dr. Dr. h. c. Andreas J. Büchting 100,020 shares in
KWS SAAT AG. All together, the members of the Supervisory
Board hold 1,750,080 shares in KWS SAAT AG.

All together, the members of the Executive Board hold
3,500 shares in KWS SAAT AG.

(27) Audit of the annual financial statements
On December 17, 2009, the Annual Shareholders’ Meeting
of KWS SAAT AG elected the accounting firm Deloitte &
Touche GmbH, Hanover, to be the Group’s auditors for fiscal
year 2009/10.

Fee paid to the external auditors under
section 314 sentence 1 no. 9 of the HGB

a) Audit of the consolidated
financial statements

b) Other certification services

c) Tax consulting

d) Other services

Total fee paid

2009 / 10

609

704

For fiscal year 2010/11, fees for consulting services (ex-
cluding auditing) of up to €100 thousand are expected.

(28) Declaration of compliance with the German
Corporate Governance Code
KWS SAAT AG has issued the declaration of compliance
with the German Corporate Governance Code required by
section 161 of the Aktiengesetz (AktG – German Stock
Corporation Act) and made this accessible to its share-
holders on the company’s home page at www.kws.de.

(29) Related party disclosures
As part of its operations, KWS procures goods and services
worldwide from a large number of business partners, in-
cluding companies in which KWS has an interest. Business
dealings with these companies are always conducted on
an arm’s length basis; from the KWS Group’s perspective,
these dealings have not been material. As part of Group
financing, short- and medium-term term loans are taken out
from and granted to subsidiaries at market interest rates. A
total of 14 shareholders declared to KWS SAAT AG in 2002
that as a result of mutual allocations, they respectively hold
a total of more than 50% of the voting rights. No other related
parties have been identified for whom there is a special
reporting requirement under IAS 24.

Annual Financial Statements I Notes I Notes to the income statement I 83

(30) Supervisory and Executive Board of KWS SAAT AG

SUPERVISORY BOARD

Dr. Carl-Ernst Büchting († May 1, 2010)
Einbeck
Honorary Chairman

Dr. Dr. h.c. Andreas J. Büchting
Einbeck
Chairman of the Supervisory Board

Dr. Arend Oetker
Berlin
Deputy Chairman of the Supervisory Board

Membership of other legally mandated
Supervisory Boards:

• Schwartauer Werke GmbH & Co. KGaA,

Bad Schwartau (Chairman)

• Cognos AG, Hamburg (Chairman)

Membership of comparable German
and foreign oversight boards:
• Hero AG, Lenzburg (President)
• E. Gundlach GmbH & Co. KG, Bielefeld
• Leipziger Messe GmbH, Leipzig
• Berliner Philharmonie GmbH, Berlin (Chairman)

Hubertus von Baumbach
Ingelheim

Jürgen Bolduan
Einbeck
Chairman of the Central Works Committee of KWS SAAT AG

Cathrina Claas-Mühlhäuser
Frankfurt/Main
Membership of other legally mandated
Supervisory Boards:
• CLAAS KGaA mbH, Harsewinkel (Chairwoman)

Membership of comparable German
and foreign oversight boards:

•

CLAAS KGaA mbH, Harsewinkel
(Deputy Chairwoman of the Shareholders’ Committee)

Dr. Dietmar Stahl
Einbeck
Employee Representative

EXECUTIVE BOARD

Philip von dem Bussche
Einbeck
(CEO)
Corporate Affairs, Sugarbeet, Human Resources

Dr. Christoph Amberger
Northeim
Corn, Cereals, Marketing

Dr. Léon Broers
Einbeck, D / Heythuysen, NL
Research and Breeding, Energy plants

Dr. Hagen Duenbostel
Einbeck
Finance, Controlling, Legal, Information Technology

Membership of legally mandated
Supervisory Boards:
• Sievert AG, Osnabrück

Committee

Chairman

Members

Audit Committee

Hubertus von Baumbach

Andreas J. Büchting, Cathrina Claas-Mühlhäuser

Committee for Executive Board Affairs

Andreas J. Büchting

Arend Oetker, Cathrina Claas-Mühlhäuser

Nominating Committee

Andreas J. Büchting

Arend Oetker, Cathrina Claas-Mühlhäuser

(31) Significant subsidiaries and affiliated companies
The following list of shareholdings of KWS SAAT AG is published in the Electronic Federal Gazette:

Subsidiaries and associated companies, which were included in the consolidated group 1)

Sugarbeet

Corn

Cereals

Breeding & Services

100 % BETASEED INC. 2)

100 % KWS MAIS GMBH

81 % KWS LOCHOW GMBH

100 % PLANTA ANGEWANDTE

Shakopee, MN/U.S.

Einbeck

100 % KWS FRANCE S. A. R. L.

100 % KWS BENELUX B. V.5)

Roye/France
100 % DELITZSCH

PFLANZENZUCHT GMBH 10)
Einbeck

100 % O. O. O. KWS RUS 12)
Lipezk/Russia
100 % KWS ITALIA S. P. A.

Forli/Italy

100 % KWS POLSKA SP. Z O. O.

Poznan/Poland

Amsterdam/Netherlands
100 % KWS SEMENA S. R. O.5)
Zahorska Ves/Slovakia
100 % KWS MAIS FRANCE S. A. R. L.5)
Sarreguemines/France
100 % KWS AUSTRIA SAAT GMBH 5)

Vienna/Austria
100 % KWS SJEME D. O. O.5)
Pozega/Croatia

100 % KWS OSIVA S. R. O.5)

100 % KWS SCANDINAVIA A/S 10)

Velke Mezirici/Czech Republic

Bergen
100 % KWS UK LTD.7)

Thriplow/Great Britain

100 % KWS LOCHOW

POLSKA SP.Z O.O.7)
Kondratowice/Poland

49 % SOCIETE DE MARTINVAL S. A.8) *
Mons-en-Pévèle/France

100 % SA MOMONT HENNETTE 14)

Mons-en-Pévèle/France

95 % SARL LABOGERM 14)

Mons-en-Pévèle/Frankreich
100 % SARL ADRIEN MOMONT 14)

Mons-en-Pévèle/France

Guldborgsund/Denmark
100 % KWS SEMILLAS IBERICA S. L.10)

Zaratán/Spain

100 % SEMILLAS KWS CHILE LTDA.
Santiago de Chile/Chile
100 % KWS SEME YU D. O. O.

New Belgrade/Serbia

100 % KWS SUISSE SA
Basle/Switzerland
100 % ACH SEEDS INC.4)

Eden Prairie, MN/U.S.
100 % BETASEED FRANCE S. A. R. L.4)
Sarreguemines/France
100 % KWS UKRAINE T.O.W.12)

Kiev/Ukraine

100 % KWS SEMENA BULGARIA

E. O. O. D.5) Sofia/Bulgaria

100 % SCA HAMET 14)

Mons-en-Pévèle/France

100 % AGROMAIS GMBH5)
Everswinkel

100 % KWS MAGYARORSZÁG KFT.5)

Györ/Hungary
100 % KWS SEMINTE S. R. L.13)

Bucharest/Romania

97 % KWS ARGENTINA S. A.5)
Balcarce/Argentina

51 % RAZES HYBRIDES S. A. R. L.3)

Alzonne/France

50 % AGRELIANT GENETICS LLC.6) *

Westfield, IND/U.S.

50 % AGRELIANT GENETICS INC.*

100 % KWS TÜRK TARIM TICARET A. S. 10)

Chatham, Ontario/Canada

Eskisehir/Turkey

PFLANZENGENETIK UND
BIOTECHNOLOGIE GMBH**
Einbeck

100 % KWS INTERSAAT GMBH

Einbeck
100 % KWS SEEDS INC.9)

Shakopee, MN/U.S.

100 % GLH SEEDS INC.2)

Shakopee, MN/U.S.
100 % KWS SAATFINANZ GMBH

Einbeck

100 % KWS KLOSTERGUT

WIEBRECHTS HAUSEN GMBH
Northeim-Wiebrechtshausen

100 % EURO HYBRID GESELLSCHAFT
FÜR GETREIDEZÜCHTUNG MBH
Einbeck

100 % O. O. O. KWS R&D RUS 11)

Lipezk/Russia

100 % RAGIS KARTOFFELZUCHT- UND
HANDELSGESELLSCHAFT MBH
Klein Wanzleben
100 % KWS R&D China LTD. 15)

Hefei/China

50 % VAN RIJN - KWS B.V. *

Poeldijk/Netherlands
85 % VAN RIJN UK LTD. 16)

Donington/Great Britain
70 % VAN RIJN FRANCE S.A.R.L 16)

Bazemont/France

67 % VAN RIJN BALCAN S.R.L 16)

Vulcan/Romania

75 % DYNAGRI S.A.R.L. 16)
Casablanca/Morocco

* Proportional consolidation
** Profit transfer agreement

1) The percentages stated relate to the interest held by the parent
2) Subsidiary of KWS SEEDS INC.
3) Subsidiary of KWS FRANCE S. A. R. L.
4) Subsidiary of BETASEED INC.
5) Subsidiary of KWS MAIS GMBH
6) Investee of GLH SEEDS INC.

Subsidiary of KWS LOCHOW GMBH
Investee of KWS LOCHOW GMBH
Subsidiary of KWS INTERSAAT GMBH und KWS SAAT AG

7)
8)
9)
10) Subsidiary of KWS INTERSAAT GMBH
11) Subsidiary of O. O. O. KWS RUS
12) Subsidiary of EURO HYBRID GMBH und KWS SAATFINANZ GMBH
13) Subsidiary of KWS MAIS GMBH und KWS SAATFINANZ GMBH
14) Subsidiary of SOCIETE DE MARTINVAL S. A.
15) Subsidiary of EURO HYBRID GMBH
16) Subsidiary of VAN RIJN - KWS B.V.

June 30, 2010

Annual Financial Statements I Notes I General disclosures I 85

(32) Proposal for the appropriation of net retained profits
KWS SAAT AG posted operating income of €12,671
thousand compared with €11,268 thousand for the previous
year. Allowing for net financial income/expenses of €5,194
thousand and income taxes totaling €5,715 thousand, net
income in accordance with the German commercial law
regulations was €12,150 thousand (€11,450 thousand).
Adding the net profit of €430 thousand brought forward
from the previous year, a net retained profit of €12,580
thousand is available for distribution.

A proposal will be made to the Annual Shareholders’ Mee-
ting that an amount of €12,540,000.00 of KWS SAAT AG’s
net retained profit should be distributed as a dividend of
€1.90 (1.80) for each of the 6,600,000 shares.

The balance of €40,000.00 is to be carried forward to the
new account.

Declaration by legal representatives
We declare to the best of our knowledge that the consoli-
dated financial statements give a true and fair view of the
assets, financial position and earnings of the Group in
compliance with the generally accepted standards of
consolidated accounting, and that an accurate picture of
the course of business, including business results, and the
Group’s situation is conveyed by the Group Management
Report, and that it describes the main opportunities and
risks of the Group’s anticipated development.

Einbeck, October 8, 2010
KWS SAAT AG
THE EXECUTIVE BOARD

P. von dem Bussche

Ch. Amberger

L. Broers

H. Duenbostel

Auditors’ Report

We have audited the annual financial statements of the
KWS Group – consisting of the Balance Sheet, the State-
ment of Comprehensive Income, the Notes, the Cash Flow
Statement, Segment reporting and the Statement of
Changes in Equity – and the Group Management Report
for the fiscal year from July 1, 2009, to June 30, 2010, all
of which were prepared by KWS SAAT AG, Einbeck. The
preparation of the consoli-dated financial statements and
Group Management Report according to the International
Financial Reporting Standards (IFRS) as applicable in the
EU, and in addition according to the commercial law regu-
lations to be applied pursuant to Section 315a (1) of the
HGB (German Commercial Code), is the responsibility of
the Executive Board of the company. Our task is to give,
on the basis of the audit we have conducted, an opinion
on the consolidated financial statements and the Group
Management Report.

We conducted our audit of the annual financial statements
in accordance with Section 317 HGB and the generally ac-
cepted standards for the audit of financial statements prom-
ulgated by the Institut der Wirtschaftsprüfer (German Institute
of Certified Public Accountants). According to these stan-
dards, the audit must be planned and executed in such a
way that misstatements and violations materially affecting
the presentation of the view of the assets, financial position
and earnings conveyed by the consolidated financial state-
ments, taking into account the applicable regulations on
orderly accounting, and by the Group Management Report
are detected with reasonable certainty. Knowledge of the
business activities and the economic and legal operating
environment of the Group and evaluations of possible errors
are taken into account. The effectiveness of the internal
accounting control system and the evidence supporting
the disclosures in the consolidated financial statements
and the Group Management Report are evaluated mainly
on the basis of test samples within the framework of the
audit. The audit includes the assessment of the annual

financial statements of the companies included in the consol-
idated financial statements, the definition of the companies
consolidated, the accounting and consolidation principles
used and any significant estimates made by the Executive
Board, as well as the evaluation of the overall presentation
of the consolidated financial statements and the Group
Management Report. We believe that our audit provides a
reasonable basis for our opinion.

On the basis of our audit, we have no reservations to note.

In our opinion pursuant to the findings gained during the
audit, the consolidated financial statements of KWS SAAT
AG, Einbeck, comply with the IFRS as applicable in the EU,
and in addition with the commercial law regulations to be
applied pursuant to Section 315a (1) of the HGB (German
Commercial Code), and give a true and fair view of the as-
sets, financial position and earnings of the Group, taking
into account these regulations. The Group Management
Report accords with the consolidated financial statements,
conveys overall an accurate view of the Group’s position
and accurately presents the opportunities and risks of
future development.

Hanover, October 8, 2010

Deloitte & Touche GmbH
Wirtschaftsprüfungsgesellschaft

(Kompenhans)
Auditor

(Bukowski)
Auditor

Annual Financial Statements I Notes I General disclosures I Auditors’ Report I 87

KWS Saat aG

Grimsehlstrasse 31 • 37555 Einbeck • P.O. Box 1463
Phone + 49 (0) 5561/311-0 • Fax + 49 (0) 5561/311-322
www.kws.com • e-mail: info@kws.com

This translation of the original German version of the Annual Report has
been prepared for the convenience of our English-speaking shareholders.
The German version is legally binding.

Photos / Illustrations:
Eberhard Franke • KWS Group archive • Dominik Obertreis
Dieter Sieg • Corinna Lerch