KWS Group Annual Report 2013

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Annual Report
2013 2014

KWS SA AT AG

Key ﬁ gures of the KWS Group

Content

2013/2014

2012/20131

2011/2012

2010/2011

2009/2010

in € millions

Net sales

1,178.0

1,147.2

Operating income (= EBIT)

138.4

152.1

as a % of net sales (= ROS)

Net Income

as a % of net sales

Operative cash ﬂ ow

Net cash from investing activities

Equity

Equity ratio in %

11.8

80.3

6.8

61.0

–75.4

637.8

50.5

13.3

92.3

8.0

84.6

–88.9

649.7

53.3

986.3

140.9

14.3

94.4

9.6

97.9

–56.6

603.1

55.2

855.4

116.6

13.6

72.9

8.5

101.2

–52.4

530.3

58.8

754.1

82.4

10.9

51.5

6.8

27.4

–55.4

492.9

57.5

2 Foreword of the Executive Board

5 Report of the Supervisory Board

8 The KWS share

11 Spotlight topic

16 Sustainability

18 Corporate Governance

22 Management Report

32 Business performance

Balance sheet total

1,262.8

1,218.7

1,092.3

902.0

857.4

33 Earnings, ﬁ nancial position and assets

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 ﬂ ow per share

Equity per share

1 adjusted pursuant to IAS 19 (2011)

12.8

7.3

15.8

9.0

424.5

396.8

82.6

45.8

4,847

225.8

3.00

11.69

9.24

96.64

65.2

38.4

4,443

209.9

3.00

13.47

12.82

98.44

18.3

10.7

378.2

111.5

28.4

3,851

182.5

2.80

13.89

15.79

91.38

15.2

8.8

12.2

7.1

290.1

275.2

49.3

27.6

3,560

165.0

2.30

10.64

15.33

80.35

58.4

22.0

3,492

147.2

1.90

7.51

4.15

74.68

34 Corn Segment

36 Sugarbeet Segment

38 Cereals Segment

40 Corporate Segment

41 Financial situation

44 Assets

45 Employees

50 Explanations regarding the Annual Financial

Statements of KWS SAAT AG

50 Report on events after the balance sheet date

50 Opportunity and risk report

57 Forecast report

59 Other disclosures

63 Annual Financial Statements of the KWS Group

71 Notes

Foreword of the Executive Board

To our shareholders

Foreword of the Executive Board

In the past ﬁ scal year we again systematically pursued
our growth path. That included orienting ourselves to
long-term goals, not short-term business cycles. Our
activities are always grounded in basic research and
breeding work to develop competitive varieties.

By investing in state-of-the-art processing plants, we
translate genetic potential into high-quality seed. Being
close to farmers makes us their preferred supplier. Our
employees put this strategy into action with their team-
work, sense of personal responsibility and entrepreneurial
freedom. This approach has enabled the KWS Group to
become a leading international seed company.

We were able to continue our growth and posted net
sales of €1,178.0 million, a year-on-year increase of
2.7%. Although we narrowly missed our original target
due to negative exchange rate developments in key
markets, we were able to maintain our market posi-
tion in important growth markets, such as the U.S. Our
operating income (EBIT) was €138.4 million, below the
ﬁ gure for the previous year as expected; exchange rate
developments likewise impacted our earnings negative-
ly. However, our EBIT margin of 11.8% means we are
still above our long-term target of 10%. We thus posted
satisfactory earnings in ﬁ scal 2013/2014 once more,
following two exceptionally strong ﬁ scal years.

We increased capital expenditure at the KWS Group
by €17.4 million to a total of €82.6 million or 1.8 times
the amount of depreciation. Among other things, we
expanded our corn seed production capacities in France,
Serbia and North America, modernized our sugarbeet
seed production in the U.S. and created the distribution
structures we need for future growth. More than 70% of
our capital spending was outside Germany. Nevertheless,

Germany remains a key foundation for our company’s
further development. That is also reﬂ ected in the growth
of our workforce: Of the 404 new jobs we created in
2013/2014, 87 are in Germany.

Apart from continuous product innovation, our highly
motivated employees are vital in ensuring the sustained
development of our company. With KWS’ own blend of
an intimate family atmosphere and its global orientation,
we have now become an attractive employer. On behalf
of the entire Executive Board, I would like to thank all
our colleagues in more than 70 countries for the energy
and commitment they show day in, day out to enable
our company to stay successful.

We again increased the budget for our diverse R&D
activities signiﬁ cantly to €148.8 million in the year under
review, or 12.6% of net sales, since our company’s
further development is founded on and driven by in-
novations in research and breeding. At the beginning of
the current ﬁ scal year, we began operations at a further
research location in the U.S., which will enable us to
expand our expertise in global plant research while also
strengthening our presence in one of our key markets.
Next year we will be able to launch our own operations
in China with our joint venture there: After many years
of examination by the Chinese authorities, we received
permission for this strategic partnership this spring. It
will give us direct access to a further international growth
market for corn seed.

Expansion of our international presence is thus pro-
ceeding alongside our efforts to secure and expand our
core business. We expect the KWS Group to further
grow its net sales in the current ﬁ scal year 2014/2015
by between 5% and 10%. The budgets for capital

from left:

Hagen Duenbostel
Corn, Investor Relations

Léon Broers
Research and Breeding

Eva Kienle
Finance, Controlling,
Global Services, IT, Legal

Philip von dem Bussche
(CEO)
Corporate Development &
Communications, Human Resources

Peter Hofmann
Sugarbeet, Cereals,
Marketing

Foreword of the Executive Board

Report of the Supervisory Board

spending and function costs are being increased to
reﬂ ect our growth strategy, so we likewise expect a
return on sales of 10%. At the same time we intend to
continue our proven dividend policy. The proposal by
the Exe cutive Board and the Supervisory Board on the
appropriation of the proﬁ ts for ﬁ scal 2013/2014 envis-
ages an unchanged dividend of €3.00 per share, or
a dividend payout ratio of 24.7%. We would also like
to take this opportunity to inform you that the Execu-
tive Board and the Supervisory Board have decided to
convert KWS SAAT AG into a European Stock Corpora-
tion – called KWS SAAT SE – subject to the approval
of the Annual Shareholders’ Meeting on December 18,
2014, thus underscoring KWS’ international ambitions
both at home and abroad.

I would like to make special mention of one new feature
in this year’s Annual Report: For the ﬁ rst time, we are
reporting on the sustainability of our business activities in
a separate section. You can ﬁ nd more information in our
detailed Sustainability Report, which is being published
for the seventh time this year.

working in a spirit of trust to make our company a suc-
cess. And I expressly include our business partners,
customers, shareholders and the Supervisory Board in
these thanks. It was for me personally a great pleasure to
be able to make a contribution to the successful devel-
opment of this wonderful company.

Dr. Hagen Duenbostel will take over as Chief Executive
Ofﬁ cer as of January 1, 2015. Dr. Peter Hofmann joined
the Executive Board on October 1, 2014. He is respon-
sible for the product segments Sugarbeet and Cereals
and for Corporate Marketing, in which capacity he is
backed by more than 20 years of successful manage-
ment work for the company. As a result, the change on
KWS’ Executive Board reﬂ ects our spirit of tradition and
progress, true to the motto “Seeding the Future – Since
1856.”

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

After more than nine years on the Executive Board of
KWS SAAT AG, I am leaving the company at the age of
65 at the end of 2014. My thanks go to all the colleagues
around the world with whom I have had the honor of

Philip von dem Bussche
Chief Executive Ofﬁ cer

Report of the Supervisory
Board

The main task in the ﬁ scal year under review was to
expand the market position of KWS and to create the
foundation for the company’s future growth. To do that,
the Supervisory Board approved considerable up-front
costs that will reduce the company’s current proﬁ tability,
but not excessively strain it. The overriding goal is to
secure KWS’ gratifyingly sustained earnings strength at
an EBIT margin of at least 10% in the long term. With this
in mind, we again took important steps in the past year.

The Supervisory Board discharged the duties incum-
bent on it in accordance with the law, the company’s
Articles of Association and the bylaws, regularly advised
and monitored the Executive Board of KWS SAAT AG
in its activities and satisﬁ ed itself that the company was
run properly and in compliance with the law and that
it was organized efﬁ ciently and cost-effectively. The
Supervisory Board decided on all signiﬁ cant business
transactions requiring its consent and carefully accom-
panied the Executive Board in all fundamental deci-
sions of importance to the company. The Supervisory
Board discussed the information and assessments
that inﬂ uenced its decisions together with the Execu-
tive Board. Both boards continued their seamless and
constructive cooperation based on mutual trust. Among
other things, this was demonstrated by the fact that, as
is customary, the Supervisory Board was involved in all
decisions of vital importance to the company at an early
stage. The Supervisory Board was provided with the
necessary information in written and oral form regularly,
promptly and comprehensively. This included all key
information on relevant questions of strategy, planning,
the business performance and situation of the company
and the KWS Group, including the risk situation, risk
management and compliance. Business transactions
requiring consent were submitted to and discussed
and approved by the Supervisory Board in compliance
with the bylaws for the Executive Board. The com-
pany’s business policy, corporate and ﬁ nancial planning,
proﬁ tability and situation, the general development of
the various businesses, market trends and the competi-
tive environment, research and product development
and, along with important individual projects, risk

Andreas J. Büchting, Chairman of the Supervisory Board

management at the KWS Group were also the subject
of detailed discussions. The Chairman of the Supervi-
sory Board continued the bilateral discussions with the
Chief Executive Ofﬁ cer and individual members of the
Executive Board in regular talks outside the meetings of
the Supervisory Board. In addition, there were monthly
meetings between the Chairman of the Supervisory
Board and the Executive Board as a whole, where the
company’s current business development and, in par-
ticular, its strategy, occurrences of special importance
and risk management were dealt with. The Chairman of
the Supervisory Board informed the Supervisory Board
of the results of these meetings. The Supervisory Board
did not make use of its right to conduct an examination
granted by Section 111 (2) AktG (German Stock Corpo-
ration Act) since the reporting by the Executive Board
meant there was no reason to do so.

Focal areas of deliberations
The full Supervisory Board held ﬁ ve regular meetings in
ﬁ scal 2013/2014. Its members participated in all of the
meetings, with the exception of two members who were

Report of the Supervisory Board

each unable to attend one meeting. The meeting of the
Supervisory Board to discuss the ﬁ nancial statements on
October 23, 2013, was devoted to examining and ap-
proving the ﬁ nancial statements of KWS SAAT AG and
the consolidated ﬁ nancial statements of the KWS Group
as of June 30, 2013. At that meeting, the Supervisory
Board also dealt with the consequences of the recent
changes to the International Financial Reporting Stan-
dard (IFRS 11) on consolidation practices at the KWS
Group. The focus of the meetings on December 18 and
19, 2013, was the “Strategic Planning” of KWS, cover-
ing a timescale of the next ten years. At its meeting on
March 27, 2014, the Supervisory Board heard reports
on the progress made in breeding in all of KWS’ prod-
uct categories. In addition, the status of development
in the most important research projects was discussed.
Not least, the Supervisory Board made the decision at
this meeting to establish a research center in the United
States to complement the research location in Einbeck.
The Supervisory Board also approved acquisition of
the outstanding shares of KWS LOCHOW GMBH. On
June 26, 2014, the agenda as usual included adoption
of the corporate planning for ﬁ scal 2014/2015, including
medium-term planning up to 2017/2018. This comprised
individual projects requiring the Supervisory Board’s
consent and relating to further expansion of the Einbeck
location, extensive increases in capacity for our seed
processing plants and additions to our IT structures.
The survey of the Supervisory Board with the aim of
avoiding and identifying fraud was also conducted. The
Super visory Board is not aware of any such acts. At its
meeting on October 15, 2014, the Supervisory Board
discussed changing KWS SAAT AG to an European
stock corporation – KWS SAAT SE – and agreed on
a corresponding proposed resolution for the Annual
Shareholders’ Meeting.

Annual and consolidated ﬁ nancial statements and
auditing
Deloitte & Touche GmbH Wirtschaftsprüfungsgesell-
schaft, Hanover, the independent auditor chosen at the
Shareholders’ Meeting on December 19, 2013, and
commissioned by the Audit Committee, has audited the
ﬁ nancial statements of KWS SAAT AG that were present-
ed by the Executive Board and prepared in accordance
with the provisions of the German Commercial Code
(HGB) for ﬁ scal 2013/2014 and the ﬁ nancial state-
ments of the KWS Group (IFRS consolidated ﬁ nancial

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 unqualiﬁ ed audit certiﬁ cate. In addition, the
auditor concluded that the audit of the ﬁ nancial state-
ments did not reveal any facts that might indicate a
misstatement in the declaration of compliance issued by
the Executive Board and the Supervisory Board in ac-
cordance with Section 161 AktG (German Stock Corpo-
ration Act) with respect to the recommendations of the
“Government Commission for the German Corporate
Governance Code” (cf. Clause 7.2.3 (2) of the German
Corporate Governance Code).

The Supervisory Board received and discussed the
ﬁ nancial statements of KWS SAAT AG and the consoli-
dated ﬁ nancial statements and Management Reports
of KWS SAAT AG and the KWS Group, along with the
report by the independent auditor of KWS SAAT AG
and the KWS Group and the proposal on utilization of
the net proﬁ t for the year made by KWS SAAT AG, in
due time. Comprehensive documents and drafts were
submitted to the members of the Supervisory Board as
preparation; for example, all of them were provided with
the annual ﬁ nancial statements, Management Reports,
audit reports by the independent auditors, Corporate
Governance Report, Compensation Report and the
proposal by the Executive Board on the appropriation
of the proﬁ ts. The Supervisory Board also held detailed
discussions of questions on the agenda at its meet-
ing to discuss the ﬁ nancial statements on October 15,
2014. 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. According 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 ﬁ nal results of its own examina-
tion, the Supervisory Board endorsed the results of the
audit, among other things as a result of the vote by
the Audit Committee, and did not raise any objections.
The Supervisory Board gave its consent to the annual

ﬁ nancial statements of KWS SAAT AG, which were
prepared by the Executive Board, and to the consoli-
dated ﬁ nancial statements of the KWS Group, along
with the Management Reports of KWS SAAT AG and
the KWS Group. The ﬁ nancial statements are thereby
approved. The Supervisory Board also endorses the
proposal by the Executive Board to the Annual Share-
holders’ Meeting on the appropriation of the net retained
proﬁ t of KWS SAAT AG after having examined it.

Corporate Governance
The Supervisory Board conducted its efﬁ ciency review
in accordance with Clause 5.6 of the German Corporate
Governance Code for ﬁ scal 2013/2014 accompanied
and supported by Ernst & Young GmbH Wirtschafts-
prüfungsgesellschaft. Recommendations and measures
derived from it were implemented without exception.

The Supervisory Board regularly addressed the question
of any conﬂ icts of interest on the part of its members
and those of the Executive Board. In the year under re-
view, there were no such conﬂ icts of interests that had to
be disclosed immediately to the Supervisory Board and
reported to the Annual Shareholders’ Meeting.

Supervisory Board Committees
The Audit Committee convened for two joint meetings
in ﬁ scal 2013/2014 and also held three telephone confer-
ences, on all occasion with all its members in attendance.
In its meeting on September 30, 2013, the Audit Commit-
tee discussed the 2012/2013 annual ﬁ nancial statements
and accounting of KWS SAAT AG and consolidated
ﬁ nancial statements of the KWS Group. Its deliberations
also focused on the changes in consolidation practices
at the KWS Group due to the fact that it will no longer
be possible to consolidate joint ventures proportionately
effective ﬁ scal year 2014/2015. The Annual Compliance
Report and the results of the auditing projects were on the
agenda at its second meeting on March 27, 2014. The
audit plan for ﬁ scal 2014/2015 was also discussed and
adopted. The quarterly reports and the semiannual report
for ﬁ scal 2013/2014 were discussed in detail in three tele-
phone conferences and their publication was approved.

In addition, the Audit Committee obtained the state-
ment of independence from the auditor in accordance
with Clause 7.2.1 of the German Corporate Gover-
nance Code, monitored the auditor’s independence and

examined its qualiﬁ cations. The Audit Committee also
satisﬁ ed itself that the regulations on internal rotation
pursuant to Section 319a (1) No. 4 HGB were observed
by the independent auditor. The Audit Committee con-
vened on September 29, 2014, to discuss the current
annual ﬁ nancial statements of KWS SAAT AG and KWS’
consolidated ﬁ nancial statements and accounting. The
independent auditor explained the results of its audit
of the 2013/2014 ﬁ nancial statements and pointed
out that there were no grounds for assuming a lack of
impartiality on the part of the independent auditor in its
audit. The Audit Committee also dealt with the proposal
by the Executive Board on the appropriation of the net
retained proﬁ t of KWS SAAT AG and recommended that
the Supervisory Board approve it. At this meeting the
Audit Committee also heard a report on the audit relat-
ing to the conversion of KWS SAAT AG into a European
Company – KWS SAAT SE – in accordance with Article
37 (6) of the Council Regulation on the Statute for a
European Company. This audit was likewise carried out
by Deloitte & Touche GmbH Wirtschaftsprüfungsgesell-
schaft, Hanover.

In the year under review the Committee for Executive
Board Affairs dealt with the question of the successor
to Chief Executive Ofﬁ cer Philip von dem Bussche, who
will leave the Executive Board of KWS SAAT AG at the
end of 2014 aged 65. Dr. Hagen Duenbostel, who was
KWS’ Chief Financial Ofﬁ cer until mid-2013 and is cur-
rently responsible for the Corn Segment, was appointed
by the Supervisory Board as Chief Executive Ofﬁ cer as
of January 1, 2015, at the proposal of the Committee for
Executive Board Affairs. As part of that, the Supervisory
Board extended his contract until December 31, 2019.
The Supervisory Board appointed Dr. Peter Hofmann as
a new member of KWS’ Executive Board effective Octo-
ber 1, 2014, for an initial period of three years. He will as-
sume responsibility from Philip von dem Bussche for the
product segments Sugarbeet and Cereals, as well as for
Corporate Marketing. Dr. Hofmann is 54 years old, has
a degree in agricultural engineering and has been with
KWS for 20 years. He has managed operational business
at the Sugarbeet Segment since 2005. The Supervisory
Board also appointed Eva Kienle as a full member of
the Executive Board for a term of ﬁ ve years as of July 1,
2014, at the proposal of the Committee for Executive
Board Affairs and additionally entrusted her with Human
Resources effective January 1, 2015. In addition, the

Report of the Supervisory Board | The KWS share

The KWS share

Supervisory Board Committees

Committee

Chairman

Audit Committee

Hubertus von Baumbach

Committee for Executive Board Affairs

Andreas J. Büchting

Nominating Committee

Andreas J. Büchting

Members

Andreas J. Büchting
Jürgen Bolduan

Arend Oetker
Cathrina Claas-Mühlhauser

Committee for Executive Board Affairs formulated a pro-
posal to the full Supervisory Board regarding adjustment
of Executive Board compensation; the proposal was
accepted by the full body on June 26, 2014, and went
into force on July 1, 2014 (see report on compensation
on page 62).

The Nominating Committee dealt with the question of
the composition of the Supervisory Board to be formed
for KWS SAAT SE. In agreement with the full body, the
sitting members of the Supervisory Board will be pro-
posed to the Annual Shareholders‘ Meeting on Decem-
ber 18, 2014, for election to the Supervisory Board of the
future KWS SAAT SE. The term of the ﬁ rst Supervisory
Board of KWS SAAT SE is to end with the completion
of the Annual Shareholders’ Meeting that will decide on

the ratiﬁ cation on the acts of the Supervisory Board of
KWS SAAT SE for ﬁ scal 2016/2017. That corresponds to
the term of the current body.

The Supervisory Board expresses its thanks to the
Executive Board and all employees of KWS SAAT AG
and its subsidiaries in the KWS Group for their com-
mitment and contributions to the successful continued
performance of KWS in ﬁ scal 2013/2014.

Einbeck, October 15, 2014

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

The KWS share

Expansive monetary policy drives capital markets
The capital markets continued to be swayed by eco-
nomic and political uncertainties in the year under
review. The expansive monetary policy of the central
banks continued to ensure that the price trend was
predominantly positive, a situation that was interrupted
temporarily only by fears that the massive injection of
liquidity into the markets would begin to be reduced.

Against this backdrop and driven by additional positive
signals about economic trends in Europe, the German
stock indexes posted new record highs. The DAX broke
the 10,000 point mark for the ﬁ rst time and closed just
below it at 9,833 points on June 30, 2014. The DAX
rose by 22.9% year on year. That performance was sur-
passed in the period under review by the SDAX, which
soared by 27.2% to 7,385 points.

The KWS share remains stable in a narrow range
After its sharp rise in price in 2012/2013, the KWS share
entered calmer waters in the year under review. That is
reﬂ ected by its ﬂ uctuation within a relatively narrow range
between €243.20 (low for the year) and €280.60 (high for

the year). Overall, the KWS share fell by around 7.4% in
the period from July 1, 2013, to June 30, 2014. The rea-
sons for this are to be found in an overall more restrained
mood on the global agricultural markets and the negative
exchange rate effects that impacted the past ﬁ scal year.

Performance of the KWS share

in %

35
30
25
20
15
10
5
0
–5
–10
–15

07/01/13 08/01/13 09/01/13 10/01/13 11/01/13 12/01/13 01/01/14 02/01/14 03/01/14 04/01/14 05/01/14 06/01/14 06/30/14

KWS share –7.4%

DAX +22.9%

SDAX +27.2%

The KWS share is a ﬁ rm part of the SDAX and the
DAXplus Family 30 Index
On the basis of the share price development in the past
ﬁ scal year, KWS SAAT AG’s market capitalization fell
slightly to €1,700 million (previous year: €1,834 million)
or, solely taking into account the free ﬂ oat of 29.7%,
€511.7 million (€552.0 million). The KWS share occu-
pies a mid-range position in the SDAX, Germany’s most
important index for small caps. Measured in terms of
free ﬂ oat market capitalization, the KWS share ranked

17th in the index, which comprises 50 companies, at the
relevant key date of June 30, 2014, and 26th in terms of
trading volume over the past twelve months.

No change in the shareholder structure
KWS SAAT AG’s shareholder structure remained practi-
cally unchanged in the past ﬁ scal year. Only Tessner
Beteiligungs GmbH increased its holdings by 0.4 per-
centage points to 14.2%.

Shareholder structure at September 30, 2014

in %

29.7
(cid:41)(cid:85)(cid:72)(cid:72)(cid:3)(cid:389)(cid:82)(cid:68)(cid:87)

14.2
Tessner
Beteiligungs GmbH

Shareholder
structure
6,600,000
shares

56.1
Families
Büchting
Arend Oetker
Giesecke

The KWS share

Spotlight topic

Great acceptance for our Employee Share Program
For more than 35 years we have offered our employees
the chance to become a shareholder in the company
and thus share in its success and identify more strongly
with it. The structure of our Employee Share Program
remained unchanged in the year under review. Our
employees were able to buy up to 500 KWS shares at
a price of €202.16, including a 20% bonus, which the
individual employees must pay tax on. 401 employees
(previous year: 384) took up this offer and purchased a
total of 11,028 shares (previous year: 12,725), corre-
sponding to an average stake per employee of 28 shares
(previous year: 33). The acquired shares are subject to
a lock-up period of four years. They cannot be sold,
transferred or pledged during this period. As in previous
years, the shares used for the Employee Share Program
were acquired in accordance with the stipulations in
Section 71 (1) No. 2 of the German Stock Corporation
Act (AktG). A total of €2.8 million (previous year:
€3.4 million) was used to buy back the company’s own
shares, giving an average purchase price per share of
€257.00 (previous year: €265.20).

Dividend of €3.00 a share
At the Annual Shareholders’ Meeting on December 19,
2013, the shareholders resolved to increase the dividend
per share by €0.20 to €3.00. The number of shares
remained unchanged at 6,600,000, giving a total amount
distributed of €19.8 million (previous year: €18.5 million).
The dividend payout ratio was thus 21.5% relative to
the KWS Group’s net income of €92.3 million for ﬁ scal
2012/2013.

Trend in dividend payouts

in €

2.80

3.00

1.80

1.90

2.30

2008/2009

2009/2010

2010/2011

2011/2012

2012/2013

Proposal on the appropriation of the proﬁ ts for ﬁ scal
2013/2014
The Executive Board and Supervisory Board propose
payment of a dividend of €3.00 for ﬁ scal 2013/2014 to
the Annual Shareholders’ Meeting. This continues our
proven dividend policy of an annual payout of between
20% and 25% of the KWS Group’s net income for the
year. The dividend yield of the KWS share based on its
closing price on June 30, 2014, would thus be 1.1%.

Key ﬁ gures for the KWS share

Number of shares (June 30)

Closing price (June 30)

Low

High

Market capitalization (June 30)

2012/2013

2013/2014

in millions

in €

in € millions

6.6

277.95

200.10

297.10

1,834

6.6

257.50

243.20

280.60

1,700

In this context, it must also be kept in mind that the
properties and performance our crops now exhibit have
only been achieved through decades – no, centuries –
of breeding work.

The breeder’s exemption
Until now, the breeder’s exemption has been regarded
as an adequate means of sharing beneﬁ ts. It states that
every protected variety that is commercially available
is allowed to be bred further, i.e. crossed, without the
consent of the holder of the rights to the variety. That
means donor countries also have free access to breed-
ing progress. This open source system has proven its
worth over many years, ensuring the lively international
exchange of plant genetic resources and promoting
both genetic diversity and breeding progress. Even small
and inventive plant breeders were able to successfully
share in the innovation process as a result.

Spotlight topic

Who owns our planet’s plant genetic resources?

The international community wants to regulate how
beneﬁ ts are shared between the donor countries
and users

This interesting question was actually resolved in 1992,
when the parties to the Convention on Biological Diversity
(CBD) speciﬁ ed that plant genetic resources are owned
by their countries of origin. Until that time, it had been
assumed that they were a common heritage of mankind.
Since then, the question has been to ﬁ nd a practicable
way to ensure that beneﬁ ts are shared between the
donor countries and users.

Should beneﬁ t sharing extend to the past? That would
mean Germany would have to pay royalties to Peru
retroactively since Frederick the Great’s famous “Potato
Decree” in 1756, under which he ordered the tuber from
Peru to be grown in Prussia. And we would not only
have to pay royalties for potatoes, but also for all major
agricultural crops, since they mainly originate from the
resource-rich centers of diversity outside Europe.

Vavilov centers of diversity

Sunﬂower

Cereals

Sugarbeet

Lucernes

Sorghum

Beans
Sweet potatoes
Corn

Potatoes
Corn

Cereals
Coffee

Rice
Sugar cane

Banana
Coconut

Spotlight topic

ABS
The term “access and beneﬁ t sharing” comes from
the CBD (1992) and denotes global access to genetic
resources coupled with ensuring that the countries of
origin have a fair and equitable share in the beneﬁ ts from
their use. The current genetic diversity in commercial
plant breeding may be sufﬁ cient to achieve small pro-
gress in breeding year after year. However, global chal-
lenges, such as climate change, demand that hitherto

Colorful mix: The genetic diversity of corn seed is clear to the naked
eye during planting.

unexplored genetic resources be tapped and leveraged
– and, as in the past, they are to be found in the well-
known centers of diversity.

The Nagoya Protocol
The Nagoya Protocol (Nagoya Protocol on Access to
Genetic Resources and the Fair and Equitable Sharing
of Beneﬁ ts Arising from their Utilization) enshrined in the
Convention on Biological Diversity is now intended to
regulate access to and use of genetic resources and fair
and equitable sharing of beneﬁ ts under international law.
It aims to enable resource-rich developing and emerging
countries to gain for the ﬁ rst time a share of the com-
mercial advantages that companies obtain from using
genetic resources. The intention is therefore to create
a genuine win-win situation that also establishes legal
security. The Nagoya Protocol was adopted in 2010
and came into effect on October 12, 2014, after being
ratiﬁ ed by more than 50 parties to the convention. The
participating countries were urged to enact legislation in
their jurisdictions to make sure that the agreements in
the Nagoya Protocol are implemented and observed. In
April 2014, the European Union thus adopted Regula-
tion No. 511/2014, under which the Nagoya Protocol is
to be implemented in its jurisdiction.

The EU Regulation
However, the provisions of the EU Regulation go well
beyond the requirements deﬁ ned in the Nagoya
Protocol. Users of genetic material will then not only
be obliged to obtain a declaration of consent from the
country of origin for them to access genetic material, but
also to document the sources for the genetic material
used to develop new varieties. That applies not only to
plant genetic resources used in situ, i.e. directly from
their natural habitat, but also to plant genetic material
that is used ex situ for further breeding and comes from
existing public and private collections. There would
therefore be no cut-off point for the obligation to furnish
proof of origin and provide documentation. Conse-
quently, the origin of all variations used for a variety that
already has market approval must be completely docu-
mented if that variety is used for further breeding to en-
able claims for royalties to be asserted. Such documen-
tation as required by the EU Regulation is not feasible in
practice, as the following example demonstrates.

Breeding tree for the winter wheat variety “Dekan”

Vers. P342

Rabe

Jubilar

Crossings of breeding
strains of
Perdix, Cappelle,
Champlein, Viking,
Tetrix, Jubilegem

Crossings of
breeding strains of:
Cappelle, Prof. Marchal,
Marne

Ibis

Caribo

Strain
LP 2.1341.69

Armada

Maris Hobbit

Carimulti

Strain
SB 1/9/83

Strain
LP 10990.80

Greif

Dekan

Source: KWS LOCHOW GMBH breeding documentation, approval 1999

The wheat variety “Veery” is the product of 3,170 crosses
between 51 parent varieties from 26 different countries.
By way of comparison: KWS alone puts some 300 new
varieties on the market every year. The upshot is an
exponentially increasing deluge of data that no one can
furnish or analyze properly. Last but not least, the Regu-
lation even prevents hitherto free and unhindered access
to commercially available varieties and breeding materials,
unlike under the breeder’s exemption.

A possible solution
Plant breeding companies, associations and scientiﬁ c
institutions support the goals of the Nagoya Protocol.
A practicable alternative on the use of plant genetic
resources is in principle offered by the FAO’s International

Treaty on Plant Genetic Resources for Food and Agricul-
ture. It likewise aims to ensure beneﬁ ts are shared, while
creating maximum legal security for all parties. However,
the treaty does not cover all types of plants, so it is vital
for it to be expanded. German plant breeders across all
companies are in favor of this treaty being extended to
cover all food and non-food crops so that the countries
of origin of new genetic material share in the beneﬁ ts from
commercial use of future agricultural varieties. As part of
that, it must not be forgotten that the “original material”
for our crops has been enhanced considerably by many
years of breeding. In view of the challenges of climate
change and feeding the world’s population, this work
to produce innovation must also be rewarded fairly and
equitably. Otherwise innovation will come to a standstill!

Spotlight topic

WINTER-HARDY
Cold resistance in sugarbeet

Sugarbeets that are not sown in the spring but rather in the
fall are called winter beet. They defy the cold during the winter
months and have a well-developed foliage by the time spring
comes around. As a result, the light intensity in this season can
be used more effectively and the beets can store more sugar in
their roots than would be possible in conventional cultivation.
An increase in yields of 20%–30% is expected to result from
extending the vegetation period to around a year, which also
opens up diverse options for the entire value chain. KWS
is applying the latest research and breeding methods to
increase winter beet’s frost tolerance.

ICEBREAKER

Sustainability

The importance of sustainability for our company
Since being founded in 1856, we as a family-run busi-
ness have developed a corporate culture and values that
are based on a special sense of responsibility toward
future generations and unite this responsibility with the
mission of long-term commercial success.

The development of each new variety takes up to ten
years. That requires proactive planning and action. We
believe it is important to identify and anticipate the eco-
nomic, ecological and social challenges of the future,
i.e. to orient our company strategically and operationally
on that basis.

We therefore address regularly and carefully external
inﬂ uences and the resulting risks and opportunities, now
and in the future, in our business activities.

Group-wide analysis of core sustainability issues
We conducted a materiality analysis this year for the ﬁ rst
time ever, as part of which we asked various stakehold-
ers, including farmers, suppliers, scientists, investors
and NGOs, about what they expect from KWS regarding
sustainability. The results will enable us to address key
sustainability issues even more purposefully and entrench
them more deeply in our strategy. Issues of particular
relevance were:

Seed quality: Our customers trust in the quality of our
seed, which we ensure by extensive testing.
Product innovations: New plant varieties are geared
toward market needs. By steadily improving the yield
performance of our products, we help improve resource
efﬁ ciency in the agricultural production process. Only
by doing that can we effectively tackle the challenges
of climate change and growing demand as a result of
global population growth.

Modern breeding methods: By using leading-edge
breeding methods, we create progress in yields of
1% – 2% a year. In addition, the essence of plant breed-
ing is to promote preservation of genetic diversity by
new crossings.
Variety protection: We are committed to appropriate
variety protection. We can only reﬁ nance our high ex-
penditures on research and development if our varieties
are adequately protected.
Product safety: Our products must not endanger peo-
ple’s health or the environment – irrespective of whether
the variety is ecological, conventional or genetically
modiﬁ ed. Extensive trials and analyses are conducted in
accordance with ofﬁ cial requirements in order to prove
their safety.
Economic performance: A clear focus on core busi-
ness and ﬁ nancial independence, liquidity and proﬁ tabil-
ity have contributed to the company’s positive economic
development. Our aim is to ensure that that remains so.
Employment, social and environmental standards:
As a responsible, internationally growing company we
have to deﬁ ne values, rules, guidelines and standards in
the ﬁ elds of employment, protection of the environment
and social welfare and ensure they are put into practice
at all subsidiaries and associated companies. We must
also establish them for our business partners in the sup-
ply chain and prevent violations of them.
Compliance: We have to ensure compliance with the law
and company requirements in a growing group of com-
panies by means of effective compliance management.
Employees: KWS is positioned worldwide as one of
the leading seed companies. We tackle the challenge of
acquiring and keeping qualiﬁ ed employees by tailored
employer branding measures and talent sourcing activi-
ties. The difference between KWS and other market play-
ers is reﬂ ected in a personal and down-to-earth culture
based on communication across hierarchies. We also

Corporate Governance

We see our responsibility toward future generations in sustainable behavior toward people and nature.

attach great importance to extensive training and con-
tinuing education.
Society: Since the company was founded, KWS has
strengthened and enhanced the attractiveness of its so-
cial environment by pinpointed donations and sponsor-
ing in the regions where we operate. However, continu-
ous, trust-building dialogue with our stakeholders is vital
– and we also conduct such dialogue on critical issues.
Environmental protection: We strive to surpass statu-
tory requirements relating to the safety of our plants and
processes, as well as to efﬁ cient use of resources in the
production process, such as water, energy, fertilizers
and pesticides, as far as our inﬂ uence allows.

Reporting on sustainability and outlook
Since 2008 we have published our annual Sustainability
Report in accordance with the criteria speciﬁ ed by the
Global Reporting Initiative. We have adapted our sus-
tainability reporting this year on the basis of the materiality
analysis and geared the report’s structure and content
to the results of that analysis. In order to increase trans-
parency regarding the development of key sustainability
issues, we are working to expand our sustainability
reporting in conjunction with Group-wide data capture
and analysis. The medium to long-term objectives are to
extend sustainability reporting to the entire KWS Group
and to integrate it in our Annual Report.

The results of the analysis will also give us a basis for
reviewing the strategic and operational action our compa-
ny needs to take and to derive potential for improvement.

Corporate Governance

KWS SAAT AG’s successful development since 1856 is
founded on thinking for the long term and acting in terms
of sustainability. Corporate Governance is entrenched
at the company and enables us to ensure responsible,
value-creating management and control of the company,
in particular by the Executive Board and Supervisory
Board. We create trust by heeding the interests of our
customers and employees, the capital markets and our
national and international business partners – and that
makes a key contribution to our lasting success.

We live up to our responsibility and take into account
the relevant legal requirements regarding management
and supervision of German stock corporations in our
decisions. We also intensively address the acknowl-
edged standards of good and responsible Corporate
Governance, in particular the German Corporate Gover-
nance Code. The Executive Board and the Supervisory
Board regularly discuss different aspects of Corporate
Governance and make a major contribution to its con-
tinuous further development.

You can ﬁ nd detailed information on Corporate Gov-
ernance in our Corporate Governance Report (which
is also the declaration on Corporate Governance in
accordance with Section 289a of the German Com-
mercial Code (HGB)), which is available on our website
at www.kws.com > Company > Investor Relations >
Corporate Governance. The Compensation Report,
which is presented on pages 60 to 62, contains details
on the compensation system and the individual remu-
neration of the members of the Executive Board and the
Supervisory Board.

Compliance declaration in accordance with Section
161 AktG (German Stock Corporation Act) 2013/2014
The Executive Board and the Supervisory Board of
KWS SAAT AG declare in compliance with Section 161
AktG (German Stock Corporation Act) that the com-
pany has complied with the recommendations of the
German Corporate Governance Code in the version

dated May 13, 2013, since the last compliance declara-
tion in October 2013, and with the recommendations of
the code in the version dated June 24, 2014, since its
publication in the ofﬁ cial section of the Federal Ofﬁ cial
Gazette, and does now comply and will comply with
them in the future, with the following exceptions.

In accordance with Clause 5.4.3 Sentence 1 of the
German Corporate Governance Code, elections to the
Supervisory Board are to be made on an individual basis.
The Supervisory Board and the Executive Board will
propose to the Annual Shareholders’ Meeting that the
company be converted into a European Company (SE),
with the shareholder representatives of the ﬁ rst Supervi-
sory Board of KWS SAAT SE being appointed pursuant
to the Articles of Association in accordance with Article
40 (2) Sentence 2 of the Council Regulation on the
Statute for a European Company. There is not to be any
change in the persons representing the shareholders as
a result of the conversion; the term of ofﬁ ce for members
of the ﬁ rst Supervisory Board of KWS SAAT SE is also
not to exceed their remaining term for which they hold
their seat on the Supervisory Board at KWS SAAT AG.

Clause 7.1.2 Sentence 4 of the German Corporate
Governance Code states that the consolidated ﬁ nancial
statements shall be publicly accessible within 90 days
of the end of the ﬁ scal year and interim reports within
45 days of the end of the reporting period. KWS SAAT AG
publishes its consolidated ﬁ nancial statements and interim
reports within the period of time deﬁ ned in the regulations
for the Prime Standard of the German Stock Exchange.
The company’s seasonal course of business means that it
cannot ensure compliance with the periods recommended
in the German Corporate Governance Code.

Einbeck, October 2014

The Supervisory Board

The Executive Board

Improvements in seed quality and technological progress have signiﬁ cantly increased sugarbeet emergence in the past years – and that is
vital in achieving a high adjusted sugar yield.

Corporate Governance

COST SAVINGS
Dry-down effect in grain corn

Dent corn varieties have a further, extremely positive
property in addition to their high yield: They can release wa-
ter from their grain particularly well and quickly – what is called
the dry-down effect. This has a major impact on the cost of
drying corn. The less water a variety contains when harvested,
the less energy is needed to dry the corn before storing it and
getting it ready for the market. This lower energy consumption
has a positive environmental effect – and cuts costs. Initial
grain corn varieties with especially good maturation have
been bred by KWS and have already obtained approval
from the German Federal Ofﬁ ce of Plant Varieties –
innovations from KWS.

SOMETIMES
DRY IS GOOD

Management Report of the KWS Group for 2013/2014
Fundamentals

Management Report of the
KWS Group for 2013/2014
Fundamentals

Group structure and business activity
The KWS Group is one of the world’s leading vendors
of high-quality seed. We have specialized in develop-
ing, producing and distributing seed for agriculture
since 1856. From its origins as a sugarbeet breeder, our
company has evolved into an innovative provider with
a broad portfolio of crops thanks to its strong focus on
research and breeding of new, high-yielding varieties.
We cover the complete value chain of a modern seed
producer – from the breeding of new varieties, multipli-
cation and processing to marketing and consulting for
farmers.

Extensive product portfolio
We supply our customers, the farmers, with crops tai-
lored to the different climatic conditions in their regions.
They include corn and sugarbeet, the cereals wheat,
rye and barley, oil plants such as rapeseed, sunﬂ ower
and soybean, as well as potatoes, mainly for the moder-
ate climatic zone. We expanded our portfolio to include
varieties for subtropical regions by moving into Brazil
in 2012.

Global footprint
The KWS Group maintains its own breeding and distri-
bution operations in more than 70 countries. We gener-
ate 19% of our net sales in Germany and 38% in other
European countries. Another 38% of our revenue is from
North and South America, with the remaining 5% coming
from other foreign countries.

Breeding as a growth driver
We have geared our operational business activities to
providing modern agriculture with competitive varieties
to grow feed and food and regenerative raw materials
to produce renewable energy. As part of that, we deliver
products that can be used for all kinds of farming sys-
tems: conventional, ecological and genetically improved.
Genetically modiﬁ ed varieties, which are distributed
particularly in North and South America, now contribute
34% (32%) of our net sales.

With our extensive breeding activities for all types of
crops, we lay the foundation for the KWS Group’s long-
term growth. The main drivers of continuous innovation
and optimization of our varieties are our employees’ great
expertise and close cooperation with other companies
and research institutions. We have our own selection and
testing locations in all key markets and are able to pro-
duce top-quality seed seasonally and contra-seasonally
in our processing plants.

In view of the long development and approval cycles for
new varieties, we pursue a sustainable approach in our
research and breeding activities. The section “Research
and development” on page 27 contains an overview of
the main focus of our activities in this area last ﬁ scal year.

Three operating units
KWS SAAT AG is the parent company of the KWS Group.
It multiplies and distributes sugarbeet seed, breeds a
broad range of crops and provides its subsidiaries with
new varieties every year for the purpose of multiplica-
tion and distribution. It also assumes the function of a
holding company and manages the Group with its 64
subsidiaries and associated companies operationally
and strategically. An overview of the subsidiaries and
associated companies included in the consolidated
ﬁ nancial statements of the KWS Group is provided in
the Notes on page 82.

Breeding and distribution activities in over 70 countries

• Test locations for trial cultivation
• Breeding stations

Distribution of value added (around 30% of the total output)

15%
Company

5%
Shareholders

1%
Minority interest

14%
Public sector

4%
Lenders

Value added
€373.1 million

61%
Employees

• Zuchtstationen
• Versuchsstandorte

Management Report of the KWS Group for 2013/2014
Fundamentals

The KWS Group’s operational business is divided into
the three segments Corn, Sugarbeet and Cereals.

The Corn Segment is the KWS Group’s largest division,
accounting for 61% of net sales. Apart from corn pro-
duction and distribution, this segment also contains our
activities in the ﬁ elds of oil and ﬁ eld seed, which include
rapeseed, soybean, sunﬂ ower and sorghum. The most
important markets are still the U.S. and Europe, where
we are one of the top 3 vendors of corn seed measured
in terms of cultivation area (7% in the U.S. and 19% in
the EU). The lion’s share of our corn revenue comes from
regions where sowing is not carried out until the spring,
with the result that the segment’s operating performance
is shaped by the seasonal course of its business. The
segment generates only about 15% of its revenue in the
ﬁ rst half of our ﬁ scal year from July to December, mainly
from winter rapeseed in Europe and corn varieties in
Latin America.

The Sugarbeet Segment generates 30% of the KWS
Group’s net sales. Around 90% comes from the produc-
tion and distribution of sugarbeet and 10% from seed
potatoes. The strongest sales market for our sugarbeet
seed is North America. Genetically improved, herbicide-
tolerant sugarbeet varieties are used almost exclusively in
this region. KWS began marketing its Roundup Ready®
sugarbeet in 2007, and since then it has been far and
away the leading vendor of these innovative special
products. We are the undisputed leader in the ﬁ eld of
sugarbeet, with a market share of 40% in the EU and
45% worldwide. Farmers begin sowing sugarbeet in the
ﬁ rst quarter of a calendar year, meaning the predominant
share of net sales is generated in the second half of our
ﬁ scal year.

The Cereals Segment handles the production and
distribution of rye, wheat, barley and rapeseed. Cereals
business is our third-largest segment and accounts for

9% of the KWS Group’s net sales. We generate 52%
of net sales in this segment from rye, around 34% from
wheat and barley, and almost 16% from other crops.
Our core markets for cereals seed are Germany, Poland,
the UK and France. Farmers sow most of the cereal
varieties in the fall, which means we generate net sales
in this segment mainly in the ﬁ rst half of our ﬁ scal year
(July to December).

Apart from the three operating segments, the Corporate
Segment, in which our research activities are bundled,
supports long-term development of competitive products.
Cross-segment, strategic administrative functions are
also grouped there. Its relatively low net sales come solely
from farms. The segment’s income is usually negative due
to the high function costs and research expenditure.

Objectives and strategies
The KWS Group’s corporate strategy is based on long-
term, proactive activities. Our goal with this core frame-
work for our values and objectives is to achieve sustain-
able and proﬁ table growth for our customers, employees
and investors. Particular cornerstones of our business
model are intensive research work, development of new,
high-yielding varieties and continuous expansion of our
global footprint so that we are able to operate locally in
regional agricultural markets with their special climatic
conditions.

Guiding principles with a clear focus
One of the major challenges of the 21st century is to
supply a growing world population with sufﬁ cient food
and regenerative raw materials despite the fact that
these resources are growing scarcer. While more than
seven billion people now have to be provided with food
and raw materials, the arable land available worldwide
cannot be increased at will. Consequently, it is falling
in terms of area per capita. That makes it necessary to
keep on increasing production on the area available.

Our plant breeders tackle this key challenge by supply-
ing newly developed varieties so that agriculture can
achieve signiﬁ cant increases in yield and thus continu-
ously improve yield per unit area. Our goal is to supply
our customers, the farmers, in many regions of the
world with seed that meets the very highest require-
ments in terms of quality and performance. As a guide
for our strategic decisions and everyday activities in
our operational business, we have developed guiding
principles that help us pursue our strategic objective at
all times.

Our guiding principles are based on four core activities:
• We increase genetic potential through outstanding

research and breeding programs.

• We supply our farmers with the very best seed.
• Farmers trust us as a strong partner throughout their

value chain.

• We create entrepreneurial freedom and help people

unfold their talents. As a result, we give individuals the
same freedom of action that is a distinguishing feature
of our company.

Research and development of new varieties
Our core competence is plant breeding. It is at the begin-
ning of the value chains for food and feed production and
all forms of regenerative raw materials. Modern variety
breeding is a process that extends over a period of about
ten years. This time span is necessary to develop a plant
with new properties into a variety that can be awarded
approval and is ready for marketing.

Progress in plant breeding is reﬂ ected in varieties that
produce higher and higher yields and are adapted better
to environmental and climatic conditions. We want to of-
fer our customers progress in yields averaging 1% to 2%
a year from new varieties. To do that, we invest between
12% and 15% of our consolidated net sales in research
and development every year.

Adapting varieties and species to different environ-
mental conditions brought about by climate change is
increasingly playing a key role in breeding. Our most
important objectives in plant breeding, across all crops,
are to increase yield, resistance to pests, weeds and
various diseases, and the technical quality of seed. We
also strive to conserve genetic resources.

The KWS Group’s medium- and long-term objectives

Proﬁ table growth

• Increase in consolidated net sales by an average of

Research & development

Internationalization

Sustainability

Dividend

5% to 10% p.a.
• EBIT margin > 10%

• R&D intensity of 12% to 15% of consolidated net sales
• 1% to 2% annual progress in yields for our customers and

development of tolerances and resistances

• Foreign sales > 80%
• Expansion of the portfolio of varieties for subtropical markets

• Integration of the international subsidiaries

• Dividend payout ratio of 20% to 25% of net income of the

KWS Group for the year

Management Report of the KWS Group for 2013/2014
Fundamentals

Expanded internationalization
The KWS Group has its own breeding and distribution
units in more than 70 countries. Although we already
generate more than 80% of our net sales abroad, our
strategic objective is still to keep on pushing ahead
with the internationalization of our company. Important
milestones on that path are our extensive commitment
in Brazil, as well as approval from the China’s Ministry
of Agriculture for the joint venture with our longstanding
partner Beidahuang Kenfeng Seed Ltd. We will be able
to start business operations in the key Chinese market
as of ﬁ scal 2015/2016.

Apart from the attractiveness and potential of these
markets – in particular for our corn business – there is
a further aspect of importance for us: While our main
revenue drivers, corn and sugarbeet, are not sown
until the spring in our core markets, farmers in South
America have different sowing and harvesting cycles.
As a result, we can cushion the highly seasonal nature
of our business in the medium term.

High quality for our customers
The quality of seed, fairness toward each other and
expert consulting are key factors for farmers when they
choose varieties. Our goal as a trusted partner, special-
ist and consultant to agriculture is to always supply
high-quality, innovative seed for producing food and feed
as well as regenerative raw materials. The KWS Group
is a powerful partner at all stages in the value chain of
modern plant breeding: in research and development,
as part of the approval process for new varieties, in mul-
tiplying and processing seed, in distribution and service,
and when it comes to providing onsite consulting.

Entrepreneurial freedom for employees
We believe qualiﬁ ed and motivated employees are the
key to our commercial success. We offer our employees
the opportunity to shape their place of work and work-
ing environment. All employees at the KWS Group can
develop their strengths and pursue their own ideas.
The foundation for that is open dialogue, which is a ﬁ rm
part of the culture of our organically grown and innova-
tive family business and offers a maximum of ﬂ exibility.
The objective is for all employees to have substantial
entrepreneurial freedom, offering them prospects for their
individual development. Employees assume individual
responsibility, which fosters their personal initiative.

Sustainable and proﬁ table growth
We create the basis for proﬁ table growth by investing
in research and the development of new varieties. Our
objective is to increase the KWS Group’s net sales by 5%
to 10% p.a. and achieve a minimum return (EBIT margin)
of 10%. The economic report beginning on page 32
contains information on how our key performance indi-
cators developed in ﬁ scal 2013/2014. In compliance with
the principles of our long-term corporate strategy, we use
years in which our proﬁ tability is well above our targets
to undertake additional investments, acquisitions and to
increase spending, in particular on research and breed-
ing and to expand our distribution structures. In this way
we strengthen the KWS Group’s potential and lay the
foundation for our further growth.

Control system
The KWS Group’s long-term corporate strategy is
formulated by the Executive Board and deﬁ ned by the
Supervisory Board. The overriding objective is to en-
sure the company’s sustainable and long-term growth.
Detailed annual and medium-term operational plans
are used to control the Group and the three segments
Corn, Sugarbeet and Cereals. The medium-term plan
covers the time frame of the annual plan plus three
further ﬁ scal years. In turn, the medium-term plan is
derived from our strategic corporate planning, which
covers a timescale of ten years.

The basic assumptions for planning are arrived at on
the basis of the regional economic and legal situation,
anticipated market trends and assessments of the com-
pany’s position in the market and potential product per-
formance. In a subsequent bottom-up process, these
premises are used to deﬁ ne targets for sales volumes
and net sales, production capacities and quantities,
the allocation of resources (including capital spending
and personnel), the level of material costs and internal
charge allocations and the resultant balance sheet data,
along with the ﬁ nancial budget. A ﬁ rm part of the plan-
ning documentation is an opportunity/risk assessment
which every manager must conduct for his or her unit.

The planning is compared every quarter with the com-
pany’s actual business performance and the updated
assessments of the underlying general conditions, and
suitable countermeasures are initiated and adjustments
made if necessary. A detailed forecast for the current

ﬁ scal year is made at the end of each quarter. In this
way, we ensure that we can respond quickly to the latest
information and knowledge. At the end of each ﬁ scal
year, all the segments and functions conduct a detailed
variance analysis of the budgeted and actual results.
That serves to optimize our internal planning processes
and further enhance the already high quality of our
forecasts.

Corporate Controlling is responsible for coordinating and
documenting all planning processes and our current ex-
pectations. It monitors compliance with adopted budgets
and analyzes the efﬁ ciency and cost-effectiveness of
business processes and measures. The Controlling team
also advises decision-makers on economic optimization
measures. The respective heads of the individual areas
of responsibility are responsible for the contents of their
planning and current forecasts. They include in particular
the heads of the three segments, the heads of R&D ac-
tivities, central functions and the regional Heads of Sales.

The Executive Board uses various indicators for planning,
controlling and monitoring the business performance of
the KWS Group and its operating units. The two main in-
dicators are net sales and return (EBIT margin) – in each
case at the Group and segment levels. The development
of these two key metrics in ﬁ scal 2013/2014 can be
found in the economic report.

Management and control
As a listed stock corporation, KWS SAAT AG has a
system of dual management, consisting of its Execu-
tive Board and its Supervisory Board. Both bodies have
strictly separated authorities and different members.
While the Executive Board is responsible for managing
the company, the Supervisory Board monitors the com-
pany and the Executive Board’s activity. This proven form
of dual management is to be retained after the company
is converted to an SE. The declaration on Corporate
Governance in accordance with Section 289a of the Ger-
man Commercial Code (HGB) contains detailed informa-
tion on the extensive and close cooperation between
the Executive Board and the Supervisory Board and has
been published at www.kws.com > Company > Investor
Relations > Corporate Governance.

Research and development
Our company’s long-term success is founded on
research and the breeding of new varieties. Research
and development expenditures in the past ﬁ scal year
were €148.8 (140.4) million – 6.0% above the level
of the previous year. As a result, we plowed 12.6% of
the KWS Group’s total net sales back into our diverse
R&D activities. At June 30, 2014, we employed 1,836
(1,768) people worldwide in research and development,
or almost 38% of the total workforce. The success of
our R&D is reﬂ ected in the number of product approvals
we were awarded worldwide, among other things. We
obtained 336 (276) marketing approvals for new KWS
varieties across all our crops in ﬁ scal 2013/2014. As a
result, the product pipeline for our international markets
is well-ﬁ lled.

Key ﬁ gures for R&D

R&D employees

Ratio of R&D employees1

R&D expenditure

R&D intensity2

Marketing approvals for new varieties

1 Ratio of R&D employees to the total workforce at June 30

2 Ratio of research and development expenditure to net sales

in %

in € millions

in %

2012/2013

2013/2014

1,768

39.8

140.4

12.2

276

1,836

37.9

148.8

12.6

336

+/–

6.0%

21.7%

Management Report of the KWS Group for 2013/2014
Fundamentals

Establishment of a research center in North America
In view of the strategic decision to increase the inter-
national orientation of our research activities, we began
to establish a new research center in North America in
the spring of 2014. At the Bio-Research & Development
Growth Park (BRDG Park) in St. Louis, Missouri (U.S.),
where we are surrounded by universities, other institu-
tions and a wide range of companies from our industry,
we can leverage a top-class infrastructure for plant
research and have access to an excellent talent pool.
Our two research centers in Einbeck, Germany, and the
U.S., which work closely together and beneﬁ t from each
other, will enable us to develop new products for the
global market more efﬁ ciently and further strengthen our
position in international plant research.

Increasing importance of powerful information
technologies
The amount of valuable data available is increasing at
a terriﬁ c pace in plant breeding, just as it is elsewhere.
Fields such as genome research, marker technologies or
the automated assessment of plant traits (phenotyping)
generate huge volumes of heterogeneous data, which is
used as the basis for making sound decisions in breed-
ing. We are therefore investing in high-performance IT in-
frastructures and innovative bioinformatics solution con-
cepts that enable data from different areas of research to
be linked together and important interconnections to be
identiﬁ ed. Customized development of smart database
architectures that are tailored speciﬁ cally to R&D require-
ments, as well as data storage, processing and analysis
standards for all crops enable us to make pinpointed use
of this big data in our breeding process.

The Bio-Research & Development Growth Park in St. Louis, Missouri (U.S.), the home of KWS’ second research center.

Genome sequences decoded: Sugarbeet
and bread wheat
After more than ten years of intensive research work,
the genome sequence of sugarbeet was able to be
completely decoded and published in the journal
“Nature” in December 2013. Since this research strand,
which involves public and private participation, was
launched in the year 2000, KWS has played an active
part and, among other things, provided its own sugar-
beet parent line as the basis for creating a genome-wide
reference sequence. In the course of the project, we
were able to use parts of this sequence for our own re-
search and development work. Completion of the work
means we have a high-quality sequence with a great
deal of additional biological information. On the basis of
this, interesting genes can be pinpointed directly in the
genome and converted into molecular markers, which in
turn enable faster decisions on selection and may thus
signiﬁ cantly increase the success of breeding.

An important milestone was also achieved in research
into the wheat genome. The International Wheat Ge-
nome Sequencing Consortium (IWGSC), in which KWS
is one of 22 partners, has published a draft sequence
of the bread wheat genome in the journal “Science.” It
gives scientists and breeders new insight into the struc-
ture and organization of the large and very complex
genome of bread wheat. It also marks an important step
in conserving a complete reference sequence of the
world’s most widely grown cereal crop.

Work starts on our own corn breeding station in Peru
Winter breeding gardens in the southern hemisphere
offer ideal conditions for conducting breeding work on
corn throughout the year so that our breeding programs
can be optimized and sped up. In Peru, where we have
cooperated to date with external local providers, we are
currently establishing our own efﬁ cient breeding station
that will enable us to grow three generations a year.
Corn was sown for the ﬁ rst time in July and August 2014;
the station is expected to be completed by the end of
the year.

Success in sunﬂ ower breeding
After moving back into sunﬂ ower breeding ﬁ ve years
ago, we have now achieved a key milestone with the
completion of our new breeding station for sunﬂ ower
and corn in Kozármisleny near Pécs, Hungary. We
now have the necessary special seed, harvesting and
processing technologies and can maintain our testing
capacities at a competitive level. The candidates tested

in the network have already achieved a good level of
performance in terms of yield and agronomic character-
istics, with the result that four of them have been able to
be registered for the ofﬁ cial variety tests, a process that
will last several years.

Premiere in Canada: Two hybrid rye varieties
registered
We succeeded in registering two hybrid rye varieties
in Canada for the ﬁ rst time in the spring of 2014. An
increase in yield of more than 20% was achieved in the
local quality controls. That gives us a good springboard
on which to breed and market continuously improved
varieties that are specially adapted to this region.

Shedding light on things: The sugarbeet’s genome was completely
decoded in December 2013.

Management Report of the KWS Group for 2013/2014
Fundamentals

A GOOD DEFENDER

FIGHTING AGAINST FUNGUS
Ergot resistance in hybrid rye

In recent years, varieties with resistance to the ergot fungus
have been planted to an increasing extent. By far the most
important contribution here is made by PollenPlus® technology
from KWS’s Cereal Segment. The decline in ergot infestation
is primarily due to a clever choice of the planted variety by
farmers and illustrates how breeding progress is successful-
ly transferred to practice. Ergot has hardly been a topic in
the last few years thanks to the direct effectiveness of
PollenPlus® technology.

Management Report of the KWS Group for 2013/2014
Economic report | Business performance

Business performance

In ﬁ scal 2013/2014 we continued the implementation
of our proven, long-term corporate strategy and, as
planned, invested more in research and breeding new
varieties and in the further expansion of our distribution
structures. In this way we are creating the foundation to
tap into new markets for the KWS Group and keep on
growing our earnings strength with high-yielding variet-
ies. Apart from higher expenditures on product devel-
opment and distribution of €21.9 million, the growing
strength of the euro compared with important curren-
cies for us, such as the US dollar, the Russian ruble,
the Ukrainian hryvnia, the Brazilian real, the Argentinean
peso and the Turkish lira, had a signiﬁ cant impact on
our operating income. Negative exchange rate effects
impacted the KWS Group’s net sales in the year under
review by about €51 million and its operating income
(EBIT) by just over €4 million.

Forecast versus actual business performance

KWS Group

Net sales

EBIT

Corn

Net sales

EBIT

Sugarbeet

Net sales

EBIT

Cereals

Net sales

EBIT

At the beginning of our 2013/2014 ﬁ scal year, we fore-
cast that net sales for the KWS Group would increase
by just over 5% and EBIT would fall by approximately
€10 million to around €141 million (–6.6%). The ex-
change rate issue mentioned above made us a little
more cautious, despite the positive trend in our opera-
tional business in the ﬁ rst three quarters, with the result
that we revised our forecasts slightly downward. At the
end of the third quarter, we assumed that we would
grow net sales by 2.4% and that operating income
would fall by 10.8%. However, we were able to surpass
this forecast slightly by the end of the ﬁ scal year thanks
to the positive development of our Corn and Sugarbeet
Segments. Sales ultimately grew by 2.7% and EBIT fell
by 9.0%.

Forecast for
2013/20141

Adjustment during
the year2

> 5%

Approx. 2.4%

About –7%

Approx. –11%

10%

+/–0%

–10%

Approx. 4%

Approx. 2%

Approx. 1%

Approx. –6%

Approx. –3%

–20%

Approx. –30%

Results for
2013/2014

2.7%

–9.0%

1.9%

9.4%

6.8%

–5.1%

–3.9%

–36.4%

1 Forecasts taken from the respective Annual Reports
2 Adjustment of the forecast with publication of the 3rd Quarterly Report for the period from July 1, 2013, to March 31, 2014

Management Report of the KWS Group for 2013/2014
Economic report | Earnings, ﬁ nancial position and assets

Earnings, ﬁ nancial position and assets

Earnings

Selected key earnings ﬁ gures

Net sales

EBITDA

EBIT

Return on sales (EBIT margin)

Net income for the period

in € millions

in %

in € millions

2012/2013

2013/2014

1,147.2

1,178.0

190.5

152.1

13.3

92.3

184.2

138.4

11.8

80.3

+/–

2.7%

–3.3%

–9.0%

–11.3%

–13.0%

Sales increase by 2.7%
The KWS Group grew its net sales in ﬁ scal 2013/2014
by 2.7% to €1,178.0 (1,147.2) million, despite negative
exchange rate effects. This growth was mainly driven
by the positive performance of the Sugarbeet and Corn
Segments. We achieved the strongest growth in South
America, followed by slight increases in our European
markets. The regional spread of sales hardly changed
year on year due to the signiﬁ cant currency effects. After
adjustment for exchange rate effects, net sales would
have been €1,228.5 million and thus up 7.1% over the
previous year.

4.3% increase in gross proﬁ t
Gross proﬁ t in the year under review rose from €540.2 mil-
lion to €563.5 million. License and material costs were
only slightly higher and resulted in a below-proportionate
increase in the cost of sales by 1.2% to €614.5 (607.0)
million. The gross margin thus rose to 47.8% (47.1%).

R&D and distribution budgets increase as planned
The planned expansion of our international distribution
structures, the goal of which is to enable us to keep on
offering high-quality, tailored consulting for customers
as we continue to grow, caused selling expenses to
increase by 7.1% to €204.0 (190.5) million. The ratio of
selling expenses to net sales was thus 17.3% (16.6%).
The continuous expansion of our R&D activities is reﬂ ect-
ed in our research and development expenditure, which
was €148.8 (140.4) million, 6.0% above the previous
year. The R&D intensity was thus 12.6% (12.2%). Gen-
eral and administrative expenses increased by 11.2% to
€76.7 (69.0) million, mainly as a result of projects aimed
at further expansion of our business activities.

Operating income (EBIT) of €138.4 million
The balance of other operating income (€60.7 million) and
other operating expenses (€56.2 million), the individual
items of which are presented in detail in the Notes on

pages 103/104, fell to €4.5 (11.8) million. The decline is
in part due to negative exchange rate inﬂ uences, as well
as to amortization and write-downs in potato business.
Operating income (EBIT) thus fell by 9.0% to €138.4
(152.1) million in the year under review. The return on
sales (EBIT margin) accordingly fell by 1.5 percentage
points to 11.8% (13.3%). After adjustment for exchange
rate effects, we would have generated an EBIT of
€142.6 million. Additional interest expenses for the fund-
ing of our expanding business in South America and
for tax back payments meant that net ﬁ nancial income/
expenses fell to € –12.5 (–10.3) million. Earnings before
taxes (EBT) were thus €125.9 (141.8) million. Income
taxes in ﬁ scal 2013/2014 were €45.6 (49.5) million. As a
result, they were higher than the previous year in relation
to income. This was due to extraordinary effects such
as losses that cannot be recognized against tax and tax
payments relating to previous periods. As a result, the
tax rate increased by an additional 5 percentage points
over what we had anticipated. The tax rate was 36.2%
and, as in the previous year (34.9%), well above our
long-term average. It is still mainly impacted by the rates
in regions where we post strong earnings. Western
Europe, with an average effective tax rate of 33%, and
North America (38%) account for almost 60% of the
current tax expense. The contribution to earnings from
our growth markets in South America and Southeastern
Europe will not perceptibly reduce the tax rate for the
Group until subsequent ﬁ scal years.

The KWS Group’s net income for the ﬁ scal 2013/2014
was €80.3 (92.3) million. Of this, €3.2 (3.4) million was
attributable to minority interests and €77.1 (88.9) million
to the shareholders of KWS SAAT AG. Given that the
number of shares remained the same, earnings per
share were €11.69 (13.47).

Management Report of the KWS Group for 2013/2014
Economic report | Corn Segment

Management Report of the KWS Group for 2013/2014
Sugarbeet Segment

Corn Segment

Key ﬁ gures for the Corn Segment

Net sales

EBIT

EBIT margin

Capital expenditure

2012/2013

2013/2014

in € millions

in %

in € millions

701.7

92.2

13.1

23.6

714.9

100.9

14.1

42.0

+/–

1.9%

9.4%

78.0%

Net sales up by 1.9%, earnings rise above-
proportionately by 9.4%
In ﬁ scal 2013/2014, the Corn Segment increased its
net sales slightly by 1.9% to €714.9 (701.7) million. Its
continuing good operating performance was sharply
impaired by unfavorable exchange rate inﬂ uences. The
US dollar zone and Brazil, Argentina, Turkey, Romania,
Russia and Ukraine were hit especially hard. After adjust-
ment for these negative exchange rate effects totaling
€28 million, the segment’s net sales would have been
€742.9 million (+5.9%). Regionally, a slight increase in
net sales (3.2%) was achieved in Europe, although the
strongest relative growth was in South America, particu-
larly Brazil (43.2%).

Although our expenditures on research and development
and on expanding our international distribution struc-
tures were again above the level of the previous year
as planned (7.2%), segment income (EBIT) rose more
strongly than net sales. EBIT grew by 9.4% to €100.9
(92.2) million, giving a return on sales (EBIT margin) of
14.1% (13.1%). However, earnings for the previous year
were reduced by revaluation of a put/call option in con-
nection with our acquisitions in Brazil.

Record harvests lead to a decline in the price of corn
for consumption
General conditions in the global market for corn for
consumption changed signiﬁ cantly in ﬁ scal 2013/2014
compared with the previous year. Record harvests were
recorded in many regions of the world, while periods of
heat and drought had reduced harvests in the previ-
ous year. The high level of supply thus resulted in a
dramatic decline in the price of corn for consumption

on the Chicago Mercantile Exchange (CME). The price
in January 2014 was around 40% below the previous
year’s level of €286 a ton. The consequences of this for
the global corn seed market and our 2013/2014 sales
season were an easing in the supply situation as well
as rather muted demand, especially in markets where
farmers were able to switch to protein crops such as
soybeans. The prices for these crops did not come
under such severe pressure as those for corn for con-
sumption, with the result that many farmers decided to
grow these alternative crops to a greater extent.

Report from the regions: Strong performance in
South America
According to the United States Department of Agri-
culture (USDA), corn cultivation area in North America
fell year on year by 4% to around 37 million hectares.
Nevertheless, we were able to consolidate our market
position as the third-largest corn breeder in the U.S.
with AGRELIANT, our North American joint venture with
the French company Vilmorin & Cie. AGRELIANT’s net
sales fell by 5% to €509 (537) million due to exchange
rate effects. There was still large demand for genetically
improved varieties with resistance to herbicides and
insects.

KWS had an especially successful ﬁ scal 2013/2014 in
South America. We were able to improve our market
share signiﬁ cantly in both Brazil and Argentina. Sales
volumes of corn seed rose year on year by just over
20% in Argentina and by more than 45% in Brazil. As
a result, we were able to beneﬁ t perceptibly from the
increasing integration of our Brazilian companies RIBER
KWS SEMENTES (production and distribution) and

Whether as feed, food or a regenerative raw material – corn is still on the rise worldwide.

KWS MELHORAMENTO E SEMENTES LTDA (research
and development). However, we largely used the income
from operational business to build our structures in the
region. As in North America, genetically engineered
corn varieties are also increasing in importance in South
America.

We were able to continue our steady growth in Europe.
Building on our strong market position as a corn breeder
in Germany, all regions contributed to this positive trend.
Our business in Ukraine remained at a low level as a
result of the country’s political destabilization, coupled
with currency risks and farmers’ poor liquidity.

We continued to invest highly in seed production in the
period under review with regard to expanding our dis-
tribution activities. That includes setting up a new seed
plant for corn and sunﬂ ower in the climatically favorable
part of Serbia (Vojvodina). Further large investments

were made at our production sites in the U.S., Southern
France and Turkey, where we expanded capacities for
storage, drying and packaging.

At the end of the period under review, we were given
ofﬁ cial approval from China’s Ministry of Agriculture
to establish our corn production and distribution joint
venture there. Together with our longstanding partner
Kenfeng, one of the largest national seed companies,
we will now create the necessary structures and make
investments in production facilities. The start of opera-
tions is scheduled for ﬁ scal 2015/2016.

Net sales from oil seed rise further
While rapeseed and sunﬂ ower are marketed predomi-
nantly in Europe, demand in North and South America
focuses on soybean. Oilseed contributed a total of
€82.2 (71.4) million to the segment’s net sales.

Management Report of the KWS Group for 2013/2014
Economic report | Sugarbeet Segment

Sugarbeet Segment

Key ﬁ gures for the Sugarbeet Segment

Net sales

EBIT

EBIT margin

Capital expenditure

2012/2013

2013/2014

in € millions

in %

in € millions

328.6

73.9

22.5

22.4

351.1

70.1

20.0

18.5

+/–

6.8%

–5.1%

–17.4%

Higher investments in R&D, production
and distribution
The Sugarbeet Segment, at which our seed potato busi-
ness is also consolidated, recorded net sales of €351.1
(328.6) million in ﬁ scal 2013/2014, an increase of 6.8%.
After adjustment for negative exchange rate effects of
€13.4 million, the segment’s net sales would have been
€364.5 million. In the core markets of North America and
the EU 28, we were again able to grow our net sales
on the back of our portfolio of high-yielding varieties
and further expand our leading market position in the
sugarbeet product segment. Sugarbeet seed business
accounted for €318.5 (297.8) million and seed potato
business for €32.6 (30.8) million of total net sales here.

As planned, we increased spending on research and de-
velopment, modernized and expanded our production
facilities and further expanded our distribution structures
so as to ensure sustainable further development of
our operations and create the foundation for securing
our market leadership in sugarbeet seed business. As
part of the fundamental realignment of our seed potato
business, we recognized write-downs in connection with
the streamlining of our portfolio of varieties, as well as
amortization of the capitalized goodwill. That reduced
KWS POTATO’s income by a total of €6.3 million. Conse-
quently, the segment’s income (EBIT) fell slightly by 5.1%
to €70.1 (73.9) million. The return on sales (EBIT margin)
declined to 20.0% (22.5%).

Innovations as a response to lower cultivation areas
In the 2014 growing season, high stockpiles of sugar
and good harvests, coupled with falling world mar-
ket prices, again resulted in a reduction in sugarbeet
cultivation area worldwide by 3% to 4.1 million hectares.
Nevertheless, the KWS Group was able to grow its net
sales from sugarbeet seed again in ﬁ scal 2013/2014
by 7.0% to €318.5 (297.8) million. This performance is
driven by our longstanding, excellent expertise in the
ﬁ eld of breeding. A key cornerstone of our research
and development activities is our exclusive cooperation
project with Bayer CropScience. Our joint research in
developing ALS-tolerant sugarbeet has already pro-
duced two patents. These innovative varieties, which
are based on conventional breeding methods, have
a natural resistance to highly effective herbicides. We
expect them to be launched on the market in ﬁ scal
2017/2018. Our innovative strength is also reﬂ ected in
the expansion of our portfolio of varieties. In the year
under review, we were awarded marketing approvals for
174 (130) new sugarbeet varieties and two new potato
varieties in 30 countries.

Report from the regions: North America contributes
40% of net sales
The North American region remained one of the growth
regions for sugarbeet, along with Northern Europe and
Turkey, in ﬁ scal 2013/2014. We now generate almost
40% of our net sales from sugarbeet, or €127.0 (115.8)
million, in North America. In order to safeguard our
positon in North America, where we are far and away the
market leader, we are currently modernizing our existing

production plants in Oregon. We are also opening up
further growth opportunities for the future with our
goal of continuing to improve quality and by expanding
capacities.

We were able to beneﬁ t from our good results in variety
performance in the EU 28, and net sales rose to €137.0
million compared with €127.7 million the year before.
Net sales remained stable in Germany, where cultiva-
tion area was constant, while there was a slight increase
in net sales in France, where cultivation area grew. In
Central Europe, we posted higher net sales in Poland in
particular. Good variety performance resulted in a sharp
increase in net sales in the Netherlands and Belgium,
enabling us to further expand our leading market posi-
tion in Northern Europe.

Net sales outside the EU 28 increased to €181.5 (170.1)
million, in particular on the back of strong business in
North America. That more than compensated for the
lower level of business in China and Russia as a result
of the decline in cultivation area there. In Turkey we
beneﬁ ted from our own local seed production, thanks
to which we were able to increase net sales despite a
decline in area.

Seed potato business with a clear focus
After the sale and licensing-out of our specialty business,
we continued to sharpen the focus of our seed potato
business in the year under review. The portfolio of our
subsidiary KWS POTATO comprises varieties for the pro-
cessing industry for making chips and French fries and
to satisfy demand for ware potatoes in export markets.
This focus of the segment is now also reﬂ ected in the
internal organization of our potato business. The empha-
sis in our seed potato production at present is not only
on increasing volumes, but in particular on ensuring and
enhancing quality at our younger production sites, for
example in Russia. Establishment of the potato breeding
station in Emmeloord in the Netherlands was concluded
in the year under review with completion of the green-
house. Net sales from our seed potato business were
€32.6 (30.8) million. The necessary up-front and start-up
costs meant that it did not make a positive contribution
to income in ﬁ scal 2013/2014 either. The annual impair-
ment test for our potato business also revealed the need
for a write-down. Consequently, the capitalized goodwill
and intangible assets of KWS POTATO were written
down to a total amount of €6.3 million.

KWS sugarbeet varieties achieved a sugar content of more than 18% for the ﬁ rst time in Germany.

Management Report of the KWS Group for 2013/2014
Economic report | Cereals Segment

Cereals Segment

Key ﬁ gures for the Cereals Segment

Net sales

EBIT

EBIT margin

Capital expenditure

2012/2013

2013/2014

in € millions

in %

in € millions

111.7

26.9

24.1

7.3

107.3

17.1

15.9

6.8

+/–

–3.9%

–36.4%

–6.8%

Lower prices for cereals for consumption cause
demand for seed to fall
After an extremely good previous year, net sales in the
Cereals Segment fell by 3.9% to €107.3 (111.7) million.
The decline was due in particular to a drop in demand
for hybrid rye in Germany and Poland, since lower
market prices induced farmers to grow other crops. As
a result, net sales in our rye business fell by a total of

10.3%. In general, there was less demand on the part
of farmers for certiﬁ ed seed from breeders in view of
the lower prices for cereals for consumption at the
time of the 2013/2014 winter sowing season, meaning
they increasingly used farm saved seed. Consequently,
net sales from wheat and rapeseed likewise declined.
However, we were able to post further growth in barley,
where our good quality and variety performance for

Over 40% of farmers in the UK now select a wheat variety from KWS.

both winter and summer barley had a positive impact.
Rye remains the main contributor to the segment’s net
sales, followed by wheat, barley and rapeseed.

The fall in net sales from rye, as well as expansion of our
breeding and distribution activities as planned, impacted
the segment’s income (EBIT) in ﬁ scal 2013/2014. EBIT
consequently fell by 36.4% to €17.1 (26.9) million and
the return on sales (EBIT margin) dropped accordingly to
15.9% (24.1%).

At the end of ﬁ scal 2013/2014, KWS SAAT AG acquired
the remaining 18.9% of shares in KWS LOCHOW GMBH
from the previous family shareholders. At the same time,
the company continued the integration efforts it initiated
ﬁ ve years ago and established the independent name
KWS GETREIDE to enhance its external visibility. As a
result, all the segments of the KWS Group have a con-
sistent look and name. The legal name of the company
is still KWS LOCHOW GMBH.

Extensive investment in developing
new cereal varieties
We continued our growth strategy in the year under
review and again increased spending in our national and
international programs to develop new cereal varieties.
Our diverse breeding programs in the core markets of
Germany, the UK, Poland, France, Russia and the U.S.
again produced good results. In ﬁ scal 2013/2014, we
obtained a total of 42 (43) marketing approvals for new
varieties in 6 (7) countries at the Cereals Segment.

The focus of farmers in Germany was on ergot resis-
tance in rye. We were able to maintain our share in a
declining market thanks to good results in the approval
tests for our rye varieties for the 2013 harvest and the
very good ergot resistance they exhibited. Apart from
continuous optimization of yields, our breeding strategy
also comprises very long-term projects, such as estab-
lishment of hybrid breeding for wheat and barley. We
are also developing specially optimized rye and wheat
varieties for the regions of Eastern Europe and North
America. Our goal for Eastern Europe is to adapt our
rye varieties to the continental weather conditions and
thus to tap additional market potential in the medium
term. In the U.S. we are focusing on developing special
winter wheat varieties (Soft Red Winter). In Canada we
obtained the ﬁ rst ofﬁ cial approvals for two rye varieties.

Report from the regions: Less use of certiﬁ ed seed
The general conditions in Germany for using certiﬁ ed
seed worsened as a result of much lower prices for cere-
als for consumption than in the previous year. The share
of cultivation area on which certiﬁ ed seed was used
fell to 50% (53%). However, we were able to maintain
our market share. The Polish market displayed a similar
trend in the year under review. There was continued
large demand for rye seed from our PollenPlus® variet-
ies, which are highly tolerant to infection by the toxic
ergot fungus. In the UK we obtained approval for new,
high-yielding wheat varieties. As a result, we were able
to maintain our leadership with a market share of 43%.
Sales of rye and wheat increased in Scandinavia, while
net sales in France were down slightly overall from the
previous year.

Management Report of the KWS Group for 2013/2014
Economic report | Corporate Segment

Management Report of the KWS Group for 2013/2014
Economic report | Financial situation

Corporate Segment

Financial situation

Key ﬁ gures for the Corporate Segment

Selected key ﬁ gures on the ﬁ nancial situation

Net sales

EBIT

Capital expenditure

2012/2013

2013/2014

in € millions

5.2

–40.9

6.1

4.7

–49.7

13.9

+/–

–9.6%

–21.5%

127.9%

Net sales at the Corporate Segment, which come mainly
from revenue from our farms, were €4.7 (5.2) million in
the year under review. All cross-segment costs, including
the higher expenses for all central functions of the KWS
Group and for long-term research projects, are allocated
to this segment, which means that its income is regularly
negative. Its income (EBIT), due particularly to the in-
creased expenditure for research and development, was
€ –49.7 (–40.9) million.

KWS: A stock corporation since 1885 and now on the way to becoming an SE (Societas Europaea).

Cash and cash equivalents

Cash proceeds from operating activities

Net cash used in investing activities

Net cash from ﬁ nancing activities

2012/2013

2013/2014

In € millions

202.4

84.6

88.9

27.2

155.0

61.0

75.4

–31.5

+/–

–23.4%

–27.9%

–15.2%

The overriding objective of ﬁ nancial management at the
KWS Group is to secure the company’s ﬁ nancial strength
for the long term and maintain its ﬁ nancial independence
by ensuring it has sufﬁ cient liquidity. With this approach
we can shape the company’s further growth ﬂ exibly and
exploit opportunities as and when they arise. The ﬁ nan-
cial management organization is controlled in the Group
centrally from Einbeck. A balanced mix of different
ﬁ nancing, investment and hedging instruments is used.
Derivative ﬁ nancial instruments are used only to hedge
the risk of interest rate changes and currency risks.

Net cash of €61.0 million from operating activities
Cash earnings in ﬁ scal 2013/2014 were €110.4 (109.5)
million, with lower net income for the year and higher
depreciation, amortization and write-downs, and were at
the level of the previous year. The net cash from operat-
ing activities (operating cash ﬂ ow) was €61.0 (84.6) mil-
lion. The decline is due largely to the increase in working
capital: Net working capital in the year under review rose
to €268.0 (238.0) million, mainly to increase inventories
so as to ensure our ability to deliver seed. Net cash used
in investing activities was €75.4 (88.9) million, €8.7 mil-
lion of which relates to higher payments for tangible ﬁ xed
assets, whereas in the previous year the acquisition of
shares in consolidated companies reduced the cash ﬂ ow
by €23.0 million. The net cash from ﬁ nancing activities in-
cludes not only the dividend payout for ﬁ scal 2012/2013
of €19.8 (18.5) million and the repayment of loan install-

ments, but also the price paid to acquire the remaining
shares in KWS LOCHOW GMBH. Net cash from ﬁ nanc-
ing activities, which was impacted last year by the raising
of a borrower’s note loan with a volume of €50 million,
fell in the period under review to € –31.5 million. Cash
and cash equivalents on the balance sheet date June 30,
2014, were a comfortable €155.0 (202.4) million.

Capital spending increases by 36.5%
In ﬁ scal 2013/2014 our Group invested a total of €82.6
(65.2) million, 26.7% more than in the previous year.
One focus of our investments was expanding our corn
production capacity. Among other things, we began
building a new corn processing plant in Serbia at a total
cost of €27.5 million. We invested an additional €7.6
million in modernizing sugarbeet production in North
America. The Corn Segment accounted for 51.8%
(39.8%), the Sugarbeet Segment for 22.8% (37.7%) and
the Cereals Segment for 8.3% (12.3%) of our invest-
ments. The Group-wide investments were spread over
the regions as follows: 28.8% (26.8%) of the invest-
ments went to Germany, 33.7% (28.0%) to the rest of
Europe, 35.0% (37.3%) to North, Central and South
America and 2.5% (7.9%) to the rest of the world.
Depreciation and amortization in ﬁ scal 2013/2014 were
€45.8 (38.4) million and, due to the increase in spending
on property, plant and equipment and necessary write-
downs in our potato business, were above the level of
the previous year.

Management Report of the KWS Group for 2013/2014
Financial situation

A FORTIFIER FOR
IN-BETWEEN

KWS ACKERFIT
Catch crop mixtures from KWS

Farmers’ greatest asset is their land. Measures to improve soil
are vital to ensure that it continues to produce high yields. KWS
has developed a new product line for catch crops to enable that.
KWS AckerFit are catch crop mixtures that ﬂ ourish after the main
crop has been harvested and before the next crop is sown. They
offer many beneﬁ ts for the soil and the plants subsequently grown
in it: They promote soil life and fertility, their extensive root sys-
tems improve the soil structure, they absorb valuable nutrients
and restrict their leaching, increase biodiversity in the ﬁ eld
and make crop rotation more ﬂ exible.

Management Report of the KWS Group for 2013/2014
Economic report | Assets

Management Report of the KWS Group for 2013/2014
Economic report | Employees

Assets

Abridged balance sheet

Assets

Noncurrent assets

Current assets

Equity and liabilities

Equity

Long-term borrowings

Short-term borrowings

Total assets

2012/2013

2013/2014

+/–

in € millions

447.5

771.2

649.7

229.3

339.7

476.8

786.0

637.8

254.2

370.8

in € millions

1,218.7

1,262.8

6.5%

1.9%

–1.8%

10.9%

9.2%

3.6%

The KWS Group’s total assets increased in the ﬁ scal year
by €44.1 million to €1,262.8 (1,218.7) million, mainly due
to expansion of the KWS Group’s business and the as-
sociated investments.

Noncurrent assets increased year on year to €476.8
(447.5) million, mainly as a result of investments in
property, plant and equipment. Current assets increased
by €14.8 million to €786.0 (771.2) million. As part of
that, inventories at the balance sheet date rose by €48.5
million to €193.0 (144.5) million and ensure our ability to
deliver seed for the next sowing season. Cash and cash
equivalents fell to €155.0 (202.4) million, mainly due to
acquisition of the remaining shares in KWS LOCHOW
GMBH. After deduction of ﬁ nancial liabilities, net liquidity
was € –12.1 (70.6) million.

On the other side of the balance sheet, the KWS Group’s
equity fell slightly by 1.8% to €637.8 (649.7) million.

This reﬂ ects the exchange rate effects of €19.2 million,
which are not recognized in the income statement, as
well as effects from our takeover of the minority interests
in our cereals business. However, we still have solid
ﬁ nancing, with an equity ratio of 50.5% (53.3%). Equity
at the balance sheet date fully covers noncurrent as-
sets. Long-term borrowings increased by €24.9 million
to €254.2 (229.3) million and short-term borrowings by
€31.1 million to €370.8 (339.7) million. This increase is
mainly due to the greater need for capital as a result of
the share acquisitions and expansion of business in the
growth markets of South America.

Employees

Headcount increases again
The KWS Group combines the values of a company that
has a tradition of family ownership with an attractive and
open international working environment. We are com-
mitted to fairness and respect toward each other, as well
as to fostering openness and mutual support. That has
helped to establish a culture of closeness and trust at our
company.

The KWS Group’s workforce continued to grow as
planned in ﬁ scal 2013/2014. In ﬁ scal 2013/2014, we
had an average of 4,847 (4,443) employees worldwide,
an increase of 9.1%. Despite our considerable growth
over the past years, the average length of service in
Germany has remained constant at the high level of
13.9 years – a trend that underscores KWS’ attractive-
ness as a modern and fair employer.

Working together in teams that reﬂ ect the diversity of
a global and modern company enables us to come up
with unconventional, creative ideas and ﬁ nd innovative
solutions. We speciﬁ cally encourage all employees to
develop their abilities and make their own contributions.
We therefore consciously delegate responsibility and
foster the entrepreneurial spirit of every employee.

Personnel costs rose below-proportionately relative to
the increase in headcount by 7.6% to a total of €225.8
(209.9) million. Of that, €180.3 (167.4) million went to
compensation and €45.6 (42.5) million to social security
contributions, expenses for pension plans and beneﬁ ts.

Employees by region

Germany

Europe (excluding Germany)

Americas

Rest of world

Total

Employees by function1

Research & development

Distribution

Production

Administration

Total

1 on average for the year

2012/2013

2013/2014

1,676

1,139

1,505

123

4,443

1,763

1,223

1,711

150

4,847

2012/2013

2013/2014

1,768

1,132

956

587

4,443

1,836

1,241

1,136

634

4,847

+/–

5.2%

7.4%

13.7%

22.0%

9.1%

+/–

3.8%

9.6%

18.8%

8.0%

9.1%

Management Report of the KWS Group for 2013/2014
Economic report | Employees

KWS – an attractive employer
Our employees are the foundation of our business
success. To secure that foundation, we have to remain
attractive as an employer. We take an approach that
enables us to ﬁ nd new talents – career starters and
experienced professionals alike – as well as to develop
the existing workforce with its diverse skills.

One focus of our activities is on modern online commu-
nications and participation in selected career fairs. At the
same time we have intensiﬁ ed our recruiting activities,
strengthening our cooperation with relevant universities
and organizations in Germany and abroad. As part of our
plans to open a second research location in St. Louis,
Missouri (U.S.), a main focus of our recruiting was to po-
sition KWS as an attractive employer in the eyes of biolo-
gists and biotechnologists in the region and universities
in and around Missouri.

Throughout the Group, we have continuously expanded
the opportunities we offer students to work as an intern
at KWS or write their degree theses in cooperation with
us. 76 students took up this offer in the year under re-
view. In Germany, KWS also offers the option of pursu-
ing a dual course of study and obtaining a scholarship,
including a Germany Scholarship funded by the German
Ministry of Education and Research. We were able to in-
crease the number of people KWS sponsored by means
of a Germany Scholarship from ﬁ ve to twelve in the past
ﬁ scal year. We have also actively expanded our offering
to students to visit KWS, to get to know the wide range
of activities of a modern plant breeding company and to
learn more about their professional prospects in person.

Successful career start at KWS
In addition to sound, in-depth technical training, our
career starters are given extensive insight into our inter-
national business processes. We also attach particular
importance to developing the personal and social
qualiﬁ cation of our trainees. In the year under review we
employed 98 (92) trainees in six business administration,
agricultural science and industrial vocations. Around
120 trainers at the KWS Group ensure a high quality of
knowledge transfer.

We offer university graduates our proven trainee program.
37 (43) university graduates made use of this attractive
means of starting their career in ﬁ scal 2013/2014. In
addition, KWS offers career starters wishing to become
a plant breeder practical internal training as part of its
“Breeders Academy.”

Employee development is of key importance
The continuing personal development of our employees
in a dynamically changing global environment, charac-
terized by continuous innovation, customer focus and
modern communication, is one of the key objectives of
our human resources work. The foundation for that is
a Group-wide personnel development landscape that
is systematically optimized and expanded. In general,
we emphasize on-the-job training in conjunction with
targeted internal and external training measures to suit
needs.

In the year under review, the ﬁ rst group completed
the International Development Program (IDP), which is
oriented toward the requirements of a global business
environment. By establishing the IDP, we have created a
special offering to help experts, young talents and man-
agers develop their skills. One focus is also on directly
imparting KWS’ typical management and leadership style
through our executives.

Further elements of employee development are the
“KWS On Board” conference, in which new executive
employees provide extensive insight into our corporate
strategy, our culture and our expectations, as well as
the Orientation Center, which offers valuable sugges-
tions for employees’ personal and professional develop-
ment. In order to promote the sharing of knowledge and
experience regarding leadership and cooperation and to
strengthen coaching skills, we also continued the proven
Sparring Circles for executive employees this year.

KWS Healthy Working World
The Works Council, the HR departments in the KWS
Group and the German service companies have jointly
developed the initiative “KWS Health Working World”
to address the issue of work and health. As part of this
initiative, a Health Day was held in Einbeck at the end of
May 2014. More than 600 employees took the oppor-
tunity to learn more about the various facets of health
– and not only at work – at an interactive fair during their
working time.

KWS as a family-friendly company
We want our employees to be able to balance their
career and private lives in every phase of their life. We
support them in that with ﬂ exitime models and company
agreements on child care allowances, as well as giving
employees leave or reducing their working time so that
they can look after dependents who need caring for.

Key ﬁ gures for employees (in Germany)

Number of employees in Germany

of which Number of part-time employees

Ratio of men

Ratio of women

Number of trainees

Trainee ratio

Average age (in years)

Length of service (in years)

Expansion of the global HR strategy
In ﬁ scal 2013/2014 we continued the international
establishment and further development of HR to meet
global requirements. We increased resources at the
regional service companies as planned and also com-
menced preparations to open two more HR depart-
ments at the planned service companies in North and
South America. A professional software product will
enable us to process, manage and aggregate all orga-
nizational and personal data even more efﬁ ciently and
thus address the company’s growth over the past years
in this ﬁ eld as well.

in %

2012/2013

2013/2014

1,676

350

5.5

40.4

13.9

1,763

350

5.6

40.2

13.9

+/–

5.2%

+/– 0%

6.5%

Management Report of the KWS Group for 2013/2014
Assets

THE GENETIC POOL
The basis of product development

Every plant has different “talents.” Characterizing the various
genotypes, choosing them by traits and combining them in
new ways by means of selective crossing – that is the essence
of plant breeding. Every restriction to biodiversity therefore
reduces the possibilities when it comes to breeding agricultural
crops. Conserving plant genetic resources is a key
concern in our industry.

Übersetzung

TREASURE TROVE
OF TALENT

Management Report of the KWS Group for 2013/2014
Explanations regarding the annual ﬁ nancial statements of KWS SAAT AG | Report on events after the balance sheet date | Opportunity and risk report

Management Report of the KWS Group for 2013/2014
Opportunity and risk report

Explanations regarding the
annual ﬁ nancial statements
of KWS SAAT AG

The annual ﬁ nancial statements of KWS SAAT AG are
prepared in accordance with the provisions of the Ger-
man Commercial Code (HGB). Operational business
relating to the production and marketing of sugarbeet
seed was expanded slightly in ﬁ scal 2013/2014. How-
ever, the central costs for administration and all other
costs of the Corporate Segment were not covered by
the income from corn business, which comprises sales
of basic seed and royalties. Consequently, the operating
income (EBIT) of KWS SAAT AG in the year under review
was €–14.3 (11.8) million, well below the previous year’s
ﬁ gure despite a slight increase in net sales of 2.5% to
€270.1 (263.5) million. Net ﬁ nancial income/expenses is
mainly from income from investments within the group
and was €37.9 (35.5) million. Accordingly, net income for
the year was €23.8 (35.7) million. Taking into account the
proﬁ t of €0.2 million carried forward from the previous
year and an allocation of €4.0 million to the revenue
reserves, the net retained proﬁ t is €20.0 (20.0) million.

Report on events after the
balance sheet date

At the beginning of September 2014, KWS SAAT AG
issued a further borrower’s note loan for €100 million at
very low interest rates. Parts of the last issue with higher
interest rates were replaced by longer-term loans at a
lower rate. Part of the new borrower’s note loan has a
variable interest rate. In this regard, KWS SAAT AG has
concluded long-term interest rate hedges to limit the
risk of changes in interest rates.

Apart from that, there were no signiﬁ cant events that the
Executive Board expects might have an impact on the
KWS Group’s earnings, assets and ﬁ nancial position.

Opportunity and risk report

As an international seed company, the KWS Group oper-
ates in a dynamically changing environment. We aim to
identify the resultant opportunities and risks early on so
that we can reduce or avoid negative effects by means of
proactive strategies to counter risks and seize opportuni-
ties systematically as and when they arise. The opportu-
nity and risk management system we have implemented
helps us to achieve our goal of operating on the global
market with lasting success.

Opportunities
At the KWS Group, opportunity management is an
integral component of the established controlling system
between the subsidiaries, associated companies and
company management. The Management of our three
product segments – Corn, Sugarbeet and Cereals – is
responsible for identifying, analyzing and making the
most of operational opportunities. Targeted measures
are formulated together with the Executive Board so that
strengths can be leveraged and strategic growth poten-
tial tapped. Strategic opportunities of major importance
are handled by the Executive Board. Extensive strategic
planning covering a 10-year time frame is the basis for
opportunity management. In keeping with our estab-
lished growth strategy, we exploit the industry-speciﬁ c
and strategic opportunities that arise by means of pin-
pointed investments in production capacities, research
and development and acquisitions.

We see numerous opportunities to continue developing
the KWS Group in keeping with our strategy. To ensure
that we achieve sustainable and proﬁ table growth in the
future as well, it is especially important that we maintain
and even increase our innovative strength. In the seed
business, that strength is reﬂ ected in continuous yield
increases in new varieties. That involves either boosting
the yield potential of the plants or improving their resis-
tance to detrimental inﬂ uences of all kinds. It is our goal
to offer our customers new varieties representing yield in-
creases of between one and two percent each year. For
that reason, we continuously expand our research and
development activities. One measure of our innovative

strength in this context is the number of newly approved
varieties. In approval processes, our varieties compete
directly with competitors’ products in the performance
tests conducted by the authorities. More detailed infor-
mation on this and on our research and development
activities is available on page 27 of this Annual Report.

Market opportunities also result from our intensiﬁ ed
activities in subtropical regions. With our corn activities in
Brazil and China, in the mid- or longer term we can tap
additional sales potential for the KWS Group in these –
for us – young markets by developing varieties adapted
exactly to the right climatic conditions. Particularly in the
strongly fragmented Chinese corn market there is a good
chance of playing a role in the emerging consolidation.

Investments in the expansion of our production capaci-
ties and the modernization of our seed processing facili-
ties offer additional opportunities for further growth. The
continued development of our portfolio of varieties and
the expansion of our capacities go hand in hand with
the expansion of our international distribution structure
since they enable us to inform and advise our customers
even more intensively and individually about the use of
our seed and, in this way, to ﬁ nd further sales potential.
In addition, the KWS Group has opportunities to increase
its productivity and optimize its cost structures through
continuous process optimization. Short-term opportuni-
ties can also result from changing relationships among
exchange rates.

Risks
Objectives and strategies in risk management
Risk management at the KWS Group is based on an
approach that is oriented toward our corporate culture.
The foundation for that is trust in employees and the
experience that they act responsibly toward themselves,
their colleagues and the company as a whole. Training
measures enable our employees to assess risks on their
own at all times.

A responsible approach to risks is supported by an ex-
tensive risk management system and an internal control
system. A risk here denotes a potential future event or
future development that may result in monetary conse-
quences and thus lead to a negative deviation from fore-
casts or targets. Risk management is deﬁ ned at KWS as
the totality of all organizational regulations and measures
to enable prompt identiﬁ cation, assessment, control,
communication and monitoring of the relevant risks. The
objective of risk management at the KWS Group is to
ensure that all regulatory requirements demanded of the
risk management system are fully complied with through-
out the Group and company value-added is generated
for decision-making processes.

Structure of the risk management system
Our risk management system is also based on strategic
planning and investment controlling, continuous opera-
tional controlling and the quality and process monitoring
systems. Central responsibility for risk management lies
with the Executive Board. It is supported by Corporate
Finance – Treasury and Risk Management, Corporate
Law & Compliance, Corporate Responsibility Affairs and
Corporate Controlling, as well as a permanent Risk Com-
mittee (Corporate Management Circle) (see ﬁ gure). The
Risk Committee consists of the two top management
levels (Executive Board and Heads of Departments/Seg-
ment) and convenes regularly.

The principles of our risk management are enshrined
in the “Rules, Guidelines & Procedures (RGPs)”. These
are published on the intranet, which can be accessed
throughout the Group. With these RGPs, which are
continuously revised and adapted to reﬂ ect changes
to the regulatory framework, we have created a shared
understanding for risk management within the KWS
Group. Core contents include principles relating to early
detection and the communication and handling of risks.

Management Report of the KWS Group for 2013/2014
Opportunity and risk report

Structure of risk management at the KWS Group

Corporate Finance

• Risk control matrix
• Early detection of risks
• Minimum requirements
• Interest and currency management
• Insurance
• External audits
• IT security

Corporate Responsibility Affairs

• Rules, Guidelines & Procedures
• Integrated Management System
• Internal audits

Corporate Controlling

• Early detection of risks
• Planning / budget
• Current expectation

Corporate Law & Compliance

• CoRA – Compliance Risk Assessment

(self-assessment approach)

• Compliance training
• External audits
• Examinations

KWS’ risk management system is organized on the basis
of the internationally recognized COSO model (Com-
mittee of Sponsoring Organizations of the Treadway
Commission). As part of its audit of the ﬁ nancial state-
ments for the ﬁ scal year 2013/2014, Deloitte & Touche
GmbH Wirtschaftsprüfungsgesellschaft also audited
KWS SAAT AG’s system for the early detection of risks
with regard to its compliance with requirements under
the German Stock Corporation Act. The auditors came
to the conclusion that the system meets all the neces-
sary statutory requirements.

Risk management process
The risk management process at KWS consists of ﬁ ve
phases that build on each other: identiﬁ cation, assess-
ment, control and monitoring of risks and risk reporting.
These phases form a closed and continuous control loop.

Risk identiﬁ cation is at the beginning of the risk manage-
ment process. We understand this to be the identiﬁ ca-
tion of current and future risks, as well as potential risks,
by the persons responsible for an area of risk. All the
identiﬁ ed risks are plausibilized and summarized in a risk
control matrix. The risk control matrix presents the re-
sults of the identiﬁ cation phase and documents the sys-
tematic entirety of all individual risks at the KWS Group
(risk inventory). Around 100 key risks and ways to control
them are currently contained in the risk control matrix.

Risk identiﬁ cation is followed by risk assessment, i.e. the
qualitative and quantitative assessment of all identiﬁ ed
individual risks. Risks are assessed on a net basis, i.e.
allowing for control and monitoring instruments. Their
materiality (upper risk limit) is evaluated on the basis of
their possible effect on operating income (EBIT) or spe-
ciﬁ c qualitative indicators. As part of this, the individual

risks are assessed with their individual likelihood of
occurrence and potential level of damage and classiﬁ ed
according to a trafﬁ c light system.

As part of risk controlling, we deﬁ ne suitable instruments
for tackling the identiﬁ ed and assessed risks and deploy
them accordingly. The objective of risk controlling is to in-
ﬂ uence risks actively. Risk controlling comprises selecting
and carrying out measures to tackle and reduce risks, as
well as constant in-process monitoring of risks and risk
transfer. The effectiveness of the instruments used for
controlling and monitoring the main risks is systematically
reviewed as part of our internal control system (ICS).

The prime tasks of the ICS include documentation of the
effectiveness of the controls and standardized reporting
to the Audit Committee. The adequacy and proper func-
tioning of the controls must be examined once a year
by the persons responsible for them at the respective
business segment or by a commissioned third party. We
ensure with this process that the risk control measures
actually do unfold their full effect. A control can only be
termed effective if it is adequately designed and works
properly. We assess the effectiveness of the controls
by means of regular tests using random samples. The
results of the effectiveness tests are documented and
reported annually to the Audit Committee. Any weak-
nesses identiﬁ ed in the control process are eliminated
promptly and fully. External audits conducted by experi-
enced auditors are an essential part of the ICS by ensur-
ing that our internal controls function properly.

As part of risk reporting during the year, the Risk Com-
mittee is informed quarterly of the current risk situation for
the KWS Group and its ﬁ elds of business.

Management Report of the KWS Group for 2013/2014
Opportunity and risk report

Internal control and risk management system with
regard to the accounting process
The internal accounting control and risk management
system for the ﬁ nancial statements of KWS SAAT AG
and the KWS Group comprises all suitable measures,
structures and processes designed to make sure that
all business events and transactions are included in
accounting promptly, consistently and correctly. It is
intended to ensure compliance with the statutory stan-
dards, accounting regulations and internal accounting
control policies that are binding on all consolidated
companies. The focus of regular internal examina-
tions to optimize processes is on, among other things,
the completeness of ﬁ nancial reporting, the Group’s
uniform accounting, measurement and account al-
location stipulations, and the authorization and access
regulations for IT systems used in accounting. Proper,
complete elimination of intra-Group transactions as
part of consolidation is also examined. The consolidat-
ed accounting process is controlled at KWS SAAT AG
by the corporate units Group Accounting and Group
Controlling.

Main areas of risk
In the following we describe the main risks to which we
as an international company are exposed in our every-
day business and that may have a signiﬁ cant negative
impact on our business situation, assets, ﬁ nancial posi-
tion and earnings, our share price and our reputation.
The KWS Group is subject to the usual economic and
political risks in the countries and regions in which it and
its subsidiaries operate. The order in which the risks are
listed does not reﬂ ect their importance. Unless otherwise
speciﬁ ed, the risks apply to all segments of the KWS
Group. Development of the individual risks is reported
on regularly in the Risk Committee.

Strategic risks
We press ahead continuously with the Group’s strategic
further development. That comprises permanent optimi-
zation of efﬁ ciency, strengthening our core areas, prod-
uct portfolio management and investment in research
and development. The success of the related decisions
is subject to a risk regarding forecasting future (market)
developments.

Overview of the signiﬁ cant individual risks

Risk

Market risks

Production risks

Procurement risks

Liquidity risks

Legal risks

Environmental risks

Personnel risks

IT risks

Examples

• Political risks
• Sales volumes and prices
• Macroeconomic risks

• Currency risks
• Risk of changes in interest rates

• Weather-related risks
• Outage of production systems

• Quality risks
• Investment risks

• Dependence on suppliers
• Diversiﬁ cation

• Cash / cash ﬂ ow
• Credit lines (with banks)

• Antitrust risks
• Corruption risks
• Capital market risks

• Access to technologies

• Receivables management

• Infringement of patents / trademarks /

know-how

• Data protection

• Pollution of air, soil and water by dusts,

waste water and dangerous waste

• Transport of hazardous goods
• Genetic mixing

• Recruitment / development
• Work safety

• High availability
• IT security

• Working time / old-age pensions

• Authorization concept

Management Report of the KWS Group for 2013/2014
Opportunity and risk report

Market risks
In the strongly regulated international agricultural indus-
try, political risks have a signiﬁ cant impact on our busi-
ness development. Uncertainty about what will happen
in Ukraine and the effects of sanctions on Russia, which
are difﬁ cult to assess, may have a negative impact on
our business activities in these two countries. We gener-
ated net sales totaling €50.6 million in the two countries
in ﬁ scal 2013/2014. The lack of statutory regulations
may also represent a risk. One unavoidable risk for our
corn business is still the possibility of the adventitious
presence of genetically modiﬁ ed organisms (GMOs) in
conventional seed. In the absence of a standardized
legal threshold value, a number of European countries
practice a policy of zero tolerance. Thanks to an exten-
sive quality assurance system, only two suspicious seed
samples were identiﬁ ed in international ofﬁ cial tests in
ﬁ scal 2013/2014.

A further risk lies in the uncertain regulatory framework
for growing energy plants. Extensive government market
incentive programs and speculation on the agricultural
commodity markets have meant that this sector of agri-
cultural production is currently being called into question
as a whole. In principle, what is needed here is a careful
analysis of what form of cultivation of energy plants
represents an economically sensible and sustainable
alternative form of producing energy. This must take into
account increases in efﬁ ciency in energy plant cultiva-
tion and the fact that the prices for fossil fuels will tend
to rise.

The medium-term sales risk depends on product per-
formance and the competitive situation. We address this
challenge with systematic analyses of the market and the
competition and by constantly developing higher-quality
seed for innovative, high-yield plants.

The greatest risk for a plant breeding company is the loss of its innovative strength. KWS and its more than 1,800 R&D employees see
innovativeness as a huge opportunity.

Currency risks arise in particular from existing receiv-
ables and liabilities denominated in foreign currency due
to ﬂ uctuations in exchange rates. There are interest rate
risks as a result of potential changes to market inter-
est rates. Variable-interest ﬁ nancial instruments may
result in ﬂ uctuations in interest payments and thus have
a positive or negative impact on earnings. The risk of
interest rate changes and currency risks are addressed
through the usual standardized hedging instruments,
which in turn may have an inﬂ uence on the KWS Group’s
earnings and assets situation. The KWS Group aims to
minimize ﬁ nancial risks resulting from its business, such
as currency and interest-rate risks, through systematic
management. This is done primarily with derivatives and
other ﬁ nancial instruments such as forward exchange
dealings.

Production risks
The agricultural production process of breeding and mul-
tiplying seed depends to a large extent on the weather.
We counteract the risk of production losses stemming
from bad weather by distributing seed multiplication
over various locations in Europe and North and South
America. Our presence in various markets around the
world also means that we can cope with ﬂ uctuations in
demand in individual regions as part of our global pro-
duction network. Contra-seasonal multiplication is carried
out in the winter half-year in Chile and Argentina if there
are bottlenecks in seed availability, for example.

We counter the risk of outages of production facilities
with regular maintenance and Group-wide business
interruption insurance. In addition, our products are
subjected to regular and extensive quality checks on the
ﬁ elds used for multiplication and during processing so
as to reduce quality-related risks. In this way, we ensure
the high quality of our products through stringent internal
quality standards and monitoring.

Procurement risks
We minimize risks that might arise from procurement
of seed by means of international diversiﬁ cation of our
production locations and sufﬁ cient stockpiling. More-
over, supply risks related to sources no longer being
able to deliver are largely reduced by means of continu-
ous classiﬁ cation of risks. As part of that, we observe
the creditworthiness of important business partners,
among our customers and suppliers alike. To keep on
improving our supply and reduce any other risks, the
entire area of purchasing is currently being improved by
the Corporate Procurement department.

Liquidity risks
We address liquidity risks with professional cash man-
agement and sufﬁ cient long-term borrower’s note loans
and syndicated credit lines. As in the previous year, full
use was not made of the variable credit lines in ﬁ scal
2013/2014. Our loan agreements include ﬁ nancial cov-
enants, compliance with which has been ensured at all
times to date. KWS uses extensive trade credit insurance
to minimize the risk of losing receivables in risky regions
and business segments. To enable this, we pursue an
active receivables management policy so that impending
payment defaults can be identiﬁ ed at an early stage.

Legal risks
The KWS Group faces risks from legal disputes and
ofﬁ cial procedures both nationally and internationally as
part of its operations. Such legal disputes may arise in
particular with suppliers, dealers, customers, employees
or investors. They may result in payment obligations or
other commitments. In ﬁ scal 2013/2014 there were no
pending legal proceedings that might result in signiﬁ cant
risks for the KWS Group. In order to prevent any viola-
tions of the diverse tax, environmental and competition
and other regulations and laws, we obligate all employ-
ees to abide by our compliance policies. The Code of
Business Ethics and the compliance policies based on
it contain provisions stipulating that all KWS employees
must act in accordance with KWS’ corporate values
and comply with the law, contracts and internal rules.

Management Report of the KWS Group for 2013/2014
Opportunity and risk report

Management Report of the KWS Group for 2013/2014
Forecast report

Environmental risks
The Integrated Management System and environmental
policies, which employees are obligated to implement
under our internal regulations, in conjunction with the
requirements deﬁ ned by environmental protection law,
form the foundation for all our strategic and operational
measures in protecting the environment. The organiza-
tion of processes and operation of plants and systems,
including documentation, in the various areas of the
company is regulated in the management system, which
complies with the DIN EN ISO 9001:2008 (quality) and
DIN EN ISO 14001:2004 (environment) standards.
The working order and effectiveness of this system is
examined regularly by internal audits and reviews and
conﬁ rmed by an external certiﬁ er. This minimizes pos-
sible risks of pollution of the air, soil and water by dusts,
waste water and hazardous waste.

Personnel risks
Our success builds on the individual skills and know-
ledge of our employees. We encourage the workforce
to expand and transfer knowledge through targeted
continuing education and development programs. We
minimize the risk of losing knowledge when people retire
by means of intensive and subject-speciﬁ c qualiﬁ ca-
tion and timely succession planning. In addition to our
speciﬁ c vocational training and trainee programs, we
initiated the “Breeders Academy” with the aim of training
young people in the ﬁ eld of research and breeding.

IT risks
Ensuring the security of our information systems is of
great importance to us. We address risks, such as unau-
thorized access to sensitive electronic company data and
information as a result of hacking or computer viruses,
with an IT security organization, IT security policies and
the use of state-of-the-art ﬁ rewall and antivirus programs.
Due to the rapid pace of technological development,
there is a residual risk to IT security which can be mini-
mized but not completely controlled.

Overall statement on the risk situation by
the Executive Board
The rising share of our business in foreign currency,
particularly in emerging countries, means there will be
additional currency risks. Nevertheless, and taking into
account our countermeasures, we assess the potential
ﬁ nancial impact of currency risks as being moderate.

The risks presented above do not jeopardize the exis-
tence of the KWS Group, neither individually nor in their
entirety. All in all, the risk situation did not change signiﬁ -
cantly in ﬁ scal 2013/2014. The main risks for us are still
related to production and the market. We feel sure that,
thanks to our global footprint, our innovativeness and the
high quality of our products, we can seize opportunities
and successfully counter risks as they arise. However,
we cannot rule out the possibility that further factors of
which we are not currently aware or which we do not at
present assess as signiﬁ cant may impact the continued
existence of the KWS Group in the future.

Change in risks in ﬁ scal 2013/2014

Individual risk

Market risks

Production risks

Liquidity risks

Legal risks

Environmental risks

IT risks

Procurement risks

Personnel risks

Likelihood of
occurrence

Potential ﬁ nancial
impact

Change

Possible

Unlikely

Possible

Unlikely

Signiﬁ cant

Moderate

No change

Increase

Forecast report

KWS Group: Net sales expected to rise by 5% to 10%
We will stick to our proven, long-term corporate strategy
in ﬁ scal 2014/2015 and focus on tapping young sales
markets and developing high-yielding new varieties.
Consequently, we intend to increase our spending on
distribution activities and research and development
sharply again.

That will be accompanied by extensive investments in
property, plant and equipment – in particular, we need to
expand our seed processing capacities in order to han-
dle our planned growth in the coming years. Especially in
our growth regions of North and South America, Eastern
Europe and China, there is hardly any possibility of hav-
ing seed production carried out by third parties, meaning
we will establish our own plants. In addition, we are ex-
panding our research facilities at Einbeck and continuing
to set up our new research center in St. Louis, Missouri
(U.S.) Our expansion strategy will also lead to growth
in our international workforce. As far as can be seen at
present, the number of employees at the KWS Group will
grow by around 300 to approximately 5,200 by the end
of the ﬁ scal year.

Operationally, the KWS Group’s Executive Board ex-
pects net sales to rise by between 5 and 10% with an
EBIT margin of at least 10% in ﬁ scal 2014/2015. We
are thus sticking to our long-term objective. This plan-
ning is based on net sales of €1,178 million for ﬁ scal
2013/2014. As far as can be seen at present the further
increase in research and development expenditure will
result in an R&D level of 13%. We intend to continue our
dividend policy, which is based on a payout ratio of 20%
to 25% of the net proﬁ t of KWS.

As already announced last year, the presentation of the
companies consolidated in the KWS Group will change
signiﬁ cantly due to an amendment to the International
Financial Reporting Standard (IFRS 11). Since the be-
ginning of ﬁ scal 2014/2015, we cannot include net sales
and costs of our 50 : 50 joint ventures in the KWS Group
by way of proportionate consolidation. The earnings
contributed by these companies will instead be carried
as a sum total under net ﬁ nancial income/expenses.
However, we will present our business activity as usual
at the segment level so as to ensure there is no impair-
ment to the transparency of our operational develop-
ment.

The KWS family will grow to more than 5,000 employees worldwide for the ﬁ rst time in ﬁ scal 2014/2015.

Management Report of the KWS Group for 2013/2014
Forecast report

Management Report of the KWS Group for 2013/2014
Other disclosures

Corn Segment: Return to our former growth
While growth in the Corn Segment was somewhat
more restrained in the year under review, mainly due to
exchange rate effects, we expect net sales to increase
again by double digits in ﬁ scal 2014/2015. The regions
of North and South America and Southern, Southeast-
ern and Eastern Europe are expected to make major
contributions to that. We also intend to make further
progress in France, where we were able to become the
market leader last year for the ﬁ rst time. The Corn Seg-
ment’s anticipated income will inevitably be impacted by
the high up-front costs on ensuring our future growth. As
far as can be seen at present, we nevertheless expect
an EBIT margin of 11% to 12%.

Sugarbeet Segment: Stable at the ambitious level
of the previous year
We expect at best a stable level of net sales and income
for the Sugarbeet Segment with its two product areas of
sugarbeet seed and seed potatoes in ﬁ scal 2014/2015.
Despite declining sugarbeet cultivation area, we man-
aged to break the €300 million mark for net sales for the
ﬁ rst time last year. Whether we can repeat this success

in the forecast period depends mainly on our business
performance in our most important sales market of
North America. Our goal is to defend our exceptionally
high market share there. In the countries covered by the
European Sugar Market Regime, we also posted record
net sales last ﬁ scal year. Given that there are now
expected to be declines in area due to good harvests
and low sugar prices, we do not see any potential for
growth at the moment. The good potato harvest in the
2014 growing season will also exert pressure on prices
and result in lower demand for seed potatoes. Never-
theless, we still expect an EBIT margin of 20% in the
Sugarbeet Segment.

Cereals Segment: Again greater cultivation of rye
The further decrease in prices for cereals for consump-
tion means that no increase in cereal cultivation area
can be expected next growing season. However, we
assume that there might be a slight shift in the variety
mix and that the share of rye in cereal cultivation might
increase slightly again. Overall, we anticipate that the
segment’s net sales and income will be at the level of
the previous year.

A good outlook – because growth is our core competence.

Other disclosures

Takeover-related disclosures
Disclosures in accordance with Section 315 (4) HGB
(German Commercial Code) and explanatory report in
accordance with Section 176 (1) AktG (German Stock
Corporation Act)

• Matthias Sohnemann, Germany
• Malte Sohnemann, Germany
• Arne Sohnemann, Germany
• AKB Stiftung, Hannover, Germany
• Zukunftsstiftung Jugend, Umwelt und Kultur, Einbeck,

Composition of the subscribed capital
KWS SAAT AG’s subscribed capital comprises
6,600,000 no-par bearer shares. Each share confers
one voting right.

Restrictions relating to voting rights or
the transfer of shares
Apart from the statutory restrictions on exercising voting
rights in accordance with Section 136 of the German
Stock Corporation Act (AktG) or Section 28 of the Ger-
man Securities Trading Act (WpHG), there are no other
restrictions relating to voting rights. Transfer of shares
is merely restricted by a four-year holding period under
the annual Employee Share Program. Only a small part
of the shares is affected by this regulation. For example,
our employees acquired 11,028 shares as part of the
program in 2014. You can ﬁ nd more information on our
Employee Share Program in the section “The KWS share”
on page 8 of this report. Apart from that, the Executive
Board is not aware of any agreements between share-
holders relating to voting rights or the transfer of shares.

Direct or indirect participating interests in excess
of 10% of the voting rights
The company has been informed of the following
direct or indirect participating interests in the capital of
KWS SAAT AG in excess of 10% of the voting rights in
accordance with Section 21 and Section 22 of the
German Securities Trading Act (WpHG) or elsewhere.

The voting shares, including mutual allocations, of the
members and companies of the families Büchting,
Arend Oetker and Giesecke listed below each exceed
10% and are 56.1%:

• Dr. Drs. h.c. Andreas J. Büchting, Germany
• Christiane Stratmann, Germany
• Dorothea Schuppert, Germany
• Michael C.-E. Büchting, Germany
• Annette Büchting, Germany
• Stephan O. Büchting, Germany
• Elke Giesecke, Germany
• Christa Nagel, Germany
• Bodo Sohnemann, Germany

Germany

• Dr. Arend Oetker, Germany
• Kommanditgesellschaft Dr. Arend Oetker Vermögens-
verwaltungsgesellschaft mbH &. Co., Berlin, Germany

The voting shares, including mutual allocations, of the
shareholders stated below each exceed 10% and are
14.2%.

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

Regulations and provisions regarding the appoint-
ment and removal of members of the Executive
Board and changes to the Articles of Association
Section 84 (1) of the German Stock Corporation Act
(AktG) speciﬁ es that members of the Executive Board
are appointed or removed by the Supervisory Board.
Under Section 6 of the Articles of Association, the
Executive Board consists of at least two persons. The
Supervisory Board is responsible for deﬁ ning the number.
In compliance with Section 179 (2) Sentence 2 of the
German Stock Corporation Act (AktG), Section 18 of
KWS SAAT AG’s Articles of Association speciﬁ es that
resolutions, and thus changes to the Articles of Associa-
tion as well, are adopted by the Annual Shareholders’
Meeting by a simple majority of the votes cast or with
the simple majority of the capital stock represented in
adoption of the resolution. Mandatory statutory provisions
that stand in the way of this arrangement are not affected
by it. The power to make amendments to the Articles
of Association that only affect the wording has been
conferred on the Supervisory Board pursuant to Section
179 (1) Sentence 2 AktG in accordance with Section 22
of KWS SAAT AG’s Articles of Association.

Compensation agreements in the event
of a takeover bid
In the event of a takeover, there are agreements for the
members of KWS SAAT AG’s Executive Board which
comply with the provisions of the German Corporate
Governance Code (Clause 4.2.3). They specify a com-
mitment to pay a maximum of three year’s compensa-
tion if an Executive Board member’s activity is terminated

Management Report of the KWS Group for 2013/2014
Other disclosures

prematurely as a result of a change of control. At the
same time, the payment does not exceed the compen-
sation to be paid for the remainder of the contract of
employment.

The other circumstances speciﬁ ed in Section 315 (4) of
the German Commercial Code (HGB) do not apply at
KWS SAAT AG, so no disclosures can be made in this
regard.

Declaration regarding Corporate Governance
The declaration on Corporate Governance in accor-
dance with Section 289a of the German Commercial
Code (HGB) (which is also the Corporate Governance
Report) is available on our website at www.kws.com
> Company > Investor Relations > Corporate Govern-
ance. Among other things, it contains the declaration in
accordance with Section 161 of the German Stock Cor-
poration Act (AktG) (declaration of compliance), which
is also reproduced on page 18 of this report, relevant
disclosures on Corporate Governance practices and a
description of the working practices of the Executive
Board and the Supervisory Board.

includes not only a ﬁ xed payment of €28 thousand p.a.
and payment for work on committees, but also a per-
formance-related component, which is oriented toward
the company’s sustainable development. The members
of the Supervisory Board receive €400.00 for each full
€0.10 by which the average net income per share before
minority interests, as disclosed by the consolidated
ﬁ nancial statements, exceeds €4.00 for the ﬁ scal year
for which the compensation is paid and for the two prior
ﬁ scal years. The performance-related payment is limited
to the amount of the ﬁ xed payment.

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 commit-
tees. The Chairman of the Audit Committee receives €25
thousand. Ordinary members of the Supervisory Board
receive €5 thousand for their work on the Committee for
Executive Board Affairs and €10 thousand for their work
on the Audit Committee. The members of the Supervi-
sory Board are reimbursed for all expenses – including
value-added tax – that they incur while carrying out the
duties of their position.

Compensation Report
The Supervisory Board’s compensation was set by the
Annual Shareholders’ Meeting on December 17, 2009.
It is based on the size of the company, the duties and
responsibilities of the members of the Supervisory Board
and the company’s economic situation. The remuneration

The total compensation for members of the Supervisory
Board amounts to €516 thousand (€516 thousand),
excluding value-added tax. In all, 46% (46%) or €238
thousand (€238 thousand) of the total compensation is
performance-related.

Supervisory Board compensation in 2013/2014

in €

Dr. Andreas J. Büchting1

Dr. Arend Oetker2

Hubertus von Baumbach3

Jürgen Bolduan

Cathrina Claas-Mühlhauser

Dr. Berthold Niehoff

1 Chairman
2 Deputy Chairman
3 Chairman of the Audit Committee

Fixed

84,000.00

42,000.00

Work
on com-
mittees

Perfor-
mance-
related

Total

0.00

84,000.00

168,000.00

0.00

42,000.00

84,000.00

28,000.00

25,000.00

28,000.00

81,000.00

28,000.00

10,000.00

28,000.00

66,000.00

28,000.00

5,000.00

28,000.00

61,000.00

28,000.00

0.00

28,000.00

56,000.00

238,000.00

40,000.00 238,000.00

516,000.00

Supervisory Board compensation in the previous year

in €

Dr. Andreas J. Büchting1

Dr. Arend Oetker2

Hubertus von Baumbach3

Jürgen Bolduan

Cathrina Claas-Mühlhauser

Dr. Berthold Niehoff

Dr. Dietmar Stahl (until December 2012)

1 Chairman
2 Deputy Chairman
3 Chairman of the Audit Committee

Fixed

84,000.00

42,000.00

Work
on com-
mittees

Perfor-
mance-
related

Total

0.00

84,000.00

168,000.00

0.00

42,000.00

84,000.00

28,000.00

25,000.00

28,000.00

81,000.00

28,000.00

10,000.00

28,000.00

66,000.00

28,000.00

5,000.00

28,000.00

61,000.00

14,000.00

0.00

14,000.00

28,000.00

0.00

14,000.00

28,000.00

238,000.00

40,000.00 238,000.00

516,000.00

The compensation of members of the Executive
Board was set by the Supervisory Board and approved
by the Annual Shareholders’ Meeting. It is based on the
size and activity of the company, its economic and ﬁ nan-
cial situation and the level and structure of compensation
for managing board members at comparable companies.

The “total compensation” of the Executive Board com-
prises ﬁ ve components:

1. A basic ﬁ xed 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. other remuneration and pension awards.

The basic annual salary, bonus payment and other
remuneration, including any special payments, are
also jointly termed “cash compensation” in the fol-
lowing. Payments for duties performed in subsidiar-
ies and associated companies are offset against the
performance-related payment. The cash compensation
is limited to an absolute amount of €750,000 per ﬁ scal
year. If the company generates sustainable average net
income of more than €70 million a year in two succes-
sive ﬁ scal years, this limit will be subsequently increased
to €800,000 and, in the case of sustainable average net
income of more than €100 million a year in two succes-
sive ﬁ scal years, to €900,000. It has been agreed that
this arrangement does not apply in ﬁ scal 2013/2014 to
the members of the Executive Board Dr. Léon Broers

and Dr. Hagen Duenbostel. The limit of €750,000 there-
fore remains for them.

The basic gross annual salary is €216.000. The Chief
Executive Ofﬁ cer receives an extra “CEO bonus” of 25%
on top of the basic annual salary. The variable payment
(performance-related bonus) for our Executive Board
members depends on the Company’s performance over
several years. It is calculated on the basis of a percent-
age of the average net income of the KWS Group for the
past three ﬁ scal years. This percentage is reduced if net
income for the year exceeds certain thresholds. There
is also a stock-based incentive program intended to act
as a long-term incentive. Every member of the Executive
Board is obligated to invest a freely selectable amount
ranging between at least 20% and at most 50% of the
gross performance-related bonus payment in KWS
shares. A long-term incentive (LTI) is paid in the form of
cash compensation after a holding period of ﬁ ve years.
This payment is calculated on the basis of the share’s
performance over the holding period and on the aver-
age return on sales, measured as the ratio of operating
income to net sales (ROS). However, it is capped at a
maximum of two-and-a-half times the payments made
by the Executive Board member as part of his or her
own investment. One third of the LTI before taxes must
be reinvested in KWS shares after it is paid out.

The basic compensation is paid as a monthly salary.
Apart from these salaries, there is also non-monetary
compensation, such as a company car or a phone.
There are also accident insurance policies for the mem-
bers of the Executive Board.

Management Report of the KWS Group for 2013/2014
Other disclosures

Annual Financial Statements
of the KWS Group 2013/2014

64 Statement of comprehensive income

65 Balance sheet of the KWS Group

66 Statement of changes in ﬁ xed assets

68 Statement of changes in equity

70 Cash ﬂ ow statement of the KWS Group

71 Notes for the KWS Group 2013/2014

112 Auditors’ Report

Executive Board compensation in 2013/2014

in €

Cash compensation

LTI

Total

Basic com-
pensation

Other
emoluments

Performance-
related

Total

Fair Value

Philip von dem Bussche1

270,000.00

17,876.82

566,123.18

854,000.00 235,178.36

1,089,178.36

Dr. Léon Broers

216,000.00

21,104.58

512,895.42

750,000.00 186,895.18

936,895.18

Dr. Hagen Duenbostel

216,000.00

19,488.16

514,511.84

750,000.00 187,819.26

937,819.26

Eva Kienle

200,000.00

26,548.49

290,263.21

516,811.70

0.00

516,811.70

902,000.00

85,018.05 1,883,793.65 2,870,811.70 609,892.80

3,480,704.50

1 CEO

Executive Board compensation in the previous year

in €

Cash compensation

LTI

Total

Basic com-
pensation

Other
emoluments

Performance-
related

Total

Fair Value

Philip von dem Bussche1

270,000.00

18,519.38

515,480.62

804,000.00

271,844.32

1,075,844.32

Dr. Christoph Amberger

216,000.00

22,882.03

511,117.97

750,000.00

135,128.84

885,128.84

Dr. Léon Broers

216,000.00

21,456.48

512,543.52

750,000.00

211,023.12

961,023.12

Dr. Hagen Duenbostel

216,000.00

19,244.95

514,755.05

750,000.00

273,166.52

1,023,166.52

Eva Kienle

50,000.00

6,483.24

70,000.00

126,483.24

0.00

126,483.24

968,000.00

88,586.08

2,123,897.16

3,180,483.24

891,162.80

4,071,646.04

1 CEO

As of ﬁ scal 2014/2015, a new arrangement has been
agreed upon with the members of the Executive Board,
under which the basic compensation is to rise from
€216,000 to €300,000. At the same time, calculation of
the performance-related bonus on the basis of a declin-
ing scale will be replaced by its being calculated as a
linear function of the sustained net income; that means
that the variable compensation will be lower, as well
as being more dependent on the company’s earnings
and thus subject to greater volatility. The performance-
related bonus will be limited to €500,000, a ﬁ gure that will
increase subsequently to €600,000 if the company posts
two successive, average sustained annual incomes of
more than €100 million. The other compensation compo-
nents will remain unchanged, but there will no longer be
an obligation to invest one third of the LTI before taxes in
KWS shares after it has been paid out.

between €130 thousand and €140 thousand. In ﬁ scal
2013/2014, €108 thousand (€72 thousand) were paid
into a provident fund backed by a guarantee for pen-
sion commitments to members of the Executive Board.
€115 thousand (€193 thousand) were allocated to the
pension provisions in accordance with IAS 19. Pension
provisions totaling €588 thousand (€1,689 thousand)
were formed for members of the Executive Board of
KWS SAAT AG.

Compensation of former members of the Executive
Board and their surviving dependents amounted to
€1,476 thousand (€1,097 thousand). Pension commit-
ments in accordance with IAS 19 (2011) recognized for
this group of persons amounted to €7,018 thousand
(€3,155 thousand) as of June 30, 2014. The pension
commitments for three former members of the Execu-
tive Board are backed by a guarantee.

Pension obligations are granted both in the form of
a direct obligation to provide beneﬁ ts and a deﬁ ned
contribution plan, with the annual pensions ranging

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

Pension commitments

in €

Dr. Hagen Duenbostel

07/01/2013

Interest
expenses

Revaluation
effects

06/30/2014

472,785.00

16,547.00

98,529.00

587,861.00

Annual ﬁ nancial statements
Statement of comprehensive income

Annual ﬁ nancial statements
Balance sheet of the KWS Group

Balance sheet of the KWS Group

Note No.

2013/2014

Previous
year1

at June 30, 2014

Assets

in € thousand

Intangible assets

1,178,007

1,147,235

Property, plant and equipment

Statement of comprehensive income

from July 1, 2013 through June 30, 2014

in € thousand

I. Income statement

Net sales

Cost of sales

Gross proﬁ t 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 similar expenses

Net income from equity investments

Net ﬁ nancial income/expenses

Results of ordinary activities

Taxes

Net income for the year

II. Other comprehensive income

Revaluation of ﬁ nancial instruments

Currency translation difference for economically independent foreign units

Items that may have to be subsequently reclassiﬁ ed as proﬁ t or loss

Revaluation of net liabilities/assets from deﬁ ned beneﬁ t plans

Items not reclassiﬁ ed as proﬁ t or loss

Other comprehensive income after tax

III. Comprehensive income

Comprehensive income

Share of other minority interests

Comprehensive income after shares of minority interests

Net income for the year

Shares of other minority interests

Net income after shares of other minority interests

Earnings per share (in €)

1 adjusted pursuant to IAS 19 (2011)

(18)

(19)

(20)

614,528

563,479

203,952

148,821

76,741

60,672

56,205

607,027

540,208

190,548

140,371

69,043

61,943

50,061

138,432

152,128

1,910

14,468

1,719

12,080

(21)

–12,551

–10,316

(22)

(24)

(11)

125,881

141,812

45,595

80,286

49,528

92,284

– 161

–19,198

–19,359

–5,878

–13,478

–13,392

–1,817

– 25,237

– 15,209

55,049

3,057

51,992

80,286

3,162

77,124

77,075

2,201

74,874

92,284

3,383

88,901

11.69

13.47

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 ﬁ nancial assets

Other current assets

Current assets

Total assets

1 adjusted pursuant to IAS 19 (2011)

Equity and Liabilities

in € thousand

Subscribed capital

Capital reserve

Retained earnings

Minority interest

Equity

Long-term provisions

Long-term borrowings

Trade payables

Deferred tax liabilities

Other noncurrent liabilities

Noncurrent liabilities

Short-term provisions

Short-term borrowings

Trade payables

Current tax liabilities

Other current ﬁ nancial liabilities

Other current liabilities

Current liabilities

Liabilities

Total equity and liabilities

1 adjusted pursuant to IAS 19 (2011)

Note no.

06/30/2014

06/30/2013 1

07/01/2012 1

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(8)

99,803

321,947

2,774

4,189

48,056

476,769

192,988

361,576

76,712

78,261

45,609

15,881

15,033

101,866

287,623

7,305

5,719

44,949

447,462

144,452

359,867

100,878

101,517

24,385

26,587

13,535

111,725

261,457

1,938

6,093

33,622

414,835

139,694

309,422

40,399

142,569

25,957

14,689

9,304

786,060

771,221

682,034

1,262,829

1,218,683

1,096,869

Note no.

06/30/2014

06/30/2013 1

07/01/2012 1

(11)

19,800

5,530

604,376

8,073

637,779

99,634

113,754

1,470

26,332

12,964

19,800

5,530

592,553

31,762

649,645

90,389

98,460

1,697

29,695

9,075

19,800

5,530

536,542

24,124

585,996

88,256

48,717

1,914

36,043

8,207

(12)

254,154

229,316

183,137

131,841

131,350

121,633

53,357

81,111

35,467

12,191

56,929

370,896

625,050

33,259

82,746

31,929

11,833

48,605

339,722

569,038

58,419

74,373

24,053

8,857

40,401

327,736

510,873

1,262,829

1,218,683

1,096,869

(13)

Annual ﬁ nancial statements
Statement of changes in ﬁ xed assets

Statement of changes in ﬁ xed assets

of the KWS Group 2013/2014

in € thousand

Currency
translation

Additions

Write-ups

Disposals

Transfers

Currency
translation

Additions

Write-ups

Disposals

Transfers

Gross values

Amortization/depreciation

Net book values

Balance
07/01/2013

Patents, industrial property
rights and software

Goodwill

83,434

56,449

– 1,008

– 491

Intangible assets

139,883

– 1,499

7,957

499

8,456

Land and buildings

250,567

–4,258

11,239

Technical equipment
and machinery

Operating and ofﬁ ce
equipment

Payments on account

Property, plant and
equipment

183,088

– 3,007

14,040

87,599

14,971

– 1,965

8,878

– 501

38,552

536,225

– 9,731

72,709

Financial assets

7,471

– 5

1,438

Assets

683,579

– 11,235

82,603

Balance
06/30/2014

101

1,136

4,859

5,995

91,418

61,316

152,734

Balance
07/01/2013

31,267

6,750

38,017

– 41

– 39

– 80

12,943

2,150

15,093

762

8,371

265,157

76,958

– 663

8,287

2,441

9,529

201,209

114,959

– 1,498

13,028

5,023

5,807

151

– 22,069

95,296

30,802

56,683

– 1,036

9,384

8,377

1,638

592,464

248,602

– 3,197

30,699

109

– 5,673

3,122

166

182

8,587

1,960

748,320

286,785

– 3,095

45,792

Balance
06/30/2014

Previous
year

700

44,070

8,861

52,931

47,348

52,455

99,803

52,167

49,699

101,866

83,887

181,270

173,609

1,918

– 696

123,875

77,334

68,129

4,543

2,265

62,753

32,543

30,800

30,916

14,969

7,161

1,574

270,517

321,947

287,623

348

2,774

7,305

7,260

1,574

323,796

424,524

396,794

Statement of changes in ﬁ xed assets

of the KWS Group 2012/2013 1

in € thousand

Currency
translation

Additions

Write-ups

Disposals

Transfers

Currency
translation

Additions

Write-ups

Disposals

Transfers

Gross values

Amortization/depreciation

Net book values

Balance
07/01/2012

Patents, industrial property
rights and software

Goodwill

82,622

56,907

– 2,584

4,406

– 458

Intangible assets

139,529

– 3,042

4,406

Land and buildings

Technical equipment
and machinery

Operating and ofﬁ ce equipment

Payments on account

237,471

– 3,703

9,991

170,233

75,591

8,707

– 2,504

– 1,096

– 115

16,899

10,107

18,046

55,043

Property, plant and equipment

492,002

– 7,418

Financial assets

2,104

– 18

5,746

Assets

633,635

–10,478

65,195

1 adjusted pursuant to IAS 19 (2011)

Balance
06/30/2013

1,021

83,434

56,449

139,883

Balance
07/01/2012

21,014

6,790

27,804

– 404

– 40

– 444

11,674

341

7,149

250,567

70,864

– 804

7,076

5,109

3,074

3,569

6,071

– 11,656

183,088

87,599

14,971

8,535

5,133

536,225

109,373

– 1,549

11,637

50,308

– 713

8,061

230,545

– 3,066

26,774

362

7,471

166

9,918

5,144

683,579

258,515

– 3,510

38,448

Balance
06/30/2013

Previous
year

31,267

6,750

38,017

52,167

49,699

61,608

50,117

101,866

111,725

76,958

173,609

166,607

– 162

1,845

114,959

56,683

68,129

30,916

14,969

60,860

25,283

8,707

1,688

248,602

287,623

261,457

1,017

183

4,340

2,818

– 2

7,339

166

7,305

1,938

8,356

1,688

286,785

396,794

375,120

Annual ﬁ nancial statements
Statement of changes in equity

Statement of changes in equity

of the KWS Group 2013/14

in € thousand

Subscribed
capital

Capital
reserve

Parent company

Accumu-
lated
group
equity from
earnings

Comprehensive other
group income

Adjustments
from
currency
translation

Reserve for
from ﬁ nancial
assets cur-
rency held
for sale

Balance as at June 30, 2012

Adjustment due to IAS 19 (2011)

Balance as at July 1, 2012 1

Dividends paid

Net income for the year

Other comprehensive income after tax

Total consolidated gains (losses)

Change in shares of minority interests

Other changes

19,800

5,530

554,110

– 1,590

19,800

5,530

– 1,590

– 12,720

554,110

– 18,480

88,901

144

Annual ﬁ nancial statements
Statement of changes in equity

Parent company

Minority interest

Group
equity

Comprehensive other
group income

Total

Minority
interest

Comprehensive other group income

Total

Revaluation
of deﬁ ned
beneﬁ t plans

Other
transactions

Adjustments
from
currency
translation

Revaluation
of deﬁ ned
beneﬁ t plans

Other
transactions

– 16,716

– 1,776

594

578,588

– 16,716

561,872

– 18,480

88,901

– 14,410

74,491

24,792

– 280

24,792

– 664

3,383

5,716

– 280

– 756

– 384

– 41

– 4

24,508

– 384

24,124

– 664

3,383

– 797

2,586

5,716

603,096

– 17,100

585,996

– 19,144

92,284

– 15,207

77,077

5,716

Balance as at June 30, 2013 1

19,800

5,530

624,531

– 14,310

230

– 18,492

594

617,883

33,227

– 1,036

– 425

– 4

31,762

649,645

Dividends paid

Net income for the year

Other comprehensive income after tax

Total consolidated gains (losses)

Change in shares of minority interests

Other changes

Balance as at June 30, 2014

1 adjusted pursuant to IAS 19 (2011)

– 19,800

77,124

– 19,559

– 265

– 19,213

– 161

– 5,758

– 545

– 19,800

77,124

– 25,132

51,992

– 1,328

3,162

– 20,104

– 25,963

– 265

– 120

545

– 1,328

– 21,128

3,162

– 105

3,057

80,286

– 25,237

55,049

– 25,418

– 45,522

– 265

19,800

5,530

662,031

– 33,523

– 24,795

594

629,706

9,098

– 1,021

– 4

8,073

637,779

Annual ﬁ nancial statements
Cash ﬂ ow statement of the KWS Group

Notes
Notes for the KWS Group 2013/2014

Cash ﬂ ow statement of the KWS Group

Notes for the KWS Group 2013/2014

in € thousand

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

Note

2013/2014

Previous year 1

80,286

92,284

45,792

1,423

–17,100

110,400

20,631

–146

38,448

–2,755

–18,492

109,485

24,062

–191

–90,881

–86,287

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

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

Net cash from operating activities

(1)

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 ﬁ nancial assets

Payments (–) for capital expenditure on ﬁ nancial assets

Payments (–) for purchase of shares in consolidated subsidiaries and other
business units

21,014

61,018

1,361

–66,461

–8,531

109

–1,901

Net cash from investing activities

(2)

–75,421

Cash receipts from issue of capital

Dividend payments (–) to owners and minority shareholders

Cash proceeds from long-term borrowings

Cash repayments of long-term borrowings

Changes from proceeds (+)/repayments (–) of short-term borrowings

Net cash from ﬁ nancing activities

(3)

–66,915

58,301

–32,903

9,994

–31,523

37,509

84,578

1,554

–57,739

–4,406

361

–5,745

–22,970

–88,942

5,716

–19,144

100,264

–51,998

–7,616

27,222

Net cash changes in cash and cash equivalents

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

Cash and cash equivalents at beginning of year

–45,926

22,858

–1,496

202,395

–3,431

182,968

Cash and cash equivalents at end of year

(4)

154,973

202,395

1 adjusted pursuant to IAS 19 (2011)

The KWS Group (KWS Konzern) is a consolidated group
as deﬁ ned in the International Financial Reporting Stan-
dards (IFRS) published by the International Accounting
Standards Board (IASB), London, taking into account
the interpretations of the International Financial Report-
ing Interpretations Committee (IFRIC) and in addition the
commercial law regulations to be applied pursuant to
section 315a (1) of the HGB (German Commercial Code).
In accordance with Section 291 (1) HGB, the consoli-
dated ﬁ nancial statements of KWS SAAT AG, Einbeck,
discharge the obligations of KWS LOCHOW GMBH,
Bergen, and KWS MAIS GMBH, Einbeck, to produce
their own consolidated ﬁ nancial statements and Group
Management Report.

The statements were prepared under the assumption
that the operations of the company will be continued.

The accounting and measurement methods have been
retained without change, except for the changes resulting
from the new accounting standards IAS 19 (2011) “Em-
ployee Beneﬁ ts” and IFRS 13 “Fair Value Measurement”.

IAS 19 (2011) – “Employee Beneﬁ ts”
IAS 19 (2011) “Employee Beneﬁ ts” must be applied
for the ﬁ rst time to ﬁ scal year 2013/2014. The amend-
ments to this standard must be applied retrospectively.
The main change relates to the abolition of the corridor
method. The net interest cost is still carried in the net
ﬁ nancial income/expenses. Remeasurement effects due
to actuarial gains and losses and income from planned
assets not already included as interest income must be
recognized in proﬁ t or loss in the statement of compre-
hensive income. IAS 19 (2011) introduces an amended
deﬁ nition of post-employment beneﬁ ts. The top-up
amounts for semi-retirement obligations are now other
long-term beneﬁ ts to employees that must be accumu-
lated on a pro-rata basis over the vesting period. Up to
now, top-up amounts have been carried in full at their
present value. That resulted in a reversal of the provision
against the retained income of €601 thousand, which
must be allocated again in proﬁ t or loss in the subse-
quent periods. Allowing for deferred taxes, there were
the following changes for the previous years:

Changes to IAS 19 (2011) – Balance sheet

in € thousand

Assets

Noncurrent assets

Deferred tax assets

Current assets

Total assets

Equity and Liabilities

Equity

Pension provisions

Other provisions

Deferred tax liabilities

Long-term borrowings

Short-term borrowings

06/30/2013
(adjusted)

Adjustment

06/30/2013

07/01/2012
(adjusted)

Adjustment

07/01/12

402,513

–2,455

404,968

381,213

–3,099

384,312

44,949

771,221

7,815

37,134

33,622

7,652

25,970

771,221

682,034

1,218,683

5,360

1,213,323

1,096,869

4,553

1,092,316

649,645

–17,881

667,526

585,996

–17,100

603,096

78,865

21,653

57,212

81,549

8,840

29,695

109,232

339,722

23,842

–601

57,707

9,441

29,695

109,232

9,391

36,043

58,838

339,722

327,736

9,391

36,043

58,838

327,736

Total equity and liabilities

1,218,683

5,360

1,213,323

1,096,869

4,553

1,092,316

Notes
Notes for the KWS Group 2013/2014

Changes to IAS 19 (2011) – Income statement and statement of comprehensive income

Financial reporting standards and interpretations

Mandatory ﬁ rst-time application

in € thousand

Net sales

Cost of sales

Gross proﬁ t on sales

Selling expenses

Research and development expenses

General and administrative expenses

Other operating income

Other operating expenses

Operating income

Net ﬁ nancial income/expenses

Results of ordinary activities

Taxes

Net income for the year

Revaluation of ﬁ nancial instruments

Currency translation difference for economically independent foreign units

Items that may have to be subsequently reclassiﬁ ed as proﬁ t or loss

Revaluation of net liabilities/assets from deﬁ ned beneﬁ t plans

Items not reclassiﬁ ed as proﬁ t or loss

Other comprehensive income after tax

Comprehensive income

2012/2013
(adjusted)

1,147,235

607,027

540,208

190,548

140,371

69,043

61,943

50,061

Adjustment

2012/2013

1,147,235

–367

367

–214

–439

–442

607,394

539,841

190,762

140,810

69,485

61,943

50,061

152,128

1,462

150,666

–10,316

141,812

49,528

92,284

–13,478

–13,392

–1,817

–15,209

77,075

–10,316

1,462

140,350

426

1,036

–1,817

49,102

91,248

–13,478

–13,392

–1,817

–13,392

–781

77,856

Earnings per share in ﬁ scal 2012/2013 are higher by
€0.15 as a result of IAS 19 (2011).

If the old version of IAS 19 had continued to be applied in
ﬁ scal 2013/2014, the following changes would not have
occurred in the present ﬁ nancial statements:

• A reduction of €24,846 thousand in the other reserves
• An increase of €34,371 thousand in pension provisions
• An increase in deferred tax assets and a reduction in

deferred tax liabilities of €10,265 thousand

• An increase of €740 thousand in net income for the year
• An increase of €0.11 in earnings per share

IFRS 13 – “Fair Value Measurement”
On May 12, 2011, the IASB adopted the new account-
ing standard IFRS 13 “Fair Value Measurement” with
the objective of introducing a consistent deﬁ nition and
principles for determining fair value. IFRS 13 must be
applied prospectively. First-time application of the new
standard does not result in any signiﬁ cant effects on the
consolidated ﬁ nancial statements of the KWS Group.

The following ﬁ nancial reporting standards and inter-
pretations were published by the IASB by the balance
sheet date, but must be applied by the KWS Group only
at a later date.

IFRS 10: Consolidated Financial Statements

IFRS 11: Joint Arrangements

IFRS 12: Disclosure of Interests in Other Entities

Amendments to IAS 27: Separate Financial Statements

Amendments to IAS 28: Investments in Associates and Joint Ventures

In ﬁ scal year 2014/2015

Amendments to IFRS 10, IFRS 11 and IFRS 12 – Consolidated Financial Statements,
Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance

In ﬁ scal year 2014/2015

Amendments to IFRS 10, IFRS 12 and IAS 27 – Consolidated Financial Statements,
Disclosure of Interests in Other Entities and Separate Financial Statements: Invest-
ment Entities

In ﬁ scal year 2014/2015

Amendments to IAS 32 – Financial Instruments: Presentation: Offsetting Financial
Assets and Financial Liabilities

In ﬁ scal year 2014/2015

Amendments to IAS 36 – Impairment of Assets: Recoverable Amount Disclosures for
Non-Financial Assets

In ﬁ scal year 2014/2015

Amendments to IAS 39 – Financial Instruments: Recognition and Measurement –
Novation of Derivatives and Continuation of Hedge Accounting

IFRIC 21 – Levies

In ﬁ scal year 2014/2015

Amendments to IAS 19 (2011) – Employee Beneﬁ ts: Deﬁ ned Beneﬁ t Plans

At the earliest in ﬁ scal year 2014/2015

Annual Improvements to the International Financial Reporting Standards
(2010 – 2012 cycle)

Annual Improvements to the International Financial Reporting Standards
(2011 – 2013 cycle)

IFRS 14 – Regulatory Deferral Accounts

Amendments to IFRS 11 – Joint Arrangements: Accounting for Acquisitions
of Interests in Joint Operations

At the earliest in ﬁ scal year 2014/2015

At the earliest in ﬁ scal year 2016/2017

Amendments to IAS 16 and IAS 38 – Property, Plant and Equipment and Intangible
Assets: Clariﬁ cation of Acceptable Methods of Depreciation and Amortization

At the earliest in ﬁ scal year 2016/2017

Amendments to IAS 16 and IAS 41 – Property, Plant and Equipment and Agriculture:
Bearer Plants

At the earliest in ﬁ scal year 2016/2017

Amendments to IAS 27 – Separate Financial Statements: Equity Method in Separate
Financial Statements

IFRS 15 – Revenue from Contracts with Customers

IFRS 9 – Financial Instruments

At the earliest in ﬁ scal year 2016/2017

At the earliest in ﬁ scal year 2017/2018

At the earliest in ﬁ scal year 2018/2019

Notes
Notes for the KWS Group 2013/2014

IAS 27 (2011), IAS 28 (2011), IFRS 10, IFRS 11 and
IFRS 12 – Consolidation
IFRS 10 introduces a new concept of control that inﬂ u-
ences the methods and scope of consolidation. IFRS 11
governs the ﬁ nancial reporting of joint arrangements and
prescribes only the equity method for consolidation of
joint ventures in future. IFRS 12 contains more extensive
disclosure requirements in connection with subsidiaries,
joint ventures, associated companies and unconsolidated
structured companies. IAS 27 (2011) and IAS 28 (2011)
are subsequent amendments of the new IFRS 10,
IFRS 11 and IFRS 12.

KWS will apply the new ﬁ nancial reporting standards
relating to consolidation for the ﬁ rst time in ﬁ scal year
2014/2015.

There will be signiﬁ cant changes for the KWS Group in
particular from application of IFRS 11. At June 30, 2014,
eight joint ventures were proportionately consolidated in
the KWS Group’s ﬁ nancial statements and will be con-
solidated using the equity method in future in accordance
with IFRS 11.

For the ﬁ rst time in ﬁ scal 2014/2015, the balance sheet
and statement of comprehensive income will no longer
include the proportionate revenue, expenses, assets and
liabilities of the above-mentioned joint ventures.

The balance sheet for ﬁ scal 2013/2014 would be as
follows if IFRS 11 were applied early:

Assets

in € millions

Noncurrent assets

Current assets

Total assets

Equity and liabilities

in € millions

Equity

Noncurrent liabilities

Current liabilities

Total equity and liabilities

The income statement sheet for ﬁ scal 2013/2014 would
be as follows if IFRS 11 were applied early:

Income statement for the period July 1, 2013 through June 30, 2014

in € millions

Net sales

Operating income

Net ﬁ nancial income/expenses

Result of ordinary activities

Taxes

Net income for the year

After
adjustment

534.5

630.5

1,165.0

Adjustments
pursuant to
IFRS 11

57.7

–155.5

–97.8

As reported

476.8

786.0

1,262.8

After
adjustment

Adjustments
pursuant to
IFRS 11

637.8

252.7

274.5

1,165.0

0.0

–1.4

–96.4

–97.8

As reported

637.8

254.1

370.9

1,262.8

After
adjustment

Adjustments
pursuant to
IFRS 11

As reported

923.5

118.3

7.6

125.9

45.6

80.3

–254.5

–20.1

20.1

0.0

1,178.0

138.4

–12.5

125.9

45.6

80.3

To the extent that these relate to supplementary disclo-
sure obligations, there will be no effects on the balance
sheet or statement of comprehensive income.

As far as can be seen at present, the other ﬁ nancial
reporting standards and interpretations will not have a
signiﬁ cant impact on the consolidated ﬁ nancial state-
ments of the KWS Group.

Notes
Notes for the KWS Group 2013/2014
1. General disclosures

According to IAS 36, goodwill is not amortized, but
tested for impairment at least once a year (impairment-
only approach). Investments in unconsolidated compa-
nies are carried at cost.

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

Subsidiaries and joint ventures are consolidated and
associated companies measured at equity only if such
recognition is considered material for the fair presenta-
tion of the ﬁ nancial position and results of operations
of the KWS Group. As part of the elimination of intra-
Group balances, borrowings, receivables, liabilities, and
provisions are netted between the consolidated com-
panies. Intercompany proﬁ ts not realized at Group level
are eliminated from intra-Group transactions. Sales,
income, and expenses are netted between consolidated
companies, and intra-group distributions of proﬁ t are
eliminated.

Deferred taxes on consolidation transactions recognized
in income are calculated at the tax rate applicable to the
company concerned. These deferred taxes are aggre-
gated with the deferred taxes recognized in the sepa-
rate ﬁ nancial statements.

Minority interests are recognized in the amount of the
imputed percentage of equity in the consolidated com-
panies.

1. General disclosures

Companies consolidated in the KWS Group
The consolidated ﬁ nancial statements of the KWS
Group include the single-entity ﬁ nancial 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 pro-
portionately consolidated according to the percentage of
equity held in those companies. Subsidiaries and joint ven-
tures that are considered immaterial for the presentation
and evaluation of the ﬁ nancial position and performance of
the Group are not included. Details on the changes in the
consolidated group are provided in Section 2. Disclosures
on the annual ﬁ nancial statements – Consolidated group
and changes in the consolidated group.

Consolidation methods
The single-entity ﬁ nancial statements of the individual
subsidiaries and joint ventures included in the consoli-
dated ﬁ nancial statements were uniformly prepared on
the basis of the accounting and measurement methods
applied at KWS SAAT AG; they were audited by indepen-
dent auditors. For fully or proportionately consolidated
units acquired before July 1, 2003, the Group exercised
the option allowed by IFRS 1 to maintain the consolida-
tion procedures chosen to date. The goodwill reported in
the HGB ﬁ nancial 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 allocating the cost of acquisition to
the Group’s interest in the subsidiary’s remeasured 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 good-
will remaining after ﬁ rst-time consolidation is recognized
under intangible assets.

Notes
Notes for the KWS Group 2013/2014
1. General disclosures

Currency translation
Under IAS 21, the ﬁ nancial statements of the con-
solidated foreign subsidiaries and joint ventures that
conduct their business as ﬁ nancially, economically, and
organizationally independent entities are translated
into euros using the functional currency method and
rounded in accordance with standard commercial prac-
tice 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 an-
nual average rates to the net proﬁ t for the period in the
income statement is taken directly to equity. Exchange
differences resulting from loans to foreign subsidiaries
and joint ventures are reported in the other comprehen-
sive income and are not recognized in proﬁ t or loss.

Classiﬁ cation of the statement of comprehensive
income
The costs for the functions include all directly attributable
costs, including other taxes. Research and develop-
ment expenses are reported separately for reasons of
trans parency. 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 unchanged from the previ-
ous year, with the exception of the ﬁ nancial reporting
standards IAS 19 (2011) and IFRS 13, which had to be
applied for the ﬁ rst time in the year under review.

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 circum-
stances.

Recognition of income and expenses
Net sales include sales of products and services, less
revenue reductions. Net sales from the sale of products
are realized at the time at which the opportunities and
risks pass to the buyer. Net sales from service transac-
tions are recognized at the time at which the outcome of
the transaction can be reliably estimated in accordance
with the percentage of completion. Other income, such
as interest, royalties and dividends, is recognized in the
period it accrues as soon as there is a contractual or
legal entitlement to it.

Performance-based public grants are carried under the
other operating income as part of proﬁ t/loss.

Operating expenses are recognized in the income state-
ment upon the service in question being used or as of
the date on which they occur.

Intangible assets
Purchased intangible assets are carried at cost less
straight-line amortization Impairment losses on in-
tangible assets with ﬁ nite useful lives are recognized
according to IAS 36. Goodwill and intangible assets with
an indeﬁ nite useful life are not amortized, but tested for
impairment at least once a year. The procedure for the
impairment 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 deﬁ nition in IAS 38 or
result from a contractual or legal right, and fair value can
be reliably measured. Straight-line amortization of these
intangible assets is applied over their individual useful life.

Notes
Notes for the KWS Group 2013/2014
1. General disclosures

Financial instruments
Financial instruments are in particular ﬁ nancial assets
and ﬁ nancial liabilities. The ﬁ nancial assets consist
primarily of bank balances and cash on hand, trade
receivables, other receivables and securities. The credit
risk mainly comprises trade receivables. The amount
recognized in the balance sheet is net of allowances for
receivables expected to be uncollectible, estimated on
the basis of historical patterns and the current economic
environment. The credit risk on cash and derivative
ﬁ nancial instruments is limited because they are kept
with banks that have been given a good credit rating by
international rating agencies. There is no signiﬁ cant con-
centration of credit risks, because 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 management system can
be found in the Management Report.

Available-for-sale ﬁ nancial assets are carried at fair value
if that can be reliably measured. Unrealized gains and
losses, including deferred taxes, are recognized directly
in the reserve for available-for-sale ﬁ nancial assets under
equity. Allowances are recognized immediately through
the income statement. Financial assets belonging to
this category of ﬁ nancial instruments are measured
at cost, since there is no active market. The ﬁ nancial
assets include shares in unconsolidated subsidiaries
and securities classiﬁ ed as noncurrent assets. They are
subsequently measured at amortized cost. Borrowings
are carried at amortized cost.

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

The useful life of intangible assets is as follows:

Breeding material, proprietary rights
to varieties and trademarks

Other rights

Software

Distribution rights

Useful life

10 years

5 – 10 years

3 – 8 years

5 – 20 years

Property, plant, and equipment
Property, plant, and equipment is measured at cost less
straight-line depreciation. If the impairments exceed the
use-related depreciation that has already been applied,
a loss is recognized. In addition to directly attributable
costs, the cost of self-produced plant or equipment also
includes a proportion of the overheads and deprecia-
tion/amortization.

Buildings

Operating equipment and other facilities

Technical equipment and machinery

Laboratory and research facilities

Other equipment, operating and ofﬁ ce
equipment

Useful life

10 – 50 years

5 – 25 years

5 – 15 years

5 – 13 years

3 – 15 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
ﬁ xed assets. Impairment losses on property, plant, and
equipment are recognized according to IAS 36 when-
ever the recoverable amount of the asset is less than its
carrying amount. The recoverable amount is the higher
of the fair value less costs to sell or the value in use. In
accordance with IAS 20, government grants are de-
ducted from the costs of the asset. Any deferred income
is not recognized.

• Loans and receivables

• Available-for-sale ﬁ nancial assets

Notes
Notes for the KWS Group 2013/2014
1. General disclosures

The ﬁ nancial liabilities comprise in particular trade pay-
ables, borrowings and other liabilities.

The fair value of ﬁ nancial liabilities with a long-term ﬁ xed
interest rate is determined as present values of the
payments related to the liabilities, using a yield curve
applicable on the balance sheet date.

Derivative instruments are measured at fair value in ac-
cordance with IAS 39; they can be assets or liabilities.
Common derivative ﬁ nancial instruments are essentially
used to hedge interest rate and foreign currency risks.
The fair value of the derivative ﬁ nancial instruments is
measured on the basis of the market information avail-
able on the balance sheet date and 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 instruments must also be classiﬁ ed in a
level of 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 ob-
servable 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 ﬁ nancial instruments.

Subsequent measurement of the ﬁ nancial instruments
depends on their classiﬁ cation in one of the following
categories deﬁ ned in IAS 39:

This category mainly comprises trade receivables,
other receivables, loans and cash, including ﬁ xed-
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 ﬁ nancial
assets in this category are measured at amortized cost
using the effective interest method, minus impair-
ments. 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
ﬁ nancial assets are derecognized at the time they are
disposed of or if they have no value.

• Financial assets at fair value

Held-for-trading securities acquired with the inten-
tion of being sold in the short term are assigned to
this category. Derivative ﬁ nancial instruments with a
positive market value are also categorized as held for
trading, unless they are designated hedging instru-
ments 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.

Notes
Notes for the KWS Group 2013/2014
1. General disclosures

Securities are generally classiﬁ ed 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 directly included
in the net income for the period.

The outstanding purchase price obligation for consoli-
dated subsidiaries must be carried at the present value
of the anticipated future purchase price payments for
minority interests. Changes to the estimates in subse-
quent years are recognized in proﬁ t or loss. The cost
of interest accrued on the purchase price obligation is
carried in the net ﬁ nancial income/expenses.

Derivatives
The derivatives do not meet the requirements of IAS 39
to be designated as a hedging instrument. They are
measured at their fair value. The changes in their market
value are recognized in the income statement. Deriva-
tives are derecognized on their day of settlement.

This category covers all ﬁ nancial assets that have
not been assigned to one of the above categories.
In principle, securities are classed as available for
sale, unless a different classiﬁ cation is required due
to the fact that they have an explicit purpose. Equity
instruments, such as shares in (unconsolidated) af-
ﬁ liated companies, which are measured at amortized
cost, and shares held in listed companies, are also
included in this category. In principle, ﬁ nancial instru-
ments 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
reserve for available-for-sale ﬁ nancial assets. The
realized gains or losses are not recognized as proﬁ t
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. Any subsequent decreases in the impair-
ment loss are recognized directly in equity.

• Financial liabilities measured at amortized cost

All ﬁ nancial liabilities, with the exception of derivative
ﬁ nancial instruments, are measured at amortized cost
using the effective 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 ﬁ nancial instruments
that have a negative market value and are categorized
in principle 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.

Inventories and biological assets
Derivatives are measured at the lower of cost or net realiz-
able value less an allowance for obsolescent or slow-mov-
ing items. In addition to directly attributable costs, the cost
of sales also includes indirect labor and materials including
depreciation under IAS 2. Under IAS 41, biological assets
are measured at fair value less the estimated costs to sell.
Immature biological assets are carried as inventories as of
the time they are harvested. The measurement procedure
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

Notes
Notes for the KWS Group 2013/2014
1. General disclosures

Notes
Notes for the KWS Group 2013/2014
2. Disclosures on the annual ﬁ nancial statements

and their tax base, and on loss carryforwards; they
are reported on a gross basis. Deferred tax assets are
recognized if they result from deductible temporary dif-
ferences and sufﬁ cient taxable proﬁ t in future periods is
expected. Deferred tax liabilities must be set up for all
taxable temporary differences. All deferred taxes must
be assessed individually at each balance sheet date
and must not be discounted. Under IAS 12, deferred
taxes are calculated on the basis of the applicable local
income tax.

Provisions for pensions and other employee
beneﬁ ts
The provisions for pensions and other employee ben-
eﬁ ts are calculated using actuarial principles in accor-
dance with the projected unit credit method. Actuarial
gains and losses resulting from revaluation of the net
liability must be recognized directly in equity in the other
comprehensive income. If there are planned assets,
they are netted off against the associated obligations.

The provisions for semi-retirement include obligations
from concluded semi-retirement agreements. Payment
arrears and top-up amounts for semi-retirement pay
and for contributions to the statutory pension insurance
program are recognized in measuring them.

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 outﬂ ow of the resource is not probable or the level
of the obligation cannot be estimated with sufﬁ cient reli-
ability or from obligations for loan amounts drawn down
by third parties as of the balance sheet date.

Borrowing costs
In accordance with IAS 23, borrowing costs are capital-
ized if they can be classiﬁ ed as qualifying assets.

Discretionary decisions and estimates
The measurement approaches and amounts to be car-
ried in these IFRS ﬁ nancial statements are partly based
on estimates and speciﬁ cally deﬁ ned speciﬁ cations. This
relates in particular to:

• Determination of the useful life of the depreciable

asset

• Deﬁ nition of measurement assumptions and future

results in connection with impairment tests, above all
for capitalized goodwill and in connection with mea-
surement of outstanding purchase price obligations
for fully consolidated subsidiaries

• Determination of the net selling price for inventories
• Deﬁ nition of the parameters required for measuring

pension provisions

• Selection of parameters for the model-based mea-

surement of derivatives

• Determination whether tax losses carried forward

can be used

• Determination of the fair value of intangible assets,
tangible 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

Despite careful estimates, the actual development may
deviate from the assumptions.

The Executive Board of KWS SAAT AG prepared the
consolidated ﬁ nancial statements on October 1, 2014,
and released them for distribution to the Supervisory
Board. The Supervisory Board has the task of examin-
ing the consolidated ﬁ nancial statements and declaring
whether it approves them.

2. Disclosures on the annual ﬁ nancial statements

Consolidated group and changes in the
consolidated group

Number of companies including KWS SAAT AG

06/30/2014

Previous year

Domestic

Foreign

Total

Domestic

Foreign

Total

Fully consolidated

Proportionately consolidated

Total

Equity method

Total

We founded the breeding company KWS PERU S.A.C.
in Lima, Peru, at the beginning of the ﬁ scal year. KWS
SERVICES MEDITERRANEAN S.L. in Barcelona took
over the existing activities of the French Service Center
on July 24, 2013. The research center KWS GATEWAY
RESEARCH CENTER LLC. in St. Louis, Missouri (U.S.)
was founded on March 12, 2014. BETASEED LTD. in
Rothwell, UK, discontinued its business operations on
June 19, 2014. The joint venture GENECTIVE S.A. in
Chappes, France, which had been previously included
at equity, was proportionately included in the consoli-
dated ﬁ nancial statements for the ﬁ rst time in ﬁ scal
2013/2014.

A total of 57 (55) companies were fully consolidated and
eight (seven) proportionately consolidated in the year
under review.

Proportionately consolidated companies

In line with the corporate strategy for the Cereals Segment,
we expanded our wheat breeding activities in France by
acquiring the remaining 51% stake in SOCIETÉ DE MAR -
TINVAL S.A. effective September 30, 2014. 110 employees
there currently generate net sales of more than €20 million,
of which over 20% is plowed back into research. The net
assets to be acquired total around €12.5 million; a large
part of the purchase price of approximately €30 million
is accounted for by intangible assets, such as approved
varieties, the gene pool and customer base. Details on
the purchase price allocation will be provided in the ﬁ rst
quarterly report as of September 30, 2014.

The ﬁ nancial position and results of operations of the
eight (seven) proportionately consolidated companies
are as follows:

in € thousand

Noncurrent assets

Current assets

Total assets

Equity

Noncurrent liabilities

Current liabilities

Total equity and liabilities

Total income

Total expenses

Net income for the year

2013/2014

Previous year

52,802

163,022

215,824

113,101

1,630

101,093

215,824

274,068

253,858

20,210

44,767

155,378

200,145

107,640

868

91,637

200,145

281,396

257,758

23,638

Notes
Notes for the KWS Group 2013/2014
List of shareholdings in accordance with Section 313 HGB (German Commercial Code)

Notes
Notes for the KWS Group 2013/2014
3. Segment reporting for the KWS Group

List of shareholdings in accordance with Section 313 HGB
(German Commercial Code)

Subsidiaries and associated companies included in the consolidated group 1

Sugarbeet

Corn

Cereals

Corporate

3. Segment reporting for the KWS Group

In accordance with its internal reporting system, the
KWS Group is primarily organized according to the
following business segments:

100 %

BETASEED INC. 2
Shakopee, MN/U.S.
KWS FRANCE S.A.R.L.
Roye/France
DELITZSCH PFLANZEN-
ZUCHT GMBH 10
Einbeck
O.O.O. KWS RUS 12
Lipezk/Russia
O.O.O. KWS R&D RUS 11
Lipezk/Russia

100 % KWS ITALIA S.P.A.
Forli/Italy

100 % KWS POLSKA SP.Z O.O.
Poznan/Poland

100 % KWS SCANDINAVIA A/S 10

100 %

Guldborgsund/Denmark
KWS SEMILLAS
IBERICA S.L. 10
Zaratán/Spain
SEMILLAS KWS
CHILE LTDA.
Rancagua/Chile

100 % KWS SRBIJA D.O.O.
New Belgrade/Serbia

100 % KWS SUISSE SA
Basle/Switzerland

100 % ACH SEEDS INC. 4

100 %

KWS MAIS GMBH
Einbeck

100 % KWS BENELUX B.V. 5

100 %

KWS LOCHOW GMBH
Bergen
100 % KWS UK LTD. 7

Thriplow/UK

100 % KWS LOCHOW POLSKA

SP.Z O.O. 7
Kondratowice/Poland
100 % KWS CEREALS USA LLC. 7
Shakopee, MN/U.S.
49 % SOCIETE DE MARTINVAL

100 %

S.A. 8, *
Mons-en-Pévèle/France
MOMONT HENNETTE
S.A. 14, *
Mons-en-Pévèle/France
95 % LABOGERM S.A.R.L. 14, *
Mons-en-Pévèle/France
ADRIEN MOMONT
S.A.R.L. 14, *
Mons-en-Pévèle/France

100 %

100 % HAMET S.C.A. 14, *

Mons-en-Pévèle/France

100 %

Amsterdam/Netherlands
KWS SEMENA S.R.O. 5
Bratislava/Slovakia
KWS MAIS FRANCE
S.A.R.L. 5
Champol/France
KWS AUSTRIA SAAT
GMBH 5
Vienna/Austria
100 % KWS SJEME D.O.O. 5
Pozega/Croatia

100 %

100 % KWS OSIVA S.R.O. 5
Velke Mezirici/Czech
Republic

100 % KWS BULGARIA E.O.O.D. 5

Soﬁ a/Bulgaria

Formerly: KWS Semena
Bulgaria E.O.O.D.
AGROMAIS GMBH 5
Everswinkel
KWS MAGYARORSZÁG
KFT. 5
Györ/Hungary
KWS SEMINTE S.R.L. 13
Bucharest/Romania

100 %

Eden Prairie, MN/U.S.
BETASEED FRANCE
S.A.R.L. 18
Bethune/France
100 % KWS UKRAINE T.O.W. 12

99 % KWS ARGENTINA S.A. 5

51 %

Balcarce/Argentina
RAZES HYBRIDES S.A.R.L. 3
Alzonne/France
50 % AGRELIANT GENETICS

100 %

Kiev/Ukraine
KWS TÜRK TARIM TICARET
A.S. 9
Eskisehir/Turkey

100 % BETASEED GMBH
Frankfurt am Main
KWS POTATO B.V. 17
Emmeloord/Netherlands

100 %

93 % DYNAGRI S.A.R.L. 16
Casablanca/Morocco

LLC. 6, *
Westﬁ eld, IND/U.S.

50 % AGRELIANT GENETICS

100 %

INC.*
Chatham, Ontario/Canada
KWS MELHORAMENTO E
SEMENTES LTDA. 21
Curitiba/Brazil
50 % RIBER KWS SEMENTES

S.A. 21
Patos de Minas/Brazil
KWS PERU S.A.C. 22
Lima/Peru

100 %

100 % KWS R&D China LTD. 15

Hefei/China

50 % GENECTIVE S.A.*

Chappes/France

1 The percentages shown for each company relate to the share in that company held within the KWS Group
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.
7 Subsidiary of KWS LOCHOW GMBH
8 Investee of KWS LOCHOW GMBH
9 Subsidiary of KWS INTERSAAT GMBH and KWS SAAT AG
10 Subsidiary of KWS INTERSAAT GMBH
11 Subsidiary of O.O.O. KWS RUS
12 Subsidiary of EURO-HYBRID GMBH and KWS SAATFINANZ GMBH
13 Subsidiary of KWS MAIS GMBH and KWS SAATFINANZ GMBH
14 Subsidiary of SOCIETE DE MARTINVAL S.A.
15 Subsidiary of EURO-HYBRID GMBH
16 Subsidiary of KWS POTATO B.V.
17 Subsidiary of RAGIS GMBH
18 Subsidiary of BETASEED GMBH
19 Subsidiary of KWS INTERSAAT GMBH and KWS SAATFINANZ GMBH
20 Subsidiary of KWS SEMENTES BRASIL PARTICIPACOES LTDA. and

KWS INTERSAAT GMBH

21 Subsidiary of KWS BRASIL PARTICIPACOES LTDA.
22 Subsidiary of KWS CHILE LTDA. and KWS SEMENTES BRASIL PARTICIPACOES LTDA.

100 %

KWS LANDWIRTSCHAFT
GMBH **
Einbeck
KWS INTERSAAT GMBH
Einbeck
KWS SEEDS INC. 9
Shakopee, MN/U.S.

• Corn
• Sugarbeet
• Cereals
• Corporate

Considered a core competency for the KWS Group’s
entire product range, plant breeding, including the
related biotechnology research, is essentially concen-
trated at the parent company KWS SAAT AG in Einbeck.
The breeding material, including the relevant informa-
tion 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.
Product-related R&D costs are carried directly in the
product segments Corn, Sugarbeet and Cereals. Cen-
trally controlled corporate functions are grouped in the
Corporate Segment. Because of their minor importance
within the KWS Group, the distribution and production
of oil and ﬁ eld seed are reported in the Cereals and Corn
Segments, in keeping with the legal entities involved.

Description of segments

Corn
KWS MAIS GMBH is the lead company for the Corn
Segment. In addition to KWS MAIS GMBH, business
activities are conducted by one (one) German company
and 18 (17) 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
ﬁ eld seed.

100 %

100 % GLH SEEDS INC. 2
Shakopee, MN/U.S.
KWS SAATFINANZ GMBH
Einbeck
RAGIS KARTOFFELZUCHT-
UND HANDELSGESELL-
SCHAFT MBH
Einbeck

100 %

100 % KWS KLOSTERGUT

WIEBRECHTSHAUSEN
GMBH

100 %

Northeim-Wiebrechtshausen
EURO-HYBRID GESELL-
SCHAFT FÜR GETRE-
IDEZÜCHTUNG MBH
Einbeck
KWS SEMENTES BRASIL
PARTICIPACOES LTDA. 19
São Paulo/Brazil
KWS BRASIL
PARTICIPACOES LTDA. 20
São Paulo/Brazil
KWS GATEWAY
RESEARCH CENTER LLC. 2
St. Louis, MO/U.S.
KWS SERVICES
DEUTSCHLAND GMBH
Einbeck
KWS SERVICES EAST
GMBH
Vienna/Austria
KWS SERVICES
NORTH B.V.
Rotterdam/Netherlands

100 % KWS SERVICES

MEDITERRANEAN S.A.S. 3

100 %

Roye/France
KWS SERVICES
MEDITERRANEAN S.L.
Barcelona/Spain

* Proportional consolidation
** Profit transfer agreement
June 30, 2014

Sugarbeet
The results of the multiplication, processing and distri-
bution activities for sugarbeet seed, as well as our seed
potato business, are reported under the Sugarbeet Seg-
ment. Under the leadership of KWS SAAT AG, 17 (18)
foreign subsidiaries and afﬁ liated companies and two
(two) subsidiaries in Germany are active in this segment.

Cereals
The lead company of this segment, which essentially
concerns the production and distribution of hybrid rye,
wheat and barley, as well as oil and ﬁ eld seed, is KWS
LOCHOW GMBH with its eight (eight) foreign subsidiar-
ies and afﬁ liated companies in France, Great Britain, the
U.S. and Poland.

Corporate
Apart from revenue from our farms and services for third
parties, net sales from strategic projects are reported in
this segment. The segment also assumes the costs of all
central functions and expenses for long-term research
projects that have not yet reached market maturity.

It also includes all management services of KWS SAAT AG,
such as holding company and administrative functions,
which are not directly charged to the product segments
or indirectly allocated to them by means of an appropriate
cost formula.

Segment information
Segment sales contains both net sales from third parties
(external sales) and net 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. Technology revenues from genetically modiﬁ ed
properties (“tech fees”) are paid as a per-unit royalty on
the basis of the number of units sold, due to their grow-
ing competitive importance.KWS is not dependent on
any one external customer.

84 Notes

Notes for the KWS Group 2013/2014
3. Segment reporting for the KWS Group

in € thousand

Corn

Sugarbeet

Cereals

Corporate

KWS Group

Segment sales

Internal sales

External sales

2013/2014

714,968

351,488

108,435

15,012

Previous
year

701,743

329,288

113,482

14,873

1,189,903

1,159,386

2013/2014

439

1,095

10,316

11,896

Previous
year

713

1,828

9,575

2013/2014

714,922

351,049

107,340

4,696

Previous
year

701,708

328,575

111,654

5,298

12,151

1,178,007

1,147,235

The Corporate Segment generates 68.7% (64.4%) of
its sales from the other segments. The sales of this
segment represents 0.4% (0.5%) of the Group’s external
sales.

The corn segment is the largest contributor of external
sales, accounting for 60.7% (61.2%) of external sales,
followed by sugarbeet with 29.8% (28.6%) and cereals
with 9.1% (9.7%).

External sales by region

in € thousand

Germany

Europe (excluding Germany)

thereof: France

North and South America

thereof: Brazil

thereof: USA

Rest of world

KWS Group

2013/2014

Previous year

225,399

447,171

223,384

433,524

(105,310)

(102,987)

448,120

(52,841)

435,787

(36,904)

(363,438)

(366,417)

57,317

54,540

1,178,007

1,147,235

The external net sales are broken down by sales region
on the basis of the country where the customer is
based. 57.1% (57.3%) of total sales are recorded in
Europe (including Germany).

in € thousand

Corn

Sugarbeet

Cereals

Corporate

KWS Group

1 adjusted pursuant to IAS 19 (2011)

Segment earnings

Depreciation and
amortization

Other noncash items

2013/2014

100,859

70,172

17,125

Previous
year1

92,150

73,939

26,917

– 49,724

– 40,878

2013/2014

16,555

16,159

4,351

8,727

Previous
year

14,978

11,740

3,928

7,802

138,432

152,128

45,792

38,448

2013/2014

689

7,036

– 3,238

– 16,110

– 11,623

Previous
year

9,885

6,818

1,284

– 7,283

10,704

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

Depreciation and amortization charges of €45,792 thou-
sand (€38,448 thousand) allocated to the segments relate
exclusively to intangible assets and property, plant, and
equipment.

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

Notes
Notes for the KWS Group 2013/2014
3. Segment reporting for the KWS Group

Operating assets

Operating liabilities

2013/2014

546,753

260,088

74,280

95,193

976,314

286,515

Previous
year1

484,560

253,973

64,910

90,365

893,808

324,875

1,262,829

1,218,683

2013/2014

Previous
year1

151,664

161,274

74,992

17,749

67,633

312,038

313,012

625,050

67,017

20,165

58,529

306,985

262,053

569,038

in € thousand

Corn

Sugarbeet

Cereals

Corporate

Total segments

Others

KWS Group

1 adjusted pursuant to IAS 19 (2011)

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 appropri-
ate formula.

The operating liabilities attributable to the segments in-
clude the borrowings reported on the balance sheet, less
provisions 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.

Capital expenditure on assets was increased year on
year by 36.5% to €81,165 thousand (€59,449 thousand).
Investments were intensiﬁ ed considerably in the Corn Seg-
ment (€42,029 thousand; previous year: €23,626 thou-
sand) and the Corporate Segment (€13,840 thousand;
previous year: €6,082 thousand), while they were slightly
below the level of the previous year in the Sugarbeet
Segment (€18,535 thousand; previous year: €22,408
thousand) and at the Cereals Segment (€6,761 thousand;
previous year: €7,333 thousand). 35.0% (37.3%) of the
capital spending was made in North and South America.
33.7% (28.0%) was made in Europe (excluding Germany)
and 28.8% (26.8%) in Germany.

Investments in long-term assets by segment

in € thousand

Corn

Sugarbeet

Cereals

Corporate

KWS Group

Investments in long-term assets by region

in € thousand

Germany

Europe (excluding Germany)

North and South America

Rest of world

KWS Group

2013/2014

Previous year

42,029

18,535

6,761

13,840

81,165

23,626

22,408

7,333

6,082

59,449

2013/2014

Previous year

23,394

27,381

28,377

2,013

81,165

15,933

16,637

22,174

4,705

59,449

Notes
Notes for the KWS Group 2013/2014
4. Notes to the balance sheet

Operating assets by region

in € thousand

Germany

Europe (excluding Germany)

thereof: France

North and South America

thereof: Brazil

thereof: USA

Rest of world

KWS Group

1 adjusted pursuant to IAS 19 (2011)

4. Notes to the balance

sheet

2013/2014

Previous year1

251,641

289,625

(53,314)

402,648

(95,492)

253,020

260,911

(41,612)

352,040

(81,649)

(274,332)

(237,801)

32,400

976,314

27,837

893,808

(1) Assets
The statement of changes in ﬁ xed assets contains a
breakdown of assets summarized in the balance sheet
and shows how they changed in ﬁ scal 2013/2014.
Capital expenditure on assets was €82,603 thousand
(€65,195 thousand). The Management Report de-
scribes the signiﬁ cant additions to assets. Deprecia-
tion and amortization amounted to €45,792 thousand
(€38,448 thousand).

(2) Intangible assets
This item includes purchased varieties, rights to variet-
ies and distribution rights, software licenses for elec-
tronic data processing, and goodwill. The additions of
€8,456 thousand (€4,406 thousand) related to software
licenses and patents to an amount of €7,957 thousand
(€4,406 thousand). Amortization of intangible assets
amounted to €15,093 thousand (€11,674 thousand), of
which €6,286 thousand (€2,420 thousand) were value
impairments. This charge is included in the relevant func-
tional costs and the other operating expenses, depend-
ing on the operational use of the intangible assets.

The capitalized goodwill relates mainly to the Bra-
zilian companies RIBER KWS SEMENTES S.A. –
€21,686 thousand (€21,686 thousand) – and KWS
MELHORAMENTO E SEMENTES LTDA. – €4,115 thou-
sand (€4,115 thousand) – and the joint ventures

AGRELIANT GENETICS LLC. – €17,655 thousand
(€17,584 thousand) and GENECTIVE S.A. – €4,888
thousand (€0 thousand) – in the Corn Segment. In the
previous year the goodwill for GENECTIVE S.A. was
measured at equity. In the Cereals Segment, the goodwill
of KWS UK LTD. is recognized to the same amount,
namely €1,693 thousand (€1,693 thousand).

In order to meet the requirements of IFRS 3 in combi-
nation with IAS 36 and to determine any impairment
of goodwill, cash-generating units have been deﬁ ned
in line with internal reporting guidelines. At the KWS
Group, these are the legal entities, with the excep-
tion of our potato unit, which as a whole represents
the cash-generating unit. To test for impairment, the
carrying amount of each entity is determined by al-
locating 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 fair value less costs to sell and the
value in use of a cash generating unit. The impairment
test uses the expected future cash ﬂ ows 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 as-
sumptions on which corporate planning is based include
assumptions about price trends for seed, in addition
to the development of market shares and the regula-
tory framework. Company-internal projections take the
assumptions of industry-speciﬁ c market analyses and
company-related growth perspectives into account.

A standard discount rate of 5.1% (5.3%) 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 inﬂ ation rate. The impairment test for
KWS POTATO B.V. revealed the need for a write-down,
which was reﬂ ected by the capitalized goodwill and
intangible assets being reduced by €6,286 thousand.
This value impairment has to be charged to the Sug-
arbeet Segment. Tests provided evidence that all the
other goodwill recognized in the consolidated balance
sheet and determined for the cash-generating units is
not impaired. Possible changes in the ﬁ gures reported in
the balance sheet result from currency translation at the
balance sheet date.

Sensitivity analyses were carried out in the ﬁ scal year for
all cash-generating units to which goodwill is allocated.
In our opinion, realistic changes in the basic assumptions
would not result in the need to recognize an impairment
loss at any cash-generating unit whose goodwill is sig-
niﬁ cant relative to the total carrying amount of goodwill.

(7) Inventories and biological assets

in € thousand

Raw materials and consumables

Work in progress

Immature biological assets

Finished goods

Total

Notes
Notes for the KWS Group 2013/2014
4. Notes to the balance sheet

(3) Property, plant, and equipment
Capital expenditure amounted to €72,709 thousand
(€55,043 thousand) and depreciation amounted to
€30,699 thousand (€26,774 thousand). The latter in-
cludes value impairments of €587 thousand (€0 thou-
sand) due to a shorter service life for buildings: they were
charged to the Corporate Segment. The Management
Report describes the signiﬁ cant capital expenditure.

(4) Financial assets
Investments in non-consolidated subsidiaries and as-
sociated companies and shares in cooperatives and
GmbHs that are of minor signiﬁ cance, are reported in
principle at their amortized cost totaling €707 thou-
sand (€5,807 thousand) since the fair value cannot
be reliably determined. The change from the previous
year is primarily due to the fact that our joint venture
GENECTIVE S.A. has been proportionately consolidated
for the ﬁ rst time. Listed shares are carried at fair value
of €88 thousand (€141 thousand). This account also
includes other interest-bearing loans totaling €572 thou-
sand (€118 thousand).

(5) Noncurrent tax assets
This mainly relates to the present value of the corporate
income tax credit balance of the German group compa-
nies, 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 and on the basis of loss carryfor-
wards. They are reported on a gross basis and total
€48,056 thousand (€44,949 thousand), of which
€5,210 thousand (€2,887 thousand) will be carried
forward for the future use of tax losses.

06/30/2014

Previous year

18,690

48,984

12,568

112,746

192,988

15,961

47,124

11,316

70,051

144,452

Notes
Notes for the KWS Group 2013/2014
4. Notes to the balance sheet

Inventories increased by €48,536 thousand, or 33.6%,
net of impairment losses totaling €55,703 thousand
(€53,556 thousand). Immature biological assets relate to
living plants in the process of growing (before harvest).
The ﬁ eld inventories of the previous year have been har-
vested in full and the ﬁ elds have been newly tilled in the

year under review. Public subsidies of €1,455 thousand
(€1,528 thousand), for which all requirements were met
at the balance sheet date, were granted for the total area
under cultivation of 4,326 (4,434) ha and were recognized
in income. Future subsidies depend on the further devel-
opment of European agricultural policy.

(8) Current receivables

in € thousand

Trade receivables

Current tax assets

Other current ﬁ nancial assets

Other current assets

Total

Trade receivables were €361,576 thousand following
€359,867 thousand in the previous year. This amount
includes €2,852 thousand (€2,618 thousand) in receiv-
ables from related parties.

06/30/2014

Previous year

361,576

359,867

45,609

15,881

15,033

24,385

26,587

13,535

438,099

424,374

in € thousand

06/30/2014

Trade receivables

Other current ﬁ nancial assets

Other current assets

Previous year

Trade receivables

Other current ﬁ nancial assets

Other current assets

Carrying
amount

361,576

15,881

10,116

387,573

359,867

26,587

7,955

394,409

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

1 – 90
days

91 – 180
days

181 – 360
days

> 360
days

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

329,136

18,916

1,540

3,459

1,257

15,278

10,116

215

354,530

18,916

1,540

3,460

1,472

311,686

29,405

3,987

2,251

1,435

26,148

7,955

345,789

29,405

3,987

2,251

1,435

4,209

289

4,498

6,260

343

6,603

The already overdue trade receivables that have been
partly written down amount to €3,060 thousand
(€4,843 thousand).

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
possible risks of non-payment of trade receivables:

in € thousand

2013/2014

2012/2013

07/01

28,642

29,098

Addition

Disposal

Reversal

8,608

7,865

2,993

1,779

5,561

6,542

06/30

28,696

28,642

The receivables include an amount of €796 thousand
(€345 thousand) due after more than one year.

The capital reserves essentially comprise the premium
obtained as part of share issues.

(9) Securities
Securities amounting to €76,712 thousand (€100,878 thou-
sand) relate primarily to short-term liabilities securities and
fund shares.

(10) Cash and cash equivalents
Cash of €78,261 thousand (€101,517 thousand) con-
sists of balances with banks and cash on hand. The
cash ﬂ ow 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
certiﬁ cated by a global certiﬁ cate for 6,600,000 shares.
The company does not hold any shares of its own.

The net retained proﬁ t, the differences from currency
translation and the reserve for available-for-sale ﬁ nan-
cial assets, as well as the reserve for revaluation of net
liabilities/assets from deﬁ ned beneﬁ t plans, are grouped
in the item “Retained earnings” in the consolidated bal-
ance sheet. The revenue reserves essentially comprise
the net income generated in the past by the compa-
nies included in the consolidated ﬁ nancial statements,
minus dividends paid to shareholders. Differences from
translation of the functional currency of foreign business
operations into the currency used by the group in report-
ing (euro) are essentially carried in the item “Adjustments
from currency translation”. The item “Revaluation of net
liabilities/assets from deﬁ ned beneﬁ t plans” includes
the actuarial gains and losses from pensions and other
employee beneﬁ ts.

Equity (including minority interest) fell by €11,866 thou-
sand to €637,779 thousand (€649,645 thousand). For
details, see the statement of changes in equity.

Notes
Notes for the KWS Group 2013/2014
4. Notes to the balance sheet

The tax effects on other comprehensive income are as
follows:

The trade payables and other long-term liabilities are due
for payment in between one and ﬁ ve (one and ﬁ ve) years.

Other comprehensive income

Long-term provisions

2013/2014

2012/2013

Before
taxes

Tax effect

After
taxes

Before
taxes

Tax effect

After
taxes

–19,407

–209

–19,359

–13,375

–17

–13,392

–161

103

–17

Pension provisions

Tax provisions

Other provisions

Total

Changes in
the con-
solidated
group,
currency

–473

106

–116

–483

07/01/20131

81,549

1,533

7,307

90,389

Addition

13,183

1,452

1,752

16,387

Consump-
tion

4,388

1,073

1,190

6,651

Reversal

06/30/2014

89,871

2,018

7,745

99,634

–19,198

–13,478

1 adjusted pursuant to IAS 19 (2011)

Items to be reclassiﬁ ed as proﬁ t or loss in
subsequent periods

Revaluation of available-for-sale
ﬁ nancial assets

Currency translation difference for
economically independent foreign units

Items to be reclassiﬁ ed as proﬁ t or loss in
subsequent periods

Revaluation of net liabilities/assets from
deﬁ ned beneﬁ t plans

Other comprehensive income

–8,232

2,354

–5,878

–2,337

520

–1,817

–8,232

–27,639

2,354

2,402

–5,878

–2,337

–25,237

–15,712

520

503

–1,817

–15,209

KWS’ long-term capital base reﬂ ects the company’s
strategy and accords with the interests of shareholders,
employees and other stakeholders. The dividend distrib-
uted is therefore geared to the earnings strength of the
KWS Group in order to ensure adequate internal ﬁ nancing
of further business expansion in the long term. Consoli-
dated income for ﬁ scal 2013/2014 (after taxes and minor-
ity interests) is €77,124 thousand (€88,901 thousand).
It was reduced by the dividend payout of €19,800 thou-
sand (€18,480 thousand) in December 2013 and effects

not recognized in the income statement, such as from
currency translation. As a result, equity fell year on year
by €11,866 thousand (previous year: an increase of
€63,649 thousand) and the equity ratio to 50.5% com-
pared with 53.3% the previous year.

Noncurrent liabilities increased by €24,838 thousand. That
is mainly attributable to the increase in long-term ﬁ nancial
borrowings from banks totaling €15,294 thousand.

(12) Noncurrent liabilities

in € thousand

Long-term provisions

Long-term borrowings

Trade payables

Deferred tax liabilities

Other long-term liabilities

Total

1 adjusted pursuant to IAS 19 (2011)

The pension provisions are based on deﬁ ned beneﬁ t
obligations, determined by years of service and pension-
able compensation. They are measured using the project
unit credit method under IAS 19 (2011), on the basis of
assumptions about future development. The assump-
tions in detail are that wages and salaries in Germany
will increase by 3.00% (3.00%) annually and abroad by
3.75% (3.75%) annually. An annual increase in pen-
sions of 2.00% (2.00%) is assumed. The discount rate
in Germany was 2.90% compared with 3.50% the year
before and averaged 4.40% abroad following 4.85% the
previous year.

The following mortality tables were used at June 30, 2014:
• In Germany: The 2005 G mortality table of Klaus

Heubeck

• Abroad: RP-2000 Mortality Table Scale AA

A retirement age of 63 years is imputed in Germany,
while a retirement age of 65 years is imputed in the U.S.

For beneﬁ t obligations backed by a guarantee by an in-
surance company toward three former members of the
Executive Board, the planned assets of €9,275 thou-
sand (€9,058 thousand) correspond to the present value
of the obligation. In accordance with IAS 19 (2011), the
pension provisions are netted off against the corre-
sponding assets (planned assets).

Abroad
The deﬁ ned beneﬁ t obligations abroad mainly relate to
pension commitments in the U.S. For the most part,
stock funds and bonds were invested in to cover them.
All employees who have reached the age of 21 are en-
titled to beneﬁ ts. In addition, each employee must have
worked at least one year and at least 1,000 working
hours to earn an entitlement.

The following beneﬁ ts are granted from the pension plan:
• An old-age pension at the age of 65
• An early retirement pension before the age of 65 –

to be eligible, the employee must be at least 55 and
the minimum vesting period must be 5 years
• A pro-rata pension if the employee reaches the

minimum vesting period of 5 years, but is below 55

The pension plans are largely subject to the following
risks:

Investment and return
The present value of the deﬁ ned beneﬁ t obligation
from the pension plan is calculated using a discount
rate deﬁ ned on the basis of the returns on high-quality
ﬁ xed-income corporate bonds. If the income from the
planned assets is below this rate of interest, the result is
a shortfall in the plan. An external fund manager selects
the corporate bonds and stock funds to ensure risk
diversiﬁ cation and manages them.

06/30/2014

Previous year1

Nature and scope of the pension beneﬁ ts

99,634

113,754

1,470

26,332

12,964

90,389

98,460

1,697

29,695

9,075

254,154

229,316

In Germany
The following beneﬁ ts are provided under a company
agreement relating to the company retirement pension
program:
• An old-age pension at the age of 65
• An early retirement pension before the age of 65,
coupled with beneﬁ ts from the early retirement
pension from the statutory pension insurance program

• An invalidity pension for persons who suffer from
occupational disability or incapacity to work as
deﬁ ned by the statutory pension insurance
program, and

• A widow’s or widower’s pension

Notes
Notes for the KWS Group 2013/2014
4. Notes to the balance sheet

Change in interest rates
The fall in the returns on corporate bonds and thus the
discount rate will result in an increase in obligations,
which is only partly compensated for by a change in the
value of the planned assets.

Wage increases
The present value of the deﬁ ned beneﬁ t obligation from
the plan is calculated on the basis of future salaries.
Consequently, increases in the salary of the entitled em-
ployees results in an increase in the plan liabilities.

In order to allow reconciliation with the ﬁ gures in the bal-
ance sheet, the accrued beneﬁ t must be netted off with
the planned assets.

Reconciliation with the balance sheet values
for pensions

Life expectancy
The present value of the deﬁ ned beneﬁ t obligation from
the plan is calculated on the basis of the best-possible
estimate using mortality tables. An increase in the life
expectancy of the entitled employees results in an
increase in the plan liabilities.

In previous years, KWS countered the usual risks of
direct obligations by converting the pension obligations
from deﬁ ned beneﬁ t to deﬁ ned contribution plans. As a
result, subsequent beneﬁ ts will be provided by a provi-
dent fund backed by a guarantee. The existing obliga-
tions, which are partly covered by planned assets, are
funded from the operating cash ﬂ ow and are subject to
the familiar measurement risks.

The tables below show the changes in the accrued beneﬁ t
and planned assets:

Changes in accrued beneﬁ t entitlements

in € thousand

Germany

Abroad

Total

Germany

Abroad

Total

2013/2014

2012/20131

Accrued beneﬁ t entitlements from
retirement obligations on July 1

Service cost

Interest expense

Actuarial gains (–) / losses (+)

of which due to a change in ﬁ nancial assumptions
used for calculation

of which due to experience adjustments

Pension payments made

Exchange rate changes

Other changes in value

Accrued beneﬁ t entitlements from
retirement obligations on June 30

1 adjusted pursuant to IAS 19 (2011)

Change in planned assets

88,122

11,985

100,107

84,144

12,253

96,397

647

3,003

8,691

7,712

979

1,418

528

1,218

1,058

160

2,065

3,531

9,909

8,770

1,139

696

3,111

4,681

3,550

1,131

706

474

– 741

– 1,100

359

1,402

3,585

3,940

2,450

1,490

– 4,521

– 837

– 5,358

– 4,510

– 692

– 5,202

– 428

– 13

– 2

– 13

– 2

95,942

13,902

109,844

88,122

11,985

100,107

2013/2014

2012/20131

in € thousand

Germany

Abroad

Total

Germany

Abroad

Total

Accrued beneﬁ t entitlements from retirement obligations
on June 30

95,942

13,902

109,844

88,122

11,985

100,107

Fair value of the planned assets on June 30

9,275

10,698

19,973

9,058

9,500

18,558

Balance sheet values on June 30

86,667

3,204

89,871

79,064

2,485

81,549

of which pension provisions

of which planned assets

1 adjusted pursuant to IAS 19 (2011)

95,942

13,902

109,844

88,122

11,985

100,107

9,275

10,698

19,973

9,058

9,500

18,558

The following amounts were recognized in the state-
ment of comprehensive income:

Effects on statement of comprehensive
income

2013/2014

2012/20131

in € thousand

Service cost

Net interest expense (+)/income (–)

Amounts recognized in the
income statement

Gains (–)/losses (+) from revaluation of the
planned assets (excluding amounts already
recognized as interest income)

Actuarial gains (–)/losses (+) due to a change
in ﬁ nancial assumptions used for calculation

Actuarial gains (–)/losses (+) due to
experience adjustments

Amounts recognized in other
comprehensive income

Total (amounts recognized in the statement
of comprehensive income)

Germany

Abroad

647

2,697

1,418

Total

2,065

2,774

696

2,795

Germany

Abroad

3,344

1,495

4,839

3,491

706

110

815

Total

1,402

2,904

4,306

–490

–1,136

–1,626

–702

–831

–1,533

7,712

1,007

8,719

3,550

–1,170

2,380

979

160

1,139

1,131

359

1,490

8,201

8,232

3,979

–1,642

2,337

11,545

1,526

13,071

7,470

–827

6,643

2013/2014

2012/20131

1 adjusted pursuant to IAS 19 (2011)

in € thousand

Germany

Abroad

Total

Germany

Abroad

Total

Fair value of the planned assets on July 1

Interest income

Income from planned assets excluding amounts already
recognized as interest income

Pension payments made

Exchange rate changes

9,058

307

490

–580

9,500

18,558

450

757

1,136

–388

1,626

–968

8,599

316

702

–559

8,689

17,288

364

680

831

–385

1,533

–944

Fair value of the planned assets on June 30

9,275

10,698

19,973

9,058

9,500

18,558

1 adjusted pursuant to IAS 19 (2011)

The service cost is allocated by means of an appropri-
ate formula and recognized in operating income in the
respective functional areas. Net interest expenses and
income are carried in the interest result.

Notes
Notes for the KWS Group 2013/2014
4. Notes to the balance sheet

The fair value of the planned assets was split over the
following investment categories:

Notes
Notes for the KWS Group 2013/2014
4. Notes to the balance sheet

The following undiscounted payments for pensions (with
their due dates) are expected in the following years:

The weighted average time at which the pension obliga-
tions are due is 14.9 years in Germany and 15.5 years
abroad.

Breakdown of the planned assets by investment category

Anticipated payments for pensions

2013/2014

2012/20131

2013/2014

in € thousand

Corporate bonds

Equity funds

Consumer industry

Finance

Industry

Technology

Healthcare

Other

Cash and cash equivalents

Reinsurance policies

Planned assets on June 30

1 adjusted pursuant to IAS 19 (2011)

Germany

Abroad

3,043

7,173

1,722

889

746

1,169

1,040

1,607

482

9,275

Total

3,043

7,173

482

9,275

Germany

Abroad

2,749

6,199

1,513

893

682

899

769

1,443

552

9,058

Total

2,749

6,199

552

9,058

10,698

19,973

9,500

18,558

The planned assets abroad relate solely to the U.S.

jected unit credit method used to calculate the balance
sheet values was also used in the sensitivity analysis.

There is no active market for the reinsurance policies
in Germany. There is an active market for the other
planned assets: the fair value can be derived from their
stock market prices. 83.8% (previous year: 82.0%) of
the corporate bonds and the cash and cash equivalents
have a AAA rating.

The following sensitivity analysis at June 30, 2014,
shows how the present value of the obligation would
change given a change in the actuarial assumptions. No
correlations between the individual assumptions were
taken into account in this, i.e. if an assumption varies,
the other assumptions were kept constant. The pro-

Sensitivity analysis

in € thousand

Discount rate

Anticipated annual
pay increases

Anticipated annual
pension increase

Life expectancy

Effect on obligation

Change in
assumption

+/– 100
base points

+/– 50
base points

+/– 25
base points

+/– 1 year

Decrease

Increase

17,602

–13,852

–508

533

–2,471

–3,006

2,578

3,067

in € thousand

Germany

Abroad

Apart from the above-described pension obligations,
there are other old-age pension systems. However, no
provisions have to be set up for them, since there are
no further obligations above and beyond payment of
the contributions (deﬁ ned contribution plans). These
comprise beneﬁ ts that are funded solely by the em-
ployer and allowances for conversion of earnings by
employees.

Total

5,192

5,100

5,031

5,065

5,105

4,784

4,681

4,595

4,577

4,566

408

419

436

488

539

23,260

3,224

26,484

The total pension costs for ﬁ scal 2013/2014 were as
follows:

2014/2015

2015/2016

2016/2017

2017/2018

2018/2019

2019/2020 –
2023/2024

Pension costs

2013/2014

2012/20131

in € thousand

Germany

Abroad

Total

Germany

Abroad

Cost for deﬁ ned contribution plans

Service cost for the deﬁ ned beneﬁ t obligations

Pension costs

1 adjusted pursuant to IAS 19 (2011)

1,728

647

2,375

2,026

1,418

3,444

3,754

2,065

5,819

1,480

696

2,176

2,350

706

3,056

Total

3,830

1,402

5,232

In addition, contributions of €11,676 thousand (previous
year: €10,200 thousand) were paid to statutory pension
insurance institutions.

the present value of the obligation of €3,724 thousand
(€3,641 thousand) (deﬁ ned contribution plan).

The costs for deﬁ ned contribution plans mainly related to
the provident fund backed by a guarantee. The contri-
butions to this pension program were €1,330 thousand
(€1,099 thousand). The return and income from the
planned assets depend on the reinsurance policy, which
yields guaranteed interest of between 1.75% and 2.25%.
In addition, the beneﬁ t obligation from salary conver-
sion was backed by a guarantee that exactly matches

The long-term ﬁ nancial borrowings include loans from
banks amounting to €79,056 thousand (€64,834 thou-
sand). 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 €26,332 thousand (€29,695 thousand). The com-
position of the deferred tax liabilities is explained in more
detail under (22) Taxes.

Notes
Notes for the KWS Group 2013/2014
4. Notes to the balance sheet

(13) Current liabilities

in € thousand

Short-term provisions

Current liabilities to banks

Current liabilities to afﬁ liates

Other current ﬁ nancial liabilities

Short-term borrowings

Trade payables to afﬁ liates

Other trade payables

Trade payables

Tax liabilities

Other current ﬁ nancial liabilities

Other liabilities

Short-term provisions

06/30/2014

Previous year

131,841

41,905

301

11,151

53,357

81,111

35,467

12,191

56,929

131,350

26,975

292

5,992

33,259

82,739

82,746

31,929

11,833

48,605

in € thousand

07/01/2013

Changes in
the consoli-
dated
group,
currency

Addition

Consumption

Reversal

06/30/2014

Obligations from sales
transaction

Obligations from purchase
transaction

Other obligations

107,615

–4,110

103,407

96,028

8,673

102,211

16,859

6,876

131,350

–128

–744

17,305

11,062

10,990

3,653

–4,982

131,774

110,671

6,882

15,630

16,164

13,466

131,841

The tax liabilities of €35,467 thousand (€31,929 thou-
sand) include amounts for the year under review and the
period not yet concluded by the external tax audit.

(14) Derivative ﬁ nancial instruments

in € thousand

Currency hedges

Interest-rate hedges

Commodity hedges

Total

Nominal
volume

52,873

54,500

13,280

120,653

06/30/2014

Carrying
amounts

272

298

06/30/2013

Market
values

Nominal
volume

Carrying
amounts

Market
values

272

298

58,124

55,100

19,828

–207

133,052

–134

Notes
Notes for the KWS Group 2013/2014
4. Notes to the balance sheet

Of the currency hedges, €4,408 thousand (€11,041 thou-
sand) have remaining maturities of between one and
ﬁ ve years. Of the interest-rate derivatives, hedges with a
nominal volume of €39,500 thousand (€600 thousand)
will mature within one year and hedges with a nominal
value of €15,000 thousand (€15,000 thousand) will ma-
ture in more than ﬁ ve years. The commodity hedges have
remaining maturities of less than one (one) year.

the liability, after taking into account transaction costs, is
used. These are active and accessible markets for identi-
cal assets and liabilities, where the fair value results from
quoted prices that are observable (level 1 input factors).
At the KWS Group, this relates to securities in the cat-
egory “available-for-sale ﬁ nancial assets,” as well as fund
shares at banks and other ﬁ nancial assets whose price is
likewise quoted in active markets.

(15) Financial instruments
In general, the fair values of ﬁ nancial assets and liabilities
are calculated on the basis of the market data available
on the balance sheet date and are assigned to one of the
three hierarchy levels in accordance with IFRS 13. The
principal market, i.e. the market with the largest volume
of trading and the greatest business activity, is used to
calculate the fair value. If this market does not exist for
the asset or liabilities in question, the market that maxi-
mizes the amount that would be received to sell the asset
or minimizes the amount that would be paid to transfer

The level 2 input factors relate to derivative ﬁ nancial
instruments that are not designated hedging instruments
and have been concluded between KWS companies and
banks. The prices can thus be derived indirectly from
active market prices for similar assets and liabilities. The
level 3 input factors cannot be derived from observable
market information.

The carrying amounts and fair values of the ﬁ nancial
assets (ﬁ nancial instruments), split into the measurement
categories in accordance with IAS 39, are as follows:

06/30/2014

Financial instruments

in € thousand

Financial assets

Trade receivables

Securities

Cash and cash equivalents

Other current ﬁ nancial assets

of which derivative ﬁ nancial instruments

Fair values

Carrying amounts

Loans and
receivables

Financial
assets held
for trading

Available-
for-sale
ﬁ nancial
assets

Total
carrying
amount

2,774

361,576

76,712

78,261

15,881

(879)

78,261

15,002

(0)

879

(879)

879

2,774

361,576

76,712

(0)

76,712

78,261

15,881

(879)

79,486

535,204

Total

535,204

454,839

Notes
Notes for the KWS Group 2013/2014
4. Notes to the balance sheet

Previous year 1

Financial instruments

06/30/2014

Financial instruments

in € thousand

Financial assets

Trade receivables

Securities

Cash and cash equivalents

Other current ﬁ nancial assets

of which derivative ﬁ nancial instruments

Total

1 adjusted pursuant to IAS 19 (2011)

Fair values

Carrying amounts

Loans and
receivables

Financial
assets held
for trading

7,305

359,867

100,878

101,517

26,587

(812)

359,867

101,517

25,775

(0)

596,154

487,159

812

(812)

812

Available-
for-sale
ﬁ nancial
assets

7,305

100,878

(0)

Total
carrying
amount

7,305

359,867

100,878

101,517

26,587

(812)

108,183

596,154

The fair value of ﬁ nancial assets (equity instruments)
measured at amortized costs cannot be reliably deter-
mined because there are no active markets. These as-
sets relate to shares in unconsolidated subsidiaries and
associated companies. It is assumed that the carrying
amounts are the same as the fair values. In addition, the
ﬁ nancial assets include securities classiﬁ ed as noncur-
rent assets, whose fair value is measured by their prices
on the stock market (level 1).

The fair values of securities classiﬁ ed as current as-
sets are based on the price for them quoted on active
markets (level 1). The fair value of derivative ﬁ nancial
instruments is the present values of the payments related
to these balance sheet items. These instruments are
mainly forward exchange deals. They are measured on
the basis of quoted exchange rates and yield curves
available from market data and allowing for counterparty
risks (level 2).

The fair value of trade receivables, other current ﬁ nancial
assets and cash and cash equivalents is the same as the
carrying amounts as a result of the short time in which
these instruments are due.

The carrying amounts and fair values of the ﬁ nancial lia-
bilities (ﬁ nancial instruments), split into the measurement
categories in accordance with IAS 39, are as follows:

in € thousand

Financial liabilities

Long-term borrowings

of which outstanding purchase price
obligations for consolidated subsidiaries

Long-term trade payables

Short-term borrowings

Short-term trade payables

Other current ﬁ nancial liabilities

of which derivative ﬁ nancial instruments

Fair values

Carrying amounts

Financial
liabilities
measured at
amortized
cost

Financial
liabilities
held for
trading

Disclosure
in acc. with
IFRS 7

Total
carrying
amount

113,754

79,056

(34,698)

1,470

53,357

81,111

12,191

(581)

(0)

1,470

53,357

81,111

11,610

(0)

581

(581)

581

34,698

113,754

(34,698)

(0)

1,470

53,357

81,111

12,191

(581)

34,698

261,883

Total

261,883

226,604

Previous year

Financial instruments

in € thousand

Financial liabilities

Long-term borrowings

of which outstanding purchase price
obligations for consolidated subsidiaries

Long-term trade payables

Short-term borrowings

Short-term trade payables

Other current ﬁ nancial liabilities

of which derivative ﬁ nancial instruments

Fair values

Carrying amounts

Financial
liabilities
measured at
amortized
cost

Financial
liabilities
held for
trading

Disclosure
in acc. with
IFRS 7

Total
carrying
amount

98,460

66,199

(32,261)

1,697

33,259

82,746

11,833

(946)

(0)

1,697

33,259

82,746

10,887

(0)

946

(946)

946

32,261

98,460

(32,261)

(0)

1,697

33,259

82,746

11,833

(946)

32,261

227,995

Total

227,995

194,788

Financial liabilities are measured at amortized cost and
using the effective interest method in accordance with
when they are due. The carrying amount is approxi-
mately the market value, since the ﬁ nancial liabilities
have a variable rate of interest on them. The ﬁ xed inter-
est rate loans have a rate of interest approximately that
of the market rate.

The outstanding purchase price obligation for consoli-
dated subsidiaries must be carried at the present value
of the anticipated future purchase price payments for
minority interests. This is derived from the anticipated
operating income of the subsidiary and a risk-adjusted
discount rate (level 3).

100

Notes
Notes for the KWS Group 2013/2014
4. Notes to the balance sheet

101

Due to the mainly short times in which trade payables
are due, it is assumed that their carrying amounts are
equal to the fair value.

None of the reported ﬁ nancial instruments will be held to
maturity.

The method of calculating the fair values of derivative
ﬁ nancial instruments is presented above under the com-
ments on ﬁ nancial assets.

The table below shows the ﬁ nancial assets and liabilities
measured at fair value:

06/30/2014

Previous year

in € thousand

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

Derivative ﬁ nancial instruments not
part of a hedge under IAS 39

Available-for-sale ﬁ nancial assets

Financial assets

Derivative ﬁ nancial instruments not
part of a hedge under IAS 39

Financial liabilities

79,011

879

581

879

79,011

101,864

79,890

101,864

581

812

946

812

101,864

102,677

946

The derivative ﬁ nancial instruments mainly consists of
forward exchange deals, whose fair value is derived
from the forward exchange rates and the use of option
pricing models (level 2).

The table below presents the net gains/losses carried in
the income statement for ﬁ nancial instruments in each
measurement category:

in € thousand

Available-for-sale ﬁ nancial assets

Financial assets held for trading

Loans and receivables

Financial liabilities measured at amortized cost

Financial liabilities held for trading

06/30/2014

Previous year

125

–658

–10,729

985

123

–250

–335

–11,879

–2,655

The net income from ﬁ nancial assets includes income
and expenses from the measurement of ﬁ nancial assets.
The net gain/loss from loans and receivables mainly
includes effects from changes in the allowances for
impairment.

The net gains from ﬁ nancial assets held for trading
and ﬁ nancial liabilities held for trading mainly comprise
changes in the market value of derivative ﬁ nancial
instruments.

The net losses from ﬁ nancial liabilities measured at am-
ortized cost mainly result from interest expense.

Liquidity is managed in the euro zone by the central
Treasury unit using a cash pooling system. Liquidity
requirements are determined by means of cash plan-
ning and are covered by cash and promised credit lines.
There is a credit line of €200 million under a syndicated
loan, which was extended by a further year and runs
until November 2018.

The table below shows the KWS Group’s liquidity analy-
sis for non-derivative and derivative ﬁ nancial liabilities.
The table is based on contractually agreed, undiscount-
ed payment ﬂ ows:

in € thousand

Book value

Cash ﬂ ows

Liquidity analysis of ﬁ nancial liabilities

Financial liabilities

Trade payables

Other ﬁ nancial liabilities

06/30/2014

06/30/2014
Total

Due in
< 1 year

167,111

185,894

82,581

11,610

82,581

11,610

60,611

81,111

11,610

Due in > 1
year and
< 5 years

125,090

1,470

Due in
> 5 years

193

Non-derivative ﬁ nancial liabilities

261,302

280,085

153,332

126,560

193

Payment claim

Payment obligation

Derivative ﬁ nancial liabilities

581

22,531

23,221

690

22,531

23,221

690

The cash ﬂ ows of the derivative ﬁ nancial liabilities mainly
relate to forward exchange deals and include both inter-
est payments and redemption payments. These deriva-
tive ﬁ nancial instruments are settled in gross.

Interest income from ﬁ nancial assets that are not mea-
sured at fair value and recognized in the income state-
ment was €1,777 thousand (€1,552 thousand). Interest
expenses for ﬁ nancial borrowings were €10,729 thou-
sand (€11,879 thousand).

In order to assess the risk of exchange rate changes,
the sensitivity of a currency to ﬂ uctuations was deter-
mined. After the euro, the US dollar is the most impor-
tant currency in the KWS Group. All other currencies
are of minor importance. The average exchange rate in
the ﬁ scal year was 1.36 (1.30) USD/€. If the US dollar
depreciated by 10%, the ﬁ nancial instruments would
have a value of €144 thousand (€184 thousand). If the
US dollar appreciated by 10%, the ﬁ nancial instruments
would have a value of €176 thousand (€225 thousand).
The net income for the year and equity would change
accordingly.

to the interest result (previous year: reduction of €0.5 mil-
lion); equity would improve by €0.1 million (previous year:
a drop of €0.3 million). A reduction in the rate of interest
to 0 percentage points would add a further €1.3 million
(€1.3 million) to the interest result. Equity would increase
by €0.8 million (€0.9 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 ﬂ uctua-
tions was determined. A 10% increase in commod-
ity prices would increase the cost of sales by around
€1.3 million (€2.0 million); a decrease would reduce it by
around €1.3 million (€2.0 million).

In the Management Report possible risks resulting from
agreements regarding ﬁ nancial dependencies are ad-
dressed.

(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.

In order to assess the risk of interest rate changes, the
sensitivity of interest rates to ﬂ uctuations was deter-
mined. The average rate of interest in the ﬁ scal year
was 0.26% (0.29%). An increase in the rate of interest
of 1 percentage point would add a further €0.2 million

(17) Other ﬁ nancial obligations
There was a €10,159 thousand (€5,588 thousand) ob-
ligation from uncompleted capital expenditure projects.
The increase is mainly the result of spending on new
software licenses totaling €1.7 million.

Obligations under rental agreements and leases

in € thousand

Due within one year

Due between 1 and 5 years

Due after 5 years

06/30/2014

Previous year

14,854

19,354

7,124

41,332

13,968

17,439

3,576

34,983

102

Notes
Notes for the KWS Group 2013/2014
5. Notes to the income statement

The leases relate primarily to full-service agreements for
IT equipment and ﬂ eet vehicles, which also include ser-
vices for which a total of €1,300 thousand (€2,139 thou-
sand) was paid in the year under review. The main
leasehold obligations relate to land under cultivation.

5. Notes to the income statement

Income statement of the KWS Group
for the period July 1, 2013 through June 30, 2014

in € millions

Net sales

Cost of sales

Gross proﬁ t on sales

Selling expenses

Research and development expenses

General and administrative expenses

Other operating income

Other operating expenses

Operating income

2013/2014

% of sales

Previous year 1

% of sales

1,178.0

614.5

563.5

204.0

148.8

76.8

60.7

56.2

138.4

100.0

52.2

47.8

17.3

12.6

6.5

5.2

4.8

11.7

1,147.2

607.0

540.2

190.5

140.4

69.0

61.9

50.1

152.1

100.0

52.9

47.1

16.6

12.2

6.0

5.4

4.4

13.3

Net ﬁ nancial income/expenses

–12.5

–1.1

–10.3

–0.9

Result of ordinary activities

125.9

10.7

141.8

12.4

Taxes

Net income for the year

Shares of minority interest

Net income after minority interest

1 adjusted pursuant to IAS 19 (2011)

(18) Net sales and function costs

By product category

in € thousand

Certiﬁ ed seed sales

Royalties income

Basic seed sales

Services fee income

Other sales

45.6

80.3

3.2

77.1

3.9

6.8

0.3

6.5

49.5

92.3

3.4

88.9

4.3

8.0

0.3

7.7

2013/2014

Previous
year

1,068,263

1,047,039

63,922

14,694

8,784

22,344

57,806

16,931

5,637

19,822

1,178,007

1,147,235

By region

in € thousand

Germany

Europe

North and South America

Rest of world

Notes
Notes for the KWS Group 2013/2014
5. Notes to the income statement

103

2013/2014

225,399

447,171

448,120

57,317

Previous
year

223,385

433,524

435,787

54,539

1,178,007

1,147,235

For further details of sales, see segment reporting.

Sales are recognized when the agreed goods or ser-
vices 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 1.2% to €614,528 thou-
sand (€607,027 thousand), or 52.2% (52.9%) of sales.
The total cost of goods sold was €336,361 thousand
(€351,442 thousand).

Allowances on inventories totaling €2,147 thousand
more (previous year: €2,220 thousand more) were
required. The allowances were lower by €275 thou-
sand (€553 thousand) for the Cereals Segment, while
they were higher by €514 thousand for the Sugar-
beet Segment (previous year: lower by €150 thou-
sand). Additional allowances totaling €1,908 thousand
(€4,864 thousand) were required in the Corn Segment.

(19) Other operating income

The €13,404 thousand increase in selling expenses to
€203,952 thousand (€190,548 thousand) is attributable
to the creation and expansion of distribution structures.
This is 17.3% of net sales, up from 16.6% the year
before.

Research and development is recognized as an ex-
pense in the year it is incurred; in the year under review,
this amounted to €148,821 thousand (€140,371 thou-
sand the year before). Development costs for new vari-
eties are not recognized as an asset because evidence
of future economic beneﬁ t can only be provided after
the variety has been ofﬁ cially certiﬁ ed.

General and administrative expenses increased by
€7,698 thousand to €76,741 thousand, representing
6.5% of sales, after 6.0% the year before.

in € thousand

Income from sales of ﬁ xed assets

Income from the reversal of provisions

Exchange rate gains and gains from currency and interest rate hedges

Income from reversal of allowances on receivables

Grants

Income relating to previous periods

Income from loss compensation received

Miscellaneous other operating income

The other operating income mainly comprises foreign
exchange gains and income from interest rate hedges,
as well as income from the reversal of provisions and
miscellaneous other operating income.

2013/2014

416

15,638

13,582

5,561

5,548

6,466

191

13,270

60,672

Previous
year

836

10,763

14,757

6,542

6,204

6,773

580

15,488

61,943

104

Notes
Notes for the KWS Group 2013/2014
5. Notes to the income statement

(20) Other operating expenses

in € thousand

Legal form expenses

Allowances on receivables

Counterparty default

2013/2014

1,056

8,216

392

Previous
year

1,263

7,865

352

Exchange rate losses and losses on currency and interest rate hedges

22,289

16,428

Losses from sales of ﬁ xed assets

Expenses relating to previous periods

Expense from remeasurement of intangible assets

Other expenses

269

1,099

2,366

20,518

56,205

636

1,027

22,418

50,061

In the year under review, allowances for receivables of
€4,596 thousand (€3,414 thousand) were recognized
as an expense at the Corn Segment, €3,504 thousand

(€4,400 thousand) at the Sugarbeet Segment, €52 thou-
sand (€48 thousand) at the Cereals Segment and
€64 thousand (€3 thousand) at the Corporate Segment.

(21) Net ﬁ nancial income/expenses

in € thousand

Interest income

Interest expenses

Income from other ﬁ nancial assets

Write-down on securities

Interest expenses from pension provisions

Interest expense for other long-term provisions

Net interest expense

Net income from subsidiaries and joint ventures

Net income from participations

Net income from write-ups on subsidiaries, joint ventures and participations

Net income from equity investments

2013/2014

Previous
year

1,791

11,515

119

2,774

179

1,641

8,227

2,904

948

–12,558

–10,361

Net ﬁ nancial income/expenses

–12,551

–10,316

Net ﬁ nancial income/expenses fell by a total of
€2,235 thousand to €–12,551 thousand as a result of
higher interest expenses. Net interest expense was
€–12,558 thousand compared with €–10,361 thousand

the year before. Net income from equity investments
likewise fell by €38 thousand to €7 thousand. The inter-
est effects from pension provisions comprise interest
expenses (compounding) and the planned income.

(22) Taxes

Income tax expense is computed as follows:

in € thousand

Income taxes, Germany

Income taxes, other countries

Current expenses from income taxes

Thereof from previous years

Deferred taxes, Germany

Deferred taxes, other countries

Deferred tax income/expense

Reported income tax expense

1 adjusted pursuant to IAS 19 (2011)

Notes
Notes for the KWS Group 2013/2014
5. Notes to the income statement

105

2013/2014

15,824

34,513

50,337

(–6,829)

–111

–4,631

–4,742

45,595

Previous
year 1

26,453

39,967

66,420

(4,836)

–6,231

–11,513

–17,744

49,528

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 proﬁ ts.
In addition, municipal trade tax is payable on proﬁ ts
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 Introduc-
tion of the Societas Europaea and Amending Further
Tax Regulations” (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

€4,933 thousand (€6,123 thousand) at June 30, 2014.
€1,190 thousand (€1,235 thousand) was recovered in
the year under review and recognized directly in equity.

Under German tax law, both German and foreign divi-
dends are 95% tax exempt.

The proﬁ ts 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
calculated at 29.1% (29.1%). For foreign Group com-
panies, deferred tax was calculated using the tax rates
applicable in the country in which they are based.

Deferred taxes result from the following:

Deferred tax assets

Deferred tax liabilities

2013/2014

Previous
year 1

Change

2013/2014

in € thousand

Intangible assets

Property, plant and equipment

Financial assets

Inventories

Current assets

Noncurrent liabilities

Current liabilities

Tax loss carryforward

Other consolidation transactions

284

1,529

9,527

2,376

14,327

14,403

5,210

388

220

2,479

8,516

3,957

10,413

16,146

2,887

326

–950

1,011

–1,581

3,914

–1,743

2,323

3,107

Previous
year 1

12,754

14,083

662

201

428

1,042

521

Change

–3,323

–96

–28

–35

772

–154

–505

9,431

13,987

634

166

1,200

888

Deferred taxes recognized

48,056

44,949

1 adjusted pursuant to IAS 19 (2011)

26,332

29,695

–3,363

106

Notes
Notes for the KWS Group 2013/2014
5. Notes to the income statement

Notes
Notes for the KWS Group 2013/2014
6. Notes to the cash ﬂ ow statement

107

The other comprehensive income includes exchange rate-
related changes to the deferred taxes of €–674 thousand
(€194 thousand), which were directly credited to equity,
without recognition in proﬁ t or loss.

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.

Tax loss carryforwards of €23,154 thousand (€5,359 thou-
sand) 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 taxable
proﬁ ts projected in the medium-term plans of the com-

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 proﬁ t before tax of the entire
Group:

in € thousand

Earnings before income taxes

Expected income tax expense 2

Difference in income tax liability outside Germany

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

Reported income tax expense

Effective tax rate

1 adjusted pursuant to IAS 19 (2011)
2 Tax rate in Germany: 29.1%

2013/2014

125,881

36,631

13,120

110

3,010

143

–75

–6,829

–515

45,595

36.2%

Previous
year 1

141,812

41,267

1,562

–517

1,591

–279

4,836

1,068

49,528

34.9%

This increase in the effective tax rate in the year under
review was due to tax expenses from previous periods
following ﬁ eld audits and strong income growth in coun-
tries with higher tax rates.

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

(23) Personnel costs/employees

in € thousand

2013/2014

Previous
year 1

Wages and salaries

180,255

167,433

Social security contributions,
expenses for pension plans
and beneﬁ ts

1 adjusted pursuant to IAS 19 (2011)

45,552

42,502

225,807

209,935

Personnel costs went up by €15,872 thousand to
€225,807 thousand, an increase of 7.6%. The number of
employees increased by 404 to 4,847 or by 9.1%.

Compensation increased by 7.7% from €167,433 thou-
sand in the previous year to €180,255 thousand. Social
security contributions, expenses for pension plans
and beneﬁ ts were €3,050 thousand higher than in the
previous year.

Employees 1

in € thousand

Germany

Rest of Europe
(without Germany)

North and South America

Rest of world

Total

1 Annual average

2013/2014

1,763

1,223

1,711

150

4,847

Previous
year

1,676

1,139

1,505

123

4,443

Of the above number, 700 (713) employees are in-
cluded according to the percentage of equity held in the
companies that employ them. 61 (59) of them were in
Europe and 639 (654) in North and South America.1,401
(1,428) employees are employed by now eight (seven)
proportionately consolidated investees. If these persons
are included in full, the workforce total is 5,549 (5,158).
The reported number of employees is greatly inﬂ uenced
by seasonal labor.

(24) Net income for the year
Net income for the year was reduced by net ﬁ nancial
income/expenses of €–12,551 thousand (€–10,316 thou-
sand) and a higher tax rate and fell by €11,998 thousand
to €80,286 thousand, representing a return on sales of
6.8%, down from 8.0% in the previous year. Net income
for the year after minority interest is €77,124 thousand.
Earnings per share are thus €11.69 (€13.47).

The share of net income of minority interests also in-
cludes the shares that accrued to shareholders who have
left the company up to the time they left.

6. Notes to the cash ﬂ ow
statement

The cash ﬂ ow statement, which has been prepared ac-
cording 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 activi-
ties, and ﬁ nancing 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.

(1) Net cash from operating activities
The cash proceeds from operating activities are
substantially determined by cash earnings. They were
€110,400 thousand (€109,485 thousand), slightly high-
er than the previous year. The proportion of cash earn-
ings included in sales was 9.4% (9.5%). Capital tie-up
amounted to €49,382 thousand (€24,907 thousand),
mainly due to an increase in assets not attributable
to ﬁ nancing or investing activity. The cash proceeds
from operating activities also include interest income
of €1,648 thousand (€1,498 thousand) and dividend
income of €6 thousand (€44 thousand) as well as inter-
est expense of €7,779 thousand (€5,017 thousand).
Income tax payments amounted to €68,023 thousand
(€56,972 thousand).

108

Notes
Notes for the KWS Group 2013/2014
7. Other notes

(2) Net cash from investing activities
A net total of €75,421 thousand (€88,942 thousand)
was required to ﬁ nance investing activities. An amount
of €74,992 thousand (€62,145 thousand) was paid
for intangible and tangible assets and an amount of
€1,901 thousand (€5,745 thousand) for ﬁ nancial assets.
There were total cash receipts of €1,472 thousand
(€1,918 thousand) for disposals of assets. €0 thousand
(€22,970 thousand) was paid to acquire shares in con-
solidated companies.

(3) Net cash from ﬁ nancing activities
Financing activities resulted in cash payments of
€31,523 thousand (previous year: cash proceeds of
€27,222 thousand). The dividend payments to par-
ent shareholders and other shareholders related to the
dividends of €19,800 thousand (€18,480 thousand)
paid to the shareholders of KWS SAAT AG, as well as
proﬁ t distributions paid to other shareholders of and
at fully consolidated subsidiaries of €1,328 thousand
(€664 thousand) and the acquisition of the remaining
shares of other shareholders in KWS LOCHOW GMBH.
In addition, net borrowings totaling €35,392 thousand
(€40,650 thousand) were raised.

(4) Supplementary information on the cash ﬂ ow

statement

The changes in cash and cash equivalents due to
exchange rate, consolidated group, and measurement
changes were attributable to an amount of €–3,990 thou-
sand (€–3,348 thousand) to exchange rate-related adjust-
ments. The other changes mainly result in an amount of
€2,494 thousand (€–83 thousand) from ﬁ rst-time partial
consolidation of the joint venture GENECTIVE S.A.

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 €32,708 thousand
(€46,582 thousand) from partially consolidated companies.

7. Other notes

Proposal for the appropriation of net retained proﬁ ts
KWS SAAT AG posted operating income of €–14,331
thousand compared with €11,768 thousand for the previ-
ous year. Allowing for net ﬁ nancial income/expenses of
€37,911 thousand (€35,512 thousand) and income taxes
totaling €–265 thousand €11,549 thousand), net income
in accordance with the German commercial law regula-
tions was €23,845 thousand (€35,731 thousand). Adding
the net proﬁ t of €154 thousand (€223 thousand) brought
forward from the previous year and the allocation to the
revenue reserves of €4,000 thousand (€16,000 thou-
sand), a net retained proﬁ t of €19,999 thousand is avail-
able for distribution.

A proposal will be made to the Annual Shareholders’
Meeting that an amount of €19,800 thousand of
KWS SAAT AG’s net retained proﬁ t should be distri-
buted as a dividend of €3.00 (€3.00) for each of the
6,600,000 shares.

The balance of €199 thousand (€154 thousand) is to be
carried forward to the new account.

Total remuneration of the Supervisory Board and
the Executive Board and of former members of
the Supervisory Board and the Executive Board of
KWS SAAT AG
The compensation of the members of the Supervisory
Board consists of a ﬁ xed and a variable component,
with the variable component being limited to the level
of the ﬁ xed compensation. As in the previous year, the
total compensation for members of Supervisory Board
amounts to €516 thousand (€516 thousand), excluding
value-added tax. €238 thousand (€238 thousand) of the
total compensation is performance-related.

Notes
Notes for the KWS Group 2013/2014
Audit of the annual ﬁ nancial statements | Compliance Declaration with the German Corporate Governance Code

109

In ﬁ scal year 2013/2014, total Executive Board com-
pensation amounted to €3,481 thousand (€4,072 thou-
sand). Variable compensation of €1,884 thousand
(€2,124 thousand), calculated on the basis of the net
proﬁ t for the period of the KWS Group, includes com-
pensation of €33 thousand (€38 thousand) for duties
performed in subsidiaries.

Compensation of former members of the Executive
Board and their surviving dependents amounted
to €1,476 thousand (€1,097 thousand). Pension
provisions recognized for this group of persons
amounted to €7,018 thousand (€3,155 thousand) as
of June 30, 2014, before being netted off with the
relevant planned assets.

Shareholdings of members of the Supervisory Board
and the Executive Board (as of August 31, 2014)
Dr. Arend Oetker indirectly holds a total of 1,650,010
(1,650,010) shares and Dr. Andreas J. Büchting 108,030
(108,030) shares in KWS SAAT AG. All together, the
members of the Supervisory Board hold 1,758,725
(1,758,718) shares in KWS SAAT AG.

The members of the Executive Board hold 14,699
(12,059) shares in KWS SAAT AG.

Related party disclosures
As part of its operations, KWS procures goods and
services worldwide from a large number of business
partners, including 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 ﬁ nancing, 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. The Execu-
tive Board, the Supervisory Board and the families of
their members were also deﬁ ned as related parties.
There were no business transactions or legal transac-
tions that required reporting for this group of persons
in ﬁ scal 2013/2014. The compensation that has to be

disclosed in accordance with IAS 24 for management in
key positions at the Group comprises remuneration for
the active Executive Board and the Supervisory Board. It
is presented in the Group Management Report. No other
related parties have been identiﬁ ed for whom there is a
special reporting requirement under IAS 24.

There are lease agreements with an annual lease of
€132 thousand (€86 thousand) between Hans-Joachim
Tessner and KWS SAAT AG.

Audit of the annual ﬁ nancial
statements

On December 19, 2013, the Annual Shareholders’
Meeting of KWS SAAT AG elected the accounting ﬁ rm
Deloitte & Touche GmbH, Hanover, to be the Group’s
auditors for ﬁ scal year 2013/2014.

Fee paid to the external auditors
under Section 314 (1) No. 9 of the HGB

in € thousand

2013/2014

a) Audit of the consolidated

ﬁ nancial statements

b) Other certiﬁ cation services

c) Tax consulting

d) Other services

Total fee paid

710

757

Previous
year

683

742

For ﬁ scal year 2014/2015, fees for consulting services
(excluding auditing) of up to €75 thousand are expected.

Compliance Declaration
with the German Corporate
Governance Code

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

110

Notes
Notes for the KWS Group 2013/2014
Supervisory and Executive Boards of KWS SAAT AG

Supervisory and Executive
Boards of KWS SAAT AG

Supervisory Board

Dr. Drs. h.c. Andreas J. Büchting
Einbeck
Agricultural Biologist/Economist
Chairman of the Supervisory Board of KWS SAAT AG

Membership of comparable German and foreign
oversight boards:

• Member of the Board of Directors of Ball Horticultural

Company, West Chicago, Illinois (U.S.)

Dr. Arend Oetker
Berlin
Businessman
Managing Partner of Kommandit gesellschaft Dr. Arend
Oetker Vermögensverwaltungsgesellschaft mbH & Co,
Berlin
Deputy Chairman of the Supervisory Board of
KWS SAAT AG

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:

• Leipziger Messe GmbH, Leipzig
• Berliner Philharmonie gGmbH, Berlin (Chairman)

Hubertus von Baumbach
Ingelheim am Rhein
Businessman
Member of Management of Boehringer Ingelheim,
Ingelheim am Rhein

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

Cathrina Claas-Mühlhäuser
Frankfurt am Main
Businesswoman
Chairwoman of the Supervisory Board of CLAAS
KGaA mbH, Harsewinkel

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. Berthold Niehoff
Einbeck
Agricultural Scientist
Employee Representative

Notes
Notes for the KWS Group 2013/2014
8. Declaration by legal representatives

111

8. Declaration by legal
representatives

We declare to the best of our knowledge that the con-
solidated ﬁ nancial statements give a true and fair view of
the assets, ﬁ nancial 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 Manage-
ment Report, and that it describes the main opportunities
and risks of the Group’s anticipated development.

Einbeck, October 1, 2014
KWS SAAT AG
The Executive Board

P. von dem Bussche

L. Broers

H. Duenbostel

E. Kienle

Executive Board

Philip von dem Bussche
Einbeck
(CEO)
Corporate Development & Communications,
Human Resources

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

Dr. Hagen Duenbostel
Einbeck
Corn, Investor Relations

Membership of comparable German and foreign
oversight boards:

• Hero AG, Lenzburg, CH

(Member of the Board of Administration)

Dr. Peter Hofmann (since October 1, 2014)
Einbeck
Sugarbeet, Cereals, Marketing

Eva Kienle
Göttingen
Finance, Controlling, Global Services, IT, Legal

P. Hofmann

112

Notes
Notes for the KWS Group 2013/2014
Auditors’ Report

Auditors’ Report

We have audited the annual ﬁ nancial 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 ﬁ scal year from July 1, 2013, to June 30, 2014, all
of which were prepared by KWS SAAT AG, Einbeck. The
preparation of the consolidated ﬁ nancial statements and
the Group Management Report according to the Interna-
tional Financial Reporting Standards (IFRS) as applicable
in the EU, and in addition according to the commercial law
regulations to be applied pursuant to Section 315a (1) of
the HGB (German Commercial Code), is the responsibil-
ity 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 ﬁ nancial statements and the
Group Management Report.

We conducted our audit of the annual ﬁ nancial state-
ments in accordance with Section 317 HGB and the
generally accepted standards for the audit of ﬁ nancial
statements promulgated by the Institut der Wirtschafts-
prüfer (German Institute of Certiﬁ ed Public Accoun-
tants). According to these standards, 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, ﬁ nancial position and earnings
conveyed by the consolidated ﬁ nancial statements,
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 ﬁ nancial
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 ﬁ nancial statements of the
companies included in the consolidated ﬁ nancial state-
ments, the deﬁ nition of the companies consolidated,
the accounting and consolidation principles used and
any signiﬁ cant estimates made by the Executive Board,
as well as the evaluation of the overall presentation of
the consolidated ﬁ nancial 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 ﬁ ndings gained during
the audit, the consolidated ﬁ nancial statements of
KWS SAAT AG, Einbeck, comply with the IFRS as
applicable in the EU, and in addition with the commer-
cial 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 assets, ﬁ nancial position
and earnings of the Group, taking into account these
regulations. The Group Management Report accords
with the consolidated ﬁ nancial statements, conveys
overall an accurate view of the Group’s position and
accurately presents the opportunities and risks of future
development.

Hanover, October 1, 2014

Deloitte & Touche GmbH
Wirtschaftsprüfungsgesellschaft

(Kompenhans)
(KKKKompenhans)
Auditor

(Bukowski)
(Bukowski)
Auditor

Notes
Notes for the KWS Group 2013/2014
Auditors’ Report

113

Financial calendar

November 26, 2014

Report on the 1st quarter of 2014/2015

December 18, 2014

Annual Shareholders’ Meeting in Einbeck

February 25, 2015

Report on the 2nd quarter of 2014/2015

May 27, 2015

Report on the 3rd quarter of 2014/2015

October 15, 2015

Publication of 2014/2015 ﬁ nancial statements,
Annual press and analyst conference in Frankfurt

December 17, 2015

Annual Shareholders’ Meeting

Key data of KWS SAAT AG

Securities identiﬁ cation number

707400

ISIN

DE0007074007

Stock exchange identiﬁ er

KWS

Transparency level

Index

Share class

Prime Standard

SDAX

Individual share certiﬁ cates

Number of shares

6,600,000

Grimsehlstrasse 31 37555 Einbeck/Germany 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:
Jan Eric Euler • Eberhard Franke • Frank Stefan Kimmel • Dominik Obertreis • Jan Schmitt • KWS Group archive

114

Annual ﬁ nancial statements
Auditors’ Report