KWS Group Annual Report 2014

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FY2014 Annual Report · KWS Group

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Annual Report
2014 | 2015

Key figures of the KWS Group

in € millions

2014/2015

2013/2014

2012/2013

2011/2012

2010/2011

Key figures of the KWS Group in accordance with the corporate controlling structure1

Key figures of the KWS Group in accordance with IFRS 112

Net sales

Operating income (= EBIT)

as a % of net sales (= ROS)

Net financial income/expenses

Net Income

as a % of net sales

Operative cash flow

Net cash from investing activities

Equity

Balance sheet total

Equity ratio in %

Return on equity in %

Return on assets in %

Capital expenditure

Depreciation

Average number of employees

Personnel costs

Net sales

Operating income (= EBIT)

as a % of net sales (= ROS)

Net financial income/expenses

Net Income

as a % of net sales

Operative cash flow

Net cash from investing activities

Equity

Balance sheet total

Equity ratio in %

Return on equity in %

Return on assets in %

Capital expenditure

Depreciation

Average number of employees

Personnel costs

Performance of KWS shares in €

Dividend per share

Earnings per share

Equity per share

855.4

116.6

13.6

–7.0

72.9

8.5

101.2

–52.4

530.3

902.0

58.8

15.2

8.9

49.3

27.6

3,560

165.0

1,260.4

138.0

10.9

–7.1

84.0

6.7

57.7

–136.3

738.7

1,440.2

1,178.0

1,147.2

138.4

11.8

–12.6

80.3

6.8

61.0

–75.4

637.8

152.1

13.3

–10.3

92.3

8.0

84.6

–88.9

649.7

986.3

140.9

14.3

–5.1

94.4

9.6

97.9

–56.6

603.1

1,262.8

1,218.7

1,092.3

51.3

13.6

7.2

140.6

51.6

5,322

256.4

986.0

113.4

11.5

16.7

84.0

8.5

48.1

–123.8

738.7

1,355.5

54.5

13.6

7.8

132.5

45.9

4,691

216.9

3.00

12.53

111.92

53.3

15.8

9.0

65.2

38.4

4,443

209.9

55.2

18.3

10.7

111.5

28.4

3,851

182.5

50.5

12.8

7.3

82.6

45.8

4,847

225.8

923.5

118.3

12.8

7.5

80.3

8.7

76.0

– 63.1

637.8

1,165.0

54.7

12.8

7.8

69.4

41.2

4,150

189.9

3.00

11.69

96.64

1 Our 50:50 joint ventures are included proportionately in accordance with their shares.
2 In accordance with IFRS 11, the net sales and expenses of our joint ventures are no longer included in KWS’ statement of comprehensive income. Instead, the shares they contribute to earnings are
carried under net financial income/expenses. In addition, the assets of our joint ventures will be included in the future in the KWS Group’s balance sheet as an equity-accounted financial asset in ac-
cordance with the new accounting regulations.

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Content

To our shareholders

3 Foreword of the Executive Board

5 Report of the Supervisory Board

10 The KWS share

12 Spotlight topic

16 Corporate Sustainability

20 Corporate Governance

23 Combined Management Report

24 Fundamentals

33 Business performance

Earnings, financial position and assets

52 Employees

55 Report on events after the balance sheet date

55 Opportunity and risk report

62 Forecast report

KWS SAAT SE

(explanations based on the German Commercial Code (HGB))

68 Other disclosures

75 Annual Financial Statements

Hagen Duenbostel (CEO) Corn, Coporate Development & Communications, Compliance
Léon Broers Research & Breeding
Eva Kienle Finance, Controlling, Global Services, IT, Legal, Human Resources
Peter Hofmann Sugarbeet, Cereals, Marketing

To our
share
holders

Foreword of the Executive Board

KWS can look back on almost 160 years of plant

industry’s high rate of innovation is driven by intense

breeding experience. In this time, the company has

competition – accompanied by shorter and shorter

evolved from its beginnings as a domestic sugar-

development cycles for new technologies. As a re-

beet seed vendor into a leading international plant

sult, research & development expenditure in plant

breeder. As an independent family business, KWS

breeding has risen steadily for years, and KWS again

now offers high-yielding varieties in some 70 coun-

increased its R&D spending by around 16% to €174

tries and generates more than 80% of its net sales

million last fiscal year.

outside Germany. In view of the tough climate in the

international agricultural markets, however, keeping

Despite this challenging environment, KWS was able

up earnings-driven expansion of KWS’ business is a

to hold its own well in fiscal 2014/2015. We grew our

particular challenge.

net sales by around 7% to almost €1.3 billion. We

posted an EBIT of €138 million and exceeded our

After years of steadily increasing demand for food

own profit expectations. That is attributable to the

and feed and a parallel trend in supply, agricultural

close collaboration of our currently 5,322 KWS em-

markets now face record cereal inventories. World

ployees worldwide. They are the crucial foundation

market prices for consumer goods have accordingly

of our innovative strength and the key to our future

fallen sharply and are still not yet trending upward.

growth. What is particularly important for us is to

Increasing globalization of trade is also causing

practice our corporate values with passion, preserve

greater volatility in commodity prices. However, in-

our family company’s independence and maintain

comes in the farming sector largely correlate with

the trust farmers have in us as a powerful partner by

these trends in commodity prices. Decisions on what

supplying seed of the very best quality.

to grow are made on the basis of crop rotation, but

also in particular on the farmer’s revenue situation

In order to achieve that goal and grow in the future,

and costs. Consumer prices for sugar, corn, potatoes

we are focusing our resources on research & deve-

and oils have dropped to lows that in some cases

lopment, expanding distribution and creating the

have not been seen for decades.

necessary production capacities. The main emphasis

of our capital spending program last fiscal year was

Depending on the market situation, influences from

therefore on expanding and modernizing our seed

exchange rate fluctuations and increases in the cost

processing and production plants worldwide. We

of capital may exert additional pressure on cultiva-

were also able to successfully increase our footprint

tion area for the individual crops. These challenges

in France, one of the world’s most important cereals

were especially clear in our international growth

markets, by acquiring the remaining 51% stake in the

markets, such as Eastern Europe and South Amer-

French seed company SOCIETE DE MARTINVAL S.A

ica. There were greater economic pressures on

(MOMONT) effective September 30, 2014. We invest-

cultivation of grain corn there, for example. As a con-

ed a total of €141 million last fiscal year.

sequence, cultivation area was reduced, as was the

size of KWS’ potential market.

KWS has grown and spread its roots over all the

Plant breeding can offer sustainable solutions to the

European player early in its history, namely at the

long-term growth in demand for food worldwide. The

beginning of the 20th century. Changing its legal

years. KWS operated outside Germany and was a

Foreword of the Executive Board | To our shareholders

KWS Group | Annual Report 2014/2015form into a European Stock Corporation (Societas

The main theme of this report is seed of the very best

Europaea/SE) was therefore a logical consequence

quality. We therefore present the individual steps of

of KWS’ development in Europe and its strong inter-

how we produce it. In the spotlight topic and on the

national growth, especially in recent years. In addi-

two-page photo spreads you can find detailed and

tion, the interests of European employees are repre-

informative explanations and impressions. I wish you

sented by a European body now that the company

a very enjoyable read!

has the legal form of an SE.

In conclusion, I would like to adress our employees.

We intend to continue implementing our corporate

Without their commitment and innovative expertise,

strategy stringently in the coming year. As part of

our company’s success would not be possible. On

that, we will continue to focus strongly on research &

behalf of the whole Executive Board, I would like to

development and product quality to keep on offering

thank them for their outstanding work. I also thank

seed of the highest quality. By doing that, we believe

our customers, investors and partners for their sup-

we can grow net sales by 5% to 10% and post an

port and trust. We will continue on our path together.

EBIT margin of at least 10.5%. In this regard I wish to

note that next fiscal year we will see a fundamental

With best regards from Einbeck on behalf of the

change in our financial communications and that the

entire Executive Board,

KWS Group’s net sales and profit (EBIT) will be lower

since they will not include the revenue and expenses

from our joint ventures. You can find more informa-

tion on page 24.

Hagen Duenbostel

Chief Executive Officer

To our shareholders | Foreword of the Executive Board

Annual Report 2014/2015 | KWS GroupReport of the Supervisory Board

In its meeting on October 15, 2014, the Supervisory

the various businesses, market trends and the com-

Board decided – following careful examination – to

petitive environment, research and product devel-

give its consent to the proposal by the Executive

opment and, along with important individual projects,

Board to convert KWS SAAT AG into KWS SAAT SE,

risk management at the KWS Group were also the

which also entailed a change in the company’s name.

subject of detailed discussions. The Chairman of the

Changes in the company’s name have always marked

Supervisory Board continued the bilateral discussions

the dawning of a new era in KWS’ history. The exten-

with the Chief Executive Officer and individual mem-

sive efforts being made to develop new products and

bers of the Executive Board in regular talks outside

penetrate new markets are testimony to the excep-

the meetings of the Supervisory Board. In addition,

tional dynamism of this dedication to the future. Close

there were monthly meetings between the Chairman

and trusted interaction between the Supervisory

of the Supervisory Board and the Executive Board

Board and the Executive Board is vital in this regard.

as a whole, where the company’s current business

development and, in particular, its strategy, occur-

The Supervisory Board discharged the duties incum-

rences of special importance and individual aspects

bent on it in accordance with the law, the company’s

of the company were dealt with. The Chairman of the

Articles of Association and the bylaws, regularly

Supervisory Board informed the Supervisory Board

advised and monitored the Executive Board in its

of the results of these meetings. The Supervisory

activities and satisfied itself that the company was

Board did not make use of its right to conduct an

run properly and in compliance with the law and that

examination granted by Section 111 (2) AktG (German

it was organized efficiently and cost-effectively. The

Stock Corporation Act) since the reporting by the

Supervisory Board decided on all significant busi-

Executive Board meant there was no reason to do so.

ness transactions requiring its consent and carefully

accompanied the Executive Board in all fundamental

Focal areas of deliberations

decisions of importance to the company. The Super-

The full Supervisory Board held five regular

visory Board discussed the information and assess-

meetings in fiscal 2014/2015. The meetings were

ments that influenced its decisions together with the

always attended by all the members, with the ex-

Executive Board. Both boards continued their con-

ception of one where a member was connected

structive cooperation based on mutual trust in every

by phone. The meeting of the Supervisory Board of

respect. Among other things, this was demonstrated

KWS SAAT AG to discuss the financial statements

by the fact that, as is customary, the Supervisory

on October 15, 2014, was devoted to examining and

Board was involved in all decisions of vital importance

approving the financial statements of KWS SAAT AG

to the company at an early stage. The Supervisory

and the consolidated financial statements of the

Board was provided with the necessary information

KWS Group as of June 30, 2014. In addition, conver-

in written and oral form regularly, promptly and com-

sion of KWS SAAT AG into a European Stock Corpo-

prehensively. This included all key information on

ration (Societas Europaea/SE) was discussed. The

relevant questions of strategy, planning, the business

change in legal form is intended to reflect our com-

performance and the situation of the company and the

pany’s strong international growth and to emphasize

KWS Group, including the risk situation, risk manage-

its large footprint in Europe. In addition, the interests

ment and compliance. Business transactions requiring

of European employees are represented by an addi-

consent were submitted to and discussed and ap-

tional European body now that the company has the

proved by the Supervisory Board in compliance with

legal form of an SE. The Supervisory Board decided,

the bylaws for the Executive Board. The company’s

together with the Executive Board, to propose to the

business policy, corporate and financial planning,

Annual Shareholders’ Meeting on December 18, 2014,

profitability and situation, the general development of

that KWS SAAT AG be converted into KWS SAAT SE.

Report of the Supervisory Board | To our shareholders

KWS Group | Annual Report 2014/2015The Annual Shareholders’ Meeting agreed to the

members and adopted bylaws for the Audit Commit-

conversion. The resolution on conversion of the

tee. The members and chairpersons of these com-

company adopted by the Annual Shareholders’

mittees were the same persons who had served in

Meeting also included a resolution on the Articles of

this capacity on the respective committees of the

Association of KWS SAAT SE, Sections 8 (1) and (2)

Supervisory Board of KWS SAAT AG. Further items

of which specify that the Supervisory Board consists

on the agenda were the appointment of the members

of six members: four shareholder representatives

of the Executive Board of KWS SAAT SE, namely

and two employee representatives. Section 8 (7) of

the same persons who had served on the Executive

the Articles of Association contains provisions on

Board of KWS SAAT AG, approval of the supplemen-

appointing the shareholder representatives on the

tal agreements to the existing contracts with the Ex-

first Supervisory Board of KWS SAAT SE; the same

ecutive Board members and adoption of the bylaws

persons were appointed as shareholder represen-

for the Executive Board of KWS SAAT SE. The mem-

tatives as were serving on the Supervisory Board of

bers of the Supervisory Board of KWS SAAT SE also

KWS SAAT AG. The change in the company’s legal

approved the appointment of the members of the

form took effect upon its entry in the commercial reg-

Executive Board and conclusion of the supplemental

ister on April 15, 2015.

agreements, including in their capacity as members

of the Supervisory Board of KWS SAAT AG. The joint

The meetings of the Supervisory Board of

formation audit report of the first Supervisory Board

KWS SAAT AG on December 17 and 18, 2014,

and first Executive Board of KWS SAAT SE was

focused on KWS’ HR strategy, establishment of its

likewise signed on March 18, 2015. The Supervisory

research center in St. Louis and expansion of corn

Board of KWS SAAT AG continued to exist alongside

production capacities in Eastern Europe. In its last

the Super visory Board of KWS SAAT SE until its term

meeting on March 18, 2015, the Supervisory Board

of office expired when the conversion took effect on

of KWS SAAT AG heard detailed reports on the

April 15, 2015. All the above-mentioned bylaws and

status of product development and the research

details on the members of the Supervisory Board’s

projects. The company’s organizational development

committees can be obtained on the company’s

was also discussed. Following this meeting, the

homepage.

first Supervisory Board of KWS SAAT SE convened

for its constitutive meeting on March 18, 2015. The

On June 24, 2015, the agenda as usual included adop-

meeting was not only attended by the shareholder

tion of the corporate planning for fiscal 2015/2016,

representatives appointed by the Annual Sharehold-

including medium-term planning up to 2018/2019.

ers’ Meeting on December 18, 2014, but also by the

The Supervisory Board also approved the merger of

employee representatives who had been appointed

KWS MAIS GMBH with KWS SAAT SE. The survey

on March 15, 2015, pursuant to the agreement be-

of the Supervisory Board with the aim of avoiding and

tween the Executive Board and the Special Negotiat-

identifying fraud was also conducted. The Supervisory

ing Body of the European employees. The employee

Board is not aware of any such acts. A further item on

representatives were likewise the same persons who

the agenda were the resolutions on the ratio of women

had served in this capacity on the Supervisory Board

on the Supervisory Board and the Executive Board.

of KWS SAAT AG. The first Supervisory Board of

The ratio of women among the shareholder represen-

KWS SAAT SE then initially elected Dr. Andreas J.

tatives on the Supervisory Board is currently 25%;

Büchting as its Chairman and Dr. Arend Oetker as

the two seats for the employee representatives are

its Deputy Chairman. The Super visory Board also

currently held by men. In accordance with Section

adopted the bylaws for the Super visory Board of

111 (5) AktG (German Stock Corporation Act), the

KWS SAAT SE. It then formed a Committee for Exec-

Super visory Board decided that the ratio of women

utive Board Affairs, a Nominating Committee and an

on the Super visory Board of KWS SAAT SE is still

Audit Committee, appointed their chairpersons and

to be 16.6% within the statutory period for defining

To our shareholders | Report of the Supervisory Board

Annual Report 2014/2015 | KWS Grouptarget figures for the ratio of women, namely by

Combined Management Report of KWS SAAT SE and

June 30, 2017. No election to the Supervisory Board

the KWS Group Management Report, including the

is envisaged within this statutory period. The ratio of

accounting reports, and awarded them its unqualified

women on the Executive Board of KWS SAAT SE is

audit certificate. In addition, the auditor concluded that

still to be 25% within the above period of time. No

the audit of the financial statements did not reveal any

new appointments to posts on the Executive Board

facts that might indicate a misstatement in the decla-

are planned within the statutory period of time. In

ration of compliance issued by the Executive Board

accordance with Clause 5.4.1 of the German Cor-

and the Super visory Board in accordance with section

porate Governance Code, the Supervisory Board of

161 AktG with respect to the “German Commission for

KWS SAAT SE also discussed setting a limit on the

the Corporate Governance Code” (cf. Clause 7.2.3 (2)

length of time members can serve on the Super-

of the German Corporate Governance Code).

visory Board of KWS SAAT SE and decided not to

comply with these recommendations by the German

The Supervisory Board received and discussed the fi-

Corporate Governance Code, since they would sig-

nancial statements of KWS SAAT SE, the consolidated

nificantly restrict the rights of a business with a tradi-

financial statements of the KWS Group and Com-

tion of family ownership like KWS, whose family share-

bined Management Report of KWS SAAT SE and the

holders hold a majority stake. The Supervisory Board,

KWS Group, along with the report by the independent

in agreement with the Executive Board, then adopted

auditor of KWS SAAT SE and the KWS Group and

the declaration of compliance with the German Cor-

the proposal on utilization of the net profit for the

porate Governance Code in accordance with section

year made by KWS SAAT SE, in due time. Compre-

161 AktG. The company’s declaration of compliance

hensive documents and drafts were submitted to the

for fiscal year 2014/2015 has been published on the

members of the Supervisory Board as preparation;

company’s homepage.

for example, all of them were provi ded with the annual

financial statements, Combined Management Report,

Annual and consolidated financial statements

audit reports by the independent auditors, Corporate

and auditing

Governance Report, Compensation Report and the

Deloitte & Touche GmbH Wirtschaftsprüfungs-

proposal by the Executive Board on the appropriation

gesellschaft, Hanover, the independent auditor chosen

of the profits. The Supervisory Board also held

at the Shareholders’ Meeting on December 18, 2014,

detailed discussions of questions on the agenda at

and commissioned by the Audit Committee, has

its meeting to discuss the financial statements on

audited the financial statements of KWS SAAT SE that

October 14, 2015. The auditor took part in the meeting.

were presented by the Executive Board and prepared

It reported on the main results of the audit and was

in accordance with the provisions of the German

also available to answer additional questions and

Commercial Code (HGB) for fiscal 2014/2015 and

provide further information for the Supervisory Board.

the financial statements of the KWS Group (IFRS

According to the report of the independent auditor,

consolidated financial statements), as well as the

there were no material weaknesses in the internal

Supervisory Board Committees

Committee

Audit Committee

Chairman

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-Mühlhäuser

Report of the Supervisory Board | To our shareholders

KWS Group | Annual Report 2014/2015control and risk management system in relation to

Supervisory Board Committees

the accounting process. There were also no circum-

The Audit Committee convened for two joint meet-

stances that might indicate a lack of impartiality on

ings in fiscal 2014/2015 and also held three telephone

the part of the independent auditor. The small extent

conferences, on all occasions with all its members

of services additionally provided by the independent

in attendance. In its meeting on September 29, 2014,

auditor can be seen from the Notes.

the Audit Committee discussed the 2013/2014

annual financial statements and accounting of

In accordance with the final results of its own exam-

KWS SAAT AG and consolidated financial statements

ination, the Supervisory Board endorsed the results

of the KWS Group. In addition, the required audit

of the audit, among other things as a result of the

relating to the conversion of KWS SAAT AG into a

vote by the Audit Committee, and did not raise any

European Company (SE) was discussed. The Annual

objections. The Supervisory Board gave its consent

Compliance Report and the results of the auditing

to the annual financial statements of KWS SAAT SE,

projects were on the agenda at its second meeting on

which were prepared by the Executive Board, and

March 18, 2015. The audit plan for fiscal 2015/2016

to the consolidated financial statements of the

was also discussed and adopted. The quarterly re-

KWS Group, along with the Combined Management

ports and the semiannual report for fiscal 2014/2015

Report of KWS SAAT SE and the KWS Group. The

were discussed in detail in three telephone confer-

financial statements are thereby approved. The

ences and their publication was approved.

Super visory Board also endorses the proposal by

the Executive Board to the Annual Shareholders’

In addition, the Audit Committee obtained the state-

Meeting on the appropriation of the net retained profit

ment of independence from the auditor in accordance

of KWS SAAT SE after having examined it.

with Clause 7.2.1 of the German Corporate Gover-

Corporate Governance

nance Code, monitored the auditor’s independence

and examined its qualifications and defined the focal

The Supervisory Board conducted its efficiency

areas of the audit. The Audit Committee also satisfied

review in accordance with Clause 5.6 of the German

itself that the regulations on internal rotation pursuant

Corporate Governance Code for fiscal 2013/2014

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

accompanied and supported by Ernst & Young GmbH

independent auditor. The Audit Committee convened

Wirtschaftsprüfungsgesellschaft. Recommendations

on September 28, 2015, to discuss the current annual

and measures derived from it were implemented with-

financial statements of KWS SAAT SE and KWS’ con-

out exception in fiscal year 2014/2015.

solidated financial statements and accounting. The

independent auditor explained the results of its audit

The Supervisory Board regularly addressed the

of the 2014/2015 financial statements and pointed

question of any conflicts of interest on the part of

out that there were no grounds for assuming a lack

its members and those of the Executive Board. In

of impartiality on the part of the independent auditor

the year under review, there were no such conflicts

in its audit. The Audit Committee also dealt with the

of interests that had to be disclosed immediately to

proposal by the Executive Board on the appropriation

the Supervisory Board and reported to the Annual

of the net retained profit of KWS SAAT SE and recom-

Shareholders’ Meeting.

mended that the Supervisory Board approve it.

To our shareholders | Report of the Supervisory Board

Annual Report 2014/2015 | KWS GroupAndreas J. Büchting, Chairman of the Supervisory Board

The Committee for Executive Board Affairs dealt

worldwide. At the same time, he was someone who

in the year under review with the examination of the

KWS employees worldwide were able to identify with

contracts of the Executive Board members.

in our phase of rapid growth. With his boundless

At the 2014 Annual Shareholders’ Meeting, the Super-

made a major contribution to the company’s success

visory Board said farewell to Philip Freiherr von dem

over the past decade. The Supervisory Board thanks

Bussche, who retired from the Executive Board of

him for his extraordinarily successful achievements.

energy and great charisma, Philip von dem Bussche

KWS SAAT AG. After working on the Supervisory

Board for five years from 2000 on, Philip von dem

The Supervisory Board also expresses its thanks

Bussche was appointed as a member of the Execu-

to the Executive Board and all employees of

tive Board in 2005 and then, from January 2008,

KWS SAAT SE and its subsidiaries for their exemplary

as Chief Executive Officer. He was responsible for

commitment and the outstanding work they again

the product segments Sugarbeet (including potatoes)

performed in fiscal 2014/2015.

and Cereals up to October 2014. In particular, the

Sugar beet Segment performed magnificently during

Einbeck, October 14, 2015

his era – despite far-reaching changes in market

policies. He also helped shape the establishment of

our corn activities in Brazil, our research joint ven-

ture GENECTIVE and our second research center

in St. Louis. As a farmer and businessman with an

optimistic and entrepreneurial spirit, Philip von dem

Dr. Drs. h.c. Andreas J. Büchting

Bussche enjoyed the special trust of our customers

Chairman of the Supervisory Board

Report of the Supervisory Board | To our shareholders

KWS Group | Annual Report 2014/2015The KWS share

Key figures for the KWS share1

Number of shares (June 30)

Closing price (June 30)

Low

High

Market capitalization (June 30)

1 Xetra trading system

in millions

in €

in € millions

2014/2015

2013/2014

6.6

298.50

257.00

298.50

1,970

6.6

257.50

243.20

280.60

1,700

Low interest rate policy of central banks

on only one day of trading in the next twelve months.

unchanged

On June 30, the share stood at €298.50, thus reach-

On the capital markets, there was again no change

ing its highest level precisely at the end of our fiscal

this year in the interest rate policy of central banks.

year. Shortly after the end of our fiscal year, the

The United States Federal Reserve (the Fed) and

consolidation plans of two large companies in our

the European Central Bank stuck to their policy of

industry became public, producing the sharp daily

low interest rates in order to keep capital cheap

swings in KWS’ share price (July 2, 2015: € +6.60,

and stimulate economic growth. There were also

July 3, 2015: € +7.25, July 6, 2015: €–13.55). On the

economic and political uncertainties: There was

other hand, the share barely responded to the sharp

turbulence in the stock market in China, the political

increase in our EBIT forecast on September 1.

situation in Eastern Europe remained difficult and

the negotiations between Greece and its mostly Eu-

KWS share is a firm part of the SDAX

ropean lenders are still ongoing. In the environment

KWS SAAT SE’s market capitalization was higher

of low-interest rates, the stock markets as a whole

than in the year before: In the year under review it

trended upward, although the prevailing uncertain-

was €1,970 million on the basis of the closing price

ties were obvious from the strong fluctuations in the

on June 30, 2015 (previous year: €1,700 million);

major indices. The DAX, for example, exhibited sharp

solely on the basis of the proportion of free float

swings that continued after the end of our fiscal year:

of 28.9% (29.7%) it was €569.4 (504.9) million. The

August 24, 2015, saw the biggest daily loss in many

share still occupies a mid-range position in the

years (–4.7%), while the next day the DAX climbed

SDAX, Germany’s most important index for small

almost 5% again.

caps. Measured in terms of free float market capi-

talization at the relevant key date of June 30, 2015,

KWS share price increases

the KWS share ranked 18th (17th) in the index, which

In KWS’ fiscal year (July 1 to June 30), the German

comprises 50 companies, and 35th (26th) in terms of

stock indices DAX, MDAX and SDAX performed

trading volume over the period under review.

positively overall. The KWS share increased in price

by almost 16% in the period from July 1, 2014, to

Shareholder structure remains largely unchanged

June 30, 2015, surpassing the rise in the SDAX (ap-

There were only slight changes in KWS SAAT SE’s

proximately 15%) and DAX (just over 10%). The share

shareholder structure in fiscal 2014/2015. Most es-

price was very stable. It was listed at €257.50 at the

sential change was Tessner Beteiligungs GmbH which

beginning of the fiscal year and fell below that mark

increased its stake by 0.9 percentage points to 15.1%.

To our shareholders | The KWS share

Annual Report 2014/2015 | KWS GroupEmployee Share Program enjoys great popularity

Proposal on the appropriation of the profits for

For more than 35 years KWS has offered its em-

fiscal 2014/2015

ployees the chance to become a shareholder in the

Surplus supply due to high global stocks of agricul-

company and thus share in its success and identify

tural raw materials, low prices for agricultural raw

more strongly with it. The content of our Employee

materials, a reduction in cultivation area, political and

Share Participation Program remained unchanged

economic tension in growth markets, and volatile ex-

in the year under review. Our employees were able

change rates created a challenging climate for KWS

to buy up to 500 KWS shares at a price of €214.40,

in the past fiscal year. Nevertheless, the KWS Group

including a 20% bonus, which the individual employ-

was able to increase its net sales year on year in all

ees must pay tax on. 401 (401) employees in nine

product segments, also after adjustment for exchange

European countries took up this offer and purchased

rate effects. This operational earnings strength under-

a total of 9,878 (11,028) shares, corresponding to

pinned our rising expenditure on research & develop-

an average stake per employee of 25 (28) shares.

ment and expansion of our international distribution

The acquired shares are subject to a lock-up period

structures. Despite these planned increases, the KWS

of four years. They cannot be sold, transferred or

Group’s net income for the year was €84.0 million,

pledged during this period. As in previous years, the

above that of the previous year (€80.3 million). How-

shares used for the Employee Share Program were

ever, the return on sales remained virtually constant at

acquired in accordance with the stipulations in Sec-

6.7% (6.8%).

tion 71 (1) No. 2 of the German Stock Corporation

Act (AktG). A total of €2.7 (2.8) million was used to

The Executive and Supervisory Boards will therefore

buy back the company’s own shares, giving an aver-

propose payment of a dividend of €3.00 for the fiscal

age purchase price per share of €271.73 (257.00).

year 2014/2015, i. e. at the same level as the previous

year, to the Annual Shareholders’ Meeting. €19.8 million

Dividend stable at €3.00 a share

would thus be distributed to KWS SAAT SE’s share-

At the Annual Shareholders’ Meeting on Decem-

holders in December 2015. That means we are able

ber 18, 2014, the shareholders decided to set the divi-

to stick to our proven dividend policy, which is geared

dend per share at €3.00. The number of shares re-

toward the company’s earnings strength and envis-

mained unchanged, giving a total amount distributed

ages a payout of 20% to 25% of the KWS Group’s net

of €19.8 million as in the previous year. The dividend

income for the year.

payout ratio relative to the KWS Group’s net income

for the year of €80.3 million in fiscal 2013/2014 was

thus 24.7%.

Shareholder structure at October 13, 2015 (in %)
6,600,000 shares

Free float 28.9

Tessner Beteiligungs GmbH 15.1

56.0 Families Büchting, Arend Oetker, Giesecke

The KWS share | To our shareholders

KWS Group | Annual Report 2014/2015Spotlight
topic

Our seed: the essence of life!

Quality is produced in the field

To successfully raise crops for food and other

all, plants need time to grow. In order to save time and

purposes, farmers need high-quality seed. Along

be able to respond more flexibly to the market, we

with fertilizer and crop protection, seed is the

also carry out multiplication in South America, for ex-

farmer’s most important production resource.

ample in Chile and Argentina. Since it is summer and

Therefore, high and high quality is crucial.

winter at different times in the northern and southern

hemispheres, two generations of seed can be pro-

It takes many years to develop a variety. High-quality

duced in one year. That saves time, creates flexibility

seed is vital so that varieties can unfold their genetic

and reduces our production risks. It also means that

potential to the full. Seed quality is a very complex

lower yields due to the weather in seed multiplication

property and may be influenced by many internal and

in Europe can be compensated for, ensuring we can

external factors, but especially by the steps involved

supply farmers in the spring.

in multiplication and processing. Special breeding

and production know-how, such as that of special-

Where does the seed come from?

ized companies, is needed to ensure high and con-

Multiplication planning is followed by field production.

stantly improved seed quality.

It is necessary here to comply with the high – and in

some cases crop-specific – requirements demanded

Why does seed production take so long?

of the production conditions in order to ensure out-

The production process begins with sales and multi-

standing seed quality. That includes, for example,

plication planning. As part of that, the volumes of each

regulations on the distance between the multiplication

variety that might potentially be cultivated in the indi-

areas for different varieties of a crop. The objective of

vidual markets are assessed in order to calculate pro-

such minimum distances is to prevent the presence

duction requirements. This planning is continuously

of undesirable traits from other populations through

adjusted throughout the production process to make

pollination.

sure that enough seed of high quality is produced

without high surpluses. Planning commences up to

However, field production also entails other challenges,

three years before the seed is sold to farmers – after

such as in the production of hybrid seed. Hybrid

To our shareholders | Spotlight topic

Annual Report 2014/2015 | KWS Groupbreeding is a breeding method that is more than

instance. However, sugarbeet seed – which is angular

100 years old. In this method, systematic crossing of

by nature – has to be polished and pelleted to obtain

two parents explicitly chosen for their properties cre-

the round “pellet” that enables precision sowing of

ates progeny that exhibits better growth and a higher

individual seeds. The individual seed lots are dressed

yield than its parent generation. To produce hybrid

as desired by the farmer with crop protection at the

seed successfully, it is therefore necessary to ensure

end of processing.

that the pollen of the plant chosen as the “father”

actually pollinates the “mother” plant. Yet how can

Structure of a sugarbeet pellet

that be guaranteed? The answer to that also depends

to a very great extent on the crop in question. There

is a relatively “simple” mechanical possibility for pro-

ducing corn hybrids. The tassels and thus the male

flowers are simply removed (page 14/15). The process

is sometimes far more complicated for other crops.

In the case of sugarbeet, for example, the female and

male flower parts are to be found together in a flower.

So special mother lines that are male-sterile due to a

biological mechanism and do not produce any pollen

are used to obtain hybrid seed. The procedure is

similar for rapeseed and rye.

The populations are monitored by experts throughout

their entire time in the field. It is important to multiply

Seed

Embryo

A pellet has four layers added in very specific,

high-tech procedures:

1 Active substance – protects the seed from sources of

fungal damage

2 Coating with substances to promote germination and emergence

3 Active substances – as protection from animals and sources

seed in regions with a favorable climate where the

of fungal damage in the earth

disease pressure on, and occurrence of pests that

attack, the crops are particularly low and the con-

ditions for pollination and maturation (page 18/19) are

4 Color layer – prevents direct contact with the coating, protects

against friction and gives the pellet its typical orange color

as ideal as possible. Such regions for sugarbeet are

How does life stay in the seed?

Northern Italy and Southern France.

All the processes are designed to make sure that

Just looking at the seed,
you’d never know how much
high-tech it contains.
Dr. Ralf Tilcher, Head of Seed Technology

the seed is handled carefully so that the seedlings

are kept protected and ideal germination capacity

can be ensured. Each lot is repeatedly examined

throughout the process – whether the seed actual-

ly has the quality features and traits that make the

variety what it is. That includes specific resistance

against diseases or constituents that define its quali-

ty, for instance. The seed’s germination capacity and

How seed becomes a high-tech product

spouting strength are also determined (page 34/35).

In order to ensure the high quality of seed produced

We set high standards: For instance, the germination

on the field, it must be processed after being har-

capacity of our sugarbeet seed is at least 96% –

vested. The seed is cleaned, dried gently and sorted

usually even higher!

by size (page 50/51). The precise technical processes

for processing the raw goods depends on the nature

Only when the seed has been thoroughly examined

and size of the seed of the various crops, among

and has passed all the checks is it approved for sale,

other factors. Corn is harvested on the cob and only

packaged and shipped (page 66/67). As a result, the

separated from the cob after it has been dried, for

farmer ends up with seed of best quality.

Spotlight topic | To our shareholders

KWS Group | Annual Report 2014/2015A great combination

Hybrid production

To produce hybrid seed successfully, it is necessary to ensure that

the pollen of the pollinating plant (“father”) actually pollinates the

“mother” plant. That is relatively easy to do with corn due to its

special architecture: The male flower (the tassel) is located at the

tip of the plant, while the female flower is in the middle section of

the stalk. The mother plants, on which the seed to be harvested

grows, are detasseled, i. e. the male flower is completely removed.

Depending on the conditions in the field and the prevailing weath-

er, detasseling is carried out in repeated mechanical operations or

completely by hand. Our employees check that every plant has ac-

tually been completely detasseled to ensure the purity of the seed

batch. Coordinating this process requires efficient logistics and a lot

of experience, since the time window for this activity is very limited.

It is precision work that guarantees the quality of the hybrid seed.

Corporate Sustainability

KWS seeds the future

■■ Economics: KWS is one of the leading seed

KWS is a forward-looking company whose missions

companies. Key factors in our success include

is to be commercially successful in the long term

specializing in our core business, i. e. breeding

and create values. Proactive planning and action is

high-yielding new varieties. We also pursue a

therefore the core principal of our corporate gover-

policy of rigorous customer orientation, orienta-

nance. That means we have to carefully address the

tion toward growth and profitability, as well as

economic, ecological and social challenges facing

independence and financial strength.

our company in the future so as to anticipate the

■■ Product innovations: KWS’ product portfolio

resultant opportunities and risks at an early stage.

is geared to our customers’ needs and require-

Core issues of our long-term

corporate development

ments. Global trends such as climate change and

the limited availability of natural resources, such as

soil and water, as well as the occurrence of plant

KWS’ long-term economic success is mainly shaped

diseases and pests, are major factors that influ-

by the following core sustainability issues:

ence breeding objectives in product development.

■■ Modern breeding methods: We use modern

■■ Employees: Our company’s success is founded

breeding methods to develop varieties that keep on

on the achievements of our employees. We make

delivering higher yields and enable resource-sparing

intensive efforts to recruit new employees and

agriculture under changing conditions. That also

have introduced a process to identify and further

includes new biotechnology methods, which are

develop junior staffers.

indispensable to enable goal-oriented, efficient

plant breeding.

The more resistant and undemanding a variety is, the fewer resources are needed to care for it
in the vegetation period – a perfect symbiosis of ecology and economics.

■■ Seed quality: Our prime concern is for our cus-

Social commitment

tomers to be satisfied. We develop genetic poten-

KWS is part of society and is committed to helping

tial and produce top-quality seed so that plants’

society. The focus of that is on promoting science

genetic potential can be fully leveraged after

and research in the field of plant breeding and

sowing in the field. Our mission is to provide our

biotechnology and strengthen ing the regional and

customers with the best-possible consulting, and

local attractiveness of our locations by fostering

we are backed in that by a closely-knit regional

cultural and social life there.

network of consultants.

■■ Safe seed: We ensure that our seed is safe for

Dialogue with stakeholders

people and the environment by means of technical

We intend to keep on systematizing the process

and organizational measures and furnish proof of

for determining the key issues relating to our long-

that in extensive tests and analyses in compliance

term corporate development. To enable that, we

with official requirements – whether it is ecological,

aim to expand our dialogue with stakeholders, which

conventional or genetically modified seed.

has been conducted to date at our headquarters in

■■ Protection of intellectual property: Adequate

Einbeck, and make it more international in the coming

protection of intellectual property is necessary

years. In this way, we obtain feedback from the various

to refinance our high expenditure on research

markets and can also discuss critical issues with the

& development. We therefore advocate variety

relevant local stakeholders and derive measures for our

protection and patenting, since both systems

company’s further development.

are of major importance for KWS’ breeding and

research activities.

Sustainability Reporting

■■ Social and ecological standards: As an inter-

The latest Sustainability Report for fiscal year

national company, we define and apply social and

2014/2015 is based on the international reporting

ecological standards for our group-wide process-

specifications of the Global Reporting Initiative

es. That also includes imposing appropriate stipu-

(GRI G4) and is available online on the company’s

lations on our suppliers and service providers.

homepage at www.kws.com/sr2015.

■■ Compliance: We support observance of the law

and company requirements by means of effective

We are currently working to internationalize our sus-

compliance management.

tainability reporting, with the objective of expanding

■■ Work safety and protection of the environment:

it so that it covers the main aspects of sustainability

Work safety and protection of the environment are

for the entire KWS Group and integrating it fully in the

firmly integrated in our production and processing

Annual Report in the medium term.

operations in order to avoid detrimental impacts on

people and the environment. Wherever possible,

we also aim to optimize our use of resources and

apply the principle of recycling.

Corporate Sustainability | To our shareholders

KWS Group | Annual Report 2014/2015
Development worker

Pollination

The flower is the heart of breeding, since crossing processes begin

there: It has to be pollinated to produce seed or fruit. That sounds

banal, but it is vital in seed production. Without pollination there

would be no fertilization and thus no seed. Even though the pol-

len of some plants is transported by wind, most of our crops are

pollinated by insects. That means that beneficial insects, such as

honey-bees, are of great importance to us as a seed producer.

The success of our seed production depends directly on them. We

therefore have specially trained auditors conduct voluntary and in-

dependent checks of our seed processing operations and have the

latter certified in accordance with the German SeedGuard quality

standard. The entire process – from trial dressing and technical pro-

cessing to packaging and storage of the treated seed – is examined.

That enables us to ensure that our processes and products provide

the greatest possible protection of the environment and health.

Corporate Governance

KWS SAAT SE’s successful development since 1856

KWS SAAT SE (Section 8.7), which was adopted by

is founded on thinking long term and acting in terms

the Annual Shareholders’ Meeting on December 18,

of sustainability. Corporate governance is entrenched

2014. In the future, the shareholder representatives

at the company and enables us to ensure responsible,

will be elected by the Annual Shareholders’ Meeting

value-creating management and control of the com-

in accordance with Section 8.2 of the company’s

pany. We create trust by heeding the interests of our

Articles of Association. The employee representatives

customers and employees, the capital markets and

will be elected by direct vote by the European employ-

our national and international business partners – and

ees of the KWS Group in accordance with the provi-

that makes a key contribution to our lasting success.

sions of the SNB Agreement. For more information,

please refer to the excerpt from the SNB Agreement

We live up to our responsibility and take into account

posted on www.kws.de > Unternehmen > Investor

the relevant legal requirements regarding manage-

Relations > Hauptversammlungen > 2015 (German

ment and supervision of German stock corporations

only).

in our decisions. We also intensively address the

acknowledged standards of good and responsible

As a listed company based in Germany, KWS SAAT SE

corporate governance, in particular the German

is still subject to the provisions of the German Corpo-

Corporate Governance Code.

rate Governance Code (DCGK).

KWS was converted from a German stock corporation

You can find detailed information on corporate govern-

to a European Stock Corporation (Societas Europaea/

ance from our Corporate Governance Report (which

SE) on April 15, 2015. This step reflects our compa-

is also the declaration on corporate governance in

ny’s strong international growth and emphasizes its

accordance with Section 289a of the German Com-

large footprint in Europe. As a European Stock Cor-

mercial Code (HGB)), which is available on our website

poration headquartered in Germany, KWS SAAT SE

at www.kws.com > Company > Investor Relations >

is governed by European legal norms and – unless

Corporate Governance. The Compensation Report,

special provisions stipulate otherwise – by German

which is presented on pages 69 to 74 of this Annual

SE and corporation law.

Report, contains details on the compensation system

and the individual remuneration of the members of the

KWS has retained the main features of its successful

Executive Board and the Supervisory Board.

corporate constitution. That applies in particular to

the dual system of management with the Supervisory

Compliance declaration in accordance with

Board and Executive Board and participation of

section 161 AktG (German Stock Corporation Act)

employees on the Supervisory Board. As in its

2014/2015

former legal form as a German stock corporation,

The Executive Board and the Supervisory Board of

one-third of KWS SAAT SE’s Supervisory Board

KWS SAAT SE declare in compliance with Sec-

is made up of employee representatives. The first

tion 161 AktG that the company has complied with

employee representatives were appointed pursu-

the recommendations of the German Corporate

ant to Section 14.1. of the “Agreement on Employ-

Governance Code in the version dated June 24,

ee Involvement at KWS SAAT SE” (“SNB Agree-

2014, since the last compliance declaration in

ment”) dated March 16, 2015.

October 2014, and with the recommendations of the

The first shareholder representatives were appointed

dated May 5, 2015, since its publication in the official

in accordance with Article 40 (2) Sentence 2 of the

section of the Federal Official Gazette, and does

Council Regulation on the Statute for a European

now comply and will comply with them in the future,

Company pursuant to the Articles of Association of

with the following exceptions:

German Corporate Governance Code in the version

To our shareholders | Corporate Governance

Annual Report 2014/2015 | KWS GroupIn accordance with Clause 5.4.1 (2) Sentence 1

they held their seats at the former KWS SAAT AG.

of the German Corporate Governance Code, the

The recommendation in Clause 5.4.3 Sentence 1 of

Supervisory Board is to set a limit on the length of

the German Corporate Governance Code is to be fully

time members can serve on the Supervisory Board.

complied with again in the future.

This recommendation is not complied with, since

in a business with a tradition of family ownership like

Clause 7.1.2 Sentence 4 of the German Corporate

KWS SAAT SE it would significantly restrict the rights

Governance Code states that the consolidated finan-

of the family shareholders, who hold a majority stake

cial statements shall be publicly accessible within 90

in the company.

days of the end of the fiscal year and interim reports

within 45 days of the end of the reporting period.

In accordance with Clause 5.4.3 Sentence 1 of the

KWS SAAT SE publishes its consolidated financial

German Corporate Governance Code, elections to

statements and interim reports within the period of

the Supervisory Board are to be made on an individ-

time defined in the regulations for the Prime Standard

ual basis. The shareholder representatives of the first

of the German Stock Exchange. The company’s sea-

Supervisory Board of KWS SAAT SE were appointed

sonal course of business means that it cannot ensure

in accordance with Article 40 (2) Sentence 2 of

compliance with the recommended periods in the

the Council Regulation on the Statute for a European

German Corporate Governance Code.

Company pursuant to the Articles of Association.

This did not entail any change in the persons rep-

resenting the shareholders; their term of office as

Einbeck, October 2015

members of the Supervisory Board of KWS SAAT SE

will also not exceed their remaining term for which

The Supervisory Board

The Executive Board

Corporate Governance | To our shareholders

KWS Group | Annual Report 2014/201524

Fundamentals

24 Group structure and business activity

26 Objectives and strategies

28 Control system

30 Research & development

Business performance

Earnings, financial position and assets

In accordance with the corporate controlling structure

36 Earnings

38 Corn Segment

40 Sugarbeet Segment

42 Cereals Segment

44 Corporate Segment

45 Financial situation

46 Assets

In accordance with IFRS 11

47 Earnings

48 Financial situation

49 Assets

Employees

Report on events after the balance sheet date

55 Opportunity and risk report

Forecast report

KWS SAAT SE (explanations based on the German Commercial Code (HGB))

68 Other disclosures

69 Declaration regarding Corporate Governance

69 Compensation Report

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Combined Management Report

We changed the presentation of the KWS Group’s consolidated financial statements at the beginning of fiscal 2014/2015

due to an amendment to the International Financial Reporting Standards (IFRS 11). The main change is that we can no

longer carry the net sales and costs of our 50:50 joint ventures, which are operated in the Corn Segment, in the statement

of comprehensive income (see page 76) in the KWS Group, so the KWS Group’s reported net sales and EBIT are signif-

icantly lower. The earnings contributed by these companies are instead included under net financial income/expenses. In

addition, their assets will be included in the KWS Group’s balance sheet as equity-accounted financial assets in accordance

with the new accounting regulations.

So as to ensure there is no impairment to the transparency of our operational development compared with the previous

year, this year we still report our joint ventures proportionately in the Combined Management Report in accordance with

our internal corporate controlling structure and present the earnings, financial position and assets both in accordance with

our internal corporate controlling structure and the KWS Group’s consolidated financial statements. We also indicate the

main differences between the two forms of presentation in the Combined Management Report. After the year of transition

2014/2015, we will only report in accordance with the new accounting regulations – with the exception of the segment

reporting.

Fundamentals

Group structure and business activity

breeding new, high-yielding plant varieties. From our

Since it was founded in 1856, KWS has specialized

beginnings in sugarbeet breeding, we have evolved

in developing, producing and distributing high-quality

into an innovative international supplier with an exten-

seed for agriculture. KWS’ core competence is

sive portfolio of crops. We cover the complete value

Breeding activities of the KWS Group

Breeding stations
Test locations for trial cultivation

24 Combined Management Report | Fundamentals

Annual Report 2014/2015 | KWS Groupchain of a modern seed company – from breeding of

purposes. Genetically improved varieties, which are

new varieties, multiplication and processing, to mar-

distributed in particular in North and South America,

keting of the seed and consulting for farmers.

now contribute 37%2 (34%) of our net sales.

Diversified product portfolio

Our company’s long-term success is founded on

We offer our customers – farmers – a broad range of

research and breeding new varieties. Our highly qual-

agricultural crops that have been adapted by breed-

ified employees and close collaboration with other

ing to the conditions of their specific location. These

companies and research institutions are key factors

crops include corn, sugarbeet, the cereals rye, wheat

that drive continuous innovation and constant opti-

and barley, oil plants such as rapeseed, sunflower

mization of our varieties. Thanks to our large network

and soybean, and potatoes. The varieties are mainly

of breeding and trial stations in all the world’s key

adapted to the moderate climatic zones. Since we

markets, we can test the individual candidates under

entered the Brazilian market in 2012, varieties for sub-

a wide range of climatic and local conditions to deter-

tropical regions have also been part of our portfolio.

mine whether the varieties are suitable for cultivation.

Global footprint

The section “Research & Development” on page 30

contains an overview of the main focus of our activities

The KWS Group has around 5,3001 employees, has

in this field last fiscal year.

65 subsidiaries and associated companies at present

and operates in more than 70 countries. We generate

Organization of the KWS Group

18% of our net sales in Germany and 36% in other

KWS SAAT SE is the parent company of the KWS

European countries. Another 41% of our revenue is

Group. It multiplies and distributes sugarbeet seed,

from North and South America, with the remaining

breeds a broad range of crops and provides its sub-

5% coming from other foreign countries.

sidiaries with new varieties every year for the purpose

of multiplication and distribution. It also conducts

Growth through research and breeding

important basic research for the entire KWS Group,

All of KWS’ activities are geared toward exploiting

assumes the function of a holding company and man-

plants’ potential as well as possible and leveraging

ages the Group with its 65 subsidiaries and associated

it to tackle the challenges of modern, sustainable

companies operationally and strategically. An overview

agriculture. Whether it’s plants for producing food,

of the subsidiaries and associated companies included

fodder or energy, conventional, organic or genetically

in the consolidated financial statements of the KWS

improved: We offer farmers the ideal variety for their

Group is provided in the Notes on page 96/97.

1 Main differences from the consolidated financial statements: Excluding the joint ventures, KWS employs around 4,700 people and generates 77.3% of its net sales abroad

(44.8% in Europe, 25.8% in North and South America and 6.7% in the rest of the world).

2 Main differences from the consolidated financial statements: Net sales from genetically improved varieties account for around 23%, excluding the proportionately consolidated

companies.

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

Lenders 3%

Shareholders 5%

Public sector 13%

Company 16%

€404.7 million

63% Employees

Fundamentals | Combined Management Report

KWS Group | Annual Report 2014/2015The KWS Group’s operational business is conducted

The Cereals Segment includes production and dis-

in the three segments Corn, Sugarbeet and Cereals

tribution of rye, wheat, barley and rapeseed. It con-

and, including our 50:50 joint ventures in the Corn Seg-

tributes 9% of the KWS Group’s net sales. Hybrid rye

ment, can be described as follows:

accounts for 44% of the segment’s revenue, wheat

21%, barley 20% and other crops around 15%. In

The Corn Segment is the KWS Group’s largest divi-

our core markets for cereal seed (Germany, Poland,

sion in terms of net sales, accounting for around 60%

England and France), farmers predominantly sow

of the total figure. It covers production and distribution

the crops in the fall. Consequently, we generate most

of corn seed and the product areas of oil and field

of our revenue in this segment in the first half of our

seed, which includes rapeseed, sunflower and sor-

fiscal year (July to December).

ghum. We still generate the lion’s share of net sales in

this segment from corn seed, in particular in the U.S.

The Corporate Segment supports the operating

and Europe. We are one of the top three largest corn

segments with research & development activities

seed vendors, in terms of cultivation area, in these

and by providing central functions for controlling the

markets. The largest share of net sales comes from

group. Its relatively low net sales mainly come from

regions where sowing is carried out in the spring, with

the revenue from our farms. Since all cross-segment

the result that the segment’s operating performance

function costs and research expenditure is charged

is impacted by seasonal fluctuations. The segment

to this segment, its income is usually negative.

generates just around 10% to 15% of its revenue in

the first half of our fiscal year (July to December),

Objectives and strategies

mainly from winter rapeseed in Europe and corn vari-

The objective of our corporate strategy, which is

eties in South America.

based on long-term, proactive thinking, is to make

sure our diverse range of products meets the chang-

The Sugarbeet Segment generates 31% of the KWS

ing and often very specific requirements of our

Group’s net sales. Most of that comes from sugar-

customers. Our corporate values define the core

beet seed production and distribution. Around one-

framework for our goal of creating sustainable,

tenth of the segment’s net sales is generated from

profitable growth for our customers, employees and

seed potato business. Our high-quality sugarbeet

investors. Particular cornerstones of our business

varieties are some of the highest-yielding in the in-

model are intensive research work, development of

dustry, which is why we are the leader in the field of

new, high-yielding varieties and continuous expansion

sugarbeet seed with a global market share of 53%.

of our global footprint so that we are on the ground in

Our main sales markets are still North America, a

regional markets with their special climatic conditions.

region where genetically improved, herbicide-tolerant

sugarbeet varieties are almost exclusively used, and

the EU, where KWS is likewise extremely successful

with conventionally bred, multiple-resistant varieties.

Sugarbeet is sown in the spring, which means that

net sales in this segment are likewise largely generated

in the second half of our fiscal year (January to June).

26 Combined Management Report | Fundamentals

Annual Report 2014/2015 | KWS GroupThe KWS Group’s medium- and long-term objectives 1

Objectives

Profitable growth

Research & development

Internationalization

Sustainability

Dividend

■■ An average increase in consolidated net sales of 5%

to 10% p. a.

■■ EBIT margin > 10%

■■ R&D intensity of 12% to 15% of consolidated sales
■■ 1% to 2% progress in yields p. a. for our customers and

development of tolerances and resistances

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

■■ Integration of international subsidiaries

■■ A dividend payout ratio of 20% to 25% of the KWS Group’s

net income for the year

1 Including our joint ventures. We will revise these medium- and long-term objectives in the coming fiscal year as a consequence of the new accounting regulations from IFRS 11.

This change will affect in particular our objectives for the EBIT margin and R&D intensity, which can already be seen from the forecast for fiscal 2015/2016 on page 62/63.

We were able to achieve our objectives successfully

The framework for our strategic decisions and every-

in the past fiscal year. Our net sales growth was in

day work as part of operational business is formed

the desired range, as was the EBIT margin, the R&D

by our guiding principles, which are based on four

intensity and our foreign sales. Our young subsidiaries

core activities:

in Brazil can look back on a very successful year, with

■■ We increase genetic potential through outstanding

sharp increases in net sales and gains in market share.

research and breeding programs.

The dividend ratio of the payout in December 2014 was

■■ We deliver best-quality seeds to our farmers

24.7% and thus also in line with our objectives.

■■ We act as trusted performance partners for our

farmers throughout their value chain

Guiding principles with a clear focus

■■ We create entrepreneurial freedom and help

One of the major challenges of the 21st century is

people unfold their talents.

to supply a growing world population with sufficient

food and regenerative raw materials despite the fact

Development of new varieties

that the necessary resources are growing scarcer.

Plant breeding is our core competence. It stands at

While more than seven billion people now have to be

the beginning of the value chain for food and feed

provided with food and raw materials, the arable land

production and all forms of regenerative raw materi-

available worldwide cannot be increased at will. Con-

als. Modern variety breeding is a resource-intensive

sequently, it is falling in terms of area per capita. That

process that extends over a period of about ten

makes it necessary to keep on increasing production

years. This time span is needed to develop a plant

on the area available.

with new properties into a variety that can be award-

ed approval and is ready for marketing.

As a global breeding company, KWS has been

working with foresight for generations on the issue

The objective of our research and breeding is to ob-

of sustainable agricultural production. The develop-

tain new crop varieties that are tailored to different

ment of new varieties makes it possible to increase

needs and changing agricultural requirements. Our

yields and thus steadily boost yields per unit area. We

most important objectives across all crops are to

supply seed that meets the very highest quality and

increase yield, breed resistances to plant diseases

performance requirements to farmers in many regions

and pests and to improve plants’ quality of process-

of the world.

ing. Conservation of plant genetic resources is also a

key concern of ours.

Fundamentals | Combined Management Report

KWS Group | Annual Report 2014/2015Expressed in hard and fast figures, the new varieties

employee extensive entrepreneurial freedom and

we supply to our customers deliver an average yield

prospects for their individual development, as well as

progress of 1% to 2% a year. So that we continue that

to encourage them to act on their own responsibility

success, we will continue to focus strongly on research

and sustainably.

& development as part of our corporate planning.

Sustainable and profitable growth

Expansion of our global footprint

Our investments and expenditure for research & de-

With business activities in more than 70 countries

velopment are the foundation for sustainable growth.

around the world, KWS has become a leading inter-

We aim to increase the KWS Group’s net sales by

national plant breeder. We now generate over 80%

an average of 5% to 10% p. a. and achieve a return

of our sales abroad. Nevertheless, our strategic ob-

(EBIT margin) of at least 10%1. The development of

jective is still to press ahead with further internation-

the key performance indicators is described in the

alizing our company. Our extensive commitment in

sections “Earnings, financial position and assets” in

Brazil, as well as the joint venture with our longstand-

accordance with our corporate controlling structure

ing partner Kenfeng in China, are part of that.

starting on page 36 and in accordance with IFRS 11

as of page 47. In line with the principles of our long-

Markets such as Brazil, with a subtropical climate and

term corporate strategy, we use our earnings strength

several harvests a year, not only offer attractive sales

to expand research and breeding in particular, as well

potential – especially for our corn business – but are

as our distribution operations. As a result, we bolster

also very attractive for another reason: In our core

the KWS Group’s potential and lay the foundation for

markets, our main contributors to net sales – corn and

future growth.

sugarbeet – are only sown in the spring, whereas there

are different sowing and harvesting cycles in other re-

Control system

gions. As a result, we can cushion the highly seasonal

The objective of the KWS Group’s corporate strat-

nature of our business in the medium term.

egy is to ensure the company’s long-term growth.

Detailed annual and medium-term operational plans

High seed quality for our customers

that include our joint ventures proportionately are used

What counts most for us is that farmers trust in KWS.

to control the Group and the three segments Corn,

That is why we demand the very highest standards

Sugarbeet and Cereals. The medium-term plan covers

as regards the quality of our seed and our consulting.

the time frame of the annual plan plus three further

Our goal as a trusted partner, specialist and consul-

fiscal years. In turn, the medium-term plan is derived

tant to agriculture is at all times to supply high-quality,

from our strategic corporate planning, which covers a

innovative seed for producing food and feed, as well

timescale of ten years.

as regenerative raw materials. The KWS Group is a

power ful partner at all stages in the value chain: in re-

The targets set in planning are derived from the basis

search into, breeding of and approval for new vari eties,

of the regional economic and legal situation, antici-

in multiplying and processing seed, in distribution, and

pated market trends and assessments of the compa-

when it comes to providing consulting on the ground.

ny’s position in the market and the potential product

performance. In a subsequent bottom-up process,

Entrepreneurial freedom for employees

which also includes the development of our joint ven-

Qualified and motivated employees are the key to

tures, these premises are used to define targets for

our commercial success. We therefore offer our em-

sales volumes and net sales, production capacities

ployees the opportunity to shape their place of work

and quantities, the allocation of resources (including

and working environment. All employees at the KWS

capital spending and personnel), the level of material

Group can develop their strengths and press ahead

costs and internal charge allocation and the resultant

with pursuing their own ideas. Open dialogue is

balance sheet data, along with the financial budget.

the foundation for that. It is a firm part of the culture

A firm part of the planning documentation is an

of our evolved and innovative family business and

opportunity/risk assessment which every manager

enables maximum flexibility. Our goal is to give every

must conduct for his unit.

1 See also medium and long-term objectives of the KWS Group on page 27.

28 Combined Management Report | Fundamentals

Annual Report 2014/2015 | KWS GroupWe subject our seed to a stringent selection process during production – just around onefifth of the
original quantity is finally packaged and sold. That means only top quality is put on the market.

The planning is compared every quarter with the

The Executive Board uses various indicators for plan-

company’s actual business performance and the

ning, controlling and monitoring the business per-

updated estimates on the underlying general con-

formance of the KWS Group and operating units. The

ditions. If necessary, suitable countermeasures are

main indicators are net sales, operating profitability

initiated and adjustments made. A detailed forecast

(EBIT margin) and R&D intensity (research expenditure

for the current fiscal year is made at the end of each

as a ratio of net sales). The development of these key

quarter. At the end of each fiscal year, all units con-

figures in fiscal 2014/2015 can be found in the report

duct a detailed variance analysis of the budgeted

on the earnings situation on page 36.

and actual results. That serves to optimize our in-

ternal planning processes and further enhance the

Management and control

already high quality of our forecasts.

KWS SAAT SE has a system of dual management,

consisting of the Executive Board and the Super-

Corporate Controlling is responsible for coordinat-

visory Board. Both bodies have strictly separated

ing and documenting all planning processes and

responsibilities and different members. While the Ex-

our current expectations. It monitors compliance

ecutive Board manages the company, the Supervisory

with adopted budgets and analyzes the efficiency

Board supervises and advises the Executive Board.

and cost-effectiveness of business processes and

These responsibilities have also been retained follow-

measures. The Controlling team also advises deci-

ing the company’s conversion into a European Stock

sion-makers on economic optimization measures.

Corporation (Societas Europaea/SE). The declaration

The respective heads of the individual areas are

on corporate governance in accordance with Section

responsible for the contents of the planning and cur-

289a of the German Commercial Code (HGB) con-

rent forecasts. They include in particular the heads of

tains detailed information on the extensive and close

the three product segments, the research & develop-

cooperation between the Executive Board and the

ment activities and the central functions, as well as

Supervisory Board and has been published at

the regional heads of sales.

www.kws.com > Company > Investor Relations >

Corporate Governance.

Fundamentals | Combined Management Report

KWS Group | Annual Report 2014/2015Our sugarbeet varieties belong to the species “Beta vulgaris”. They are always given female names. Due to their excellent
properties, some of the names are ingrained in our customers’ minds like those of pop stars, e. g. Lisanna, Danicia, Rashida.

Research & development

Opening of the KWS Gateway Research Center

Breeding progress means sustainable, enhanced crop

The pace of change in plant research, develop-

performance and higher yields for farmers. According-

ment of methods and product innovation keeps on

ly, we continued to invest last fiscal year in expanding

growing. As a result, cutting-edge technologies and

our research and breeding capacities in order to be

research approaches for plant breeding are gaining

able to develop products that offer high long-term

importance. KWS has therefore invested in estab-

performance for our international markets. Research

lishing a new research center in the U.S. in order to

& development expenditure in fiscal 2014/2015 was

better tap the country’s international excellence in

€173.8 (150.0) million. As a result, 13.8%1 of KWS’ total

innovation and strengthen its own presence in plant

net sales were invested in research & development

research. Also, access to innovative technologies

activities. 37% of our employees, around 2,0002 peo-

and top-class research is to be ensured by means of

ple, worked in research & development. The success

cooperation ventures and networks.

of our breeding activities is reflected, among other

things, in the number of variety approvals worldwide:

The establishment of the research center began in

We obtained 429 (336) marketing approvals for new

the spring of 2014 in the Bio-Research & Develop-

KWS varieties across all our crops in fiscal 2014/2015,

ment Growth Park (BRDG Park) in St. Louis, Missouri

28% more than in the previous year. That means we

(U.S.). The center is surrounded by universities,

still have a competitive product pipeline.

1 The research & development intensity is going to be restated due to the fact that the requirements under IFRS 11 are mandatory for the first time and will increase sharply as a

result. While research & development expenditure is hardly impacted by this change, the KWS Group’s net sales will be lower by the share contributed by the joint ventures. The
R&D intensity will therefore be around 17%.

2 The average number of R&D employees excluding joint ventures is around 1,800. See pages 52 to 54 for more information on employees.

30 Combined Management Report | Fundamentals

Annual Report 2014/2015 | KWS Group institutions and various companies from our industry.

Importance of winter breeding nurseries for corn

It was officially opened in January 2015.

breeding at KWS

Winter breeding nurseries have been a core com-

Research in molecular biology will be conducted at

ponent of corn breeding at KWS for many years. If it

the KWS Gateway Research Center, and the results

were not for the large and flexible breeding stations in

will be used specifically to develop new and im-

the southern hemisphere, no breeding program would

proved product traits. 15 highly qualified employees

now be competitive, since winter breeding nurseries

were hired to carry out research in the period under

speed up variety development significantly and create

review and have already initiated their first scientific

a cost advantage. Thanks to the favorable climatic

projects. The team is to be expanded to around 25

conditions, two to three generations of corn a year

by the end of 2015; an increase to up to 75 research-

can be established (depending on the location) and

ers is planned in the medium-term.

selected for the desired traits.

Expansion of corn activities in China

As corn breeding at KWS grows sharply, the winter

The Chinese market is developing steadily and is

breeding nurseries also have to be expanded steadi-

one of KWS’ key markets of the future. China now

ly. Over the past six years, KWS has succeeded in

has the world’s largest corn cultivation area – almost

doubling its capacities at the winter breeding nurs-

38 million hectares in 2015 and more than the U.S.

eries. To enable that, extensive investments were

for the first time. KWS was quick to respond to

made in new stations, the related infrastructure and

this trend and, within the space of five years, has

machinery. KWS currently has winter breeding nurs-

put together an expert breeding team that is able

eries in four different countries in South America and

to develop high-yielding corn varieties for all major

their capacities are being increased steadily.

cultivation areas in China, with the exception of

tropical regions. Last fiscal year, we were able to

Acquisition of MOMONT and initial

submit competitive hybrids for approval in KWS’

breeding activities

important regions in China, for the first time also in

After 15 years of excellent cooperation between KWS

the country’s summer cultivation areas, which total

and the French company SOCIETE DE MARTINVAL

more than ten million hectares. After the joint venture

S.A. (MOMONT), KWS acquired the remaining

KENFENG-KWS was awarded its business license

51% stake in the company in September 2014. In do-

at the end of 2014, we began activities to commence

ing so, we aim to leverage the opportunity to further

commercial operations and establish a joint breeding

expand our cereal breeding activities and strengthen

program. The first breeding nursery was set up in

our market position in France long-term.

Gongzhuling in Jilin Province in the spring of 2015.

MOMONT’s existing structures are an ideal comple-

ment to our organization and allow us to pool joint

activities. To benefit from state-of-the-art breeding

technologies as soon as possible, we established

cutting-edge sowing techniques and an advanced

trial design in the current season. We intend to use

further modern breeding tech nologies soon.

Fundamentals | Combined Management Report

KWS Group | Annual Report 2014/2015Increasing importance of nematode-tolerant

The requirements demanded of new varieties have

varieties and increased leaf health in sugarbeet

increased constantly: Apart from high yield potential,

Many sugarbeet cultivation areas have experienced

the importance of leaf health has also increased,

a sharp increase in infestation by cyst nematodes

coupled with reduced use of fungicides. The further

in the past years. We recognized this development

strategic alignment of our breeding programs and

at an early date and have responded by develop-

intensified use of new breeding methods have result-

ing new high-performance varieties by means of

ed in a significant increase in the competitiveness

intensive breeding. The first variety with triple toler-

of KWS’ sugarbeet varieties.

ance – combining resistance to the Rhizomania virus,

Rhizoctonia and beet cyst nematodes – has been

approved in France.

Key figures for research & development1

R&D employees

Ratio of R&D employees

R&D expenditure

R&D intensity

Marketing approvals for new varieties

in %

in € millions

in %

2014/2015

2013/2014

1,985

173.8

13.8

429

1,836

150.0

12.7

336

+/–

8.1%

15.9%

27.7%

1 Main differences from the consolidated financial statements: R&D expenditure €174.6 million, R&D intensity 17.7%, number of R&D employees 1,777

In plant breeding, you can choose your parents. However, only by choosing the right
crossing partners can we reach our goal: to increase our varieties’ resistance.

Business performance

Forecast versus actual business performance1

KWS Group

Net sales

EBIT

Corn

Net sales

EBIT

Sugarbeet

Net sales

EBIT

Cereals

Net sales

EBIT

Results
2014/2015

Forecast
2014/2015 2

Q3
05/28/2015

Ad-hoc
09/01/2015

+7.0% +5% to 10%

Approx. +7.5% Approx. +7%

– 0.3%

≥ –10.6%

Approx. – 9% Approx. +/– 0%

+5.5%

> +10%

Approx. +7% Approx. +5%

–16.6% – 6% to –14%

Approx. –19% Approx. –17%

+11.2%

+32.5%

+3.7%

–29.8%

+/– 0%

Approx. +9% Approx. +11%

Approx. +21% Approx. +32%

Approx. +5% Approx. +4%

Approx. –32% Approx. –30%

1 Including our joint ventures.
2 Forecasts taken from the Annual Report 2013/2014. See also www.kws.com/ir.

We successfully implemented our planning and activ-

When we published our 2013/2014 Annual Report

ities in line with our corporate strategy for 2014/2015

in October 2014, we forecast that the KWS Group

in the year under review, despite some turbulence on

would grow its net sales by 5% to 10% and post

agricultural markets, a fall in cultivation area in many

an EBIT margin of at least 10%. This guidance was

places and the fact that farmers felt a greater strain on

confirmed by our results after the first three quarters;

their liquidity in some cases. Expansion of research

however, the contribution made by our segments to

and breeding to develop new, high-yielding varieties

net sales and income was different than had been

impacted many projects in the fiscal year and meant

assumed at the start of the fiscal year, mainly due

our research & development expenditure rose by

to the above-described regional turbulences. The

€23.8 million. That we are on the right track is shown

Sugarbeet Segment significantly surpassed our ex-

by our good market position in individual regions (see

pectations. Our good sugarbeet variety performance

the segment reports on pages 38 to 44) and the sharp

resulted in higher net sales than forecast, especially

rise in marketing approvals awarded to our new vari-

in regions outside Europe. The segment’s anticipated

eties. We achieved both thanks to outstanding variety

EBIT was far exceeded as a result of non-recurring

performance and our strong, likewise significantly

currency effects and lower counterparty defaults (as-

expanded distribution network in the relevant markets.

pects that are difficult to factor into planning), which

Our operating performance was accompanied by

is why we increased our income guidance on Sep-

trade restrictions in Eastern Europe and wild fluctua-

tember 1, 2015, to €138 million (corresponding to an

tions in exchange rates: Currencies in Eastern Europe

EBIT margin of 10.9%). Ultimately, our sales grew by

suffered from a sharp depreciation, while the US

7.0% and the EBIT margin was 10.9%. These trends

dollar grew in strength. All in all, the KWS Group’s net

include the net sales and expenses of our joint ven-

sales were positively impacted by currency influences

tures and are based on the forecast in the preceding

to an amount of around €30 million, compared with

Annual Report. They therefore differ from the figures

the significant negative effect in the previous year.

in the consolidated financial statements. An explana-

tion of the earnings situation in accordance with the

consolidated financial statements can be found on

page 47.

Business performance | Combined Management Report

KWS Group | Annual Report 2014/2015Best in class

Quality testing

Seed is one of the most important resources for a farmer. Its quality

– tested several times over to ensure its reliability – is the prerequi-

site for good yields and thus the viability of agricultural enterprises.

That is why seed has to meet the very highest quality requirements

and is checked continuously by various institutions throughout

the production process. Our quality tests start as early as the field

multiplication phase. We then conduct quality tests when we take

delivery of the raw goods. Further tests are performed as part of

drying, cleaning and calibration, up to when the seed is treated with

pesticides and packaged. The seed’s germination capacity, sprout-

ing strength and field emergence are also determined. The minimum

qualities of seed for sale are regulated by law. However, we demand

much higher standards of quality from our seed. Only if these high

requirements are met is the seed accepted, certified and sold.

Earnings, financial position and assets in accordance
with the corporate controlling structure

In this section, we present our business performance

The main difference is that we can no longer carry

in accordance with our corporate controlling struc-

the net sales and costs of our 50:50 joint ventures in

ture. That means that, as in previous years, our 50:50

the individual items of the statement of comprehen-

joint ventures, which are operated in the Corn Seg-

sive income and the net assets of our joint ventures

ment, are shown proportionately in terms of earn-

are included in the KWS Group’s balance sheet as

ings, financial situation and assets in accordance

equity-accounted financial assets. As a result, the

with the stake in them.

KWS Group’s net sales, EBIT and total assets are

much lower, whereas net financial income/expenses

In the following section we present the earnings,

increased by the share of earnings contributed by the

financial situation and assets in accordance with KWS’

joint ventures. Net income for the year is practically

consolidated financial statements based on IFRS 11.

identical under both consolidation methods.

Earnings

Abridged income statement

Net sales

Operating income

Net financial income/expenses

Result of ordinary activities

Taxes

Net income for the year

2014/2015

2013/2014

in € millions

1,260.4

1,178.0

in € millions

138.0

–7.1

130.9

46.9

84.0

138.4

–12.6

125.9

45.6

80.3

+/–

7.0%

– 0.3%

43.7%

4.0%

2.9%

4.6%

Earnings per share

in €

12.54

11.69

7.3%

EBIT margin

10.9%

11.8%

7.0% increase in net sales – growth in

Gross margin improved again

all product segments

Gross profit in the year under review rose to €610.8

Net sales at the KWS Group rose by 7.0% to

(563.5) million. License and material costs were only

€1,260.4 (1,178.0) million in fiscal 2014/2015. The in-

slightly higher and again resulted in a below-pro-

crease in net sales at the Sugarbeet Segment was

portionate increase in the cost of sales by 5.7% to

11.2%, well above the forecasts for the fiscal year.

€649.6 (614.5) million. That gives an improved gross

Net sales rose by 5.5% in the Corn Segment and by

margin of 48.5% (47.8%).

3.7% in the Cereal Segment. In particular in North

and South America, the Sugarbeet Segment (in

Function costs rise due to business expansion

North America) and Corn Segment (in North and

Continuous expansion of our business activities

South America) posted sharp increases in net sales.

needs to be flanked by expansion of our global dis-

The performance of the US dollar against the euro had

tribution structures. Consequently, selling expenses

a positive effect in this regard.

in the year under review increased as planned by

36 Combined Management Report | Earnings, financial position and assets

Annual Report 2014/2015 | KWS GroupOne unit of sugarbeet seed with 100,000 pellets is enough to cultivate around
a hectare of land and yields (100m x 100m = 10,000 sqm) up to 20 tons of sugar.

11.5% to €236.7 (212.3) million. Their ratio of the

The EBIT margin declined accordingly to 10.9%

KWS Group’s net sales was 18.8% (18.0%). The

(11.8%). Net financial income/expenses improved

high expenditure on distribution is intended to last-

to € –7.1 (–12.6) million due to a fall in interest ex-

ingly secure KWS’ position in growth markets. This

pense and the con tributions to earnings from the

long-term approach is underscored by the planned

stake acquired in MOMONT. Earnings before taxes

increase in our research & development budget. Re-

(EBT) rose from €125.9 million in the previous year

search & development costs increased in fiscal year

to €130.9 million. Income taxes for the year under

2014/2015 by 15.9% (6.5%) to €173.8 (150.0) million.

review were €46.9 (45.6) million, meaning that our tax

Administrative expenses in the year under review rose

rate improved slightly to 35.8% (36.2%), although it

moderately by 5% (10.4%) to €80.5 million.

was still above the long-term average. Losses that

Operating income at the level of the

in net sales in countries where the tax rate is above

previous year

30% (North America) were key factors influencing

cannot be deducted against tax and the increases

Other operating income was €89.8 (60.7) million,

that.

while other operating expenses totaled

€71.6 (46.8) million. The balance of them rose year

The KWS Group posted net income of

on year by €4.3 million to €18.2 (13.9) million, among

€84.0 (80.3) million for fiscal year 2014/2015.

things due to positive currency effects.

Minority interests were €1.3 (3.2) million, meaning

€82.7 (77.1) million are attributable to shareholders

Operating income (EBIT) was €138.0 million,

of KWS SAAT SE. The number of shares was un-

on a par with the previous year (€138.4 million).

changed, giving earnings per share of €12.53 (11.69).

Earnings, financial position and assets | Combined Management Report

KWS Group | Annual Report 2014/2015Corn Segment

Key figures for the Corn Segment

Net sales

EBIT

EBIT margin

2014/2015

2013/2014

in € millions

in %

754.4

84.2

11.2

714.9

100.9

14.1

+/–

5.5%

–16.6%

Net sales grow by 5.5%

The regions: Gains in market share despite fall in

The Corn Segment continued its operational growth

cultivation area

of past years in fiscal 2014/2015 and increased its net

Corn cultivation area in North America fell by 2%

sales by 5.5% to €754.4 (714.9) million. It was able to

to around 36 (37) million hectares. Nevertheless,

grow its sales above all in North and South America.

AGRELIANT, our 50:50 joint venture with the French

That was accompanied by different, in some cases

company Vilmorin & Cie., was able to slightly improve

significant currency effects. The positive impacts from

its market position as the third-largest vendor of corn.

exchange rate developments in the U.S. and Argentina

AGRELIANT’s net sales in North America rose to

were offset by depreciation in the currencies of Brazil,

€556 (509) million due to exchange rate effects. De-

Ukraine and Russia during the year. After adjustment

mand for high-quality varieties with multiple genetic

for exchange rate effects, the segment’s net sales

resistance to herbicides and insects declined slightly

would have risen by 3.0% to around €736 million.

due to the pressure on U.S. farmers to cut costs.

The planned continuation of our growth strategy

In our growth market Brazil, we were again able to

included increasing distribution and research expen-

increase our net sales of corn and soybean signifi-

diture by €31.7 million year on year. Together with

cantly: Our net sales in this important corn market

negative non-recurring effects, such as currency

rose by over 20% in total, despite the negative cur-

influences from Eastern Europe and allowances on

rency influences due to the depreciation of the Bra-

inventories, the segment’s income (EBIT) fell by 16.6%

zilian real. As a result, we were able to expand our

to €84.2 (100.9) million. It was thus well below the

market share sharply. That is a good success for our

previous year which had been impacted by positive

companies operating in Brazil, given that corn cul-

non-recurring effects.

tivation area there likewise declined by around 2%.

Corn cultivation area also fell sharply in Argentina. As

Bumper harvests worldwide – consumer prices

one of the few corn seed vendors there, KWS posted

for corn continue to drop

almost constant net sales and so achieved a gratify-

For the second year in a row, record harvests and

ing 1% gain in market share.

high inventories worldwide defined the economic cli-

mate in the corn seed industry. The price for corn for

There was also a decline in area totaling 4% in

consumption on the exchange in Chicago fell

Europe, although this varied greatly from region to

in January 2015 to 146.50 USD/ton, a further drop of

region. We were able to defend our outstanding mar-

15% from the level in January 2014. The current bear-

ket position in Germany and Northern Europe, while

ish mood on the agricultural commodity markets, ac-

we grew our net sales by double digits in individual

companied by the economic crisis in Eastern Europe,

markets in Eastern and Southern Europe despite

resulted in untypically high declines in cultivation area

declines in cultivation area. In contrast, our business

in important markets for corn seed. The exceptionally

performance was slightly down in France and fell

high seed harvests in the fall of 2014 also produced a

sharply in Southeastern Europe. All in all, we were

global supply surplus, resulting in perceptible pres-

not quite able to achieve our net sales targets in

sure on prices that varied from region to region.

Europe in a challenging economic climate.

38 Combined Management Report | Earnings, financial position and assets

Annual Report 2014/2015 | KWS GroupCorn

Our activities in China are now mainly based on corn

seed licensing business. Net sales from that rose

slightly in the year under review. Along with that, our

corn production and distribution joint venture cleared

the first hurdle to start its operations by obtaining

its business license in December 2014. Together

with our longstanding Chinese partner Kenfeng, we

expect the last step in the approval process to be

accomplished in fiscal 2015/2016.

Oil seed revenue rises by 7.8%

Revenues from our oil seed business rose both in

Europe and America. While soybean is mainly mar-

keted in America, rapeseed and sunflower are more

important in Europe. Net sales from oil seed totaled

€88.6 (82.2) million.

Corn is cultivated on
about 180 million hectares
worldwide – a figure that
is growing, since the crop
delivers the highest yields
per hectare.

KWS Group | Annual Report 2014/2015Sugarbeet Segment

Key figures for the Sugarbeet Segment

Net sales

EBIT

EBIT margin

2014/2015

2013/2014

in € millions

in %

390.5

93.0

23.8

351.1

70.2

20.0

+/–

11.2%

32.5%

Significant rise in net sales and profit

whereas the strong US dollar had a positive impact

outside the EU

on our performance in North America. Consumer

Net sales at the Sugarbeet Segment, comprising

prices for potatoes reached new lows, diminishing

sales revenue from our sugarbeet seed and seed

the revenue prospects for our seed potato business.

potato business, rose by 11.2% in fiscal 2014/2015 to

€390.5 (351.1) million. With the exception of France,

The regions: North America boosts sugarbeet

the increases in net sales were almost exclusively

seed business

outside the European Union, in particular in North

Expansion of sugarbeet breeding and outstanding

America, Russia and Turkey. Sugarbeet seed busi-

variety performance were the foundation for very

ness accounted for €364.4 (318.5) million and seed

successful business in the past fiscal year in all re-

potato business for €26.1 (32.6) million of total net

gions. Net sales in North America increased yet again

sales. After adjustment for exchange rate effects,

over the already high level of the previous year. We

the segment’s net sales would have risen by 8.3% to

further expanded our clear leadership in the market.

€380.4 million.

Following a very successful fourth quarter, net sales

in North America were up about 25% year on year.

The segment’s income (EBIT) in the period under

review was €93.0 (70.2) million, mainly due to the ad-

In the EU 28, high inventories and quotas trans-

ditional contribution margin from the increase in net

ferred from the previous growing season led to a

sales, and so was 32.5% up year on year despite the

significant reduction in cultivation area of more than

planned far higher distribution and research expendi-

10%. However, sales were maintained at a virtually

ture. This significant increase was largely due to our

constant level thanks to gains in market share and

good performance in North America. As previously

were €136.1 million (€137.2 million). Business went

reported on September 1, 2015, there were also

particularly well in France and was accompanied

positive exchange rate effects and lower allowances

by sharp gains in market share. In Germany, the

for receivables in the fourth quarter. Administrative

Netherlands and Poland, the reduction in cultivation

expenses remained stable.

area – despite increasing market share – meant that

Low sugar prices worldwide – high inventories,

our business performance fell sharply as a result of

our net sales declined. In particular in Scandinavia,

especially in the EU

a large reduction in area.

Our business activity in the Sugarbeet Segment was

exposed to both positive and negative external influ-

Net sales outside the EU 28 increased to €228.3

ences in the year under review. High sugar invento-

(180.8) million. Apart from our success in North

ries worldwide resulted in a further fall in the price of

America, we recorded very positive business in

sugar, which had a direct impact on sugarbeet cul-

Turkey, where our market share rose to more than

tivation area. The political and economic situation in

50%. In addition, net sales rose in Russia and China,

Eastern Europe resulted in sharp exchange rate fluc-

among other countries. However, we were not able

tuations there and insolvencies among local farmers,

to compensate for trends in Serbia, Croatia and

40 Combined Management Report | Earnings, financial position and assets

Annual Report 2014/2015 | KWS GroupSugarbeet

Ukraine, which were affected by sharp declines in

area, by winning market share. In some cases, we

suffered significant declines in net sales here.

We pressed ahead with our cooperation project with

Bayer CropScience to develop a conventional her-

bicide-tolerant sugarbeet. The new technology was

named CONVISO® SMART. The new varieties are

resistant to the herbicide Conviso and enable more

efficient control of weeds in sugarbeet cultivation.

We expect the market launch of the first varieties as

of 2018.

Seed potato business impacted by all-time lows

for consumer prices

Last season, consumer prices for potatoes were at a

record low. That is due, among other things, to high

production volumes and a large supply of potatoes

for consumption. Such a climate tends to foster the

use of farm-saved seed potatoes, since farmers use

their own harvest for the next growing cycle due to

the decline in prices. In this difficult market environ-

ment, net sales from our seed potato business fell

to €26.1 (32.6) million, resulting in a sharply negative

contribution to earnings.

Sugarbeets do not form
their seed pods until the
second growing season.
Seed production – from
requirements planning
to packaging – therefore
takes up to three years.

KWS Group | Annual Report 2014/2015Cereals Segment

Key figures for the Cereals Segment

Net sales

EBIT

EBIT margin

2014/2015

2013/2014

in € millions

in %

111.3

12.0

10.8

107.3

17.1

15.9

+/–

3.7%

–29.8%

Segment’s net sales rise slightly – research and

breeding companies was lower, since farmers increas-

distribution expenditure increased

ingly opted to use farm-saved seed in response to the

Net sales in the Cereals Segment rose slightly year

above conditions. That meant in particular that net

on year by 3.7% to €111.3 (107.3) million. Against the

sales from hybrid rye declined. The greening mea-

backdrop of low agricultural commodity prices, our

sures under agricultural policy, which aim for greater

business with wheat, barley and rapeseed went well:

crop diversity and envisage the provision of ecological

Net sales for each of the crops increased year on

focus areas on arable land, had a stabilizing impact on

year – and even by around 50% for barley. However,

the area used to grow rapeseed and barley.

revenue from our high-quality hybrid rye varieties de-

clined, since alternative types of cereal are preferred

The regions: Growth in core markets,

when consumer prices are low. Nevertheless, hybrid

acquisition in France

rye remained the largest contributor to net sales in

KWS’ cereals varieties turned in a promising perfor-

the segment, accounting for 44% of the total figure.

mance compared with the competition in the year

Along with operational business, the takeover of the

under review. We grew our net sales in all important

remaining 51% stake in the French seed company

regions. While our business went well in key mar-

SOCIETE DE MARTINVAL S.A. (MOMONT) had a

kets such as the UK, Poland or France, there were

positive impact, adding around €6 million to the seg-

slight declines in net sales in Germany. That is mainly

ment’s net sales.

attributable to the difficult conditions in hybrid rye

business, where – along with the fall in cultivation

The segment’s income (EBIT) was €12.0 (17.1) million.

area – we suffered slight losses in market share.

The positive effects on income from the increase

in net sales and reduction in the cost of sales were

France is one of the world’s largest individual mar-

cancelled out by higher expenditure aimed at se-

kets for cereals, with around 5 million hectares used

curing our future growth: Expenditure on research &

for wheat and some 1.8 million for barley. KWS has

development and on distribution rose as planned and

operated in the French cereals market for many years

were the main reason for the year-on-year decline in

now and has successfully expanded its footprint in

EBIT. Due to the time of acquisition, which was after

this important market by acquiring the remaining

the segment’s key fall sowing season, not all the pos-

51% stake in the French seed company SOCIETE

itive contributions to income from the acquisition of

DE MARTINVAL S.A. (MOMONT) effective Septem-

MOMONT were able to be recognized by the Cereals

ber 30, 2014. The already mentioned effects on net

Segment.

sales and profit are due to the time of the takeover

and the seasonal nature of cereals business.

Economic environment: Prices for cereals for

consumption remain low

Sharp increase in the number of marketing

The market environment for cereals proved to be

approvals for new varieties

tough in fiscal 2014/2015: Consumer prices for cere-

We increased our expenditure on research & devel-

als stagnated at a low level for the second year in a

opment in fiscal 2014/2015 in line with our growth

row. In general, demand for certified seed from plant

strategy. The cost and effort involved in our diverse

42 Combined Management Report | Earnings, financial position and assets

Annual Report 2014/2015 | KWS GroupCereals

breeding programs is paying off: In the year under

review we significantly increased the number of

marketing approvals for new varieties. They include

new hybrid rye varieties with improved yield perfor-

mance and ergot resistance. They will be launched

in Germany and Poland in fiscal 2015/2016 as part

of our “VorsprungPlus”, a system that gives farmers

early access to newly approved varieties.

Our breeding activities cover not only traditional

breeding of new varieties, but also long-term research

& development projects, such as establishment of

hybrid breeding for barley and wheat and use of state-

of-the-art technologies to optimize breeding processes.

A further objective is to develop hybrid rye varieties

that are adapted to growing conditions in Eastern

Europe or the U.S. and Canada and will help us tap

additional market potential in the medium term.

KWS Cereals set new
standards of seed quality
with the QualityPlus
system. To ensure that
high standards are met,
only selected multipliers
and processors produce
the QualityPlus seed for
KWS’ cereals varieties.

KWS Group | Annual Report 2014/2015Corporate Segment

Key figures for the Corporate Segment

Net sales

EBIT

2014/2015

2013/2014

in € millions

4.2

– 51.2

4.7

– 49.7

+/–

–10.6%

– 3.0%

All cross-segment costs are allocated to our Corpo-

and were not sufficient to cover the increase in

rate Segment. They include expenses for all central

expenditure. For the above reasons, the segment’s

functions of the KWS Group and for long-term re-

income (EBIT) is usually negative. Due to an increase

search projects. The segment’s net sales are mainly

in R&D costs, it was € –51.2 (–49.7) million.

generated from our farms. They were €4.2 (4.7) million

Just 3.5 kilograms of seed are needed to grow one hectare of sugarbeet.
This requires the highest seed quality. This can be guaranteed through the
centralization of the processing and refining process for our European
sugarbeet production operations in Einbeck.

Corporate

Corporate Segment

Financial situation

Selected key figures on the financial situation

Cash and cash equivalents

Net cash from operating activities

Net cash from investing activities

Net cash from financing activities

2014/2015

2013/2014

in € millions

132.4

57.7

–136.4

41.8

155.0

61.0

–75.4

– 31.5

+/–

–14.5%

–5.6%

– 80.9%

> 100%

KWS’ financial management is geared in particular

A syndicated loan with a volume of €200 million exists

to reflect the corporate values of farsightedness and

to provide financing during the year. It was renegoti-

independence. Consequently, the overriding objec-

ated in October 2014 and will run until October 2019,

tive of financial management is to secure adequate

with an option to extend its term until 2021.

earnings strength long term and to safeguard the

company’s financial independence. Apart from pro-

Sharp increase in capital expenditure

viding sufficient liquidity, the objective is to enable it

Total capital expenditure in fiscal year 2014/2015

to expand its business activities flexibly and seize

was €140.6 (82.6) million. Capital expenditure was

opportunities as and when they arise. The financial

increased by 70.2% year on year, largely due to the

management organization is controlled in the Group

takeover of the remaining shares (51%) in MOMONT.

centrally from Einbeck. A balanced mix of financ-

The Group’s capital expenditure was spread region-

ing, investment and hedging instruments is used as

ally as follows: 24.7% (35.0%) in North and South

the instrument for that. Derivative financial instru-

America, 24.1% (28.8%) in Germany and 43.3%

ments are used only to hedge the risk of interest rate

(33.7%) in Europe (excluding Germany). 7.9% (2.5%)

changes and currency risks.

of capital spending was in the rest of the world.

Operating cash flow of €57.7 million

The Corn Segment accounted for 36.9% (51.8%) of

Cash earnings in fiscal 2014/2015 were €122.2

total capital expenditure. Expansion of our production

(110.4) million. The net cash from operating activities

capacities was driven by investments in production

(operating cash flow) was €57.7 (61.0) million. The

plants in Serbia, North America and France, among

increase in working capital resulting from business

other countries. We also invested in further breeding

expansion in our capital-intensive growth markets

capacities in South America and Europe.

and higher inventories had a negative impact here.

The net cash used in investing activities totaled

In the Sugarbeet Segment, we continued the drive

€136.3 (75.4) million and includes the payment for

we began in previous years to modernize production

acquisition of the shares in SOCIETE DE MARTINVAL

plants in the U.S. We also invested in production sites

S.A. and the planned increase in payments for tan-

in Germany and Turkey with the goal of further improv-

gible fixed assets. The net cash from financing ac-

ing the quality of our seed. The Sugarbeet Segment

tivities was €41.8 (–31.5) million and comprised the

accounted for 17.1% (22.8%) of the KWS Group’s total

dividend for the fiscal year 2013/2014, higher cash

capital expenditure.

proceeds from long-term borrowings, and slightly

reduced installments for repayment of raised loans.

In the previous year, it also included the cash paid

to acquire the remaining shares in KWS LOCHOW

GMBH. The KWS Group’s cash and cash equiva-

lents on the balance sheet date at June 30, 2015

totaled €132.4 (155.0) million.

Earnings, financial position and assets | Combined Management Report

KWS Group | Annual Report 2014/2015Capital spending in the Cereals Segment was in-

Depreciation and amortization in the year under review

creased significantly with our strategic objectives in

totaled €51.6 (45.8) million. This rise is attributable to

mind. The segment’s share of total capital expen-

the rapid increase in the KWS Group’s property, plant,

diture at the KWS Group thus rose from 8.3% in the

and equipment as a result of the high investment ratio.

previous year to 31.7%. The investments include the

acquisition of the remaining shares in MOMONT and

focused on construction and expansion of produc-

tion plants, as well as on increasing office capacities.

Assets

Abridged balanced sheet

Assets

Noncurrent assets

Current assets

Equity and liabilities

Equity

Noncurrent liabilities

Current liabilities

06/30/2015

06/30/2014

+/–

in € millions

580.6

859.6

738.7

336.1

365.4

476.8

786.0

637.8

254.2

370.8

21.8%

9.4%

15.8%

32.2%

–1.5%

Total assets

in € millions

1,440.2

1,262.8

14.0%

The KWS Group’s total assets rose by 14.0% to

On the other side of the balance sheet, the

€1,440.2 (1,262.8) million. This was mainly attributable

KWS Group’s equity rose by 15.8% to €738.7

to high capital expenditure as part of our business

(637.8) million. The equity ratio increased to 51.3%

expansion.

(50.5%) and thus remained at a solid level. Equity

at the balance sheet date far exceeded noncurrent

Noncurrent assets increased by 21.8% to €580.6

assets by €158.1 (161.0) million. Noncurrent liabil-

(476.8) million, mainly due to investment in property,

ities rose by 32.2% to €336.1 (254.2) million as a

plant, and equipment. The increase in inventories to

consequence of a further borrower’s note loan that

€239.7 million and higher trade receivables totaling

€377.5 million, both of which grew due to the planned

expansion of our business, resulted in an increase in

was raised to fund further business expansion in our
future markets and the acquisition of MOMONT.
Current liabilities on the bal ance sheet date totaled

current assets to €859.6 (786.0) million. Cash and cash

€365.4 (370.8) million.

equivalents, including securities, fell by €22.5 million

to €132.5 million. After deduction of financial liabilities,

net liquidity was € –88.3 (–12.1) million.

46 Combined Management Report | Earnings, financial position and assets

Annual Report 2014/2015 | KWS GroupEarnings, financial position and assets
in accordance with IFRS 11

The significant differences from the explanations in

accordance with the corporate controlling structure”

Section “Earnings, financial position and assets in

mainly impact the Corn Segment.

Earnings

Abridged income statement

Net sales

Operating income

Net financial income/expenses

Result of ordinary activities

Taxes

Net income for the year

in € millions

2014/2015

2013/2014

986.0

113.4

16.7

130.1

46.1

84.0

923.5

118.3

7.5

125.8

45.5

80.3

+/–

6.8%

– 4.1%

> 100%

3.4%

1.3%

4.6%

Earnings per share

in €

12.53

11.69

7.2%

EBIT margin

11.5%

12.8%

–10.2%

Surplus supply due to high global stocks of agricultural

Gross profit in the year under review rose to

raw materials, low prices for agricultural raw materials,

€532.5 (494.2) million. License and material costs

a reduction in cultivation area, political and economic

were only slightly higher and again resulted in a be-

tensions in growth markets, and volatile exchange

low-proportionate increase in the cost of sales by

rates created a challenging climate for KWS in the past

5.6% to €453.5 (429.3) million. That gives a gross

fiscal year. Nevertheless, the KWS Group was able to

margin of 54.0% (53.5%).

increase its net sales year on year in all product seg-

ments, also after adjustment for exchange rate effects.

Our global growth is secured by expansion of our

Net sales rose by 6.8% to €986.0 (923.5) million in

distribution activities, among other things in new mar-

the year under review. This is mainly attributable to a

kets such as Brazil. Consequently, selling expenses

significant increase in net sales from our sugarbeet

in the year under review increased by €19.0 million to

activities in North America and in net sales in our

€189.0 (170.0) million . Their ratio to the KWS Group’s

growth markets South America, Russia and Turkey.

net sales was 19.2% (18.4%).

The increase in net sales was underpinned among

other things by higher sales volumes in the Sugarbeet

Research & development expenditure in-

Segment. Good variety performance in all major KWS

creased as planned in the year under review to

regions made a considerable contribution to this. The

€174.6 (149.4) million. The research & development

sales volume in the Corn Segment was maintained

intensity relative to the Group’s net sales was

at the level of the previous year against a backdrop

17.7% (16.2%). General and administrative expens-

of sharp falls in cultivation area. Acquisition of the re-

es increased below-proportionately relative to net

maining shares (51%) in the French cereals company

sales by 4% to €74.8 (71.9) million. Other operating

MOMONT increased net sales only slightly. 22.7%

income was €88.0 (58.2) million, while other operating

of total net sales were generated in Germany, 44.8%

expenses totaled €68.7 (42.8) million. The balance

in Europe (excluding Germany), 25.8% in North and

thus rose to €19.3 (15.4) million. The related indi-

South America and 6.7% in the other regions.

vidual items are presented in detail in the Notes on

pages 125 to 127.

Earnings, financial position and assets | Combined Management Report

KWS Group | Annual Report 2014/2015The operating income (EBIT) for the KWS Group

€125.8 million in the previous year to €130.1 million.

was thus €113.4 (118.3) million. The EBIT margin fell

Income taxes in the year under review rose to

to 11.5% (12.8%).

€46.1 (45.5) million, with the result that our tax rate

was 35.4% (36.2%). Although the tax rate therefore

Net financial income/expenses rose to €16.7 (7.5)

fell slightly, losses that cannot be deducted against

million. Apart from an improvement of €1.9 million

tax and the sharp increases in net sales in high-tax

in the interest result, it was mainly impacted by

countries are still above the long-term average. The

the net income from equity investments. The latter

KWS Group posted net income of €84.0 (80.3) million

rose by 35.9% to €27.5 (20.2) million as a result

for fiscal year 2014/2015. Minority interests were

of higher income from equity-accounted financial

€1.3 (3.2) million, meaning €82.7 (77.1) million are

assets (€ +3.5 million) and income from write-ups

attributable to shareholders of KWS SAAT SE. The

on subsidiaries, joints ventures and participations

number of shares was unchanged, giving earnings

(€ +3.7 million). Earnings before taxes (EBT) rose from

per share of €12.53 (11.69).

Financial situation

Selected key figures on the financial situation

Cash and cash equivalents

Net cash from operating activities

Net cash from investing activities

Net cash from financing activities

2014/2015

2013/2014

in € millions

108.2

48.1

–123.8

48.4

122.3

76.1

– 63.1

– 43.6

+/–

–11.5%

– 36.8%

96.2%

> 100%

KWS’ financial management is geared in particular

increase in working capital results from business

to reflect the corporate values of farsightedness and

expansion in our capital-intensive growth markets

independence. Consequently, the overriding objective

and higher inventories.

of financial management is to secure adequate earn-

ings strength long term and to safeguard the com-

The net cash used in investing activities totaled

pany’s financial independence. Apart from providing

€123.8 (63.1) million and includes the payment for

the company with sufficient liquidity, the objective is

acquisition of the shares in MOMONT and the

to enable it to expand its business activities flexibly

planned increase in payments for tangible fixed

and seize opportunities as and when they arise. The

assets. The net cash from financing activities was

financial management organization is controlled in the

€48.4 (–43.6) million and comprised the dividend

Group centrally from Einbeck. A balanced mix of

for the fiscal year 2013/2014, which was constant

financing, investment and hedging instruments is used

compared with the previous year, higher cash pro-

as the instrument for that. Derivative financial instru-

ceeds from long-term borrowings, and installments

ments are used only to hedge the risk of interest rate

for repayment of raised loans. Last year they also

changes and currency risks.

included the cash paid to acquire the remaining

shares in KWS LOCHOW GMBH. The KWS Group’s

Cash earnings in fiscal year 2014/2015 were

cash and cash equivalents on the balance sheet

€92.1 (85.0) million on the back of higher deprecia-

date at June 30, 2015, totaled €108.2 (122.3) million.

tion and amortization of assets and lower other non-

cash income. The net cash from operating activities

A syndicated loan with a volume of €200 million exists

(operating cash flow) was €48.1 (76.1) million. The lower

to provide financing during the year. It was renegoti-

increase in trade payables and short-term provisions,

ated in October 2014 and will run until October 2019,

together with the increase in working capital, had

with an option to extend its term until 2021.

a negative impact on the operating cash flow. The

48 Combined Management Report | Earnings, financial position and assets

Annual Report 2014/2015 | KWS GroupTotal capital expenditure in fiscal year 2014/2015

the Cereals Segment for 37.2% (8.2%). The Group’s

was €132.5 (69.4) million. Capital expenditure was

capital expenditure was spread regionally as follows:

increased by 90.9% year on year, mainly due to the

17.2% (23.0%) in North and South America, 25.5%

takeover of the remaining shares (51%) in MOMONT.

(34.4%) in Germany and 48.9% (39.6%) in Europe

As in the previous year, the main focus of the invest-

(excluding Germany). 8.3% (2.5%) of capital spend-

ments was on expanding corn processing capacities.

ing was in the rest of the world.

For instance, a corn processing plant was erected

in Serbia. Capital was also invested at the Einbeck

Depreciation and amortization in the year under

location. Investments were made in construction of a

review totaled €45.9 (41.2) million. This rise is attrib-

new research and office building. The Corn Segment

utable to the rapid increase in the KWS Group’s

accounted for 29.5% (44.1%) of total capital expendi-

property, plant, and equipment as a result of the high

ture, the Sugarbeet Segment for 18.1% (27.3%) and

investment ratio.

Assets

Abridged balanced sheet

Assets

Noncurrent assets

Current assets

Equity and liabilities

Equity

Noncurrent liabilities

Current liabilities

06/30/2015

06/30/2014

+/–

in € millions

651.4

704.1

738.7

334.9

281.9

538.7

626.3

20.9%

12.4%

637.8

253.0

274.2

15.8%

32.4%

2.8%

Total assets

in € millions

1,355.5

1,165.0

16.4%

The KWS Group’s total assets rose by 16.4% to

financing thus remains solid. Equity at the bal-

€1,355.5 (1,165.0) million. This was mainly attribut-

ance sheet date far exceeded noncurrent assets by

able to high capital expenditure as part of our busi-

€87.3 (99.1) million. Noncurrent liabilities rose by

ness expansion.

32.4% to €334.9 (253.0) million as a consequence of

a further borrower’s note loan that was raised to fund

Noncurrent assets at the balance sheet date totaled

further business expansion in our future markets and

€651.4 (538.7) million as a result of higher investments

the acquisition of MOMONT. Current liabilities on

in property, plant, and equipment. As a result of the

the balance sheet date totaled €281.9 (274.2) million.

planned expansion of business, higher inventories

totaling €178.0 million and trade receivables totaling

€309.7 million resulted in an increase in current assets

to €704.1 (626.3) million. Cash and cash equivalents, in-

cluding securities, fell by €14.1 million to €108.2 million.

Net liquidity was € –105.9 (–31.6) million.

The KWS Group’s equity rose by 15.8% to

€738.7 (637.8) million. The equity ratio declined

slightly to 54.5% (54.7%). The KWS Group’s

Earnings, financial position and assets | Combined Management Report

KWS Group | Annual Report 2014/2015Climate protector

Processing

In order to ensure the high quality of seed produced in the field,

it must be processed after being harvested. Seed processing is a

very time-consuming and labor-intensive process that depends on

the specific crop. The raw goods are always cleaned, gently dried if

necessary and calibrated. All the processes are designed to make

sure that the seed is handled carefully so that the seedlings are

healthy and an ideal quality can be ensured. As part of that, the

necessary resources such as energy, water, auxiliary materials and

supplies are used as economically as possible in all processing

steps. The quantities used may vary from year to year, sometimes

considerably, since they depend on the weather-related fluctuations

in the quantity and quality of seed harvested. The main focus of

environmental protection at the company is therefore on efficient

controlling of the use of resources in the processing plants so that

seed production is as environmentally friendly and resource-saving

as possible.

Employees

Producing high-quality seed entails a great deal of

the employees’ commitment, as well as raising the

cost and effort and relies on excellent contributions

employer’s contributions to capital-forming payments.

from our employees with their high professional

This arrangement benefits in particular part-time

qualifications. We therefore endeavor to offer our

employees and trainees, making it easier for them to

employees a working environment that encourages

build up their own capital.

continuous progress. An attractive and open interna-

tional work environment, characterized by fairness,

Outstanding attractiveness as an employer –

mutual respect and support for each other, enables

more important than ever for KWS

us to find unconventional and innovative solutions

In view of our constant growth and the importance

together. We foster a corporate culture that is based

of qualified employees to our company, it is increas-

on mutual trust and the common goal of keeping KWS

ingly vital for KWS to give its employer brand a

on its path to success. The values of our family busi-

sharper profile and position itself internationally as

ness with its rich tradition are the basis for our actions.

an attractive place to work. Modern forms of online

communication, participation in selected career fairs

Europe-wide cooperation strengthened by

in Germany and abroad and systematic establish-

change in legal form to KWS SAAT SE

ment of a significant network are key components

KWS has continued to grow strongly in the interna-

of our employer branding. We have also maintained

tional arena in the past years. The KWS Group gen-

intensive contact with relevant professional groups

erates around 53% of its total net sales in Europe.

and intensified and expanded our cooperation with

This trend was reflected by conversion of KWS into a

universities and organizations worldwide – for exam-

European Stock Corporation (Societas Europaea/SE),

ple in Argentina, the U.S. or China.

and an additional employee representative body was

set up at the European level: the European Employee

Seeding the Future: KWS fosters young talents

Committee (EEC). After its initial short term of office

at an early stage

up to 2017, the EEC will be elected for five years and

We believe youngsters should gain an initial insight

consists of eleven delegates: Three delegates come

into working life as early as possible, i. e. when they

from Germany and the remaining eight from the other

are in school or studying at a university. That is why

EU countries in which KWS has subsidiaries.

KWS offers students the opportunity to learn more

The above-average turnout for the election of the body

example in excursions to the company, as interns or

at the end of July 2015 showed that our employees at

through scholarships. Students can also write their

all European companies have a high degree of identi-

degree theses in cooperation with KWS or take dual

about its various task areas throughout the group: for

fication with KWS and make use of the opportunities

courses of study.

to help shape it. Following the election of the EEC’s

Chairperson and two deputies in September 2015, the

Excellent career start at KWS

body commenced its task of representing employees

Good training for our employees is a basic necessity

in cross-border matters within the European Union. It

so that KWS can remain successful in the future. In

will hold at least two meetings a year with the Execu-

fiscal 2014/2015, KWS employed 100 youngsters in

tive Board to discuss the company’s development and

six business administration, agricultural science and

planned measures.

industrial vocations. Around 120 instructors ensure a

high quality of training. KWS offers university gradu-

At the national level, too, the focus is on harmonious

ates two introductory programs: There is very great

rapport: The collective bargaining agreement for

demand for our tried-and-tested internal Trainee

Germany that was concluded in Einbeck in May 2015

Program and for the “Breeders Academy”, which is

specifically paid tribute to the social component and

tailored specifically to plant breeding.

52 Combined Management Report | Employees

Annual Report 2014/2015 | KWS GroupOpenness and transparency are not only reflected in our architecture, but above all in our daytoday activities.

We give all career starters at KWS extensive insight

of KWS’ values, its strategic orientation and its gover-

into our globalized, highly networked business pro-

nance structures. In the course of our ten-month “Inter-

cesses. We also attach particular importance to devel-

national Development Program” (IDP), potential junior

oping professional qualifications and personal skills.

talents are taught the skills that are particularly required

Focus on employee development

successful completion of the first IDP in February 2015,

Personnel development at KWS helps our employees

a new intake embarked on the program in June 2015.

in KWS’ global business environment. Following the

acquire skills that are demanded by our global busi-

ness environment with its ever-changing general con-

Work-life balance at KWS

ditions: constant innovation, customer orientation and

We want our employees to be able to reconcile their

modern communications. To enable that, a concept for

career and private life in every phase of their life.

a group-wide successor and talent management sys-

KWS supports that goal in Germany with flexitime

tem was set up in the year under review. In manage-

models and company agreements on child care

ment groups consisting of participants from different

allowances, as well as by letting employees reduce

locations and units, potential candidates are identified

their working time so that they can look after depen-

in development meetings. The findings obtained help

dents who need caring for.

boost further development of the identified employees.

In addition, the “Orientation Center” (OC) was adapted,

The health management initiative launched in Ger-

a further training measure whose members include

many in 2013/2014 is now firmly in place. Among

Executive Board members and external experts and

other things, running groups and KWS dragon boot

which aims to identify the strengths of selected em-

training are offered at the Einbeck location and a fit-

ployees and the fields they can develop further. Strate-

ness studio accompanies sports programs for entire

gic and intercultural aspects are now taken into greater

departments. Health management is also becoming

account to reflect the company’s environment.

established internationally: For example, 86% of all

employees in Brazil take part in the “Quality for Life”

However, we also continued our proven development

program, in which they are given dietary advice and

programs: For example, the “KWS On Board” program

regular health checks. As part of that, employees

gives experts and executives who have newly taken

obtain information on possible risk factors and sug-

over a management function a better understanding

gestions for a healthy lifestyle.

Employees | Combined Management Report

KWS Group | Annual Report 2014/2015Employees in numbers1

went to compensation and €49.7 (45.6) million to

The number of employees at the KWS Group rose

social security contributions, expenses for pension

again as planned in fiscal 2014/2015 and averaged

plans and benefits. The average length of service

5,322 worldwide, 9.8% up from the previous year.

in Germany remains at the constantly high level of

13.0 years. All in all, that underscores the attractive-

Personnel costs rose by 13.6% to a total of

ness of KWS as a modern and fair employer.

€256.4 (225.8) million. Of that, €206.8 (180.3) million

1 Including our joint ventures. Excluding them, the average number of employees is 4,691.

Employees by region

Germany

Europe (excluding Germany)

Americas

Rest of world

Total

Employees by function

Research & Development

Distribution

Production

Administration

Total

Key figures for employees (in Germany)

Number of employees in Germany

of which number of part-time employees

Ratio of men

Ratio of women

Number of Apprentices

Apprentice ratio

Average age

Length of service

in %

in years

+/–

6.0%

14.6%

9.0%

25.3%

9.8%

+/–

8.1%

1.5%

23.9%

5.7%

9.8%

+/–

6.0%

4.9%

2.0%

2014/2015

2013/2014

1,868

1,401

1,865

188

5,322

1,763

1,223

1,711

150

4,847

2014/2015

2013/2014

1,985

1,259

1,408

670

5,322

1,836

1,241

1,136

634

4,847

2014/2015

2013/2014

1,868

1,763

367

50.9

49.1

100

5.3

40.4

13.0

350

50.2

49.8

5.5

40.2

14.0

54 Combined Management Report | Employees

Annual Report 2014/2015 | KWS GroupReport on events after the
balance sheet date

We began implementing adaptation of our Euro-

our administrative overhead. The structure of our

pean Service Center structure at the beginning of

segments will not be affected by this measure.

August 2015. As part of that, the Service Center

North was integrated in the Service Centers Medi-

As a further step in optimizing the KWS Group’s

terranean and East effective October 1, 2015. The

structures, the Executive Board and the Supervisory

Rotter dam location was closed; some of its employ-

Board will propose conclusion of a profit and loss

ees were offered work in the Service Centers that

transfer agreement between KWS SAAT SE and

took over its activities.

KWS LOCHOW GMBH to the Annual Sharehold-

ers’ Meeting. KWS SAAT SE holds all the shares

As already announced on several occasions, a

in KWS LOCHOW GMBH, which bundles the

decision was made to merge KWS MAIS GMBH with

KWS Group’s cereals activities. Both companies

KWS SAAT SE. The merger will become effective

have performed successfully in the past years; con-

upon being entered in the commercial register and

clusion of the agreement is intended to secure their

will be carried out in the course of fiscal 2015/2016.

successful commercial development, create the

KWS MAIS GMBH now generates the highest net

conditions for further organic growth and tap further

sales in the KWS Group and consistently makes a

group-related advantages.

large contribution to earnings. The company’s rein-

tegration marks a first step in simplifying the Group’s

Apart from that, there were no significant events that,

structure. Our objective with the merger is also to

in the assessment of the Executive Board, might

make internal processes more efficient and reduce

have an impact on the KWS Group’s earnings, assets

and financial position.

Opportunity and risk report

As an international seed company, the KWS Group

and products. Targeted measures are formulated

operates in a dynamically changing environment.

together with the Executive Board so that strengths

That results in risks as well as opportunities, which

can be leveraged and strategic growth potentials

we have to weigh as the foundation for our entrepre-

tapped. Strategic opportunities of major importance

neurial decisions.

Opportunities

are handled by the Executive Board. Extensive

strategic planning covering a 10-year time frame is

the basis for opportunity management. In keeping

We understand an opportunity as a development

with our established growth strategy, we exploit

that might have a positive impact on our earnings,

the industry-specific and strategic opportunities

financial position and assets.

that arise by means of pinpointed investments in

production capacities, research & development and

At the KWS Group, opportunity management is an

acquisitions.

integral component of the established controlling sys-

tem between the subsidiaries/associated companies

We see diverse opportunities for the KWS Group to

and company management. Strategic opportunities,

develop the company further in line with our strategy.

such as joint ventures and acquisitions, are handled

So that we succeed in achieving sustainable, profit-

by the Executive Board. Operational opportunities

able growth in future as well, our prime goal must be

are identified and exploited in our segments, since

to retain and further increase our innovativeness. The

they have the greatest knowledge of their markets

latter is expressed in seed business by continuous

Report on events after the balance sheet date | Opportunity and risk report | Combined Management Report

KWS Group | Annual Report 2014/2015Our huge seed processing plant in Serbia was opened this fiscal year after being built in less than a year.

increases in the yields of new varieties. The plants’

by developing varieties tailored exactly to their cli-

yield potential can either be increased or their resis-

matic conditions. In particular in the highly fragment-

tance to detrimental influences, of whatever type,

ed Chinese corn market, there is a good opportunity

can be improved. Our target is to offer our customers

to participate in the process of consolidation that is

an increase in yield of 1% to 2% per annum with our

now beginning.

new varieties. That is why we constantly expand our

research & development activities. A measure of

Investing in expansion of our production capacities

our innovativeness is the number of newly approved

and modernization of our seed processing offers

varieties. In the approval processes, our varieties

additional opportunities to grow further. Further

are compared directly with rival products in official

development of our variety portfolio and expansion

performance tests. More details of that and on our

of capacities are accompanied by expansion of our

research & development activities can be found on

distribution structures to enable even more tailored

page 30 of this report.

and intensive information and advice for our custom-

ers on the possible uses of our seed and allow us to

There are also market opportunities as a result of our

leverage further sales potential. In addition, continu-

intensified activities in subtropical regions. Our corn

ous optimization of processes offers the KWS Group

activities in Brazil and China will enable us to tap

the opportunity to increase productivity and optimize

additional sales potential for the KWS Group in the

cost structures. Short-term opportunities may also

medium to long term in these – for us – new markets

arise as a result of movements in exchange rates.

56 Combined Management Report | Opportunity and risk report

Annual Report 2014/2015 | KWS GroupRisks

KWS’ risk management system is organized on the

We define a risk as a potential future event that might

basis of the internationally recognized COSO model

have a negative impact on our business.

(Committee of Sponsoring Organizations of the Tread-

way Commission). Risks are identified and assessed

Objectives and strategies in risk management

as well as mitigated by suitable control measures. The

Our risk management is founded on trust in employ-

principles of our risk management are enshrined in our

ees and the sense of responsibility of every individual.

group-wide “Rules, Guidelines & Procedures”. Core

Our employees are to be enabled to assess and mini-

contents include principles relating to early detection

mize risks on their own.

and communication and handling of risks. These

standards are implemented by the local subsidiaries.

Our risk management system supports a responsible

Our group’s own Service Centers help in preparing

approach to risks and decision-making processes. It

local financial statements and provide a consistent

consists of organizational measures so that relevant

data model that is subject to the group’s regulations

risks can be identified, assessed and controlled at an

on accounting and thus ensures that the consolidated

early stage. With proactive strategies to counter risks,

financial statements comply with the rules.

we reduce or avoid negative impacts so that we can

operate successfully on the world market.

As part of its audit of the annual financial statements

for fiscal year 2014/2015, Deloitte & Touche GmbH

Structure of the risk management system

Wirtschaftsprüfungsgesellschaft confirmed that our

The Executive Board is responsible for risk manage-

system for early detection of risks complies with the

ment. The central functions Corporate Finance, Cor-

requirements under the German Stock Corporation

porate Controlling, Corporate Compliance Office and

Act. It also enables early identification of risks that

Corporate Development & Communications share

jeopardize the company’s existence. Identified weak-

the various tasks among themselves (see the figure).

nesses are reported to the Executive Board and the

There is also a Risk Committee that reports regularly

Supervisory Board and rectified in the continuous

on the development of risks.

improvement process.

Structure of risk management at the KWS Group

Corporate Finance

Corporate Controlling

Corporate Development & Communications

Corporate Compliance Office

Tasks

■■ Early detection of risks
■■ Risk management
■■ Interest and currency management
■■ Insurance
■■ Loan management
■■ Damage prevention
■■ External audits

■■ Planning/budget
■■ Current expectations

■■ Rules, Guidelines & Procedures
■■ Integrated Management System
■■ Internal audits
■■ Excellence Through Stewardship

■■ Compliance Management System
■■ Compliance Risk Assessment
■■ Compliance training
■■ External audits
■■ Examinations

Opportunity and risk report | Combined Management Report

KWS Group | Annual Report 2014/2015Risk management process

Risk management and the internal control

The risk management process at KWS consists of

system in the accounting process

the phases of identification, assessment, control and

The internal control and risk management system

monitoring of risks and risk reporting.

comprises measures, structures and processes

designed to make sure that business transactions

By risk identification, we mean that the persons

are included in accounting promptly, consistently

responsible for an area of risk identify the potential

and correctly. Its objective is to ensure compliance

risks. The identified risks are plausibilized and sum-

with the law and external and internal accounting

marized in a risk control matrix. The risk inventory

regulations. The completeness of financial reporting,

currently contains around 100 risks and means of

the Group’s uniform accounting, measurement and

controlling them.

account allocation stipulations, and the authoriza-

tion and access regulations for IT systems used in

This is followed by risk assessment, i. e. qualitative

accounting are examined regularly. Intra-group

and quantitative analysis of the risks. Risks are

trans actions are consolidated appropriately and

measured on a net basis, i. e. after risk mitigation

in full. Consolidated accounting is carried out at

measures have been taken. Their materiality (upper

KWS SAAT SE by the corporate units Group Account-

risk limit) is evaluated either on the basis of their

ing and Group Controlling.

potential effect on operating income (EBIT) or spe-

cific qualitative indicators. The risks are classified by

Main areas of risk

their likelihood of occurrence and level of damage

We assess risks as being significant if they might

and prioritized according to a traffic light system.

have a considerable negative impact on our business

With risk controlling, we create instruments to actively

which the risk categories and individual risks are

influence the main risks. Risk controlling comprises

listed reflects their importance. Unless otherwise

measures to reduce risks, constant monitoring of

specified, the risks apply to all segments of the

them and risk transfer. Our internal control system

KWS Group.

activity, financial position or earnings. The order in

(ICS) is used to systematically review and document

whether this controlling is effective. The adequacy and

proper functioning of the controls must be examined

once a year by the person responsible for them at the

respective business segment or a commissioned third

party. External auditing by experienced auditors is

conducted to ensure that internal controls work. The

objects audited are chosen on a risk-based approach.

A report on the ICS’ effectiveness is given to the Audit

Committee of the Supervisory Board once a year. The

Risk Committee is informed quarterly of the current

risk situation for the KWS Group and its fields of

business.

58 Combined Management Report | Opportunity and risk report

Annual Report 2014/2015 | KWS GroupCorporate risks

Risk category

Market risks

■■ Political instability
■■ Fall in sales volumes and/or

prices

■■ Currency depreciation
■■ Change in interest rates

Production risks

■■ Influence of the weather on
multiplication in the field

Likelihood
of occurrence1

Potential impact 2

Change from the
previous year

Possible

Significant

■■ Outage of production

Possible

Significant

systems

■■ Product liability
■■ Genetic mixing

Procurement risks

■■ Non-delivery by suppliers
■■ Loss of reputation

Liquidity risks

■■ Insolvency
■■ Violation of financial

obligations

■■ Default by customers

Legal risks

■■ Breaches of contract
■■ Anti-trust proceedings
■■ Corruption
■■ Violation of capital market

law

■■ Infringement of proprietary

rights

■■ Violation of data protection

Environmental risks

■■ Pollution of the air, soil and

water by dusts, waste water
and waste

Personnel risks

■■ Demographic change
■■ Shortage of skilled workers

IT risks

■■ Non-availability of IT

systems
■■ Hacking
■■ Data theft
■■ Conflict in the authorization

process

Unlikely

Moderate

Unlikely

Significant

Possible

Significant

Possible

Significant

Unlikely

Moderate

Possible

Significant

1 Unlikely = 1% – 33%. Possible = 34% – 66%. Likely = 67%– 99%.
2 Moderate: Hardly perceptible effects on our business activity, financial position or earnings.

Significant: Considerable negative effects on our business activity, financial position or earnings.
Existential: Substantial negative effects on our business activity, financial position or earnings that would put the company’s continued existence at jeopardy.

Opportunity and risk report | Combined Management Report

KWS Group | Annual Report 2014/2015Market risks

KWS has established extensive checks and tests

We face political risks in the strongly regulated interna-

throughout the production process to safeguard the

tional agricultural industry. The continued uncertainty

performance and quality of its products. Regular

in Ukraine and sanctions against Russia may have

quality examinations and controls are conducted

a constant negative impact on our business activities

at all process levels and also include testing of con-

in those countries. We generated net sales totaling

ventional seed to determine that it is free of genetic

€59.5 million in the two countries in fiscal 2014/2015.

technology. In addition, very strict requirements have

to be met, in particular in relation to genetically modi-

Sale of our products depends on product performance

fied products. In the absence of a standardized legal

and the competitive situation. In addition, the state

threshold value, a number of European countries

of the global economy has a major influence on our

even practice a policy of zero tolerance.

net sales and income. We address this challenge with

systematic analyses of the market and the competition

KWS joined the “Excellence Through Stewardship”

and by developing high-quality seed all over the world.

(ETS) initiative in January 2013. This is an internation-

Currency risks arise from fluctuations in exchange

to the use of biotechnology-derived plant material

rates, in particular for outstanding receivables and

throughout the product lifecycle. By becoming a mem-

liabilities denominated in foreign currency. There are

ber, KWS signals its clear and unswerving commitment

interest rate risks as a result of potential changes to

to the responsible use of transgenic plant material.

ally standardized quality management program relating

market interest rates. The interest payable on finan-

cial obligations with a variable rate of interest may

Procurement risks

increase. We address the risk of interest rate changes

We reduce supply risks that might arise from the

and currency risks through the usual hedging instru-

procurement of pesticides for the seed we treat by

ments, such as derivatives and forward exchange

maintaining sufficient stocks. Moreover, the risk of

deals, to reduce the influence on the KWS Group’s

sources no longer being able to deliver is minimized

earnings and assets situation. In fiscal 2014/2015, the

by continuous assessment of the quality and ability

research & development expenditure and inter-com-

to deliver on the part of our suppliers. In addition,

pany loans were almost completely hedged

our sustainability principles and requirements are laid

in order to avoid exchange rate risks.

down in our newly introduced Code of Business Eth-

Production risks

ics for Suppliers. Our suppliers are to respect human

rights and work safety and environmental protection

Breeding and multiplying seed are dependent on

regulations, as well as to avoid any form of child

the weather. We reduce the risk of production losses

labor. Violation of the code harbors the risk of dam-

stemming from bad weather by distributing seed

age to our reputation. We conduct audits of suppliers

multiplication and processing over several locations

to examine whether they comply with the code.

in Europe and North and South America. Fluctuations

in demand in one region can be compensated for as

Liquidity risks

part of our global production network. Contra-sea-

Liquidity risks arise if the KWS Group is not able

sonal multiplication is carried out in the winter half-

to fulfill existing or future payment obligations. We

year in Chile and Argentina if there are bottlenecks in

reduce the liquidity risk by means of central liquidity

seed availability in Europe. We counter the outage of

planning, cash pooling, long-term borrower’s note

production facilities by means of regular maintenance,

loans and syndicated credit lines. As in the previous

risk inspections and organizational and technical

year, full use was not made of the variable credit

damage prevention programs. To cover financial loss,

lines in fiscal 2014/2015. The financial covenants in

we maintain group-wide property and business inter-

our loan agreements were complied with. We use

ruption insurance.

trade credit insurance to reduce the risk of losing

60 Combined Management Report | Opportunity and risk report

Annual Report 2014/2015 | KWS Groupreceivables in risky regions and business segments.

IT risks

There may be a greater potential for counterparty

The KWS Group’s business and production processes,

default is some regions at present due to political

as well as its internal and external communications,

developments (Ukraine) and economic developments

are based on globally networked IT systems. Any

(exchange rate effects, increase in the price of

outages in them can result in a significant interruption

goods). Loan management helps us identify drops

to business operations. In addition, theft of sensitive

in customers’ creditworthiness in good time and to

information can entail a loss of reputation for us. Our

avoid resultant payment defaults.

IT security organization and security policies impede

Legal risks

unauthorized access to sensitive electronic company

data. Firewall and antivirus programs are kept up-

The KWS Group faces risks in its operations from of-

to-date and are designed to avoid losses as a result

ficial proceedings and legal disputes. Legal disputes

of hacking and malware. There is also an extensive

are possible in particular with suppliers, customers,

authorization concept. Constant external examinations

employees and investors and may result in payment

of our IT security concept and system authorizations

or other obligations. There were no significant legal

ensure an objective risk assessment of the imple-

proceedings in fiscal 2014/2015. Under our compli-

mented concepts and measures.

ance policies and the Code of Business Ethics, our

employees undertake to act in accordance with laws,

Overall statement on the risk situation by the

contractual provisions, internal regulations and our

Executive Board

corporate values.

Environmental risks

The risks presented above do not jeopardize the exis-

tence of the KWS Group, either individually or in their

entirety. All in all, the risk situation did not change sig-

KWS’ international management system regulates the

nificantly in fiscal 2014/2015. The main risks for us are

proper operation of plant and facilities of relevance to

still related to products and the market. The increasing

environmental protection so as to minimize negative

share of our business in foreign currency, in particular

influences on people, the environment and material

in emerging countries, means there will be additional

assets. Implementation of the instructions is audited

currency risks. Nevertheless, and taking into account

internally and externally as part of our continuous

our countermeasures, we assess the potential financial

improvement process.

impact of currency risks as being moderate.

Personnel risks

We feel sure that, thanks to our global footprint, our

It is KWS’ conviction that qualified and committed em-

innovative strength and the high quality of our prod-

ployees are the key to its success. We therefore have

ucts, we can seize opportunities and successfully

to remain an attractive employer. Our strategies enable

counter risks as they arise. However, we cannot rule

us to find new talents – career starters and experienced

out the possibility that further factors of which we are

professionals alike – as well as to further develop the

not currently aware or which we do not at present

existing workforce. Our employer branding has posi-

assess as significant may impact the continued exis-

tioned KWS as an attractive place to work in the eyes

tence of the KWS Group in the future.

of relevant professionals. Extensive vocational training

and induction programs help junior staff get their career

off to an excellent start. Our integrated personnel

development landscape supports our employees in

acquiring professional qualifications and personal skills

that are demanded by our globally networked business

environment with its constantly changing general condi-

tions: continuous innovation, customer orientation and

modern communications.

Opportunity and risk report | Combined Management Report

KWS Group | Annual Report 2014/2015Forecast report

Forecast for the KWS Group for fiscal 2015/2016

in € millions

According to the IFRS statement
of comprehensive income
(application of IFRS 11)

Sales for
2015/2016

EBIT margin
for 2015/2016

R&D intensity
for 2015/2016

1,035 – 1,085

≥ 10.5%

~17%

We have changed the KWS Group’s forecast report

several locations. For example, a new, cutting-edge

due to the previously described amendments to

greenhouse is being built in Einbeck and a new

the International Financial Reporting Standards

breeding station is being set up in Bernburg. We are

(IFRS 11). Apart from the forecast for our segment

expanding our footprint outside Germany, such as in

reporting, which is of relevance to internal corporate

the U.S. as a result of the research center in St. Louis.

controlling, we will for the first time specify the KWS

Group’s anticipated operating income excluding

At the Corn Segment, we assume increasing sales

our 50:50 joint ventures (see “Forecast for the KWS

revenues, in particular in North and South America,

Group”). The forecast is based on our corporate

but also in Eastern and Southeastern Europe. We

planning and the information included in it, such as

currently expect net sales to increase by between

market expectations or exchange rate developments.

10% and 15% year on year. Despite the sharp in-

Forecast for segment reporting

and distribution, the segment’s EBIT margin will prob-

crease in expenditure on research & development

We will continue to implement our successful corpo-

ably be around 11%.

rate strategy in fiscal 2015/2016. As part of that, we

intend to expand our business activities in the sales

Following the extremely successful fiscal year

markets of Brazil and China we have recently tapped

2014/2015 for the Sugarbeet Segment, it will be

and to further increase our already high level of com-

difficult to achieve further growth in 2015/2016 in

petitiveness in our core markets. As in previous years,

view of the fact that cultivation area will likely remain

we will further strengthen KWS’ main success factors:

stable. In order to repeat the previous year’s suc-

our innovative strength and our distribution network.

cess, we need to defend the high market shares we

Our expenditure on research & development and

have captured. It will be crucial to our business to

distribution will therefore be increased.

expand our position in the growth markets of Eastern

Europe and successfully establish our varieties,

These measures will be flanked by extensive invest-

whose performance is good almost across the

ments in property, plant and equipment. The main

board, in the other individual markets. If we manage

focus of that will be on expanding and modernizing

to do that, we expect the segment’s net sales and

production plants in the growth markets of Eastern/

income to be at the level of the previous year, despite

Southeastern Europe and the U.S. We are also

the still difficult situation in the potato market.

expanding our research & development facilities at

62 Combined Management Report | Forecast report

Annual Report 2014/2015 | KWS GroupA very good outlook: the very best seed as the foundation for future growth.

At the Cereals Segment, we expect slight growth in

Forecast for the KWS Group’s statement

net sales from our acquisition in the important cere-

of comprehensive income

als market of France. The segment’s EBIT margin is

The statement of comprehensive income in accor-

likely tobe below that of the previous year, however,

dance with IFRS 11 no longer includes the net sales

due to expected reductions.

and costs of our joint ventures. In line with our cor-

porate strategy and annual planning, the Executive

At the Corporate Segment, we expect stable net

Board expects the KWS Group to post operational

sales from our farms’ business activities. Due to the

sales growth of 5% to 10% and an EBIT margin of at

fact that all cross-segment costs at the KWS Group

least 10.5% in the coming fiscal year. The R&D inten-

are allocated to it, we expect the segment to post a

sity is expected to be around 17%. We intend to stick

negative EBIT of around € –60 million.

to our dividend policy, with a payout ratio between

20% to 25% of our net income for the year.

Forecast report | Combined Management Report

KWS Group | Annual Report 2014/2015KWS SAAT SE
( Explanations based on the German Commercial Code (HGB))

The Management Reports of KWS SAAT SE and the

Research & development expenditure, which is

KWS Group have been combined for the first time for

pooled at KWS SAAT SE, increased as planned by

fiscal 2014/2015. The annual financial statements of

€20.2 million to €158.2 (138.0) million. Expansion of

KWS SAAT SE in accordance with the German Com-

distribution activities resulted in an increase in selling

mercial Code (HGB) and the Combined Management

expenses to €30.7 (27.5) million. Most of the admin-

Report will be published in the Electronic Federal

istrative functions for the KWS Group are located

Gazette at the same time.

in KWS SAAT SE, with the result that administrative

expenses were €53.8 (51.1) million. The balance of

Declaration regarding corporate governance

other operating income and other operating expens-

The declaration on corporate governance in accor-

es rose by €12.7 million to €34.7 million and was

dance with Section 289a of the German Commercial

impacted positively by the balance of currency trans-

Code (HGB), which also contains the compliance dec-

lation differences and exchange rate hedges totaling

laration in accordance with section 161 AktG (German

€2.3 (4.7) million and lower allowances for receivables

Stock Corporation Act), has been published in the

totaling €3.7 (11.4) million.

Internet at www.kws.com/ir > Corporate Governance.

Compensation Report

KWS SAAT SE’s operating income thus fell as expected

to € –23.2 million compared with € –14.3 million in the

The disclosures in accordance with Section 289 (2)

previous year, mainly due to the planned increase in

No. 5 of the German Commercial Code (HGB) are con-

research & development expenditure. The net finan-

tained in the Compensation Report on page 69 to 74.

cial income/expenses is made up of the net income

from equity investments from eight (seven) companies

Disclosures in accordance with Section 289 (4)

and the interest result. The net income from equity

of the German Commercial Code (HGB) and

investments increased by 15.0% to €47.6 (41.4) million.

explanatory report of the Executive Board

The interest result was € –2.6 (–3.5) million. Taking into

The disclosures in accordance with Section 289 (4)

account tax expenditures, KWS SAAT SE posted net

of the German Commercial Code (HGB) and the

income for the year of €19.7 (23.8) million.

explanatory report of the Executive Board can be

found on page 68/69.

Assets and financial situation

KWS SAAT SE’s total assets increased in the year un-

Business activity, corporate strategy,

der review by €61.3 million to €639.8 million. Fixed as-

corporate controlling and management,

sets at the balance sheet date were €383.1 (357.0) mil-

business performance

lion or 59.9% (61.7%) of total assets. The increase in

You can find disclosures on our business activity,

fixed assets is mainly due to capital measures at

corporate strategy, corporate controlling and manage-

affiliated and associated companies, as well as in-

ment, as well as explanations on our business

vestments in construction of an office and research

performance, on pages 24 to 33.

building in Einbeck, licenses, laboratory equipment

Earnings

and agricultural machinery. At the same time current

assets rose to €255.9 (221.3) million, largely as a result

KWS SAAT SE’s net sales increased in fiscal

of the fact that receivables and other assets increased

2014/2015 by 5.3% to €284.4 (270.1) million. This is

by €60.2 million to €210.0 million. Inventories increased

mainly due to the positive development of revenue

by 11.8% to €26.1 million. The securities held totaled

from sugarbeet seed, which – including the sugar-

€7.0 (24.3) million and cash and cash equivalents fell to

beet technology fee – rose by 7.8%.

€12.8 (17.6) million.

64 Combined Management Report | KWS SAAT SE ( Explanations based on the German Commercial Code (HGB))

Annual Report 2014/2015 | KWS GroupThe company’s equity was €185.3 million, on a par with

Report on events after the balance sheet date

the previous year. The equity ratio on the balance sheet

You can find the report on events after the balance

date was therefore 29.0% (32.0%). Provisions increased

sheet date for KWS SAAT SE and the KWS Group on

by 4.3% to €102.2 million. There was an increase in

page 55.

the liabilities to banks of €75.9 million to €150.0 million,

mainly due to the issue of a further borrower’s note loan

Forecast report

with a volume of €100 million and simultaneous repay-

KWS SAAT SE generates the main part of its net

ment of a tranche of the borrower’s note loan that was

sales from sugarbeet seed business and royalties

issued in 2012. Liabilities to affiliated companies fell by

from basic corn seed. Further development of

8.9% to €178.0 million. KWS SAAT SE’s total liabilities

sugarbeet seed business depends to a major extent

were €347.1 (289.4) million.

on developments in our growth markets in Eastern

Europe and cultivation areas in our key markets. We

At the balance sheet date, fixed assets were covered

currently anticipate a slight increase in net sales.

by equity to an amount of 48%. A long-term syndicat-

The planned integrated of KWS MAIS GMBH’s corn

ed loan with a total volume of €200 million exists with

activities in fiscal 2015/2016 will also significantly

KWS SAAT SE’s principal bankers to finance operat-

increase KWS SAAT SE’s net sales.

ing resources during the year.

Dividend

In turn, KWS SAAT SE’s operating income is primarily

impacted by the KWS Group’s research & develop-

You can find details on the dividend on page 11.

ment expenditure, which will again be increased as

Employees

planned in the coming year so as to secure KWS’

good market position. Together with the administra-

An average of 1,195 (1,145) people were employed

tive expenses, which are pooled in KWS SAAT SE,

at KWS SAAT SE in the year under review, of whom

this resulted in negative operating income in the last

115 (118) were trainees and interns.

two fiscal years. However, operating income will im-

prove sharply and is expected to be positive again as

Research & Development

a result of the integration of KWS MAIS GMBH.

You can find a detailed description of the KWS

Group’s research & development activities on

The detailed annual financial statements of

pages 30 to 32.

KWS SAAT SE for fiscal 2014/2015 in accordance

with the German Commercial Code (HGB) have also

Risks and opportunities

been published at www.kws.com > Investor Relations

The risks and opportunities at KWS SAAT SE are

> Financial Reports.

essentially the same as at the KWS Group. It shares

the risks of its subsidiaries and associated companies

in accordance with its respective stake in them. You

can find a detailed description of the opportunities

and risks and an explanation of the internal control

and risk management system (Section 289 (5) of the

German Commercial Code (HGB)) on pages 55 to 61.

KWS SAAT SE ( Explanations based on the German Commercial Code (HGB)) | Combined Management Report

KWS Group | Annual Report 2014/2015Packaging artist

Packaging and certification

Seed production is predominantly organized by the breeder itself,

but – depending on the crop – is handled in cooperation with many

agricultural partners and processing companies. Our seed’s quality

must be guaranteed throughout the production value chain. The

complex processes of multiplication and processing are therefore

supported organizationally by an Integrated Management System

so that, despite a largely decentralized production structure, the

processes and subsequent goods movements can be influenced at

all times. After undergoing a large number of official tests and quality

inspections of our own, the seed is approved for sale. The seed is

packaged and certified in Germany under official control, for exam-

ple by the Chamber of Agriculture in Hanover. That ensures that only

tested seed with a high germination capacity and varietal purity is

put on the market. The “blue label” on the seed units indicates that

the seed is certified and of top quality.

Other disclosures

Disclosures in accordance with Sections 289 (4) and

The voting shares, including mutual allocations,

(5) and 315 (4) of the German Commercial Code (HGB)

of the members and companies of the families

and the explanatory report of the Executive Board

Büchting, Arend Oetker and Giesecke listed below

each exceed 10% and total 56.1%:

Composition of the subscribed capital

The subscribed capital of KWS SAAT SE is

■■ Dr. Drs. h.c. Andreas J. Büchting, Germany

€19,800,000.00. It is divided into 6,600,000 bearer

■■ Christiane Stratmann, Germany

shares. Each share grants the holder the right to cast

■■ Dorothea Schuppert, Germany

one vote at the Annual Shareholders’ Meeting.

■■ Michael C.-E. Büchting, Germany

■■ Annette Büchting, Germany

Restrictions relating to voting rights

■■ Stephan O. Büchting, Germany

or the transfer of shares

■■ Elke Giesecke, Germany

There may be restrictions relating to voting rights

■■ Christa Nagel, Germany

or the transfer of shares as a result of statutory or

■■ Bodo Sohnemann, Germany

contractual provisions. For example, shareholders are

■■ Matthias Sohnemann, Germany

barred from voting under certain conditions pursuant

■■ Malte Sohnemann, Germany

to Section 136 of the German Stock Corporation Act

■■ Arne Sohnemann, Germany

(AktG) or Section 28 of the German Securities Trading

■■ AKB Stiftung, Hanover

Act (WpHG). In addition, no voting rights accrue to the

■■ Büchting Beteiligungsgesellschaft mbH, Hanover

company on the basis of the shares it holds (Section

■■ Zukunftsstiftung Jugend, Umwelt und Kultur,

71b AktG). The Executive Board is not aware of any

Einbeck

contractual restrictions relating to voting rights or

■■ Dr. Arend Oetker, Germany

transfer of shares. If there are no restrictions to voting

■■ Kommanditgesellschaft Dr. Arend Oetker

rights, all shareholders who register for the Annual

Vermögensverwaltungsgesellschaft mbH & Co.,

Shareholders’ Meeting in time and have submitted

Berlin

proof of their authorization to participate in the Annual

Shareholders’ Meeting and exercise their voting rights

The voting shares, including mutual allocations, of

are authorized to exercise the voting rights conferred

the shareholders stated below each exceed 10% and

by all the shares they hold and have registered. If

total 15.1%:

members of the Executive Board or executive em-

ployees have acquired shares as part of the long-term

■■ Hans-Joachim Tessner, Germany

incentive programs, these shares are subject to a

■■ Tessner Beteiligungs GmbH, Goslar

lock-up period until the end of the fifth year after the

■■ Tessner Holding KG, Goslar

end of the quarter in which they were acquired. The

lock-up period for shares that employees have ac-

Shares with special rights and voting control

quired as part of the Employee Share Programs runs

Shares with special rights that grant powers of con-

until the end of the fourth year as of when they are

trol have not been issued by the company.

posted to the employee’s securities account.

Direct and indirect participating interests in

ticipating interests of employees. Employees who

excess of 10% of the voting rights

have an interest in the company’s capital exercise their

The company has been informed by shareholders of

control rights in the same way as other shareholders.

There is no special type of voting control for the par-

the following direct or indirect participating interests

in the capital of KWS SAAT SE 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:

68 Combined Management Report | Other disclosures

Annual Report 2014/2015 | KWS GroupAppointment and removal of members

Significant agreements in the event of a change

of the Executive Board

of control, compensation agreements

Members of the Executive Board of KWS SAAT SE are

Significant agreements subject to the condition of a

appointed and removed in accordance with Article 9 (1)

change in control pursuant to a takeover bid have not

and Article 39 (2) of the Council Regulation on the Stat-

been concluded. The compensation agreements

ute for a European Company (SE Regulation), Article 46

between the company and members of the Executive

of the Council Regulation on the Statute for a Euro-

Board and governing the case of a change in control

pean Company (SE Regulation) and Sections 84 and

stipulate that any such compensation will be limited

85 AktG (German Stock Corporation Act). Section 6 of

to the applicable maximum amounts specified by the

KWS SAAT SE’s Articles of Association also contains

German Corporate Governance Code.

provisions that relate to the appointment of members

of the Executive Board by the Supervisory Board and

Declaration regarding Corporate Governance

that correspond to the statutory regulations.

The declaration on corporate governance in accor-

dance with Section 289a of the German Commercial

Amendments to the Articles of Association

Code (HGB) (which is also the Corporate Governance

The company’s Articles of Association can be amend-

Report) is available on our website at www.kws.com

ed by a resolution adopted by the Shareholders’

> Company > Investor Relations > Corporate

Meeting in accordance with Article 59 of the Council

Governance. Among other things, it contains the dec-

Regulation on the Statute for a European Company

laration in accordance with Section 161 of the German

(SE Regulation) and Section 179 (a) AktG (German

Stock Corporation Act (AktG) (declaration of compli-

Stock Corporation Act). In accordance with Article 59

ance), which is also reproduced on page 20/21 of this

of the Council Regulation on the Statute for a Euro-

report, relevant disclosures on corporate governance

pean Company (SE Regulation), Section 179 (1) AktG

practices and a description of the working practices of

(German Stock Corporation Act) and Section 18 of

the Executive Board and the Supervisory Board.

the Articles of Association of KWS SAAT SE, amend-

ments to the Articles of Association require that at

Compensation Report

least half the capital stock be represented and that a

The compensation report contains explanations

resolution be adopted by the Shareholders’ Meeting

on the salient features, structure and level of the

by a simple majority of the capital stock represented

compensation paid to members of the Executive

in adoption of the resolution, unless obligatory stat-

Board and the Supervisory Board. It is based on the

utory regulations specify otherwise; if at least half

relevant statutory provisions and takes into account

the capital stock is not represented in adoption of

the pertinent recommendations of the German

the resolution to amend the Articles of Association,

Corporate Governance Code.

the resolution must be passed with a majority of at

least two-thirds of the votes cast. The power to make

Compensation for members of

amendments to the Articles of Association that only

the Supervisory Board

affect the wording (Section 179 (1) Sentence 2 AktG)

The Supervisory Board’s compensation was set by the

has been conferred on the Supervisory Board in ac-

Annual Shareholders’ Meeting on December 17, 2009,

cordance with Section 22 of the Articles of Associa-

and has remained unchanged since then. It is based

tion of KWS SAAT SE.

on the size of the company, the duties and responsibil-

ities of the members of the Supervisory Board and the

Powers of the Executive Board, in particular in

company’s economic situation. The remuneration in-

relation to issuing or buying back shares

cludes not only a fixed payment of €28 thousand p. a.

The Executive Board is not currently authorized to

and a fixed payment for work on committees, but also

issue or buy back shares.

a performance-related component. This component is

Other disclosures | Combined Management Report

KWS Group | Annual Report 2014/2015geared toward the company’s long-term development.

In keeping with that, members of the Supervisory

Board receive €400 for each full €0.10 by which the

average consolidated annual earnings per share be-

fore minority interests for the past three fiscal years,

starting with the fiscal year for which the compensa-

tion is granted and calculated backward, exceeds the

amount of €4.00. The performance-related payment

is limited to the amount of the fixed payment.

Supervisory Board compensation

in €

Dr. Andreas J. Büchting 1

Dr. Arend Oetker 2

Fixed

84,000.00

42,000.00

Work on
committees

Performance-
related

2014/2015
Total

Previous year
Total

0.00

84,000.00

168,000.00

42,000.00

84,000.00

Hubertus von Baumbach 3

28,000.00

25,000.00

28,000.00

81,000.00

Jürgen Bolduan

28,000.00

10,000.00

28,000.00

66,000.00

Cathrina Claas-Mühlhäuser

28,000.00

5,000.00

28,000.00

61,000.00

Dr. Berthold Niehoff

28,000.00

0.00

28,000.00

56,000.00

84,000.00

81,000.00

66,000.00

61,000.00

56,000.00

238,000.00

40,000.00

238,000.00

516,000.00

1 Chairman
2 Deputy Chairman
3 Chairman of the Audit Committee

The Chairman of the Supervisory Board receives

three times and his or her deputy one-and-a-half

Compensation for members of the

times the fixed compensation of an ordinary mem-

Executive Board

ber. There is currently no extra compensation for

The compensation of members of the Executive Board

them for work on committees. The Chairman of the

was set by the Supervisory Board and approved by the

Audit Committee receives €25 thousand p. a. Or-

Annual Shareholders’ Meeting. It is based on the size

dinary members of the Supervisory Board receive

and activity of the company, its economic and financial

€5 thousand p. a. for their work on the Committee

situation and the level and structure of compensa-

for Executive Board Affairs and €10 thousand p. a.

tion for managing board members at comparable

for their work on the Audit Committee. The mem-

companies.

bers of the Supervisory Board are reimbursed for

all expenses – including value-added tax – that they

The “total compensation” of the Executive Board

incur while carrying out the duties of their position.

comprises five components:

The compensation for the Supervisory Board in the

1. A basic fixed annual salary

year under review was unchanged over the previ-

2. A variable payment in the form of a

ous year. Total compensation was €516 thousand

performance-related bonus

exclusive of value-added tax. In all, 46% (46%) or

3. A variable payment in the form of a long-term

€238 (238) thousand of the total compensation is

incentive (LTI) based on the KWS stock price

performance-related.

4. Any special payments

5. Other remuneration and pension awards.

70 Combined Management Report | Other disclosures

Annual Report 2014/2015 | KWS GroupThe total compensation of every member of the

There has also been a stock-based bonus system in-

Executive Board is limited individually to an overall

tended to act as a long-term incentive since fiscal year

amount that can be achieved.

2010/2011. Every member of the Executive Board is

obligated to invest a freely selectable amount ranging

Additional payments for any duties performed in

between at least 20% and at most 50% of the gross

subsidiaries and associated companies are offset

performance-related bonus payment in shares of

against the variable payment (performance-related

KWS SAAT SE. The long-term incentive (LTI) is paid in

bonus). This – including the other remuneration – is

the form of cash compensation after a holding period

limited to an amount of €500 thousand or, in the case

of five years. This payment is calculated on the basis

of Dr. Peter Hofmann, to €300 thousand per fiscal

of the share’s performance over the holding period

year. If sustainable average net incomes of more than

and on the average return on sales (ROS, based on

€100 million in each year are generated in two succes-

segment reporting), measured as the ratio of operat-

sive years, the upper limit for the bonus is increased to

ing income to net sales. For persons with contracts as

€600 thousand for each Executive Board member as

of July 1, 2014, the LTI payment is limited to a maxi-

of the following fiscal year. The increase in the upper

mum of 1.5 times (2 times for Dr. Hagen Duenbostel)

limit for the bonus does not yet apply to the Executive

of the capital used to acquire the shares. Due to his

Board member Dr. Peter Hofmann.

leaving the Executive Board, Philip von dem Bussche

The basic annual salary in the year under review for

the last time in January 2015.

Philip von dem Bussche until he left at the end of

2014 was still €216 thousand, that for the Executive

Additional special payments were not granted to

Board members Dr. Hagen Duenbostel, Dr. Leon

the members of the Executive Board in the past

took part in the LTI program by acquiring shares for

Broers and Eva Kienle was €300 thousand, and that

fiscal year.

for Dr. Peter Hofmann was €250 thousand. New regu-

lations on the compensation for Dr. Peter Hofmann

Apart from these salaries, there is also non-monetary

have been agreed on as of fiscal 2015/2016 and will

compensation, such as a company car or a phone, as

raise his basic salary to the level of the other Executive

fringe benefits. There are also accident insurance pol-

Board members. Consequently, the limit on his bonus

icies for the members of the Executive Board. Pension

and total compensation will be adjusted to €500 thou-

obligations are granted both in the form of a direct

sand and €1,247 thousand respectively per fiscal year.

obligation to provide benefits and a defined contribu-

The Chief Executive Officer receives an extra “CEO

tion plan, with the annual anticipated pensions ranging

bonus” of 25% on top of the basic annual salary. The

at present between €13 thousand and €130 thousand.

basic compensation is paid as a monthly salary.

In fiscal 2014/2015, €279 (108) thousand was paid to

a provident fund backed by a guarantee for pension

The variable payment for Executive Board members

commitments to members of the Executive Board.

depends on the Company’s performance over three

€143 (115) thousand was allocated to the pension pro-

years. It is calculated on the basis of a linear percent-

visions in accordance with IAS 19. Pension provisions

age of the average net income of the KWS Group for

totaling €960 (588) thousand were formed for the

the past three fiscal years.

members of the Executive Board of KWS SAAT SE.

Pension commitments

in €

06/30/2015 06/30/2014

Transition from individual
commitments to
the Executive Board

Interest
expenses

Revaluation
effects

Dr. Hagen Duenbostel

682,379.00 587,861.00

0.00

17,048.00

77,470.00

Dr. Peter Hofmann

278,114.00

229,766.00

6,663.00

41,685.00

960,493.00 587,861.00

229,766.00

23,711.00

119,155.00

Other disclosures | Combined Management Report

KWS Group | Annual Report 2014/2015The total compensation to be reported for the Execu-

salary, including benefits in kind, 44% (54%) by

tive Board in accordance with Section 314 (1) No. 6a

annual variable components and 22% (18%) by

of the German Commercial Code (HGB) in conjunction

multi-year variable components. The tables below

with German Accounting Standard No. 17 (GAS 17)

provide an overview of the total compensation

was €4,007 (3,481) thousand in fiscal 2014/2015.

granted in the fiscal year on an individualized basis

34% (28%) was accounted for by the basic annual

(excluding pension costs).

Fiscal year 2014/2015

in €

Cash compensation

LTI fair
value

Total

LTI

Basic com-
pensation

Other
emolu-
ments

Perfor-
mance-
related
bonus3

Total

Grant

Cost

Philip von dem Bussche1

135,000.00

9,131.94

282,868.06

427,000.00 159,035.30

586,035.30 232,368.96

Dr. Léon Broers

300,000.00

21,902.68

433,588.53

755,491.21 216,196.55

971,687.76 174,081.27

Dr. Hagen Duenbostel

337,500.00

20,350.50

433,588.53

791,439.03 240,839.40 1,032,278.43 229,067.52

Eva Kienle

300,000.00

26,995.92

433,588.53

760,584.45

54,366.70

814,951.15

5,449.04

Dr. Peter Hofmann2

187,499.97

15,905.68

195,114.84

398,520.49

0.00

398,520.49

0.00

1,259,999.97

94,286.72 1,778,748.49 3,133,035.18 670,437.95 3,803,473.13 640,966.79

Fiscal year 2013/2014

in €

Cash compensation

LTI fair
value

Total

LTI

Basic com-
pensation

Other
emolu-
ments

Perfor-
mance-
related
bonus3

Total

Grant

Cost

Philip von dem Bussche

270,000.00

17,876.82

566,123.18

854,000.00

235,178.36

1,089,178.36 142,335.17

Dr. Léon Broers

216,000.00

21,104.58

512,895.42

750,000.00

186,895.18

936,895.18

98,410.03

Dr. Hagen Duenbostel

216,000.00

19,488.16

514,511.84

750,000.00

187,819.26

937,819.26 137,969.82

Eva Kienle

200,000.00

26,548.49

290,263.21

516,811.70

0.00

516,811.70

0.00

902,000.00

85,018.05

1,883,793.65 2,870,811.70

609,892.80

3,480,704.50 378,715.02

1 Until December 31, 2014
2 Since October 1, 2014
3 Annual variable compensation

Compensation of former members of the Executive

Board, as incurred in the past fiscal year and in the

Board and their surviving dependents amounted to

previous year in accordance with the recommen-

€1,693 (1,476) thousand, of which €364 (364) thousand

dations in Clause 4.2.5 (3) of the German Corporate

was non-compete compensation. Pension commit-

Governance Code (DCGK) in the version dated

ments in accordance with IAS 19 (2011) recognized for

June 24, 2014.

this group of persons amounted to €7,131 (7,018) thou-

sand as of June 30, 2015. The pension commitments

The target compensation, including the agreed lower

for three former members of the Executive Board are

and upper limits, is shown under “Award”. The

backed by a guarantee. No loans were granted to

LTI awards are assessed at the present value at the

members of the Executive Board and the Supervisory

time of acquisition of the last tranche of shares. The

Board in the year under review.

details on the receipts show the payments actually

made to a member of the Executive Board in fiscal

In the tables below, we present the individual awards

years 2013/2014 and 2014/2015.

and receipts for each member of the Executive

72 Combined Management Report | Other disclosures

Annual Report 2014/2015 | KWS GroupExecutive Board compensation

in €

Grant

Prevoius
year

2014/2015

Receipt

Prevoius
year

2014/2015

min.

max.

Philip von dem Bussche (Chief Executive Officer until December 31, 2014)

Fixed payment

Fringe benefits

Subtotal1

Annual variable payment
(performance-related bonus)3

135,000.00

270,000.00

135,000.00

270,000.00

9,131.94

17,876.82

9,131.94

17,876.82

144,131.94

135,000.00

144,131.94

287,876.82

144,131.94

287,876.82

282,868.06

0.00

282,868.06

566,123.18

282,868.06

566,123.18

Total cash compensation1

427,000.00

135,000.00

427,000.00

854,000.00

427,000.00

854,000.00

Multi-year variable payment

Long term incentive 2012/2013

235,178.36

Long term incentive 2013/2014

159,035.30

0.00

424,334.10

Subtotal1

Pension costs 2

586,035.30

135,000.00

851,334.10 1,089,178.36

427,000.00

854,000.00

0.00

Total Compensation1

586,035.30

135,000.00

851,334.10 1,089,178.36

427,000.00

854,000.00

Hagen Duenbostel (Chief Executive Officer as of January 1, 2015)

Fixed payment

Fringe benefits

Subtotal1

Annual variable payment
(performance-related bonus)3

337,500.00

216,000.00

337,500.00

216,000.00

20,350.50

19,488.16

20,350.50

19,488.16

357,850.50

135,000.00

357,850.50

235,488.16

357,850.50

235,488.16

421,424.46

0.00

479,649.50

514,511.84

433,588.53

514,511.84

Total cash compensation1

779,274.96

135,000.00

837,500.00

750,000.00

791,439.03

750,000.00

Multi-year variable payment

Long term incentive 2012/2013

187,819.26

Long term incentive 2013/2014

240,839.40

0.00

642,601.80

Subtotal1

Pension costs 2

1,020,114.36

135,000.00 1,480,101.80

937,819.26

791,439.03

750,000.00

17,048.00

115,076.00

0.00

Total Compensation1

1,037,162.36

152,048.00 1,765,000.00 1,052,895.26

791,439.03

750,000.00

Léon Broers

Fixed payment

Fringe benefits

Subtotal1

Annual variable payment
(performance-related bonus)3

300,000.00

216,000.00

300,000.00

216,000.00

21,902.68

21,104.58

21,902.68

21,104.58

321,902.68

135,000.00

321,902.68

237,104.58

321,902.68

237,104.58

421,424.46

0.00

478,097.32

512,895.42

433,588.53

512,895.42

Total cash compensation1

743,327.14

135,000.00

800,000.00

750,000.00

755,491.21

750,000.00

Multi-year variable payment

Long term incentive 2012/2013

186,895.18

Long term incentive 2013/2014

216,196.55

0.00

346,110.21

Subtotal1

Pension costs 2

959,523.69

135,000.00 1,146,110.21

936,895.18

755,491.21

750,000.00

0.00

Total Compensation1

959,523.69

135,000.00 1,547,000.00

936,895.18

755,491.21

750,000.00

1 Taking into account the agreed lower and upper limits.
2 In accordance with IAS 19 from commitments for pensions and other pension benefits; this relates to costs for the company, not the actual entitlement or payment.
3 Annual variable compensation.

Other disclosures | Combined Management Report

KWS Group | Annual Report 2014/2015Executive Board compensation

in €

Eva Kienle

Fixed payment

Fringe benefits

Subtotal1

Annual variable payment
(performance-related bonus)3

Grant

Prevoius
year

2014/2015

Receipt

Prevoius
year

2014/2015

min.

max.

300,000.00

200,000.00

300,000.00

200,000.00

26,995.92

26,548.49

26,995.92

26,548.49

326,995.92

135,000.00

326,995.92

226,548.49

326,995.92

226,548.49

421,424.46

0.00

473,004.08

292,272.54

433,588.53

290,263.21

Total cash compensation1

748,420.38

135,000.00

800,000.00

518,821.03

760,584.45

516,811.70

Multi-year variable payment

Long term incentive 2012/2013

0.00

Long term incentive 2013/2014

54,366.70

0.00

87,035.94

Subtotal1

Pension costs 2

802,787.08

135,000.00

887,035.94

518,821.03

760,584.45

516,811.70

0.00

Total Compensation1

802,787.08

135,000.00 1,247,000.00

518,821.03

760,584.45

516,811.70

Peter Hofmann (since January 10, 2014)

Fixed payment

Fringe benefits

Subtotal1

187,499.97

15,905.68

203,405.65

135,000.00

203,405.65

Annual variable payment
(performance-related bonus)3

189,641.01

0.00

209,094.32

Total cash compensation1

393,046.66

135,000.00

412,499.97

Multi-year variable payment

Long term incentive 2012/2013

Long term incentive 2013/2014

0.00

Subtotal1

Pension costs 2

393,046.66

135,000.00

412,499.97

6,663.00

Total Compensation1

399,709.66

141,663.00

635,250.00

0.00

187,499.97

15,905.68

203,405.65

195,114.84

398,520.49

0.00

398,520.49

0.00

74 Combined Management Report | Other disclosures

Annual Report 2014/2015 | KWS GroupAnnual Financial Statements
for the KWS Group 2014/2015

76 Statement of comprehensive income

77 Balance sheet

78 Statement of changes in fixed assets

80 Statement of changes in equity

82 Cash flow statement

83 Notes for the KWS Group 2014/2015

88 1. General disclosures

94 2. Disclosures on the annual financial statements

97 3. Segment reporting for the KWS Group

101 4. Notes to the balance sheet

125 5. Notes to the income statement

132 6. Notes to the cash flow statement

132 7. Other notes

135 8. Declaration by legal representatives

136 Auditors’ Report

s
t
n
e
m
e
t
a
t
S

a
c
n
a
n
F

a
u
n
n
A

Statement of comprehensive income

in € thousand

I. Income statement

Net sales

Cost of sales

Gross profit on sales

Selling expenses

Research & development expenses

General and administrative expenses

Other operating income

Other operating expenses

Operating income

Interest and similar income

Interest and similar expenses

Income from equity-accounted financial assets

Other net income from equity investments

Net financial income/expenses

Results of ordinary activities

Taxes

Net income for the year

II. Other income

Revaluation of available-for-sale financial assets

Currency translation difference for economically independent
foreign units

Currency translation difference from equity-accounted
financial assets

Items that may have to be subsequently reclassified as profit or loss

Revaluation of net liabilities/assets from defined benefit plans

Items not reclassified as profit or loss

Other income after tax

III. Comprehensive income (total of I. and II.)

Net income after shares of minority interests

Share of minority interests

Net income for the year

Comprehensive income after shares of minority interests

Share of minority interests

Comprehensive income

Earnings per share (in €)

76 Annual Financial Statements | Statement of comprehensive income

Note no.

2014/2015

Previous year

(20)

(21)

(22)

(23)

(24)

(27)

(12)

986,015

453,498

532,517

188,991

174,627

74,756

87,960

68,686

113,417

1,621

12,401

23,747

3,722

16,689

130,106

46,058

84,048

923,481

429,272

494,209

170,024

149,382

71,866

58,107

42,777

118,267

1,717

14,428

20,208

7,497

125,764

45,488

80,276

–172

–161

24,606

–14,915

21,223

45,657

– 8,956

36,701

120,749

82,712

1,336

84,048

120,282

467

120,749

– 4,283

–19,359

– 5,878

– 25,237

55,039

77,124

3,152

80,276

51,992

3,047

55,039

12.53

11.69

Annual Report 2014/2015 | KWS GroupBalance sheet

Assets

in € thousand

Intangible assets

Property, plant and equipment

Equity-accounted financial assets

Financial assets

Noncurrent tax assets

Deferred tax assets

Noncurrent assets

Inventories

Biological assets

Trade receivables

Securities

Cash and cash equivalents

Current tax assets

Other current financial assets

Other current assets

Current assets

Total assets

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 financial liabilities

Other current liabilities

Current liabilities

Liabilities

Note no.

06/30/2015

06/30/2014

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

(9)

85,661

351,856

153,018

2,465

3,976

54,319

651,295

177,990

12,344

309,665

66,973

41,211

57,549

26,758

11,756

73,877

283,893

126,130

2,700

4,189

47,935

538,724

120,180

12,568

297,780

69,188

53,076

45,265

14,883

13,305

704,246

626,245

1,355,541

1,164,969

Note no.

06/30/2015

06/30/2014

(12)

19,800

5,530

705,720

7,668

738,718

110,641

181,783

1,600

28,095

12,756

19,800

5,530

604,376

8,063

637,769

98,951

113,754

1,469

26,165

12,676

(14)

334,875

253,015

87,355

32,283

59,658

30,111

15,952

56,589

281,948

616,823

74,825

40,086

56,821

35,426

11,617

55,410

274,185

527,200

(15)

Total equity and liabilities

1,355,541

1,164,969

Balance sheet | Annual Financial Statements

KWS Group | Annual Report 2014/2015Statement of changes in fixed assets

Fiscal year 2014/2015

in € thousand

Gross book values

Amortization/depreciation

Net book values

Change
in con
solidated
companies

Currency
translation

Additions Disposals

Transfers

Balance
06/30/2015

Balance

07/01/2014

Currency

Planned

Value im

translation

additions

pairments Disposals

Transfers

– 2,819

3,584

21,511

2,610

24,121

4,460

585

– 399

110,543

36,975

– 399

147,518

6,118

26,163

1,744

14,701

284,248

43,411

5,452

48,863

72,244

– 973

10,561

3,905

– 973

1,130

10,561

8,729

3,905

Balance
07/01/2014

88,375

34,365

122,740

235,426

Balance

06/30/2015

06/30/2014

56,405

5,452

61,857

80,407

54,138

31,523

85,661

44,964

28,913

73,877

203,841

163,182

173,546

1,193

6,017

23,741

2,582

9,295

211,210

108,178

298

13,563

120,161

91,049

65,368

81,818

28,185

1,441

589

106

14,002

20,283

7,454

576

403

– 24,171

90,489

24,483

54,658

1,200

9,153

58,004

32,485

24,481

27,160

28,183

518,975

6,807

12,241

84,189

12,183

401

610,430

235,082

2,628

31,445

10,602

258,574

351,856

283,893

134,523

3,048

779,286

21,223

–13,278

31,100

12,157

–116

182

331

25,095

23,136

119,931

25,256

161,411

2,835

922,194

8,393

348

123

292,686

1,778

42,006

3,905

11,181

8,393

153,018

126,130

370

2,465

2,700

329,194

593,000

486,600

– 21

– 56

– 7

Gross book values

Amortization/depreciation

Net book values

Patents, industrial property
rights and software

Goodwill

Intangible assets

Land and buildings

Technical equipment
and machinery

Operating and
office equipment

Payments on account

Property, plant and
equipment

Equityaccounted
financial assets

Financial assets

Assets

Fiscal year 2013/2014

in € thousand

Change
in con
solidated
companies

Currency
translation

Additions Disposals

Transfers

Balance
06/30/2014

Balance

07/01/2013

Currency

Planned

Value im

translation

additions

pairments Disposals

Transfers

478

1,640

1,962

7,000

101

550

Balance

06/30/2014

06/30/2013

43,411

5,452

48,863

72,244

44,964

28,913

73,877

51,608

31,088

82,696

163,182

158,373

6,993

– 25

6,968

103

88,375

34,365

103

122,740

11,179

602

4,200

235,426

8,606

7,459

4,176

2,150

6,326

12,923

2,300

3,225

173,546

100,646

– 974

11,023

1,821

– 696

108,178

65,368

61,324

8,857

28,056

4,741

151

2,075

– 9,603

81,818

28,185

7,792

4,272

690

54,658

27,160

28,183

25,904

10,178

61,015

7,794

–103

518,975

217,523

– 2,071

26,274

6,643

–1

235,082

283,893

255,779

21,183

1,423

90,589

11,272

19,255

–12

134,523

3,048

779,286

260,140

–1,925

34,880

6,326

6,734

292,685

486,600

460,536

–1

8,393

126,130

120,490

348

2,700

1,571

30,755

3,302

34,057

65,613

51,262

8,393

167

– 35

– 283

– 814

181

Patents, industrial property
rights and software

Goodwill

Intangible assets

Land and buildings

Technical equipment
and machinery

Operating and
office equipment

Payments on account

Property, plant and
equipment

Equityaccounted
financial assets

Financial assets

Assets

Balance
07/01/2013

82,363

34,390

116,753

223,986

– 990

– 3,337

161,970

– 2,272

77,166

10,180

–1,539

– 297

473,302

– 7,445

128,883

1,738

– 4,283

– 6

720,676

–12,724

78 Annual Financial Statements | Statement of changes in fixed assets

Annual Report 2014/2015 | KWS Group

Statement of changes in fixed assets

Fiscal year 2014/2015

in € thousand

Gross book values

Amortization/depreciation

Net book values

Patents, industrial property

rights and software

Goodwill

Intangible assets

Land and buildings

Technical equipment

and machinery

Operating and

office equipment

Payments on account

Property, plant and

equipment

Equityaccounted

financial assets

Financial assets

Assets

Fiscal year 2013/2014

in € thousand

Patents, industrial property

rights and software

Goodwill

Intangible assets

Land and buildings

Technical equipment

and machinery

Operating and

office equipment

Payments on account

Property, plant and

equipment

Equityaccounted

financial assets

Financial assets

Assets

134,523

3,048

779,286

21,223

–13,278

31,100

12,157

–116

182

331

25,095

23,136

119,931

25,256

161,411

2,835

922,194

Balance

07/01/2013

82,363

34,390

116,753

223,986

– 990

– 3,337

128,883

1,738

– 4,283

– 6

720,676

–12,724

21,183

1,423

90,589

11,272

19,255

–12

134,523

3,048

779,286

Change

in con

Currency

solidated

translation

companies

Additions Disposals

Transfers

Balance

07/01/2014

88,375

34,365

122,740

235,426

Balance

06/30/2015

Balance
07/01/2014

– 2,819

3,584

21,511

2,610

24,121

4,460

585

– 399

110,543

36,975

– 399

147,518

6,118

26,163

1,744

14,701

284,248

43,411

5,452

48,863

72,244

173,546

1,193

6,017

23,741

2,582

9,295

211,210

108,178

298

13,563

81,818

28,185

1,441

589

106

14,002

20,283

7,454

576

403

– 24,171

90,489

24,483

54,658

1,200

9,153

518,975

6,807

12,241

84,189

12,183

401

610,430

235,082

2,628

31,445

8,393

348

123

Currency
translation

Planned
additions

Value im
pairments Disposals

Transfers

– 973

10,561

3,905

– 973

1,130

10,561

8,729

3,905

478

1,640

1,962

7,000

10,602

101

292,686

1,778

42,006

3,905

11,181

Balance
06/30/2015

Balance
06/30/2014

– 21

– 56

– 7

56,405

5,452

61,857

80,407

54,138

31,523

85,661

44,964

28,913

73,877

203,841

163,182

120,161

91,049

65,368

58,004

32,485

24,481

27,160

28,183

258,574

351,856

283,893

8,393

153,018

126,130

370

2,465

2,700

329,194

593,000

486,600

Change

in con

Currency

solidated

translation

companies

Additions Disposals

Transfers

Gross book values

Amortization/depreciation

Net book values

Balance

06/30/2014

Balance
07/01/2013

Balance
06/30/2014

Balance
06/30/2013

Currency
translation

Planned
additions

Value im
pairments Disposals

Transfers

6,993

– 25

6,968

103

88,375

34,365

103

122,740

11,179

602

4,200

235,426

30,755

3,302

34,057

65,613

– 35

– 283

8,606

7,459

161,970

– 2,272

12,923

2,300

3,225

173,546

100,646

– 974

11,023

77,166

10,180

–1,539

– 297

8,857

28,056

4,741

151

2,075

– 9,603

81,818

28,185

51,262

– 814

7,792

473,302

– 7,445

61,015

7,794

–103

518,975

217,523

– 2,071

26,274

8,393

167

181

4,176

2,150

6,326

550

43,411

5,452

48,863

72,244

44,964

28,913

73,877

51,608

31,088

82,696

163,182

158,373

1,821

– 696

108,178

65,368

61,324

4,272

690

54,658

27,160

28,183

25,904

10,178

6,643

–1

235,082

283,893

255,779

–1

8,393

126,130

120,490

348

2,700

1,571

292,685

486,600

460,536

260,140

–1,925

34,880

6,326

6,734

Statement of changes in fixed assets | Annual Financial Statements

KWS Group | Annual Report 2014/2015

Statement of changes in equity

in € thousand

Parent company

Minority interest

Group equity

Subscribed
capital

Capital
reserve

Accumu
lated group
equity from
earnings

Comprehensive other
group income

Comprehensive other

group income

Total

Minority

interest

Comprehensive other

group income

Total

Adjustments
from currency
translation of
equity-
accounted
financial
assets

Reserve for
available-
for-sale
financial
assets

Adjustments
from currency
translation

Balance as at July 1, 2013

19,800

5,530

Dividends paid

Net income for the year

Other income after tax

Total consolidated
gains (losses)

Change in shares of minority
interests

Other changes

– 7,300

– 7,010

230

–18,492

594

617,883

624,531

– 19,800

77,124

–14,930

– 4,283

77,124

–14,930

– 4,283

–161

–19,559

–265

Balance as at June 30, 2014

19,800

5,530

662,031

– 22,230

–11,293

– 24,795

594

629,706

9,088

–1,021

– 4

8,063

Dividends paid

Net income for the year

Other income after tax

Total consolidated
gains (losses)

Change in shares of minority
interests

Other changes

–19,800

82,712

25,463

21,223

82,712

25,463

21,223

–160

862

Balance as at June 30, 2015

19,800

5,530

724,943

3,233

9,930

– 91

– 33,751

1,456

731,050

10,424

–1,878

– 878

7,668

738,718

Revaluation

of defined

benefit

Other trans-

plans

actions

Revaluation

Adjustments

of defined

from currency

translation

–1,036

benefit

plans

– 425

Other

trans-

actions

– 4

33,227

–1,328

3,152

–19,800

77,124

– 25,132

51,992

3,152

– 20,104

– 25,963

– 265

–19,800

82,712

37,570

1,336

120,282

1,336

– 5,758

– 545

– 8,956

–120

545

3,047

55,039

31,762

–1,328

3,152

–105

– 25,418

1,336

–869

649,645

– 21,128

80,276

– 25,237

– 45,522

– 265

637,769

–19,800

84,048

36,701

– 857

–12

–862

467

120,749

80 Annual Financial Statements | Statement of changes in equity

Annual Report 2014/2015 | KWS Group

Statement of changes in equity

in € thousand

Parent company

Minority interest

Group equity

Subscribed

capital

Capital

reserve

Accumu

lated group

equity from

earnings

Comprehensive other
group income

Total

Minority
interest

Comprehensive other
group income

Total

Balance as at July 1, 2013

19,800

5,530

Revaluation
of defined
benefit
plans

Other trans-
actions

–18,492

594

617,883

Comprehensive other

group income

Adjustments

from currency

translation of

Reserve for

equity-

available-

Adjustments

from currency

translation

– 7,300

accounted

financial

assets

– 7,010

for-sale

financial

assets

230

–14,930

– 4,283

77,124

–14,930

– 4,283

25,463

21,223

82,712

25,463

21,223

–161

–160

624,531

– 19,800

77,124

–19,559

–265

–19,800

82,712

Dividends paid

Net income for the year

Other income after tax

Total consolidated

gains (losses)

Change in shares of minority

interests

Other changes

Dividends paid

Net income for the year

Other income after tax

Total consolidated

gains (losses)

Change in shares of minority

interests

Other changes

Balance as at June 30, 2014

19,800

5,530

662,031

– 22,230

–11,293

– 24,795

594

629,706

9,088

–1,021

Balance as at June 30, 2015

19,800

5,530

724,943

3,233

9,930

– 91

– 33,751

1,456

731,050

10,424

–1,878

– 8,956

–19,800

82,712

37,570

1,336

120,282

1,336

– 857

862

Adjustments
from currency
translation

Revaluation
of defined
benefit
plans

–1,036

– 425

Other
trans-
actions

– 4

33,227

–1,328

3,152

–19,800

77,124

– 25,132

51,992

3,152

– 20,104

– 25,963

– 265

–120

545

– 5,758

– 545

31,762

–1,328

3,152

–105

649,645

– 21,128

80,276

– 25,237

3,047

55,039

– 25,418

– 4

8,063

1,336

–869

–12

– 45,522

– 265

637,769

–19,800

84,048

36,701

467

120,749

–862

– 878

7,668

738,718

Statement of changes in equity | Annual Financial Statements

KWS Group | Annual Report 2014/2015

Cash flow statement

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 no.

2014/2015

Previous year

84,048

80,276

45,911

–1,192

– 36,704

92,063

14,027

–160

41,206

1,631

– 38,159

84,954

25,567

– 92

– 72,809

– 62,626

2,841

12,157

48,119

1,741

16,932

11,272

76,007

1,244

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

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

Proceeds and payments (+) from/for equity-accounted companies

Net cash from operating activities

(1)

Proceeds from disposals of property, plant and equipment

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

– 82,108

– 56,485

Proceeds from disposals of intangible assets

Payments (–) for capital expenditure on intangible assets

Proceeds from disposals of financial assets

Payments (–) for capital expenditure on financial assets

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

Net cash from investing activities

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 financing activities

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

Cash and cash equivalents at end of year

107

– 4,468

229

– 7,535

– 31,727

–123,761

–19,800

103,678

– 30,907

– 4,573

48,398

– 27,244

13,164

122,264

108,184

(2)

(3)

(4)

– 7,071

– 874

– 63,089

– 66,915

46,265

– 32,902

9,994

– 43,558

– 30,640

– 2,909

155,813

122,264

82 Annual Financial Statements | Cash flow statement

Annual Report 2014/2015 | KWS Group

Notes for the KWS Group 2014/2015

The KWS Group (KWS Konzern) is a consolidated group as

IFRS 11 “Joint Arrangements” supersedes the previous

defined in the International Financial Reporting Standards

regulations of IAS 31, “Interests in Joint Ventures”, and SIC-13,

(IFRS) published by the International Accounting Standards

“Jointly Controlled Entities – Non-monetary Contributions by

Board (IASB), London, taking into account the interpreta-

Venturers”. IFRS 11 governs the financial reporting of joint

tions of the International Financial Reporting Interpreta-

arrangements and prescribes only the equity method for

tions Committee (IFRIC) and in addition the commercial

consolidation of joint ventures. Application of IFRS 11 had

law regulations to be applied pursuant to Section 315 a (1)

significant impacts on the consolidated financial statements

of the HGB (German Commercial Code).

of the KWS Group.

KWS SAAT SE is an international company based in

IFRS 12 contains more extensive disclosure requirements

Germany and has its headquarters at Grimsehlstrasse 31,

in connection with subsidiaries, joint ventures, associated

37574 Einbeck, Germany.

companies and unconsolidated structured companies.

IAS 27 (2011) and IAS 28 (2011) are subsequent amendments

The statements were prepared under the assumption that

of the new IFRS 10, IFRS 11 and IFRS 12.

the operations of the company will be continued.

There are significant changes for the KWS Group in particular

The accounting and measurement methods have generally

from application of IFRS 11, since for the first time in

been retained without change, except for the changes re-

fiscal 2014/2015 the consolidated financial statements no

sulting from the new accounting standards IAS 27 (2011),

longer include the proportionate income, expenses, assets,

IAS 28 (2011), IFRS 10, IFRS 11 and IFRS 12.

liabilities and cash flows of the joint ventures AGRELIANT

Unless otherwise stated, all the figures in the Notes are in

INC., Chatham, Canada, and GENECTIVE S.A., Chappes,

thousands of euros (€ thousand) and have been rounded in

France (as well as SOCIETE DE MARTINVAL S.A. in the

accordance with standard commercial practice.

previous year).

GENETICS LLC., Westfield, U.S., AGRELIANT GENETICS

IAS 27 (2011), IAS 28 (2011), IFRS 10, IFRS 11 and

These new standards were applied for the first time in com-

IFRS 12 – Consolidation

pliance with the specific transitional provisions.

IFRS 10 “Consolidated Financial Statements” introduces a

model where control is the single basis for consolidation of

The new standards on consolidation must be applied for the

all types of entities. Under the new concept, control exists

first time retrospectively. Consequently, the comparative

when the following three criteria are cumulatively fulfilled:

figures for the previous year have been adjusted accordingly.

The potential parent company has power over the potential

subsidiary due to voting rights or other rights, it has the right

The reconciliation and breakdown of the assets and lia-

to variable returns from the subsidiary and it has the ability

bilities for all joint ventures (AGRELIANT GENETICS LLC.,

to use its power to affect the amount of these returns.

AGRELIANT GENETICS INC., GENECTIVE S.A. and SOCIE-

First-time application of IFRS 10 did not result in any

portionate accounting to the equity method in accordance

changes to the companies consolidated in the KWS Group.

with IAS 8 is as follows for the balance sheets of the pre

TE DE MARTINVAL S.A.) as part of the transition from pro-

IFRS 10 supersedes the previous regulations of IAS 27

vious years:

“Consolidated and Separate Financial Statements” and

SIC-12 “Consolidation – Special Purpose Entities”.

Notes for the KWS Group 2014/2015 | Annual Financial Statements

KWS Group | Annual Report 2014/2015Changes to IFRS 11 – Balance sheet

in € thousand

Assets

Intangible assets

Property, plant and equipment

Equity-accounted financial
assets

Financial assets

Noncurrent tax assets

Deferred tax assets

Noncurrent assets

Inventories

Biological assets

Trade receivables

Securities

Cash and cash equivalents

Current tax assets

Other current financial assets

Other current assets

Current assets

Total assets

Equity and Liabilities

Subscribed capital

Capital reserve

Retained earnings

Minority interest

Equity

Long-term provisions

Long-term borrowings

Trade payables

Deferred tax liabilities

Other noncurrent liabilities

Noncurrent liabilities

Short-term provisions

Short-term borrowings

Trade payables

Current tax liabilities

Other current financial liabilities

Other current liabilities

Current liabilities

Liabilities

06/30/2014
(adjusted)

Adjustment
(application
of IFRS 11)

06/30/2014
(before
adjustment)

07/01/2013
(adjusted)

Adjustment
(application
of IFRS 11)

07/01/2013
(before
adjustment)

73,877

283,893

– 25,926

– 38,054

99,803

321,947

82,696

255,779

–19,170

– 31,844

126,130

121,475

2,700

4,189

47,935

538,724

120,180

12,568

297,780

69,188

53,076

45,265

14,883

13,305

– 74

–121

61,955

– 60,240

– 63,796

– 7,524

– 25,185

– 344

– 998

–1,728

2,774

4,189

48,056

476,769

180,420

12,568

361,576

76,712

78,261

45,609

15,881

15,033

4,014

5,719

37,133

506,816

102,800

11,316

288,507

95,345

60,468

24,385

25,871

11,633

– 3,291

– 7,816

59,354

– 30,336

– 71,360

– 5,533

– 41,049

– 716

–1,902

101,866

287,623

7,305

5,719

44,949

447,462

133,136

11,316

359,867

100,878

101,517

24,385

26,587

13,535

626,245

–159,815

786,060

620,325

–150,896

771,221

1,164,969

– 97,860

1,262,829

1,127,141

– 91,542

1,218,683

19,800

5,530

604,376

8,063

637,769

98,951

113,754

1,469

26,165

12,676

253,015

74,825

40,086

56,821

35,426

11,617

55,410

274,185

527,200

–10

– 683

–1

–167

– 288

–1,139

– 57,016

–13,271

– 24,290

– 41

– 574

–1,519

– 96,711

– 97,850

19,800

5,530

604,376

8,073

637,779

99,634

113,754

1,470

26,332

12,964

254,154

131,841

53,357

81,111

35,467

12,191

56,929

19,800

5,530

592,553

31,762

649,645

84,262

98,461

1,697

29,530

9,076

223,026

79,252

26,161

63,930

31,930

11,833

41,364

370,896

625,050

254,470

477,496

– 6,127

–165

– 6,290

– 52,098

– 7,098

–18,816

– 7,241

– 85,252

– 91,542

19,800

5,530

592,553

31,762

649,645

90,389

98,460

1,697

29,695

9,075

229,316

131,350

33,259

82,746

31,929

11,833

48,605

339,722

569,038

Total equity and liabilities

1,164,969

– 97,860

1,262,829

1,127,141

– 91,542

1,218,683

84 Annual Financial Statements | Notes for the KWS Group 2014/2015

Annual Report 2014/2015 | KWS Group

The statement of comprehensive income for fiscal year

2013/2014 and reconciliation of it pursuant to first-time

application of IFRS 11 can be seen from the table below:

Statement of comprehensive income

in € thousand

I. Income statement

Net sales

Cost of sales

Gross profit on sales

Selling expenses

Research & development expenses

General and administrative expenses

Other operating income

Other operating expenses

Operating income

Interest and similar income

Interest and similar expenses

Income from equity-accounted financial assets

Other net income from equity investments

Net financial income/expenses

Results of ordinary activities

Taxes

Net income for the year

II. Other comprehensive income

Revaluation of available-for-sale financial assets

Currency translation difference for economically
independent foreign units

Currency translation difference from
equity-accounted financial assets

Items that may have to be subsequently
reclassified as profit or loss

Revaluation of net liabilities/assets from
defined benefit plans

Items not reclassified as profit or loss

Other comprehensive income after tax

III. Comprehensive income (total of I. and II.)

Net income for the year

Net income after shares of minority interests

Share of minority interests

Comprehensive income

Comprehensive income after shares of minority interests

Share of minority interests

Earnings per share (in €)

2013/2014
(adjusted)

Adjustment
(application of
IFRS 11)

2013/2014
(before
adjustment)

923,481

429,272

494,209

170,024

149,382

71,866

58,107

42,777

118,267

1,717

14,428

20,208

7,497

125,764

45,488

80,276

– 254,526

–185,256

– 69,270

– 33,928

561

– 4,875

– 2,565

– 13,428

– 20,165

– 193

– 40

20,208

– 7

20,048

–117

–107

–10

1,178,007

614,528

563,479

203,952

148,821

76,741

60,672

56,205

138,432

1,910

14,468

– 12,551

125,881

45,595

80,286

–161

–14,915

4,283

–19,198

– 4,283

–19,359

– 5,878

– 25,237

55,039

80,276

77,124

3,152

55,039

51,992

3,047

– 10

–10

–19,359

– 5,878

– 25,237

55,049

80,286

77,124

3,162

55,049

51,992

3,057

11.69

0.00

11.69

Notes for the KWS Group 2014/2015 | Annual Financial Statements

KWS Group | Annual Report 2014/2015

In addition, the way in which amortization of and impairment

thousand and research & development costs increased by

losses on intangible assets acquired as part of business

€1,136 thousand. The effects of the change in presentation

combinations are presented in the income statement has

are summarized in the table relating to the adjustments pur-

changed. In previous periods they were carried as other

suant to first-time application of IFRS 11. This change in pre-

operating expenses. In the current fiscal year, they are

sentation did not have any impact on balance sheet items.

allocated to the relevant function costs. The figures for the

previous year have been adjusted accordingly. For the pre-

The table below presents reconciliation of the cash flow

vious year, that means that other operating expenses fell

statement for the previous year pursuant to first-time

by €9,442 thousand, selling expenses increased by €8,306

application of IFRS 11:

Cash flow statement

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

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

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

Proceeds and payments (+) from/for equity-accounted companies

Net cash from operating activities

Proceeds from disposals of property, plant and equipment

2013/2014
(adjusted)

80,276

Adjustment
(application of
IFRS 11)

2013/2014
(before ad
justment)

–10

80,286

41,206

1,631

– 38,159

84,954

25,567

–92

– 4,586

208

– 21,059

– 25,446

4,936

45,792

1,423

–17,100

110,400

20,631

–146

– 62,626

28,255

– 90,881

16,932

11,272

76,007

1,244

–4,082

11,272

14,989

–117

9,976

1,460

–14

1,027

12,332

–12,036

–12,035

15,286

–1,413

– 46,582

– 32,709

21,014

61,018

1,361

– 66,461

– 8,531

109

–1,901

– 75,421

– 66,915

58,301

– 32,903

9,994

– 31,523

– 45,926

–1,496

202,395

154,973

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

– 56,485

Proceeds from disposals of intangible assets

Payments (–) for capital expenditure on intangible assets

Proceeds from disposals of financial assets

Payments (–) for capital expenditure on financial assets

Net cash from investing activities

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 financing activities

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

Cash and cash equivalents at end of year

– 7,071

– 874

– 63,089

– 66,915

46,265

– 32,902

9,994

– 43,558

– 30,640

– 2,909

155,813

122,264

86 Annual Financial Statements | Notes for the KWS Group 2014/2015

Annual Report 2014/2015 | KWS Group

Use is made of the exemption specified in IFRS 11.C1B in

The new standards and interpretations to be applied did not

conjunction with IAS 8.28.

result in any significant impact.

In addition, the following standards had to be applied for the

The following standards and interpretations, or revisions of

first time in fiscal year 2014/2015:

standards or interpretations, were not applied in the year

under review, since they have not yet been adopted by the

■■ Amendments to IAS 32 – Financial Instruments: Presenta-

EU or application of them for fiscal 2014/2015 was not yet

tion: Offsetting Financial Assets and Financial Liabilities

mandatory:

■■ Amendments to IAS 36 – Impairment of Assets: Recover-

able Amount Disclosures for Non-Financial Assets

■■ Amendments to IAS 39 – Financial Instruments:

Recognition and Measurement: Novation of Derivatives

and Continuation of Hedge Accounting

■■ IFRIC 21 – Levies

Financial reporting standards and interpretations

Mandatory firsttime application

Amendments to IAS 19 (2011) – Employee Benefits: Employee Contributions

In fiscal year 2015/2016

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

In fiscal year 2015/2016

At the earliest in fiscal year 2016/2017

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

At the earliest in fiscal year 2016/2017

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

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

Amendments to IFRS 10 and IAS 28 – Investments in Associates and
Joint Ventures: Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture

Annual Improvements to the International Financial Reporting Standards
(2012 - 2014 cycle)

At the earliest in fiscal year 2016/2017

Amendments to IAS 1 – Presentation of Financial Statements: Disclosure Initiative

At the earliest in fiscal year 2016/2017

Amendments to IFRS 10, IFRS 12 and IAS 28 – Investment Entities: Applying the
Consolidation Exception

At the earliest in fiscal year 2016/2017

IFRS 15 – Revenue from Contracts with Customers

IFRS 9 – Financial Instruments

At the earliest in fiscal year 2017/2018

At the earliest in fiscal year 2018/2019

Notes for the KWS Group 2014/2015 | Annual Financial Statements

KWS Group | Annual Report 2014/2015The impact of the standards and interpretations on the

the results of this examination to date, KWS does not expect

consolidated financial statements of the KWS Group are

any significant effects on the consolidated financial state-

currently being examined and determined. On the basis of

ments from application of new or amended standards.

1. General disclosures

Companies consolidated in the KWS Group

According to IAS 36, goodwill is not amortized, but tested for

The consolidated financial statements of the KWS Group in-

impairment at least once a year (impairment-only approach).

clude the single-entity financial statements of KWS SAAT SE

Investments in unconsolidated companies are carried at cost.

and its subsidiaries in Germany and other countries, as

well as joint ventures and associated companies, which are

Joint ventures are consolidated using the equity method in

carried using the equity method. A company is a subsidiary

application of IFRS 11 and IAS 28. The basis for a joint ven-

if KWS SAAT SE has existing rights that give it the current

ture is a contractual agreement with a third party to manage

ability to control its relevant activities. Relevant activities are

a joint venture together. In the case of joint ventures, the

the activities that significantly affect the company’s returns.

parties who exercise joint management have rights to the

Control therefore only exists if KWS SAAT SE has the ability

net assets of the agreement.

to use its power to affect the amount of the variable returns.

Control can usually be derived from holding a majority of the

In the case of joint ventures measured in accordance

voting rights directly or indirectly. Subsidiaries and joint ven-

with the equity method, the carrying amount is increased

tures that are considered immaterial for the presentation and

or reduced annually by the equity capital changes corre-

evaluation of the financial position and performance of the

sponding to the KWS Group’s share. In the case of first-time

Group are not included. Details on the changes in the con-

consolidation of equity investments using the equity method,

solidated group are provided in Section 2. “Disclosures on

differences from first-time consolidation are treated in accor-

the annual financial statements – Consolidated group and

dance with the principles of full consolidation. The changes in

changes in the consolidated group”.

the proportionate equity that are recognized in profit or loss

Consolidation methods

are included, along with impairment of goodwill, under the

item “Income from equity-accounted financial assets” in the

The single-entity financial statements of the individual

net financial income/expenses.

subsidiaries included in the consolidated financial state-

ments and the single-entity financial statements of the

Associated companies in which a stake between 20% and

joint ventures and associated companies included using

50% is held are likewise measured using the equity method.

the equity method were uniformly prepared on the basis

In the year under review, KENFENG – KWS SEEDS CO.,

of the accounting and measurement methods applied at

LTD., Beijing, China, was carried for the first time as an as-

KWS SAAT SE; they were audited by independent auditors.

sociated company in the consolidated financial statements

For fully or proportionately consolidated units acquired be-

using the equity method. KWS has a significant influence on

fore July 1, 2003, the Group exercised the option allowed by

the associated company.

IFRS 1 to maintain the consolidation procedures chosen to

date. The goodwill reported in the HGB financial statements

Subsidiaries are always consolidated if such recognition is

as of June 30, 2003, was therefore transferred unchanged at

considered material for the fair presentation of the financial

its carrying amount to the opening IFRS balance sheet. For

position and results of operations of the KWS Group. As

acquisitions made after June 30, 2003, capital consolidation

part of the elimination of intra-Group balances, borrowings,

follows the purchase method by allocating the cost of acqui-

receivables, liabilities, and provisions are netted between

sition to the Group’s interest in the subsidiary’s remeasured

the consolidated companies. Intercompany profits not

equity at the time of acquisition. Any excess of interest in

realized at Group level are eliminated from intra-Group trans-

equity over cost is recognized as an asset, up to the amount

actions. Sales, income, and expenses are netted between

by which fair value exceeds the carrying amount. Any good-

consolidated companies, and intra-Group distributions of

will remaining after first-time consolidation is recognized

profit are eliminated.

under intangible assets.

88 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 1. General disclosures

Annual Report 2014/2015 | KWS GroupDeferred taxes on consolidation transactions recognized

financially, economically, and organizationally independent

in income are calculated at the tax rate applicable to the

entities are translated into euros using the functional curren-

company concerned. These deferred taxes are aggregated

cy method and rounded in accordance with standard com-

with the deferred taxes recognized in the separate financial

mercial practice as follows:

statements.

Minority interests are recognized in the amount of

the year;

the imputed percentage of equity in the consolidated

■■ Balance sheet items at the exchange rate on the balance

companies.

sheet date.

■■ Income statement items at the average exchange rate for

Currency translation

The following exchange rates were applied in the consoli-

Under IAS 21, the financial statements of the consolidated

dated financial statements for the main foreign currencies

foreign group companies that conduct their business as

relative to the euro:

1 EUR/

ARS

BRL

GBP

RUB

UAH

USD

Argentina

Brazil

Russia

Ukraine

USA

Rate on balance
sheet date

Average rate

06/30/2015 06/30/2014

2014/2015

2013/2014

10.16290

11.10030

10.27994

3.49470

0.71153

2.99440

0.80120

3.20855

0.75716

9.49031

3.11168

0.83282

61.52060

45.82510

59.64182

46.21843

23.54140

16.08685

20.80004

12.69831

1.11840

1.36510

1.19175

1.36030

The difference resulting from the application of annual

Accounting policies

average rates to the net profit for the period in the income

statement is taken directly to equity. According to IAS 21

Consistency of accounting policies

exchange differences resulting from loans to foreign

The accounting policies are unchanged from the previous

subsidiaries are reported in the other comprehensive

year, with the exception of the financial reporting standards

income and are not recognized in profit or loss.

IAS 10 and IFRS 11, which had to be applied for the first time

Classification of the statement of comprehensive

income

All estimates and assessments as part of accounting and

The costs for the functions include all directly attributable

measurement are continually reviewed; they are based on

costs, including other taxes. Research & development

historical patterns and expectations about the future regarded

expenses are reported separately for reasons of transparency.

as reasonable in the particular circumstances.

in the year under review.

Performance-based government grants are not deducted

from the costs to which they relate, but reported gross

under other operating income.

1. General disclosures | Notes for the KWS Group 2014/2015 | Annual Financial Statements

KWS Group | Annual Report 2014/2015Recognition of income and expenses

Property, plant, and equipment

Net sales include sales of products and services, less reve-

Property, plant, and equipment is measured at cost less

nue reductions. Net sales from the sale of products are re-

straight-line depreciation and impairment losses. In addition

alized at the time at which the opportunities and risks pass

to directly attributable costs, the cost of self-produced plant

to the buyer. Net sales from service transactions are recog-

or equipment also includes a proportion of the overheads

nized at the time at which the outcome of the transaction

and depreciation/amortization.

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 profit/loss.

Buildings

Operating equipment and other
facilities

Technical equipment and machinery

Laboratory and research facilities

Operating expenses are recognized in the income statement

upon the service in question being used or as of the date on

Other equipment, operating and office
equipment

Useful life

10 – 50 years

5 – 25 years

5 – 15 years

5 – 13 years

3 – 15 years

which they occur.

Intangible assets

Low-value assets are fully expensed in the year of purchase;

Purchased intangible assets are carried at cost less

they are reported as additions and disposals in the year of

straight-line amortization and impairment losses. It is neces-

purchase in the statement of changes in fixed assets.

sary to examine whether the useful life of intangible assets

Impairment losses on property, plant, and equipment are

is finite or indefinite. Goodwill has an indefinite useful life.

recognized according to IAS 36 whenever the recoverable

Goodwill and intangible assets with an indefinite useful life

amount of the asset is less than its carrying amount. The

are not amortized, but tested for impairment at least once a

recoverable amount is the higher of the fair value less

year. The procedure for the impairment test is explained in

costs to sell or the value in use. If the reason for an earlier

the notes to the balance sheet. Intangible assets acquired

impairment loss on property, plant, and equipment no lon-

as part of business combinations are carried separately

ger applies, its value is increased to up to the amount that

from goodwill if they are separable according to the defini-

would have resulted if the impairment loss had not occurred,

tion in IAS 38 or result from a contractual or legal right.

taking depreciation into account. In accordance with IAS 20,

government grants are deducted from the costs of the as-

The service life of intangible assets is as follows:

set. Any deferred income is not recognized.

Breeding material, proprietary rights
to varieties and trademarks

Other rights

Software

Distribution rights

Financial instruments

Useful life

Financial instruments are in particular financial assets and

financial liabilities. The financial assets consist primarily of

10 years

bank balances and cash on hand, trade receivables, other

5 – 10 years

receivables and securities. The credit risk mainly comprises

3 – 8 years

trade receivables. The amount recognized in the balance

5 – 20 years

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 financial instruments is limited because

they are kept with banks that have been given a good credit

rating by international rating agencies. There is no significant

concentration of credit risks, 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.

90 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 1. General disclosures

Annual Report 2014/2015 | KWS GroupAvailable-for-sale financial assets are carried at fair value if

Subsequent measurement of the financial instruments de-

that can be reliably measured. Unrealized gains and losses,

pends on their classification in one of the following catego-

including deferred taxes, are recognized directly in the

ries defined in IAS 39:

reserve for available-for-sale financial assets under equity.

Allowances are recognized immediately through the income

■■ Loans and receivables

statement. Financial assets belonging to this category of

This category mainly comprises trade receivables, other

financial instruments are measured at cost, since there is no

receivables, loans and cash, including fixed-income short-

active market. The financial assets include shares in uncon-

term securities. Loans are measured at cost. Loans that

solidated subsidiaries and securities classified as noncur-

carry no interest or only low interest are measured at their

rent assets. They are subsequently measured at amortized

present value. Discernable risks are taken into account by

cost. Borrowings are carried at amortized cost.

recognition of an impairment loss. After their initial recog-

The carrying amount of receivables, fixed-income securities

sured at amortized cost using the effective interest meth-

and cash is assumed as the fair value due to their short term

od, minus impairments. Receivables that carry no interest

and the fixed-interest structure of the investments.

or only low interest and with a term of more than twelve

months are discounted. Necessary value impairments are

The financial liabilities comprise in particular trade payables,

based on the expected credit risk and are carried in sepa-

nition, the other financial assets in this category are mea-

borrowings and other liabilities.

rate impairment accounts. Receivables are derecognized

if they are settled or uncollectible. Other financial assets

The fair value of financial liabilities with a long-term fixed in-

are derecognized at the time they are disposed of or if

terest rate is determined as present values of the payments

they have no value.

related to the liabilities, using a yield curve applicable on the

balance sheet date.

■■ Financial assets at fair value

Held-for-trading securities acquired with the intention of

Derivative instruments are measured at fair value in accor-

being sold in the short term are assigned to this category.

dance with IAS 39; they can be assets or liabilities. Com-

Derivate financial instruments with a positive market

mon derivative financial instruments are essentially used

value are also categorized as held for trading, unless they

to hedge interest rate and foreign currency risks. The fair

are designated hedging instruments in accordance with

value of the derivative financial instruments is measured on

IAS 39. They are measured at fair value. Changes in value

the basis of the market information available on the balance

are recognized in income. Securities are derecognized

sheet date and using recognized mathematical models,

after being sold on the settlement date.

such as present value or Black-Scholes, to calculate option

values, taking their volatility, remaining maturity and capital

■■ Availableforsale financial assets

market interest rates into account. The instruments must

This category covers all financial assets that have not

also be classified in a level of the fair value hierarchy.

been assigned to one of the above categories. In prin-

ciple, securities are classed as available for sale, unless

Financial instruments in level 1 are measured using quoted

a different classification is required due to the fact that

prices in active markets for identical assets or liabilities. In

they have an explicit purpose. Equity instruments, such

level 2, they are measured by directly observable market

as shares in (unconsolidated) affiliated companies, which

inputs or derived indirectly on the basis of prices for similar

are measured at amortized cost, and shares held in listed

instruments. Finally, input factors not based on observable

companies, are also included in this category. In principle,

market data are used to calculate the value of level 3 finan-

financial instruments in this category are measured at

cial instruments.

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 financial assets. The real-

ized gains or losses are not recognized as profit or loss

until they are disposed of. If there is objective evidence

of permanent impairment on the balance sheet date, the

instruments are written down to the lower value. Any sub-

sequent decreases in the impairment loss are recognized

directly in equity.

1. General disclosures | Notes for the KWS Group 2014/2015 | Annual Financial Statements

KWS Group | Annual Report 2014/2015
■■ Financial liabilities measured at amortized cost

Inventories and biological assets

All financial liabilities, with the exception of derivative

Inventories are measured at the lower of cost or net realizable

financial instruments, are measured at amortized cost

value less an allowance for obsolescent or slow-moving

using the effective interest method. The liabilities are

items. In addition to directly attributable costs, the cost of

derecognized at the time they are settled or when the rea-

sales also includes indirect labor and materials including

son why they were formed no longer exists.

depreciation under IAS 2. Under IAS 41, biological assets are

measured at fair value less the estimated costs to sell. Im-

■■ Financial liabilities at fair value

mature biological assets are carried as inventories as of the

This category covers derivative financial instruments that

time they are harvested. The measurement procedure used is

have a negative market value and are categorized in prin-

based on standard industry value tables.

ciple as held for trading. They are measured at fair value.

Changes in value are recognized in income. Derivatives

Deferred taxes

that are designated hedging instruments in accordance

Deferred taxes are calculated on differences between the

with IAS 39 are excluded from this provision.

IFRS carrying amounts of assets and liabilities and their tax

Securities are generally classified as available for sale, which

basis. Deferred tax assets are recognized if they result from

is why changes in their fair values that require reporting are

deductible temporary differences and sufficient taxable profit

taken directly to equity. If securities are carried at their fair

in future periods is expected. Deferred tax liabilities must be

value and have to be recognized in income, changes to the

set up for all taxable temporary differences. All deferred taxes

fair values are directly included in the net income for the

must be assessed individually at each balance sheet date

base, and on loss carryforwards; they are reported on a gross

period.

and must not be discounted. Under IAS 12, deferred taxes

are calculated on the basis of the applicable local income tax.

The outstanding purchase price obligation for consolidated

subsidiaries must be carried at the present value of the

Provisions for pensions and other employee benefits

anticipated future purchase price payments for minority in-

The provisions for pensions and other employee benefits are

terests. Changes to the estimates in subsequent years are

calculated using actuarial principles in accordance with the

recognized in profit or loss. The cost of interest accrued on

projected unit credit method. Actuarial gains and losses re-

the purchase price obligation is carried in the net financial

sulting from revaluation of the net liability must be recognized

income/expenses.

Derivatives

directly in equity in the other income. If there are planned as-

sets, they are netted off against the associated obligations.

The derivatives do not meet the requirements of IAS 39 to be

The provisions for semi-retirement include obligations from

designated as a hedging instrument. They are measured at

concluded semi-retirement agreements. Payment arrears and

their fair value. The changes in their market value are recog-

top-up amounts for semi-retirement pay and for the contribu-

nized in the income statement. Derivatives are derecognized

tions to the statutory pension insurance program are recog-

on their day of settlement.

nized in measuring them.

92 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 1. General disclosures

Annual Report 2014/2015 | KWS GroupOther provisions

Discretionary decisions and estimates

Provisions are set up if current obligations have accrued from

The measurement approaches and amounts to be carried

past events and it is likely that they will be utilized. In addition,

in these IFRS financial statements are partly based on esti-

it must be possible to estimate the amount of the anticipated

mates and specifically defined specifications. This relates in

obligation reliably.

particular to:

Provisions are measured at their expected amount or most

■■ Determination of the useful life of the depreciable asset

likely amount, depending on whether they comprise a large

■■ Definition of measurement assumptions and future

number of items or constitute a single obligation. Provisions

results in connection with impairment tests, above all for

are reviewed regularly and adjusted to reflect new findings

capitalized goodwill and in connection with measurement

or changes in circumstances. Long-term provisions are dis-

of outstanding purchase price obligations for fully consoli-

counted taking into account future cost increases and using

dated subsidiaries

capital market interest rates for matching maturities, insofar

■■ Determination of the net selling price for inventories

as the interest effect is material.

■■ Definition of the parameters required for measuring

pension provisions

Contingent liabilities

■■ Selection of parameters for the model-based measure-

The contingent liabilities result from debt obligations where

ment of derivatives

outflow of the resource is not probable or the level of the ob-

■■ Determination whether tax losses carried forward can be

ligation cannot be estimated with sufficient reliability or from

used

obligations for loan amounts drawn down by third parties as

■■ Determination of the fair value of intangible assets, tan-

of the balance sheet date.

Borrowing costs

gible assets and liabilities acquired as part of a business

combination and determination of the service lives of the

purchased intangible assets and tangible assets

In accordance with IAS 23, borrowing costs are capitalized if

■■ Measurement of other provisions

they can be classified as qualifying assets.

Despite careful estimates, the actual development may devi-

ate from the assumptions.

The Executive Board of KWS SAAT SE prepared the

consolidated financial statements on October 1, 2015, and

released them for distribution to the Supervisory Board.

The Super visory Board has the task of examining the

consolidated financial statements and declaring whether it

approves them.

1. General disclosures | Notes for the KWS Group 2014/2015 | Annual Financial Statements

KWS Group | Annual Report 2014/20152. Disclosures on the annual financial statements

Number of companies including KWS SAAT SE

Fully consolidated

Equity method

Total

Domestic

Foreign

Total

Domestic

Foreign

Total

06/30/2015

06/30/2014

Consolidated group and changes in

The remaining shares in the SOCIETE DE MARTINVAL

the consolidated group

Group were acquired effective September 30, 2014. The

The French service company KWS SERVICES MEDITER-

French breeding company specializes in breeding and dis-

RANEAN S.A.S., Roye, France, was merged with KWS

tributing field crops. Apart from cereals, the main revenue

FRANCE S.A.R.L., Roye, France, effective July 1, 2014. In

driver, its product portfolio also includes sugarbeets, peas,

Brazil, the Brazilian company KWS SEMENTES BRASIL

oil plants and corn. The main reason for acquiring the 51%

PARTICIPACOES LTDA. was renamed KWS SERVICOS

stake held by the Momont family is to strengthen competitive

E PARTICIPACOES SOUTH AMERICA LTDA. effective

cereal breeding programs and expand distribution activities

July 1, 2014. In addition, KWS BRASIL PARTICIPACOES

in France. Acquisition of the remaining shares in SOCIETE

LTDA. was split up and merged with the company RIBER

DE MARTINVAL S.A. and the simultaneous sale of the

KWS SEMENTES S.A. and KWS MELHORAMENTO LTDA.

shares in its subsidiary HAMET S.C.A., Mons-en-Pévèle,

The service company KWS SERVICES NORTH AMERICA

France, effective September 30, 2014, mean that the re-

LLC., Shakopee, U.S., was founded on July 16, 2014. The

maining four companies of the SOCIETE DE MARTINVAL

company relocated its headquarters from Shakopee to

Group must be fully consolidated in the KWS Group’s con-

Bloomington in March 2015. KWS PODILLYA T.O.V., Kiev,

solidated financial statements as of the time of acquisition.

Ukraine, was founded on January 15, 2015. The company’s

The 51% stake in the French cereals company and measure-

purpose is to acquire and manage land and property.

ment of the existing 49% stake at fair value resulted in the

BEIJING KWS AGRICULTURE TECHNOLOGY CO. LTD.,

following fully consolidated assets and liabilities at the time

Beijing, China, was founded on March 6, 2015. In addition,

of acquisition:

our Chinese joint venture KENFENG – KWS SEED CO. LTD.,

which is carried as an associated company in accordance

with the equity method, was awarded its business license by

the Chinese authorities on December 15, 2014.

94 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 2. Disclosures on the annual financial statements

Annual Report 2014/2015 | KWS Groupin € millions

Intangible assets

Property, plant and equipment

Inventories

Trade receivables

Cash and cash equivalents

Other assets

Total assets

Provisions

Liabilities

Deferred taxes

Total liabilities

Net assets

06/30/2014

21.5

12.3

5.2

12.2

6.7

0.1

58.1

0.4

6.5

4.7

11.6

46.4

The acquired property, plant, and equipment was com-

As of the time of full consolidation, the SOCIETE DE

posed of land and buildings totaling €6.1 million and tech-

MARTINVAL Group posted net sales of €11,823 thousand

nical equipment and machinery totaling €6.2 million. The

and income of € –2,823 thousand before consolidation. If

fair value of the equity shares held previously in the joint

the SOCIETE DE MARTINVAL Group had been fully consoli-

venture was €17,282 thousand. Remeasurement of the shares

dated at July 1, 2014, consolidated net sales would have

resulted in a gain of €3,722 thousand, which was carried

increased by €8,876 thousand and consolidated income

under the net financial income/expenses.

would have improved by €3,256 thousand.

The goodwill of €2.6 million reflects synergy potentials from

A total of 62 (57) companies were fully consolidated in the

expansion of European wheat business. Trade receivables

consolidated financial statements and four (eight) joint ven-

totaling €12.2 million were acquired as part of the merger;

tures and associated companies were measured using the

none has been classified as uncollectible. Deferred taxes

equity method at June 30, 2015.

have been carried to an amount of €4.7 million. Transaction

costs totaling €448 thousand were incurred to acquire the

remaining shares and have been recognized under the other

operating expenses in the income statement.

2. Disclosures on the annual financial statements | Notes for the KWS Group 2014/2015 | Annual Financial Statements

KWS Group | Annual Report 2014/2015List of shareholdings in accordance with Section 313 HGB (German Commercial Code)

Fully consolidated subsidiaries 1

Sugarbeet

Corn

Cereals

Corporate

100% KWS MAIS GMBH

100% KWS LOCHOW GMBH

100% KWS LANDWIRTSCHAFT

100%

BETASEED INC. 2
Bloomington, MN, U.S.

Einbeck

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

100% KWS BENELUX B.V. 5

100%

Roye, France
DELITZSCH
PFLANZENZUCHT GMBH 10

Einbeck

100% O.O.O. KWS RUS 12

Lipezk, Russia

Amsterdam, Netherlands

100% KWS SEMENA S.R.O. 5
Bratislava, Slovakia

100%

KWS MAIS FRANCE
S. A.R.L. 5

Champol, France

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

100% KWS AUSTRIA SAAT GMBH 5

Lipezk, Russia

100% KWS ITALIA S.P.A.
Forlì, Italy

100% KWS POLSKA SP.Z O.O.

Poznan, Poland

Vienna, Austria

100%

KWS SJEME D.O.O. 5
Pozega, Croatia
KWS OSIVA S.R.O. 5
Velke Mezirici, Czech Republic
KWS BULGARIA E.O.O.D. 5
Sofia, Bulgaria

100% KWS SCANDINAVIA A/S 10

100%

Guldborgsund, Denmark

100%

KWS SEMILLAS
IBERICA S.L. 10
Zaratán, Spain

100% 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% AGROMAIS GMBH 5

Everswinkel

100%

KWS MAGYARORSZÁG
KFT. 5

Györ, Hungary

100% KWS SEMINTE S.R.L. 13
Bucharest, Romania
99% KWS ARGENTINA S. A. 5
Balcarce, Argentina

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

Bloomington, MN, U.S.

Alzonne, France

100% KWS MELHORAMENTO E
SEMENTES LTDA. 21
Curitiba, Brazil

50%

RIBER KWS SEMENTES
S. A. 21, 24

Patos de Minas, Brazil

100% KWS PERU S. A.C. 8
Lima, Peru

100% KWS R&D China LTD. 15

Hefei, China

100%

BETASEED
FRANCE S. A.R.L. 18

Bethune, France
100% KWS UKRAINE T.O.V. 12

Kiev, Ukraine

100%

KWS TÜRK TARIM
TICARET A.S. 9
Eskisehir, Turkey

100% BETASEED GMBH
Frankfurt

100% KWS POTATO B.V. 17

Emmeloord, Netherlands

93% DYNAGRI S. A.R.L. 16
Casablanca, Morocco
100% KWS Podillya T.O.V. 22

Kiev, Ukraine

Bergen
100% KWS UK LTD. 7

Thriplow, UK

100% KWS LOCHOW

100%

POLSKA SP.Z O.O. 7
Kondratowice, Poland
SOCIETE DE
MARTINVAL S. A. 7
Mons-en-Pévèle, France
MOMONT
HENNETTE S. A. 14
Mons-en-Pévèle, France
100% LABOGERM S. A.R.L. 14
Mons-en-Pévèle, France
ADRIEN
MOMONT S. A.R.L. 14
Mons-en-Pévèle, France

100%

GMBH *
Einbeck

100% KWS INTERSAAT GMBH

Einbeck
100% KWS SEEDS INC. 9

Bloomington, MN, U.S.

100% GLH SEEDS INC. 2

Bloomington, MN, U.S.

100% KWS SAATFINANZ GMBH

100%

Einbeck
RAGIS KARTOFFELZUCHT-
UND HANDELS-
GESELLSCHAFT MBH
Einbeck

100% KWS KLOSTERGUT

WIEBRECHTSHAUSEN
GMBH
Northeim-Wiebrechtshausen

100% EURO-HYBRID

100%

GESELLSCHAFT FÜR
GETREIDEZÜCHTUNG MBH
Einbeck
KWS SERVICOS E PARTICI-
PACOES
SOUTH AMERICA LTDA. 19
São Paulo, Brazil

100% KWS GATEWAY RESEARCH

100%

CENTER LLC. 2
St. Louis, MO, U.S.
KWS SERVICES
DEUTSCHLAND GMBH
Einbeck

100% KWS SERVICES EAST GMBH

Vienna, Austria

100% KWS SERVICES NORTH B.V.

100%

Rotterdam, Netherlands
KWS SERVICES
MEDITERRANEAN S.L.
Barcelona, Spain
100% KWS SERVICES NORTH
AMERICA LLC.
Bloomington, MN, U.S.
100% BEIJING KWS AGRICULTURE

TECHNOLOGY CO., LTD.15
Beijing, China

100% KWS CEREALS USA LLC. 2
Champagne, IL, U.S.

Equity-accounted joint ventures 1

Equity-accounted associated companies 1

Corn

50%

AGRELIANT GENETICS
LLC. 6

50% GENECTIVE S. A.
Chappes, France

Corn

49%

KENFENG – KWS SEEDS
CO., LTD.
Beijing, China

Westfield, IND, U.S.

50% AGRELIANT GENETICS INC.

Chatham, Ontario, Canada

Unconsolidated subsidiaries 1

Sugarbeet

65% NOSOMA S.A.R.L. 23

Sahel M'Harza, Morocco
67% VAN RIJN BALCAN S.R.L. 16

Vulcan/Romania

Cereals

74%

Corporate

LOCHOW-PETKUS BELGIUM
N.V. 7
Linter, Belgium

100%

KANT-HARTWIG & VOGEL
GMBH
Einbeck

96 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 2. Disclosures on the annual financial statements

Annual Report 2014/2015 | KWS Group

* Profit and loss transfer agreement
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 Subsidiary of KWS CHILE LTDA. and KWS SERVICOS E PARTICIPACOES SOUTH AMERICA LTDA.
9 Subsidiary of KWS INTERSAAT GMBH and KWS SAAT SE
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 SERVICOS E PARTICIPACOES SOUTH AMERICA LTDA. and KWS INTERSAAT GMBH
21 Subsidiary of KWS SERVICOS E PARTICIPACOES SOUTH AMERICA LTDA.
22 Subsidiary of KWS UKRAINE T.O.V.
23 Subsidiary of DYNAGRI S.A.R.L.
24 The KWS Group's stake is 50% plus four shares.

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:

Description of segments

Corn

■■ Corn

■■ Sugarbeet

■■ Cereals

■■ Corporate

KWS MAIS GMBH is the lead company for the Corn Seg-

ment. In addition to KWS MAIS GMBH, business activities

are conducted by one (one) German company and 15 (15)

foreign subsidiaries and three (three) joint ventures of the

KWS Group. The production and distribution activities of

this segment relate to corn for grain and silage corn, and to

Considered a core competency for the KWS Group’s entire

oil and field seed.

product range, plant breeding, including the related biotech-

nology research, is essentially concentrated at the parent

Sugarbeet

company KWS SAAT SE in Einbeck. The breeding material,

The results of the multiplication, processing and distribution

including the relevant information and expertise about how

activities for sugarbeet seed, as well as our seed potato busi-

to use it, is owned by KWS SAAT SE with respect to sugar-

ness, are reported under the Sugarbeet Segment. Under the

beet and corn and by KWS LOCHOW GMBH with respect

leadership of KWS SAAT SE, 18 (17) foreign subsidiaries and

to cereals. Product-related R&D costs are carried directly in

two (two) subsidiaries in Germany are active in this segment.

the product segments Corn, Sugarbeet and Cereals. Cen-

trally controlled corporate functions are grouped in the Cor-

Cereals

porate Segment. The distribution and production of oil and

The lead company of this segment, which essentially con-

field seed are reported in the Cereals and Corn Segments,

cerns the production and distribution of hybrid rye, wheat

in keeping with the legal entities currently involved.

and barley, as well as oil and field seed, is KWS LOCHOW

GMBH with its six (three) foreign subsidiaries and zero (five)

joint ventures in France, Great Britain, the U.S. and Poland.

3. Segment reporting for the KWS Group | Notes for the KWS Group 2014/2015 | Annual Financial Statements

KWS Group | Annual Report 2014/2015Corporate

The segment net sales, segment income, depreciation

Apart from revenue from our farms and services for third

and amortization, other noncash items, operating assets,

parties, net sales from strategic projects are reported in this

operating liabilities and capital expenditure on noncurrent

segment. The segment also assumes the costs of all cen-

assets by segment have been determined in accordance

tral holding functions and expenses for long-term research

with the internal operational controlling structure, with the

projects that have not yet reached market maturity.

joint ventures consolidated proportionately (management

It also includes all management services of KWS SAAT SE,

been reconciled with the figures in the IFRS consolidated

approach). In order to permit better comparability, they have

such as holding company and administrative functions, which

financial statements.

are not directly charged to the product segments or indirectly

allocated to them by means of an appropriate cost formula.

Segment sales contains both net sales from third parties

Segment information

(external sales) and net sales between the segments (in-

tersegment sales). The prices for intersegment sales are

The Executive Board as the main decision-making body

determined on an arm’s-length basis. Uniform royalty rates

is responsible for allocating resources and assessing the

per segment for breeding genetics are used as the basis.

earnings strength of the business segments. The segments

Technology revenues from genetically modified properties

and regions are defined in compliance with the internal

(“tech fees”) are paid as a per-unit royalty on the basis of

controlling and reporting systems (management approach).

the number of units sold, due to their growing competitive

The accounting policies used to determine the information

importance.

for the segments are basically the same as used for the

KWS Group. The only exception relates to consolidation

The Corporate Segment generates 77.1% (68.7%) of its

of the equity-accounted joint ventures that are assigned to

sales from the other segments. The sales of this segment

the Corn Segment, namely AGRELIANT GENETICS LLC.,

represent 0.3% (0.4%) of the Group’s external sales.

AGRELIANT GENETICS INC. and GENECTIVE S.A (as well

as SOCIETE DE MARTINVAL S.A. in the previous year). In

The corn segment is the largest contributor of external

accordance with the accounting practices we have used

sales, accounting for 59.9% (60.7%) of external sales,

up to now, they are still included proportionately in internal

followed by sugarbeet with 31.0% (29.8%) and cereals with

controlling as part of segment reporting.

8.8% (9.1%).

in € thousand

Segment sales

Internal sales

External sales

Corn

Sugarbeet

Cereals

Corporate

Segments acc. to management
approach

Elimination of equityaccounted
joint ventures

Segments acc. to consolidated
financial statements

2014/2015

754,458

390,646

113,207

18,133

Previous
year

714,968

351,488

108,435

15,012

2014/2015

Previous
year

2014/2015

1,939

13,981

439

1,095

10,316

754,442

390,547

111,268

4,152

Previous
year

714,922

351,049

107,340

4,696

1,276,444

1,189,903

16,035

11,896

1,260,409

1,178,007

– 274,394

– 254,526

986,015

923,481

98 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 3. Segment reporting for the KWS Group

Annual Report 2014/2015 | KWS Groupin € thousand

Corn

Sugarbeet

Cereals

Corporate

Segment
earnings

Previous
year

100,859

70,172

17,125

2014/2015

84,184

92,998

12,019

– 51,186

– 49,724

Depreciation and
amortization

Other
noncash items

2014/2015

19,525

14,974

7,284

9,840

Previous
year

16,555

16,159

4,351

8,727

2014/2015

– 4,517

15,199

4,143

Previous
year

689

7,036

– 3,238

22,150

–16,110

Segments acc. to management
approach

Elimination of equity-accounted
joint ventures

Segments acc. to consolidated
financial statements

138,015

138,432

51,623

45,792

36,975

–11,623

–24,598

–20,165

–5,712

– 4,586

8,680

362

113,417

118,267

45,911

41,206

45,655

–11,261

Net financial income/expenses

16,689

7,497

Earnings before taxes

130,106

125,764

The income statements of the consolidated companies are

Depreciation and amortization charges of €51,623 (45,792)

assigned to the segments by means of profit center alloca-

thousand allocated to the segments relate exclusively to

tion. Operating income, the most important internal para-

intangible assets and property, plant, and equipment.

meter and an indicator of the earnings strength in the KWS

Group, is used as the segment result. The operating income

The other noncash items recognized in the income

of each segment is reported as the segment result. The

statement relate to noncash changes in the allowances

segment results are presented on a consolidated basis and

on inventories and receivables, and in provisions.

include all directly attributable income and expenses. Items

that are not directly attributable are allocated to the segments

on the basis of an appropriate formula.

in € thousand

Operating assets

Operating liabilities

Corn

Sugarbeet

Cereals

Corporate

Segments acc. to management approach

Elimination of equity-accounted joint ventures

Segments acc. to consolidated financial statements

Others

2014/2015

644,909

274,238

120,291

102,719

Previous
year

546,753

260,088

74,280

95,193

1,142,157

976,314

321,560

–204,640

–188,016

– 63,698

937,517

418,024

788,298

376,671

2014/2015

Previous
year

136,624

151,664

70,233

23,490

91,213

257,862

358,961

616,823

74,992

17,749

67,633

312,038

– 81,990

230,048

297,152

527,200

KWS Group acc. to consolidated financial statements

1,355,541

1,164,969

3. Segment reporting for the KWS Group | Notes for the KWS Group 2014/2015 | Annual Financial Statements

KWS Group | Annual Report 2014/2015The operating assets of the segments are composed of

Capital expenditure on assets was increased year on

intangible assets, property, plant, and equipment, inven-

year by 64.0% to €133,073 (81,165) thousand. Investments

tories, biological assets and trade receivables that can be

were intensified considerably in the segments Corporate

charged directly to the segments or indirectly allocated to

(€20,120 thousand; previous year: €13,840 thousand),

them by means of an appropriate formula.

Cereals (€44,399 thousand; previous year: €6,761 thousand)

The operating liabilities attributable to the segments include

€18,535 thousand). Investments in the Corn Segment

the borrowings reported on the balance sheet, less provi-

rose to €44,528 (42,029) thousand.

and Sugarbeet (€24,026 thousand; previous year:

sions for taxes and the portion of other liabilities that cannot

be charged directly to the segments or indirectly allocated

to them by means of an appropriate formula.

Investments in longterm assets by segment

in € thousand

Corn

Sugarbeet

Cereals

Corporate

Segments acc. to management approach

Elimination of equity-accounted joint ventures

Segments acc. to consolidated financial statements

2014/2015

Previous year

44,528

24,026

44,399

20,120

133,073

– 8,061

125,012

42,029

18,535

6,761

13,840

81,165

– 13,182

67,983

The capital expenditure in the Cereals Segment includes

consolidated financial statements of the KWS Group and thus

consolidation-related additions of €28,121 thousand from

without proportionate consolidation of the joint ventures.

acquisition of the SOCIETE DE MARTINVAL Group.

Disclosures by region

The external net sales by sales region are broken down on

the basis of the country where the customer is based. No

The disclosures on the regional composition of net sales,

individual customer accounted for more than 10% of total

capital expenditure and operating assets have been made in

net sales in the current or past fiscal year.

accordance with the accounting policies to be applied to the

External sales by region

in € thousand

Germany

Europe (excluding Germany)

Thereof in France

North and South America

Thereof in Brazil

Thereof in the U.S.

Rest of world

KWS Group

67.5% (71.5%) of total sales are recorded in Europe (including

Germany).

2014/2015

Previous year

223,885

441,526

(107,263)

254,709

(66,316)

(164,571)

65,895

986,015

225,149

435,508

(94,921)

205,600

(52,841)

(132,889)

57,224

923,481

100 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 3. Segment reporting for the KWS Group

Annual Report 2014/2015 | KWS GroupInvestments in longterm assets by region

in € thousand

Germany

Europe (excluding Germany)

Thereof in France

North and South America

Thereof in Brazil

Thereof in the U.S.

Rest of world

KWS Group

2014/2015

Previous year

33,859

64,630

(44,305)

22,834

(2,871)

(17,067)

3,689

125,012

23,396

26,947

(6,515)

15,627

(3,127)

(10,126)

2,013

67,983

27.1% (34.4%) of the capital spending was made in Germany.

North and South America, 51.7% (39.6%) in Europe (exclud-

Of the further capital spending, 18.2% (23.0%) was made in

ing Germany) and 3.0% (3.0%) in the rest of the world.

Operating assets by region

in € thousand

Germany

Europe (excluding Germany)

Thereof in France

North and South America

Thereof in Brazil

Thereof in the U.S.

Rest of world

KWS Group

06/30/2015

06/30/2014

300,198

343,915

(50,828)

258,872

(96,146)

(162,727)

34,532

937,517

248,943

278,784

(42,462)

228,171

(95,492)

(107,573)

32,400

788,298

4. Notes to the balance sheet

(1) Assets

to the variety portfolio of SOCIETE DE MARTINVAL S.A.,

The statement of changes in fixed assets contains a

which totals €15,600 thousand and has a useful life of

breakdown of assets summarized in the balance sheet

eight years. Amortization of intangible assets amounted to

and shows how they changed in 2014/2015. Capital ex-

€14,466 (14,932) thousand, of which €3,905 (6,326) thousand

penditure on property, plant and equipment and intangible

were value impairments. This charge is included in the rele-

assets was €125,011 (67,983) thousand. Of that, the acqui-

vant function costs, depending on the operational use of the

sition of the SOCIETE DE MARTINVAL Group accounts

intangible assets.

for €36,353 (0) thousand, which have been presented as

a change to the consolidated companies. The Combined

The goodwill recognized as an asset relates mainly to

Management Report describes the significant additions to

the Brazilian companies RIBER KWS SEMENTES S.A. –

assets. Depreciation and amortization and value impair-

€21,686 (21,686) thousand – and KWS MELHORAMENTO E

ments amounted to €45,911 (41,206) thousand.

SEMENTES LTDA. – €4,115 (4,115) thousand. In the Cereals

(2) Intangible assets

Segment, the goodwill of SOCIETE DE MARTINVAL is recog-

nized to an amount of €2,600 (0) thousand and that of KWS

This item includes purchased varieties, rights to varieties

UK LTD. to an amount of €1,693 (1,693) thousand.

and distribution rights, software licenses for electronic

data processing, and goodwill. The current additions of

In order to meet the requirements of IFRS 3 in combination

€4,460 (6,993) thousand related to software licenses and

with IAS 36 and to determine any impairment of goodwill,

patents. The consolidated-related additions mainly relate

cash-generating units have been defined in line with internal

4. Notes to the balance sheet | Notes for the KWS Group 2014/2015 | Annual Financial Statements 101

KWS Group | Annual Report 2014/2015reporting guidelines. At the KWS Group, these are generally

The impairment tests conducted at the end of fiscal year

the legal entities, with the exception of our potato unit,

2014/2015 confirmed that the existing goodwill is not

which as a whole represents the cash-generating unit. To

impaired. Sensitivity analyses were also carried out for all

test for impairment, the carrying amount of each entity is

cash-generating units to which goodwill is allocated. In our

determined by allocating the assets and liabilities, including

opinion, realistic changes in the basic assumptions would

attributable goodwill and intangible assets. An impairment

not result in the need to recognize an impairment loss at any

loss is recognized if the recoverable amount of an entity is

cash-generating unit whose goodwill is significant relative to

less than its carrying amount. The recoverable amount is

the total carrying amount of goodwill.

the higher of the fair value less costs to sell and the value in

use of a cash-generating unit. The impairment tests to be

At KWS POTATO B.V., the impairment test revealed the

carried out for fiscal 2014/2015 determine the recoverable

need for a write-down, which was reflected in a reduction

amount on the basis of the value in use of the respective

in the value of its intangible assets by €3,905 thousand;

cash-generating unit.

€2,237 thousand have been allocated to the research &

development costs and €1,668 thousand to the selling ex-

The impairment test uses the expected future cash flows on

penses, since a number of varieties, customer relationships

which the medium-term plans of the companies are based;

and industrial property rights were relinquished. This value

these plans, which cover a period of four years, have been ap-

impairment has to be charged to the Sugarbeet Segment.

proved by the Executive Board. They are based on historical

Tests provided evidence that all the other goodwill recognized

patterns and expectations about future market development.

in the consolidated balance sheet and determined for the

cash-generating units is not impaired. Possible changes in

For the European and American markets, the key

the figures reported in the balance sheet result from currency

assumptions on which corporate planning is based include

translation at the balance sheet date.

assumptions about price trends for seed, in addition to the

development of market shares and the regulatory framework.

The impairment test for KWS POTATO B.V. in the previous

Company-internal projections take the assumptions of indus-

year revealed the need for a write-down, which was reflected

try-specific market analyses and company-related growth

by the capitalized goodwill and intangible assets being

perspectives into account.

reduced by €6,326 thousand.

Due to the change in the KWS Group’s debt situation, the

(3) Property, plant, and equipment

discount rate was derived as the weighted average cost of

Capital expenditure amounted to €96,430 (61,015) thousand

capital (WACC) in fiscal 2014/2015. The discount rate for the

and depreciation amounted to €31,445 (26,274) thousand.

cash-generating units is 5.46% after tax. A growth rate of

That includes consolidation-related additions of

1.5% (1.5%) has been assumed here beyond the detailed

€12,241 thousand from acquisition of the SOCIETE DE

planning horizon in order to allow for extrapolation in line with

MARTINVAL Group. The Combined Management Report

the expected inflation rate. In the previous year, a standard

describes the significant capital expenditure.

discount rate of 5.1% (after tax) was assumed to calculate

present values.

102 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 4. Notes to the balance sheet

Annual Report 2014/2015 | KWS Group(4) Equityaccounted financial assets

The three joint ventures AGRELIANT GENETICS LLC.,

AGRELIANT GENETICS INC. and GENECTIVE S.A. are

Equityaccounted joint ventures

operating units. The main business activity of the two joint

The joint ventures AGRELIANT GENETICS LLC., AGRELIANT

ventures AGRELIANT GENETICS LLC. and AGRELIANT

GENETICS INC. and GENECTIVE S.A., which KWS operates

GENETICS INC. is the production and sale of corn and soy-

together with its joint venture partner Vilmorin, are recognized

bean seed in North America. The main activity of the joint

at equity. In the year under review, AGRELIANT GENETICS

venture GENECTIVE S.A. is development of its own traits for

LLC. was classified as a significant joint venture. From

genetically improving crops.

the group perspective, AGRELIANT GENETICS INC. and

GENECTIVE S.A. were classified as insignificant joint ven-

The following disclosures on the joint ventures in accor-

tures. This also applied to the 49% stake in the SOCIETE DE

dance with IFRS 12.21 (a) and (b) in conjunction with IFRS

MARTINVAL Group in the previous year.

12.B12-B13 are only slightly influenced by the insignificant

joint ventures. If individual items of the information pre-

sented are materially influenced by the insignificant joint

ventures, this information is presented separately.

Disclosures on equityaccounted joint ventures (with the partner Vilmorin)

in € thousand

Stake in the joint venture

Current assets

Thereof cash and cash equivalents

Noncurrent assets

Current liabilities

Thereof current financial liabilities
(excluding trade payables and other liabilities and provisions)

Noncurrent liabilities

Net assets (100%)

Group share of net assets (50%)

Goodwill

Carrying amount for the stake in the joint ventures

Net sales

Depreciation and amortization

Net income for the year

Other income

Comprehensive income (100%)

Comprehensive income (50%)

Group share of comprehensive income

Dividend payment

06/30/2015

06/30/2014

50%

318,792

(48,494)

122,992

174,974

(17,158)

2,352

264,458

132,229

13,668

145,897

570,236

10,820

44,292

42,932

87,224

43,612

23,408

50%

305,270

(49,874)

89,899

192,648

(21,886)

1,870

200,651

100,326

13,668

113,994

519,944

7,179

38,262

– 8,552

29,710

14,855

22,536

4. Notes to the balance sheet | Notes for the KWS Group 2014/2015 | Annual Financial Statements 103

KWS Group | Annual Report 2014/2015

This also applied to the SOCIETE DE MARTINVAL Group

in the previous year.

Disclosures on insignificant equityaccounted joint ventures (Société de Martinval S.A.)

in € thousand

Stake in the joint venture

Current assets

Thereof cash and cash equivalents

Noncurrent assets

Current liabilities

Thereof current financial liabilities
(excluding trade payables and other liabilities and provisions)

Noncurrent liabilities

Net assets (100%)

Group share of net assets (49%)

Carrying amount for the stake in the joint ventures

Net sales

Depreciation and amortization

Interest income

Interest expense

Taxes

Net income for the year

Comprehensive income (100%)

Comprehensive income (49%)

Group share of comprehensive income

Dividend payment

06/30/2014

49%

24,712

(15,859)

11,362

10,944

(4,835)

232

24,898

12,136

21,520

1,169

143

220

2,200

1,078

104 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 4. Notes to the balance sheet

Annual Report 2014/2015 | KWS Group
Equityaccounted associated companies

The disclosures on insignificant associated companies in

In the year under review, this relates to our Chinese joint

accordance with IFRS 12.21 (c) in conjunction with IFRS

venture KENFENG – KWS SEED CO. LTD., which is included

12.B16 are as follows:

in the KWS Group’s consolidated financial statements as an

associated company in accordance with the equity method.

Disclosures on insignificant equityaccounted associated companies

in € thousand

06/30/2015

06/30/2014

Carrying amount for the stake in insignificant associated companies (aggregated)

Net income for the year

Other comprehensive income

Comprehensive income (100%)

7,120

– 495

– 475

(5) Financial assets

(7) Deferred tax assets

Investments in unconsolidated subsidiaries totaling €39

Under IAS 12, deferred tax assets are calculated as the

(39) thousand and shares in cooperatives and GmbHs that

difference between the IFRS balance sheet amount and

are of minor significance are reported in principle at their

the tax base and on the basis of loss carryforwards. They

amortized cost totaling €1,871 (1,936) thousand since the

are reported on a gross basis and total €54,319 (47,935)

fair value cannot be reliably determined. Listed shares are

thousand, of which €6,660 (5,115) thousand will be carried

carried at their fair value of €89 (88) thousand. This account

forward for the future use of tax losses.

also includes other interest-bearing loans totaling €466 (637)

thousand.

(6) Noncurrent tax assets

(8) Inventories and biological assets

Inventories increased by €57,586 thousand, or 43.4%, a

figure that includes write-downs of the net realizable value

This mainly relates to the present value of the corporate

totaling €51,244 (48,230) thousand. Immature biological

income tax credit balance of the German group compa-

assets relate to living plants in the process of growing

nies, which was last determined at December 31, 2006,

(before harvest). The field inventories of the previous year

and has been paid in ten equal annual amounts since

have been harvested in full and the fields have been newly

September 30, 2008.

in € thousand

Raw materials and consumables

Work in progress

Immature biological assets

Finished goods

tilled in the year under review. Public subsidies of €1,443

(1,455) thousand, for which all the requirements were met

at the balance sheet date, were granted for the total area

under cultivation of 4,246 (4,326) ha and were recognized in

income. Future public subsidies depend on the further de-

velopment of European agricultural policy.

06/30/2015

Previous year

18,263

48,921

12,344

110,806

190,334

15,995

38,282

12,568

65,903

132,748

4. Notes to the balance sheet | Notes for the KWS Group 2014/2015 | Annual Financial Statements 105

KWS Group | Annual Report 2014/2015(9) Current receivables

in € thousand

Trade receivables

Current tax assets

Other current financial assets

Other current assets

Trade receivables were €309,665 thousand following

€297,780 thousand in the previous year. This amount in-

cludes €3,022 (5,695) thousand in receivables from joint

ventures.

06/30/2015

06/30/2014

309,665

297,780

57,549

26,758

11,756

45,265

14,883

13,305

405,728

371,233

in € thousand

Balance on
06/30/2015

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

Carrying
amount

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

Trade receivables

309,665

254,682

45,630

3,442

2,285

Other current
financial assets

Balance on
06/30/2014

26,758

336,423

21,996

276,678

45,635

1,108

4,550

2,286

134

Trade receivables

297,780

264,771

17,642

1,525

3,364

1,257

Other current finan-
cial assets

14,883

312,663

14,282

215

279,053

17,642

1,525

3,365

1,472

1,402

3,317

289

3,606

106 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 4. Notes to the balance sheet

Annual Report 2014/2015 | KWS Group

The already overdue trade receivables that have been partly

down and are not overdue will not meet their payment obli-

written down amount to €2,224 (5,904) thousand.

gations.

There are no indications on the balance sheet date that cus-

The following allowances have mainly been made for possible

tomers who owe trade receivables that have not been written

risks of non-payment of trade receivables:

in € thousand

2014/2015

2013/2014

07/01

Addition

Disposal

Reversal

27,393

26,999

7,305

5,999

1,219

747

10,852

4,858

06/30

22,627

27,393

The receivables include an amount of €361 (346) thousand

The revenue reserves essentially comprise the net income

due after more than one year.

generated in the past by the companies included in the

(10) Securities

consolidated financial statements, minus dividends paid to

shareholders. The differences from currency translation,

Securities amounting to €66,973 (69,188) thousand relate

the reserve for available-for-sale financial assets and the

primarily to short-term liabilities securities and fund shares.

reserve for revaluation of net liabilities/assets from defined

benefit plans are also carried here.

(11) Cash and cash equivalents

Cash of €41,211 (53,076) thousand consists of balances with

Differences from translation of the functional currency of

banks and cash on hand. The cash flow statement explains

foreign business operations into the currency used by the

the change in this item compared with the previous year,

group in reporting (euro) are essentially carried in the item

together with the change in securities.

Adjustments from currency translation. The item Revalu ation

(12) Equity

of net liabilities/assets from defined benefit plans includes

the actuarial gains and losses from pensions and other

The fully paid-up subscribed capital of KWS SAAT SE is still

employee benefits.

€19,800 thousand. The no-par bearer shares are certificated

by a global certificate for 6,600,000 shares. The company

does not hold any shares of its own.

The capital reserves essentially comprise the premium

obtained as part of share issues.

4. Notes to the balance sheet | Notes for the KWS Group 2014/2015 | Annual Financial Statements 107

KWS Group | Annual Report 2014/2015The tax effects on other comprehensive income are as

follows:

Other comprehensive income

in € thousand

Items that may have to be subsequently
reclassified as profit or loss

Revaluation of available-for-sale
financial assets

Currency translation difference for
economically independent foreign
units

Currency translation difference from
equity-accounted financial assets

Items not reclassified as profit or loss

Revaluation of net liabilities/assets
from defined benefit plans

Other comprehensive income

Before
taxes

45,606

– 223

24,606

21,223

–12,945

32,661

2014/2015

Previous year

Tax effect After taxes

Before
taxes

Tax effect After taxes

3,989

4,040

45,657

–19,407

–172

- 209

24,606

–14,915

21,223

– 8,956

36,701

– 4,283

– 8,232

– 27,639

2,354

2,402

–19,359

–161

–14,915

– 4,283

– 5,878

– 25,237

The objective of KWS’ capital management activities is

is ensured by that. Equity increased by €100,949 thousand

to pursue the interests of shareholders and employees in

to €738,718 (637,769) thousand. This figure includes an

accordance with the corporate strategy and earn a rea-

increase of €45,829 thousand (previous year: decrease of

sonable return on investment. One main goal is to retain

€19,198 thousand) in the reserve for currency translation for

the trust of investors, lenders and the market so as to

foreign subsidiaries and equity-accounted joint ventures

strengthen the company’s future business development.

and associated companies. Please refer to the statement of

KWS’ capital management activities intend to optimize the

changes in equity for further effects not recognized in the

average cost of capital. Another goal is a balanced mix of

income statement.

equity and debt capital. Consolidated income (after taxes

and minority interests) is €82,712 (77,124) thousand. How-

An important indicator in capital management is the equity

ever, there was a total dividend payout of €19,800 (19,800)

ratio. It was 54.5% (54.7%) at June 30, 2015, and thus at a

thousand in December 2014. Adequate internal financing of

good and solid level. The capital structure is as follows:

further operating business expansion in the long term-term

108 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 4. Notes to the balance sheet

Annual Report 2014/2015 | KWS GroupCapital structure

in € thousand

Equity

Long-term financial borrowings

Other noncurrent liabilties

Short-term borrowings

Other current liabilties

Total capital

Share of total
capital

54.5%

06/30/2015

738,718

181,783

153,092

32,283

249,665

1,355,541

Share of total
capital

54.7%

06/30/2014

637,769

113,754

139,261

40,086

234,099

1,164,969

The focus in selecting financial instruments is on financing

(13) Minority interest

with matching maturities, which is achieved by controlling

The accumulated minority interests in RIBER KWS

the maturities. Long-term financial borrowings increased

SEMENTES S.A. at the balance sheet date were €5,576

by €68,029 (15,293) thousand. This is mainly due to the

(6,078) thousand and are carried under minority interests.

increase in long-term financial loans from banks.

The disclosures on significant minority interests in accor-

dance with IFRS 12.12 in conjunction with IFRS 12.B10 are

as follows:

Disclosures on subsidiaries with significant minority interests

in € thousand

Equity

Current assets

Noncurrent assets

Current liabilities

Noncurrent liabilities

Net sales

Profit/loss

Other income

Comprehensive income

Net cash from operating activities

Net cash from investing activities

Net cash from financing activities

RIBER KWS SEMENTES S.A.

06/30/2015

06/30/2014

11,152

69,164

16,259

44,300

29,971

65,804

2,525

– 2,465

1,446

– 2,237

2,868

12,155

57,857

20,754

49,883

16,573

51,894

1,085

– 483

602

– 6,405

– 2,866

7,690

4. Notes to the balance sheet | Notes for the KWS Group 2014/2015 | Annual Financial Statements 109

KWS Group | Annual Report 2014/2015The voting rights of minority interests in RIBER KWS SE-

(14) Noncurrent liabilities

MENTES S.A. total 49.99% (49.99%). Consequently, the

Noncurrent liabilities increased by €81,860 thousand. That

share of minority interests in this company’s net income for

is mainly attributable to the increase in long-term financial

the year is €1,263 (543) thousand.

borrowings from banks totaling €68,029 thousand.

In addition, KWS ARGENTINA S.A., DYNAGRI S.A.R.L.

and RAZES HYBRIDES S.A.R.L. have minority interests,

although these are assessed as being insignificant.

in € thousand

Long-term provisions

Long-term borrowings

Trade payables

Deferred tax liabilities

Other noncurrent liabilities

06/30/2015

06/30/2014

110,641

181,783

1,600

28,095

12,756

98,951

113,754

1,469

26,165

12,676

334,875

253,015

The trade payables and other long-term liabilities are due for

payment in between one and five (one and five) years.

Longterm provisions

Pension provisions

Tax provisions

Other provisions

06/30/2014

89,834

2,018

7,099

98,951

Changes in the
consolidated
group, currency

Addition Consumption

Reversal

06/30/2015

– 56

–379

–338

16,437

706

871

18,014

4,014

1,429

530

5,973

102,201

1,392

7,048

110,641

The pension provisions are based on defined benefit ob-

3.00% (3.00%) annually and abroad by 3.75% (3.75%) annu-

ligations, determined by years of service and pensionable

ally. An annual increase in pensions of 2.00% (2.00%) is as-

compensation. They are measured using the projected unit

sumed. The discount rate in Germany was 2.50% compared

credit method under IAS 19 (2011), on the basis of assump-

with 2.90% the year before and averaged 4.60% abroad fol-

tions about future developments. The assumptions in detail

lowing 4.40% the previous year.

are that wages and salaries in Germany will increase by

110 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 4. Notes to the balance sheet

Annual Report 2014/2015 | KWS GroupThe following mortality tables were used at June 30, 2015:

The following benefits are granted from the pension plan:

■■ In Germany: The 2005G mortality table of Klaus Heubeck

■■ An old-age pension at the age of 65

■■ Abroad: RP-2000 Mortality Table Scale AA

■■ An early retirement pension before the age of 65 – to be

eligible, the employee must be at least 55 and the mini-

A retirement age of 63 years is imputed for Germany,

mum vesting period must be five years

whereas a retirement age of 65 years is imputed for the

■■ A pro-rata pension if the employee reaches the minimum

U.S.

vesting period of five years, but is below 55

Nature and scope of the pension benefits

The pension plans are mainly subject to the following risks:

In Germany

Investment and return

The following benefits are provided under a company agree-

The present value of the defined benefit obligation from the

ment relating to the company retirement pension program:

pension plan is calculated using a discount rate defined on

the basis of the returns on high-quality fixed-income corpo-

■■ An old-age pension at the age of 65

rate bonds. If the income from the planned assets is below

■■ An early retirement pension before the age of 65, coupled

this rate of interest, the result is a shortfall in the plan. The

with benefits from the early retirement pension from the

corporate bonds and share funds are chosen to ensure risk

statutory pension insurance program

diversification and managed by an external fund manager.

■■ An invalidity pension for persons who suffer from occu-

pational disability or incapacity to work as defined by the

Change in interest rates

statutory pension insurance program

The fall in the returns on corporate bonds and thus the dis-

■■ A widow’s or widower’s pension

count rate will result in an increase in the obligations, which

is only partly compensated for by a change in the value of

For benefit obligations backed by a guarantee by an insurance

the planned assets.

company toward three former members of the Executive

Board, the planned assets of €9,446 (9,275) thousand corre-

Life expectancy

spond to the present value of the obligation. In accordance

The present value of the defined benefit obligation from the

with IAS 19 (2011), the pension commitments are netted off

plan is calculated on the basis of the best-possible estimate

against the corresponding assets (planned assets).

using mortality tables. An increase in the life expectancy

of the entitled employees results in an increase in the plan

Abroad

liabilities.

The defined benefit obligations abroad mainly relate to pen-

sion commitments in the U.S. Share funds and bonds were

Wage increases

mainly invested in to cover them. All employees who have

The present value of the defined benefit obligation from the

reached the age of 21 are entitled to benefits. In addition,

plan is calculated on the basis of future salaries. Conse-

each employee must have worked at least one year and at

quently, increases in the salary of the entitled employees

least 1,000 working hours to earn an entitlement.

results in an increase in the plan liabilities.

4. Notes to the balance sheet | Notes for the KWS Group 2014/2015 | Annual Financial Statements 111

KWS Group | Annual Report 2014/2015In previous years, KWS countered the usual risks of direct ob-

by planned assets, are funded from the operating cash flow

ligations by converting the pension obligations from defined

and are subject to the familiar measurement risks.

benefit to defined contribution plans. As a result, subsequent

benefits will be provided by a provident fund backed by a

The tables below show the changes in the accrued benefit

guarantee. The existing obligations, which are partly covered

and planned assets:

Changes in accrued benefit entitlements

Accrued benefit entitlements from
retirement obligations on July 1

Service cost

Interest expense

Actuarial gains (–)/losses (+)

of which due to a change in financial
assumptions used for calculation

of which due to experience
adjustments

Pension payments made

Exchange rate changes

Other changes in value

Accrued benefit entitlements from
retirement obligations on June 30

Change in planned assets

Germany

Abroad

Total

Germany

Abroad

Total

2014/2015

2013/2014

95,942

13,865

109,807

88,122

11,948

100,070

691

2,713

12,402

12,010

392

– 4,911

689

671

986

747

239

– 678

2,365

510

1,380

3,384

13,388

647

3,003

8,691

1,418

528

1,218

2,065

3,531

9,909

12,757

7,712

1,058

8,770

979

– 4,521

631

– 5,589

2,365

510

160

– 837

– 428

1,139

– 5,358

– 428

106,837

18,408

125,245

95,942

13,865

109,807

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

Other changes in value

2014/2015

2013/2014

Germany

Abroad

Total Germany

Abroad

9,275

260

491

– 580

10,698

19,973

603

–47

– 485

2,309

520

863

444

–1,065

2,309

520

9,058

307

490

– 580

9,500

450

1,136

– 388

Total

18,558

757

1,626

– 968

Fair value of the planned assets on June 30

9,446

13,598

23,044

9,275

10,698

19,973

112 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 4. Notes to the balance sheet

Annual Report 2014/2015 | KWS Group

In order to allow reconciliation with the figures in the bal-

ance sheet, the accrued benefit must be netted off with the

planned assets.

Reconciliation with the balance sheet values for pensions

Accrued benefit entitlements from
retirement obligations on June 30

Fair value of the planned assets
on June 30

Balance sheet values on June 30

of which pension provisions

of which planned assets

Germany

Abroad

Total

Germany

Abroad

Total

06/30/2015

06/30/2014

106,837

18,408

125,245

95,942

13,865

109,807

9,446

97,391

106,837

9,446

13,598

4,810

18,408

13,598

23,044

102,201

125,245

23,044

9,275

86,667

95,942

9,275

10,698

3,167

13,865

10,698

19,973

89,834

109,807

19,973

The following amounts were recognized in the statement of

comprehensive income:

Effects on the statement of comprehensive income

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 financial 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

691

2,452

3,143

698

766

2014/2015

Total

1,389

2,520

Germany

Abroad

647

2,697

1,418

2013/2014

Total

2,065

2,774

3,909

3,344

1,495

4,839

–491

–444

– 490

–1,136

–1,626

12,011

392

747

239

631

979

12,758

7,712

1,007

8,719

160

1,139

8,232

11,912

1,033

12,945

8,201

15,055

1,799

16,854

11,545

1,526

13,071

The service cost is recognized in operating income in the

respective functional areas by means of an appropriate for-

mula. Net interest expenses and income are carried in the

interest result.

4. Notes to the balance sheet | Notes for the KWS Group 2014/2015 | Annual Financial Statements 113

KWS Group | Annual Report 2014/2015

The fair value of the planned assets was split over the fol-

lowing investment categories:

Breakdown of the planned assets by investment category

in € thousand

06/30/2015

06/30/2014

Germany

Abroad

Corporate bonds

Equity funds

Consumer industry

Finance

Industry

Technology

Healthcare

Other

Cash and cash equivalents

Reinsurance policies

Planned assets on June 30

9,446

3,646

9,071

2,010

1,068

698

1,396

1,337

2,562

881

Total

3,646

9,071

881

9,446

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

13,598

23,044

10,698

19,973

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

The following sensitivity analysis at June 30, 2015, shows

There is no active market for the reinsurance policies in

change in the actuarial assumptions. No correlations between

Germany. There is an active market for the other planned

the individual assumptions were taken into account in this, i.e.

assets: the fair value can be derived from their stock market

if an assumption varies, the other assumptions were kept con-

prices. 82.0% (83.8%) of the corporate bonds and the cash

stant. The projected unit credit method used to calculate the

and cash equivalents have a AAA rating.

balance sheet values was also used in the sensitivity analysis.

how the present value of the obligation would change given a

Sensitivity analysis

in € thousand

Discount rate

Anticipated annual pay increases

Anticipated annual pension increase

Life expectancy

Effect on obligation in 2014/2015

Effect on obligation in 2013/2014

Change in
assumption

+/– 100
basis points

+/– 50
basis points

+/– 25
basis points

+/– 1 year

Decrease

Increase

21,889

–17,286

– 915

991

– 3,848

– 4,489

3,991

4,563

Change in
assumption

+/– 100
basis points

+/– 50
basis points

+/– 25
basis points

+/– 1 year

Decrease

Increase

17,602

–13,852

– 508

533

– 2,471

– 3,006

2,578

3,067

114 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 4. Notes to the balance sheet

Annual Report 2014/2015 | KWS GroupThe following undiscounted payments for pensions (with

their due dates) are expected in the following years:

Anticipated payments for pensions

in € thousand

2014/2015

in € thousand

2013/2014

2015/2016

2016/2017

2017/2018

2018/2019

2019/2020

Germany

Abroad

5,050

4,948

4,909

4,864

4,986

535

594

623

751

756

Total

5,585

5,542

5,532

5,615

5,742

2014/2015

2015/2016

2016/2017

2017/2018

2018/2019

Germany

Abroad

4,784

4,681

4,595

4,577

4,566

408

419

436

488

539

Total

5,192

5,100

5,031

5,065

5,105

2020/2021–2024/2025

24,425

4,713

29,138

2019/2020 –2023/2024

23,260

3,224

26,484

The weighted average time at which the pension obligations

above and beyond payment of the contributions (defined con-

are due is 15.2 (14.9) years in Germany and 16.0 (15.5) years

tribution plans). These comprise benefits that are funded sole-

abroad.

ly by the employer and allowances for conversion of earnings

Apart from the above-described pension obligations, there are

by employees.

other old-age pension systems. However, no provisions have

The total pension costs for fiscal 2014/2015 were as follows:

to be set up for them, since there are no further obligations

Pension costs

in € thousand

Germany

Abroad

Cost for defined contribution plans

2,070

1,095

Service cost for the defined benefit
obligations

Pension costs

691

2,761

698

1,793

2014/2015

2013/2014

Total

3,165

1,389

4,554

Germany

Abroad

1,728

849

647

2,375

1,418

2,267

Total

2,577

2,065

4,642

In addition, contributions of €12,947 (11,676) thousand

interest of between 1.75% and 2.25%. In addition, the benefit

were paid to statutory pension insurance institutions.

obligation from salary conversion was backed by a guarantee

that exactly matches the present value of the obligation of

The costs for defined contribution plans in Germany main-

€4,048 (3,709) thousand (defined contribution plan).

ly related to the provident fund backed by a guarantee.

The contributions to this pension plan were €1,649 (1,330)

The long-term financial borrowings include loans from

thousand. The return and income from the planned assets

banks amounting to €152,534 (79,056) thousand. They

depend on the reinsurance policy, which yields guaranteed

have remaining maturities through 2017.

4. Notes to the balance sheet | Notes for the KWS Group 2014/2015 | Annual Financial Statements 115

KWS Group | Annual Report 2014/2015

Under IAS 12, deferred tax liabilities are calculated as the

€28,095 (26,165) thousand. The composition of the de-

difference between the IFRS balance sheet amount and

ferred tax liabilities is explained in more detail under (24)

the tax base. They are reported on a gross basis and total

Taxes.

(15) Current liabilities

in € thousand

Shortterm provisions

Current liabilities to banks

Current financial liabilities to affiliates

Other current financial liabilities

Shortterm borrowings

Trade payables to affiliates

Other trade payables

Trade payables

Tax liabilities

Other current financial liabilities

Other current liabilities

Shortterm provisions

06/30/2015

06/30/2014

87,355

31,857

308

118

74,825

39,537

301

248

32,283

40,086

1,108

58,550

59,658

30,111

15,952

56,589

129

56,692

56,821

35,426

11,617

55,410

281,948

274,185

in € thousand

06/30/2014

Changes in
the con
solidated
group,
currency

Addition

Con
sumption

Reversal 06/30/2015

Obligations from sales transactions

Obligations from purchase transactions

Other obligations

59,577

9,068

6,180

74,825

4,462

70,333

58,000

103

283

3,439

4,648

4,119

2,204

4,848

78,420

64,323

3,220

3,096

6,415

73,152

5,395

8,808

87,355

The obligations from sales transactions essentially relate to

The tax liabilities of €30,111 (35,426) thousand include

provisions for licenses and returns. The obligations from pur-

amounts for the year under review and the period not yet

chase transactions include provisions for procurement trans-

concluded by the external tax audit.

actions, such as compensation for breeding areas. The other

obligations relate to litigation risks and other provisions that

cannot be assigned to the group of sales transactions or the

group of purchase transactions.

116 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 4. Notes to the balance sheet

Annual Report 2014/2015 | KWS Group
(16) Derivative financial instruments

in € thousand

06/30/2015

06/30/2014

Currency hedges

Interest-rate hedges

Commodity hedges

Total

Nominal
volume

Carrying
amounts

Fair value

Nominal
volume

Carrying
amounts

Fair value

95,003

34,000

148

1,182

–130

1,182

–130

52,873

54,500

129,151

1,052

107,373

272

298

272

298

Of the currency hedges, hedges with a nominal volume of

or liabilities in question, the market that maximizes the

€89,248 (48,465) thousand have a remaining maturity of

amount that would be received to sell the asset or minimizes

less than one year and hedges with a nominal volume of

the amount that would be paid to transfer the liability, after

€5,755 (4,408) thousand have a remaining maturity of be-

taking into account transaction costs, is used. These are

tween one and five years. Of the interest-rate derivatives,

active and accessible markets for identical assets and lia-

hedges with a nominal volume of €19,000 (39,500) thousand

bilities, where the fair value results from quoted prices that

will mature within one year and hedges with a nominal value

are observable (level 1 input factors). At the KWS Group,

of €15,000 (15,000) thousand will mature in more than five

this relates to securities in the category “available-for-sale

years. The commodity hedges have remaining maturities of

financial assets”, as well as fund shares at banks and other

less than one (one) year.

financial assets whose price is likewise quoted in active

(17) Financial instruments

markets.

In general, the fair values of financial assets and liabilities

The level 2 input factors relate to derivative financial instru-

are calculated on the basis of the market data available

ments that have been concluded between KWS companies

on the balance sheet date and are assigned to one of the

and banks. The prices can thus be derived indirectly from

three hierarchy levels in accordance with IFRS 13. The

active market prices for similar assets and liabilities. The

principal market, i.e. the market with the largest volume of

level 3 input factors cannot be derived from observable

trading and the greatest business activity, is used to calcu-

market information.

late the fair value. If this market does not exist for the asset

4. Notes to the balance sheet | Notes for the KWS Group 2014/2015 | Annual Financial Statements 117

KWS Group | Annual Report 2014/2015The carrying amounts and fair values of the financial assets

(financial instruments), split into the measurement catego-

ries in accordance with IAS 39, are as follows:

06/30/2015

in € thousand

Financial assets

Trade receivables

Securities

Cash and cash equivalents

Other current financial assets

of which derivative
financial instruments

Total

06/30/2014

in € thousand

Financial assets

Trade receivables

Securities

Cash and cash equivalents

Other current financial assets

of which derivative
financial instruments

Total

Fair Values

Financial instruments

Carrying amounts

Loans and
receivables

Financial
assets held
for trading

Available
forsale
financial
assets

2,465

309,665

66,973

41,211

26,758

(3,002)

447,072

309,665

41,211

23,756

(0)

374,632

3,002

(3,002)

3,002

2,465

66,973

(0)

69,438

Total
carrying
amount

2,465

309,665

66,973

41,211

26,758

(3,002)

447,072

Fair Values

Financial instruments

Carrying amounts

Loans and
receivables

Financial
assets held
for trading

Available
forsale
financial
assets

2,700

297,780

69,188

53,076

14,883

(879)

437,627

297,780

53,076

14,004

(0)

364,860

879

(879)

879

2,700

69,188

(0)

71,888

Total
carrying
amount

2,700

297,780

69,188

53,076

14,883

(879)

437,627

118 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 4. Notes to the balance sheet

Annual Report 2014/2015 | KWS GroupThe fair value of financial assets (equity instruments) mea-

The fair values of securities classified as current assets are

sured at amortized costs cannot be reliably determined

based on the price for them quoted on active markets (level 1).

because there are no active markets. These assets relate

The fair value of derivative financial instruments is the pres-

to shares in unconsolidated subsidiaries and associated

ent values of the payments related to these balance sheet

companies. It is assumed that the carrying amounts are

items. These instruments are mainly forward exchange

the same as the fair values. In addition, the financial assets

deals. They are measured on the basis of quoted exchange

include securities classified as noncurrent assets, whose

rates and yield curves available from the market data and

fair value is measured by their prices on the stock market

allowing for counterparty risks (level 2).

(level 1).

The fair value of trade receivables, other current financial

ties (financial instruments), split into the measurement cate-

assets and cash and cash equivalents is the same as the

gories in accordance with IAS 39, are as follows:

The carrying amounts and fair values of the financial liabili-

carrying amounts as a result of the short time in which these

instruments are due.

06/30/2015

in € thousand

Fair Values

Financial instruments

Carrying amounts

Financial
liabilities
measured at
amortized
cost

Financial
liabilities
held
for trading

Disclosure
in acc. with
IFRS 7

Total
carrying
amount

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 financial liabilities

of which derivative financial instruments

183,428

152,534

(29,249)

1,600

32,283

59,658

15,952

(1,949)

(0)

1,600

32,283

59,658

14,003

(0)

Total

292,921

260,078

(0)

1,949

(1,949)

1,949

29,249

181,783

(29,249)

(0)

1,600

32,283

59,658

15,952

(1,949)

29,249

291,276

4. Notes to the balance sheet | Notes for the KWS Group 2014/2015 | Annual Financial Statements 119

KWS Group | Annual Report 2014/201506/30/2014

in € thousand

Fair Values

Financial instruments

Carrying amounts

Financial
liabilities
measured at
amortized
cost

Financial
liabilities
held
for trading

Disclosure
in acc. with
IFRS 7

Total
carrying
amount

Financial liabilities

Long-term borrowings

of which outstanding purchase price obliga-
tions for consolidated subsidiaries

Long-term trade payables

Short-term borrowings

Short-term trade payables

Other current financial liabilities

of which derivative financial instruments

114,224

79,056

(34,698)

1,469

40,086

56,821

11,617

(581)

(0)

1,469

40,086

56,821

11,036

(0)

Total

224,217

188,468

(0)

581

(581)

581

34,698

113,754

(34,698)

(0)

1,469

40,086

56,821

11,617

(581)

34,698

223,747

The fair value of long-term borrowings was calculated on the

Due to the mainly short times in which trade payables and

basis of discounted cash flows. To enable that, interest rates

other financial liabilities (excluding derivatives) are due by, it is

for comparable transactions and yield curves were used

assumed that their carrying amounts are equal to the fair value.

(level 2).

The outstanding purchase price obligation for consolidated

instruments has been presented above under the comments

The method of calculating the fair values of derivative financial

subsidiaries must be carried at the present value of the

on financial assets.

anticipated future purchase price payments for minority

interests. This is derived from the anticipated operating income

None of the reported financial instruments will be held to

of the subsidiary and a risk-adjusted discount rate (level 3).

maturity.

120 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 4. Notes to the balance sheet

Annual Report 2014/2015 | KWS GroupThe table below shows the financial assets and liabilities

measured at fair value:

in € thousand

06/30/2015

06/30/2014

Level 1 Level 2 Level 3

Total Level 1 Level 2 Level 3

Total

Derivative financial instruments not part
of a hedge under IAS 39

Available-for-sale financial assets

Financial assets

Derivative financial instruments not part
of a hedge under IAS 39

Financial liabilities

3,002

69,104

3,002

1,949

3,002

69,104

71,443

72,106

71,443

1,949

879

581

879

71,443

72,322

581

The derivative financial instruments mainly consists of for-

The table below presents the net gains/losses carried in the

ward exchange deals, whose fair value is derived from the

income statement for financial instruments in each measure-

forward exchange rates and the use of option pricing models

ment category:

(level 2).

in € thousand

Available-for-sale financial assets

Financial assets held for trading

Loans and receivables

Financial liabilities measured at amortized cost

Financial liabilities held for trading

06/30/2015

06/30/2014

141

2,141

3,854

–10,644

–1,471

119

–1,080

–10,688

314

4. Notes to the balance sheet | Notes for the KWS Group 2014/2015 | Annual Financial Statements 121

KWS Group | Annual Report 2014/2015

The net income from available-for-sale financial assets

financial transactions are controlled centrally by Corporate

essentially includes income from equity investments in

Finance/Treasury. In order to minimize risks, financial trans-

cooperatives.

actions are exclusively conducted within defined limits with

banks and partners who always have an investment grade.

The net gains from financial assets held for trading and

Compliance with the risk limits is constantly monitored. The

financial liabilities held for trading solely comprise changes

limits are adjusted depending on the credit volume only sub-

in the market value of derivative financial instruments.

ject to the approval of the regional or divisional management

and the Executive Board.

The net gain/loss from loans and receivables mainly

includes effects from changes in the allowances for impair-

Liquidity is managed in the euro zone by the central Treasury

ment.

unit using a cash pooling system. Liquidity requirements

are generally determined by means of cash planning and

The net losses from financial liabilities measured at

are covered by cash and promised credit lines. In order to

amortized cost result mainly from interest expense.

finance acquisition of the shares in KWS LOCHOW GMBH

Interest income from financial assets that are not measured

sued a borrower’s note loan with a volume of €100 million in

at fair value and recognized in the income statement was

September 2014. As part of that, €19.5 million of the existing

€1,480 (1,583) thousand. Interest expenses for financial bor-

borrower’s note loan from 2012 was repaid.

and the SOCIETE DE MARTINVAL Group, KWS SAAT SE is-

rowings were €10,644 (10,688) thousand.

There are unutilized credit lines totaling €222 million. A

In order to control the credit risk resulting from receivables

syndicated loan of €200 million was renegotiated in October

from customers, a regular creditworthiness analysis is con-

2014. It runs until October 2019, with the option of extending

ducted by the responsible Credit Manager in accordance

it up to October 2021. Unlike the old loan, the new agree-

with the credit volume. Security is available for some of

ment only contains one financial covenant. In the case of

these receivables and is used depending on the local cir-

financial covenants, the dynamic gearing ratio is used as

cumstances. This includes in particular credit insurance,

a financial indicator. Compliance with the covenants is

down payments and guarantees. In general, reservation

regularly reviewed by KWS SAAT SE’s Treasury unit and

of ownership of goods is agreed with our customers.

reported to the banks every quarter in connection with the

Credit limits are defined for all customers. Credit risks from

quarterly and annual financial statements.

122 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 4. Notes to the balance sheet

Annual Report 2014/2015 | KWS GroupThe table below shows the KWS Group’s liquidity analysis

for non-derivative and derivative financial liabilities. The

table is based on contractually agreed, undiscounted pay-

ment flows:

in € thousand

Book value

Liquidity analysis of financial liabilities

06/30/2015

06/30/2015
Total

Financial liabilities

Trade payables

Other financial liabilities

214,066

197,425

61,258

14,003

61,258

14,003

Due in
> 1 year and
< 5 years

98,814

1,189

Cash flows

Due in
> 5 years

56,326

411

Due in
< 1 year

42,285

59,658

14,003

Nonderivative financial liabilities

289,327

272,686

115,946

100,003

56,737

Payment claim

Payment obligation

Derivative financial liabilities

1,949

40,134

43,812

3,678

39,868

43,168

3,300

266

644

378

in € thousand

Book value

Liquidity analysis of financial liabilities

06/30/2014

06/30/2014
Total

Financial liabilities

Trade payables

Other financial liabilities

153,840

185,894

58,290

11,036

58,290

11,036

Due in
> 1 year and
< 5 years

125,090

1,146

Due in
< 1 year

60,611

56,821

11,036

Nonderivative financial liabilities

223,166

255,221

128,468

126,237

Payment claim

Payment obligation

Derivative financial liabilities

581

22,531

23,221

690

22,531

23,221

690

Cash flows

Due in
> 5 years

193

323

516

4. Notes to the balance sheet | Notes for the KWS Group 2014/2015 | Annual Financial Statements 123

KWS Group | Annual Report 2014/2015The cash flows of the derivative financial liabilities mainly

In order to assess the risk of interest rate changes, the sen-

relate to forward exchange deals and include both inter-

sitivity of interest rates to fluctuations was determined. The

est payments and redemption payments. These derivative

average rate of interest in the fiscal year was 0.16% (0.26%).

financial instruments are settled in gross.

An increase in the rate of interest of 1 percentage point

The following sensitivity analyses show the impact on in-

ous year: increase of €0.2 million); equity would improve by

come and equity. The calculated figures relate to the port-

€0.1 million (previous year: an improvement of €0.1 million).

folio at the balance sheet date and show the hypothetical

A reduction in the rate of interest to 0 percentage points

would add a further €0.1 million to the interest result (previ-

effect for one year.

would add a further €1.1 (1.3) million to the interest result.

Equity would increase by €+0.7 (+0.8) million in the event of

After the euro, the US dollar is the most important currency

such a change in the rate of interest.

in the KWS Group. All other currencies are of minor impor-

tance. The average exchange rate in the fiscal year was

The Management Report addresses possible risks resulting

1.19 (1.36) USD/€. If the US dollar depreciated by 10%, the

from agreements regarding financial dependencies.

financial instruments would be worth €233 (170) thousand. If

the US dollar appreciated by 10%, the financial instruments

(18) Contingent liabilities

would have a value of €285 (208) thousand. The net income

As in the previous year, there are no contingent liabilities to

for the year and equity would change accordingly.

report at the balance sheet date.

Due to seasonally related fluctuations in borrowing require-

(19) Other financial obligations

ments, the impact of changes in market interest rates is cal-

There was a €11,875 (9,815) thousand obligation from un-

culated across the board on the basis of the current interest

completed capital expenditure projects, mainly relating

result.

to property, plant, and equipment. The largest item is the

obligations from investment in the new office and research

building in Einbeck totaling €1.2 million.

Obligations under rental agreements and leases

in € thousand

Due within one year

Due between 1 and 5 years

Due after 5 years

06/30/2015

06/30/2014

15,063

20,788

7,530

43,381

14,038

18,303

6,939

39,280

The leases relate primarily to full-service agreements for IT

year under review. The main leasehold obligations relate to

equipment and fleet vehicles, which also include services

land under cultivation.

for which a total of €4,544 (1,300) thousand was paid in the

124 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 4. Notes to the balance sheet

Annual Report 2014/2015 | KWS Group5. Notes to the income statement

Income statement

in € millions

Net sales

Cost of sales

Gross profit on sales

Selling expenses

Research & development expenses

General and administrative expenses

Other operating income

Other operating expenses

Operating income

Net financial income/expenses

Result of ordinary activities

Taxes

Net income for the year

Share of minority interest

Net income after minority interest

(20) Net sales and function costs

By product category

in € thousand

Certified seed sales

Royalties income

Basic seed sales

Services fee income

Other sales

2014/2015

% of sales

Previous year

% of sales

986.0

453.5

532.5

189.0

174.6

74.8

88.0

68.7

113.4

16.7

130.1

46.1

84.0

1.3

82.7

100.0

46.0

54.0

19.2

17.7

7.6

8.9

7.0

11.5

1.7

13.2

4.7

8.5

0.1

8.4

923.5

429.3

494.2

170.0

149.4

71.9

58.2

42.8

118.3

7.5

125.8

45.5

80.3

3.2

77.1

100.0

46.5

53.5

18.4

16.2

7.8

6.3

4.6

12.8

0.8

13.6

4.9

8.7

0.3

8.3

2014/2015

Previous year

877,494

821,673

72,626

14,318

780

20,797

986,015

64,435

14,698

684

21,991

923,481

5. Notes to the income statement | Notes for the KWS Group 2014/2015 | Annual Financial Statements 125

KWS Group | Annual Report 2014/2015
By region

in € thousand

Germany

Europe

North and South America

Rest of world

2014/2015

Previous year

223,885

441,526

254,709

65,895

986,015

225,149

435,508

205,600

57,224

923,481

The other sales include net sales from barter transactions

totaling €2,440 thousand were required in the Sugarbeet

totaling €571 (774) thousand.

Segment (previous year: lower by €1,087 thousand).

For further details of sales, see segment reporting. Sales are

The €18,967 thousand increase in selling expenses to

recognized when the agreed goods or services have been

€188,991 (170,024) thousand is attributable to the creation

supplied and risk and title pass to the buyer. Any rebates or

and expansion of distribution structures. This is 19.2% of

discounts are taken into account.

net sales, up from 18.4% the year before.

The cost of sales increased by 5.6% to €453,498 (429,272)

Research & development is recognized as an expense

thousand, or 46.0% (46.5%) of sales. The total cost of goods

in the year it is incurred; in the year under review, this

sold was €272,836 (269,012) thousand.

amounted to €174,627 (149,382) thousand. Development

costs for new varieties are not recognized as an asset

Allowances on inventories totaling €1,755 thousand more

because evidence of future economic benefit can only be

(previous year: lower by €226 thousand) were required. The

provided after the variety has been officially certified.

allowances were lower by €1,065 thousand for the Cereals

Segment (previous year: lower by €181 thousand), while they

General and administrative expenses increased by

were lower by €1,750 thousand for the Corn Segment (previ-

€2,890 thousand to €74,756 thousand, representing 7.6%

ous year: higher by €1,042 thousand). Additional allowances

of sales, after 7.8% the year before.

(21) Other operating income

in € thousand

Income from sales of fixed 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

Performance-based public grants

Income relating to previous periods

Income from loss compensation received

Miscellaneous other operating income

2014/2015

Previous year

877

6,427

36,640

10,852

4,845

8,227

862

19,230

87,960

333

15,638

13,512

4,858

5,454

6,315

191

11,806

58,107

The other operating income mainly comprises foreign ex-

well as income from the reversal of provisions and miscel-

change gains and income from interest rate hedges, as

laneous other operating income.

126 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 5. Notes to the income statement

Annual Report 2014/2015 | KWS Group
(22) Other operating expenses

in € thousand

Legal form expenses

Allowances on receivables

Counterparty default

Exchange rate losses and losses on currency and interest rate hedges

Losses from sales of fixed assets

Expenses relating to previous periods

Expense from remeasurement of intangible assets

Other expenses

2014/2015

Previous year

1,712

8,478

44,304

717

1,199

238

12,030

68,686

1,056

7,520

392

22,285

241

1,098

2,366

7,819

42,777

In the year under review, allowances for receivables of

Sugarbeet Segment, €251 (70) thousand at the Cereals

€5,636 (3,144) thousand were recognized as an expense

Segment and €0 (64) thousand at the Corporate Segment.

at the Corn Segment, €2,591 (4,242) thousand at the

(23) Net financial income/expenses

in € thousand

Interest income

Interest expenses

Income from other financial assets

Write-down on securities

Interest effects from pension provisions

Interest expense for other long-term provisions

Financial lease interest expense

Interest result

Result from equity-accounted financial assets

Gain from remeasurement of the existing shares in SOCIéTé DE MARTINVAL S.A.

Net income from equity investments

2014/2015

Previous year

1,480

9,709

141

2,518

158

–10,780

23,747

3,722

27,469

1,598

11,471

119

2,762

192

–12,711

20,208

Net financial income/expenses

16,689

7,497

Net income from equity investments increased to

interest result of € –10,780 (–12,711) thousand, net

€27,469 (20,208) thousand, largely due to improved in-

financial income/expenses rose by €9,192 thousand to

come from equity-accounted financial assets totaling

€16,689 (7,497) thousand. The interest effects from pen-

€23,747 (20,208) thousand and gains from remeasurement

sion provisions comprise interest expenses (compounding)

of the existing shares in SOCIéTé DE MARTINVAL S.A.

and the planned income.

totaling €3,722 (0) thousand. Together with an

5. Notes to the income statement | Notes for the KWS Group 2014/2015 | Annual Financial Statements 127

KWS Group | Annual Report 2014/2015(24) 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

2014/2015

Previous year

15,723

36,231

51,954

(294)

– 634

– 5,262

– 5,896

46,058

15,824

34,289

50,113

(– 6,829)

–111

– 4,514

– 4,625

45,488

Adjusted for tax relating to previous periods, KWS pays

present value totaling €3,702 (4,933) thousand at June 30,

tax in Germany at a rate of 29.1%. Corporate income tax of

2015. €1,235 (1,235) thousand was recovered in the year

15.0% (15.0%) and solidarity tax of 5.5% (5.5%) are applied

under review and recognized directly in equity.

uniformly to distributed and retained profits. In addition, mu-

nicipal trade tax is payable on profits generated in Germany.

Under German tax law, both German and foreign dividends

Trade income tax is applied at a weighted average rate of

are 95% tax exempt.

13.3% (13.3%), resulting in a total tax rate of 29.1% (29.1%).

The “Law on Tax Measures Accompanying Introduction of

Germany are taxed at the rates applicable in the country

The profits generated by Group companies outside

the Societas Europaea and Amending Further Tax Regu-

in which they are based.

lations” (SEStEG), which was passed at the end of 2006,

means that the corporate income tax credit balance at

For the German Group companies, deferred tax was

December 31, 2006, can be realized. It will be paid out in

calculated at 29.1% (29.1%). For foreign Group companies,

ten equal annual amounts from 2008 to 2017. The German

deferred tax was calculated using the tax rates applicable in

Group companies carried these claims as assets at their

the country in which they are based.

128 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 5. Notes to the income statement

Annual Report 2014/2015 | KWS GroupDeferred taxes result from the following:

in € thousand

Deferred tax assets

Deferred tax liabilities

2014/2015

Previous
year

Change

2014/2015

Previous
year

Intangible assets

Biological assets

Property, plant and equipment

Financial assets

Inventories

Current assets

Noncurrent liabilities

Current liabilities

Tax loss carryforward

Other consolidation transactions

Deferred taxes recognized

273

515

1,655

9,645

4,760

18,145

11,547

6,660

1,119

54,319

284

1,529

9,527

2,351

14,327

14,404

5,115

386

47,935

261

231

126

118

2,409

3,818

– 2,857

1,545

733

6,384

8,118

15,375

187

3,363

954

9,431

13,886

634

166

1,139

888

Change

–1,313

1,489

– 633

2,224

28,095

26,165

1,930

The other income includes exchange rate-related changes

The deferred taxes from temporary differences recognized

to the deferred taxes of €54 (–735) thousand, which were di-

in the income statement changed as follows:

rectly credited to equity, without recognition in profit or loss.

Deferred tax expense/income per balance sheet item

in € thousand

Temporary differences from:

Intangible assets

Property, plant and equipment

Financial assets

Inventories

Current assets

Noncurrent liabilities

Current liabilities

Tax loss carryforward

Other

Recognized in the income statement

2014/2015

Previous year

5,012

– 74

953

– 315

752

– 39

– 3,111

2,664

725

6,567

3,038

206

–1,005

–123

– 2,088

1,673

– 698

3,784

4,845

5. Notes to the income statement | Notes for the KWS Group 2014/2015 | Annual Financial Statements 129

KWS Group | Annual Report 2014/2015Deferred tax assets totaling €1,308 thousand were written

that made losses in the past period or the previous period.

down and recognized in the income statement, while de-

These were considered recoverable, since it is assumed that

ferred tax assets totaling €56 thousand were written down

the companies in question will post taxable profits in the

and not recognized in the income statement. Deferred taxes

future.

due to tax loss carryforwards totaling €289 thousand were

recognized in the income statement.

The following schedule reconciles the expected income tax

expense to the reported income tax expense. The calcula-

In the year under review, there were surpluses of deferred

tion assumes an expected tax expense, applying the Ger-

tax assets from temporary differences and loss carryfor-

man tax rate to the profit before tax of the entire Group:

wards totaling €9,506 (7,430) thousand at group companies

in € thousand

Earnings before income taxes

Expected income tax expense 1

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 Tax rate in Germany: 29.1%

2014/2015

Previous year

130,106

37,861

4,228

– 2,989

6,654

– 313

294

323

46,058

35.4%

125,764

36,597

13,573

110

2,600

143

– 2

– 6,829

– 704

45,488

36.2%

This increase in the effective tax rate in the year under re-

Personnel costs went up by €26,944 thousand to €216,873

view compared with the tax rate of 29.1% in Germany was

thousand, an increase of 14.2%. The number of employees

due to strong income growth in countries with higher tax

increased by 541 to 4,691, or by 13.0%.

rates and tax effects on non-deductible expenses.

Other taxes, primarily real estate tax, are allocated to the

in the previous year to €176,088 thousand. Social security

Compensation increased by 15.3% from €152,751 thousand

relevant functions.

(25) Personnel costs/employees

in € thousand

Wages and salaries

Social security contributions,
expenses for pension plans
and benefits

contributions, expenses for pension plans and benefits

were €3,607 thousand higher than in the previous year.

Employees 1

2014/2015

Previous
year

176,088

152,751

Germany

40,785

37,178

216,873

189,929

Rest of Europe (without
Germany)

North and South America

Rest of world

Total

1 Annual average

2014/2015

Previous
year

1,868

1,763

1,401

1,234

188

4,691

1,163

1,073

151

4,150

130 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 5. Notes to the income statement

Annual Report 2014/2015 | KWS Group

Acquisition of the remaining shares in the SOCIETE DE

shares in KWS SAAT SE every year in a freely selectable

MARTINVAL Group meant that its headcount was included

amount ranging between 20% and 50% of the gross per-

in full in the figures this year. If our joint ventures are in-

formance-related bonus. Along with that, all members of

cluded proportionately, the headcount is 5,322 (4,847). The

the second management level can likewise take part in an

reported number of employees is greatly influenced by sea-

LTI program. As part of this program, they are obligated

sonal labor.

(26) Sharebased payment

Employee Share Program

to invest in shares in KWS SAAT SE every year in a freely

selectable amount ranging between 10% and 40% of the

gross performance-related bonus. The members of the

Executive Board and the second management level may

sell these shares at the earliest after a regular holding pe-

KWS has established a share program for employees. All

riod of five years beginning at the time they are acquired

employees who have been with the company for at least one

(end of the quarter in which the shares were acquired).

year without interruption and have a permanent employment

The entitled persons are paid a long-term incentive (LTI) in

relationship that has not been terminated at a KWS Group

the form of cash compensation after the holding period for

company that participates in the program are eligible to take

the tranche in question. Its level is calculated on the basis

part. That also includes employees who are on maternity

of KWS SAAT SE’s share performance and on the KWS

leave or parental leave or who are in semi-retirement.

Group’s return on sales (ROS), measured as the ratio of

operating income to net sales, over the holding period. For

Each employee can acquire up to 500 shares. A bonus of

persons with contracts as of July 1, 2014, the cash com-

20% is deducted from the purchase price, which depends

pensation for members of the Executive Board is a maxi-

on the price applicable on the key date. The shares are

mum of one-and-half times (for the Chief Executive Officer

subject to a lock-up period of four years beginning when they

two times), and for members of the second management

are posted to the employee’s securities account. The right

level a maximum of two times their own investment (LTI

to a dividend, if KWS SAAT SE pays one out, exists during

cap). The costs of this compensation are recognized in the

the lock-up period. Holders can also exercise their right to

income statement over the period and were €1,044 (718)

participate in the Annual Shareholders’ Meeting during the

thousand in the period under review. The provision for it

lock-up period. They can dispose freely of the shares after

at June 30, 2015, was €2,170 (1,200) thousand. The LTI fair

the lock-up period.

values are calculated by an external expert.

9,878 (11,028) shares were repurchased for the Employee

(27) Net income for the year

Share Program at a total price of €2,684 (2,834) thousand in

The KWS Group’s net income for the year was €84,048

the year under review.

(80,276) thousand on operating income of €113,417 (118,267)

Longterm incentive (LTI)

thousand and net financial income/expenses of €16,689

(7,497) thousand. The return on sales fell slightly to 8.5%

The stock-based compensation plans awarded at the

(8.7%). Net income for the year after minority interest is

KWS Group are recognized in accordance with IFRS 2

€82,712 (77,124) thousand. Due to the acquisition of the

“Share-based Payment”. The incentive program, which

remaining shares held by the Momont family, the share of

was launched in fiscal 2009/2010, involves stock-based

minority interests in the KWS Group’s income fell sharply

payment transactions with cash compensation, which

year on year. Earnings per share in the year under review

are measured at fair value at every balance sheet date.

were €12.53 (11.69).

Members of the Executive Board are obligated to acquire

5. Notes to the income statement | Notes for the KWS Group 2014/2015 | Annual Financial Statements 131

KWS Group | Annual Report 2014/20156. Notes to the cash flow statement

The cash flow statement, which has been prepared according

disposals of assets. €31,727 (0) thousand was paid to acquire

to IAS 7 (indirect method), shows the changes in cash and

shares in consolidated companies and other business units.

cash equivalents of the KWS Group in the three categories of

operating activities, investing activities, and financing activi-

(3) Net cash from financing activities

ties. The effects of exchange rate changes and changes in the

Financing activities resulted in cash proceeds of €48,398

consolidated group have been eliminated from the respective

thousand (previous year: cash payments of €43,558 thou-

balance sheet items, except those affecting cash and cash

sand). The dividend payments to parent shareholders and

equivalents.

other shareholders comprise the dividends of €19,800

(19,800) thousand paid to the shareholders of KWS SAAT SE,

(1) Net cash from operating activities

as well as profit distributions paid to other shareholders of

The cash proceeds from operating activities are substantially

and at fully consolidated subsidiaries of €0 (1,328) thousand.

determined by cash earnings. In the year under review they

In the previous year, this also related to acquisition of the

were €92,063 (84,954) thousand. The proportion of cash

remaining minority interests in KWS LOCHOW GMBH. In

earnings included in sales was 9.3% (9.2%). Capital tie-up

addition, net borrowings totaling €68,198 (23,357) thousand

amounted to €72,809 (62,626) thousand, mainly due to an

were raised.

increase in assets not attributable to financing or investing

activity. The cash proceeds from operating activities also in-

(4) Supplementary information on the

clude interest income of €1,479 (1,592) thousand and interest

cash flow statement

expense of €6,843 (7,288) thousand. Income tax payments

Of the changes in cash and cash equivalents caused by ex-

amounted to €69,552 (67,497) thousand. The dividends re-

change rate, consolidated group, and measurement changes,

ceived from the joint ventures are also carried here and total

a total of €6,879 (–2,909) thousand results from exchange

€12,157 (11,272) thousand.

rate-related adjustments and a total of €6,285 (0) thousand

from adjustments relating to changes in the consolidated

(2) Net cash from investing activities

companies.

A net total of €123,761 (63,089) thousand was required to

finance investing activities. An amount of €86,576 (63,556)

As in previous years, cash and cash equivalents are com-

thousand was paid for intangible and tangible assets and an

posed of cash (on hand and balances with banks) and current

amount of €7,535 (874) thousand for financial assets. There

available-for-sale securities.

were total cash receipts of €2,077 (1,341) thousand for

7. Other notes

Proposal for the appropriation of net retained profits

The balance of €66 (199) thousand is to be carried forward to

KWS SAAT SE posted operating income of € –23,242 thousand

the new account.

compared with € –14,331 thousand for the previous year.

Allowing for net financial income/expenses of €45,017 (37,911)

Total remuneration of the Supervisory Board and

thousand and income taxes totaling €2,108 (–265) thousand,

Executive Board and of former members of the Super

net income in accordance with the German commercial law

visory Board and Executive Board of KWS SAAT SE

regulations was €19,667 (23,845) thousand. Adding the net

The compensation of the members of the Supervisory Board

profit of €199 (154) thousand brought forward from the previ-

consists of a fixed and a variable component, with the vari-

ous year, a net retained profit of €19,866 thousand is available

able component being limited to the level of the fixed com-

for distribution.

pensation. As in the previous year, the total compensation for

members of Supervisory Board amounts to €516 (516) thou-

A proposal will be made to the Annual Shareholders’ Meeting

sand, excluding value-added tax. €238 (238) thousand of the

that an amount of €19,800 thousand of KWS SAAT SE’s net

total compensation is performance-related.

retained profit should be distributed as a dividend of €3.00

(3.00) for each of the 6,600,000 shares.

132 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 6. Notes to the cash flow statement

Annual Report 2014/2015 | KWS Group
In fiscal year 2014/2015, total Executive Board compen-

Related party disclosures

sation amounted to €4,007 (3,481) thousand. The variable

As part of its operations, KWS procures goods and services

compensation, which is calculated on the basis of the net

worldwide from a large number of business partners, in-

profit for the period of the KWS Group, is made up of a

cluding companies in which KWS has an interest. Business

bonus and a long-term incentive. The bonus totals €1,772

dealings with these companies are always conducted on

(1,884) thousand; there are contributions from the long-term

an arm’s length basis; from the KWS Group’s perspective,

incentive tranche for 2013/2014 totaling €881 thousand

these dealings have not been material. As part of Group

(tranche for 2012/2013: €610 thousand).

financing, short- and medium-term loans are taken out from

and granted to subsidiaries at market interest rates. A total

Compensation of former members of the Executive Board

of 14 shareholders declared to KWS SAAT SE in 2002 that

and their surviving dependents amounted to €1,693 (1,476)

as a result of mutual allocations, they respectively hold a

thousand. Pension provisions recognized for this group of

total of more than 50% of the voting rights. The Executive

persons amounted to €7,131 (7,018) thousand as of June 30,

Board, Supervisory Board and the families of their members

2015, before being netted off with the relevant planned

were also defined as related parties. There were no business

assets.

transactions or legal transactions that required reporting for

this group of persons in fiscal 2014/2015. The compensa-

Shareholdings of members of the Supervisory Board

tion that has to be disclosed in accordance with IAS 24 for

and the Executive Board (as of July 31, 2015)

management in key positons at the Group comprises remu-

Dr. Arend Oetker indirectly holds a total of 1,650,010

neration for the active Executive Board and the Supervisory

(1,650,010) shares and Dr. Andreas J. Büchting 108,030

Board. It is presented in the Group Management Report. No

(108,030) shares in KWS SAAT SE. The members

other related parties have been identified for whom there is a

of the Supervisory Board hold a total of 1,758,735

special reporting requirement under IAS 24.

(1,758,725) shares in KWS SAAT SE.

All together, the members of the Executive Board hold

€132 (132) thousand between Hans-Joachim Tessner and

14,445 (14,699) shares in KWS SAAT SE.

KWS SAAT SE. The three equity-accounted joint ventures

There are lease agreements with an annual lease of

provided breeding services for KWS SAAT SE on an arm’s

length basis.

Related parties

in € thousand

Deliveries and
services provided

Received deliveries
and services

Receivables

2014/2015

year 2014/2015

year 06/30/2015

Unconsolidated subsidaries

332

262

Equity-accounted
joint ventures

Other related parties

7,887

9,035

22,016

19,360

6,394

5,693

1,108

132

Payables

Previous
year

The receivables from unconsolidated companies in the

current fiscal year total €332 thousand. They are classified

as dubious and so have been completely written down.

7. Other notes | Notes for the KWS Group 2014/2015 | Annual Financial Statements 133

KWS Group | Annual Report 2014/2015

Audit of the annual financial statements

Membership of other legally mandated Supervisory Boards:

On December 18, 2014, the Annual Shareholders’ Meeting

of KWS SAAT SE elected the accounting firm Deloitte &

■■ Schwartauer Werke GmbH & Co. KGaA,

Touche GmbH, Hanover, to be the Group’s auditors for fiscal

Bad Schwartau (Chairman)

year 2014/2015.

■■ Cognos AG, Hamburg (Chairman)

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

Membership of comparable German and foreign

oversight boards:

in € thousand

a) Audit of the consolidated financial

statements

b) Other certification services

c) Tax consulting

d) Other services

Total fee paid

2014/2015

Previous
year

■■ Leipziger Messe GmbH, Leipzig

741

710

Hubertus von Baumbach

795

757

Ingelheim am Rhein

Businessman

Member of Management of Boehringer Ingelheim, Ingelheim

am Rhein

Jürgen Bolduan

Einbeck

For fiscal year 2015/2016, fees for consulting services (ex-

Seed Breeding Employee

cluding auditing) of to up to €75 thousand are expected.

Chairman of the Central Works Committee

Declaration of compliance with the German Corporate

Governance Code

Cathrina ClaasMühlhäuser

KWS SAAT SE has issued the declaration of compliance

Frankfurt am Main

with the German Corporate Governance Code required by

Businesswoman

of KWS SAAT SE

section 161 of the Aktiengesetz (AktG – German Stock Cor-

Chairwoman of the Supervisory Board of

poration Act) and made it accessible to its shareholders on

CLAAS KGaA mbH, Harsewinkel

the company’s home page at www.kws.com.

Supervisory and Executive Boards of KWS SAAT SE

Supervisory Board

Membership of other legally mandated Supervisory Boards:

■■ CLAAS KGaA mbH, Harsewinkel (Chairwoman)

Membership of comparable German and foreign

Dr. Drs. h.c. Andreas J. Büchting

oversight boards:

Einbeck

Agricultural Biologist

■■ CLAAS KGaA mbH, Harsewinkel

Chairman of the Supervisory Board of KWS SAAT SE

(Deputy Chairwoman of the Shareholders’ Committee)

Membership of comparable German and foreign oversight

Dr. Berthold Niehoff

boards:

Einbeck

Agricultural Scientist

■■ Member of the Board of Directors of Ball Horticultural

Employee Representative

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

Dr. Arend Oetker

Berlin

Businessman

Managing Partner of Kommanditgesellschaft Dr. Arend

Oetker Vermögensverwaltungsgesellschaft mbH & Co., Berlin

Deputy Chairman of the Supervisory Board of

KWS SAAT SE

134 Annual Financial Statements | Notes for the KWS Group 2014/2015 | 7. Other notes

Annual Report 2014/2015 | KWS GroupSupervisory Board Committees

Dr. Hagen Duenbostel

Einbeck

Audit Committee

Chief Executive Officer (since January 1, 2015)

Chairman: Hubertus von Baumbach

Corn, Corporate Development and Communication,

Members: Andreas J. Büchting, Jürgen Bolduan

Corporate Compliance

Committee for Executive Board Affairs

Membership of comparable German and foreign oversight

Chairman: Andreas J. Büchting

boards:

Members: Arend Oetker, Cathrina Claas-Mühlhäuser

■■ Hero AG, Lenzburg, CH

Nominating Committee

Chairman: Andreas J. Büchting

(Member of the Board of Administration)

Dr. Léon Broers

Members: Arend Oetker, Cathrina Claas-Mühlhäuser

Einbeck

Executive Board

Research and Breeding

Dr. Peter Hofmann (since October 1, 2014)

Philip von dem Bussche (until December 31, 2014)

Einbeck

Sugarbeet, Cereals, Marketing

Chief Executive Officer (until December 31, 2014)

Corporate Development and Communication,

Human Resources

Eva Kienle

Göttingen

Finance, Controlling, Global Services,

IT, Legal, Human Resources

8. Declaration by

legal representatives

We declare to the best of our knowledge that the con-

Report, and that it describes the main opportunities and

solidated financial statements give a true and fair view of

risks of the Group’s anticipated development.

the assets, financial position and earnings of the Group

in compliance with the generally accepted standards of

Einbeck, October 1, 2015

consoli dated accounting, and that an accurate picture of

KWS SAAT SE

the course of business, including business results, and the

The Executive Board

Group’s situation is conveyed by the Group Management

H. Duenbostel

L. Broers

E. Kienle

P. Hofmann

8. Declaration by legal representatives | Notes for the KWS Group 2014/2015 | Annual Financial Statements

135

KWS Group | Annual Report 2014/2015

Auditors’ Report

We have audited the annual financial statements of the

basis of test samples within the framework of the audit.

KWS Group – consisting of the Balance Sheet, the State-

The audit includes the assessment of the annual financial

ment of Comprehensive Income, the Notes, the Cash

statements of the companies included in the consolidat-

Flow Statement, Segment Reporting and the Statement of

ed financial statements, the definition of the companies

Changes in Equity – and the Combined Group Management

consolidated, the accounting and consolidation principles

Report for the fiscal year from July 1, 2014, to June 30, 2015,

used and any significant estimates made by the Executive

all of which were prepared by KWS SAAT SE, Einbeck. The

Board, as well as the evaluation of the overall presentation

preparation of the consolidated financial statements and

of the consolidated financial statements and the Group

the Group Management Report according to the Interna-

Management Report. We believe that our audit provides a

tional Financial Reporting Standards (IFRS) as applicable

reasonable basis for our opinion.

in the EU, and in addition according to the commercial law

regulations to be applied pursuant to Section 315a (1) of the

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

HGB (German Commercial Code), is the responsibility of

the Executive Board of the company. Our task is to give, on

In our opinion pursuant to the findings gained during

the basis of the audit we have conducted, an opinion on the

the audit, the consolidated financial statements of

consolidated financial statements and the Group Manage-

KWS SAAT SE, Einbeck, comply with the IFRS as appli-

ment Report.

cable in the EU, and in addition with the commercial law

regulations to be applied pursuant to Section 315a (1) of

We conducted our audit of the annual financial statements

the HGB (German Commercial Code), and give a true and

in accordance with Section 317 HGB and the generally

fair view of the assets, financial position and earnings

accepted standards for the audit of financial statements

of the Group, taking into account these regulations. The

promulgated by the Institut der Wirtschaftsprüfer (German

Group Management Report accords with the consolidated

Institute of Certified Public Accountants). According to these

financial statements, conveys overall an accurate view of

standards, the audit must be planned and executed in such

the Group’s position and accurately presents the opportu-

a way that misstatements and violations materially affecting

nities and risks of future development.

the presentation of the view of the assets, financial position

and earnings conveyed by the consolidated financial state-

Hanover, October 1, 2015

ments, taking into account the applicable regulations on

orderly accounting, and by the Group Management Report

are detected with reasonable certainty. Knowledge of the

Deloitte & Touche GmbH

business activities and the economic and legal operating

Wirtschaftsprüfungsgesellschaft

environment of the Group and evaluations of possible errors

are taken into account. The effectiveness of the internal

accounting control system and the evidence supporting the

disclosures in the consolidated financial statements and

(Kompenhans)

the Group Management Report are evaluated mainly on the

Auditor

(Bukowski)

Auditor

136 Annual Financial Statements | Notes for the KWS Group 2014/2015 | Auditors’ Report

Annual Report 2014/2015 | KWS Group

Report on the 1st quarter of 2015/2016

Annual Shareholders’ Meeting in Einbeck

Report on the 2nd quarter of 2015/2016

Report on the 3rd quarter of 2015/2016

Publication of 2015/2016 financial statements,
annual press and analyst conference in Frankfurt

Annual Shareholders’ Meeting

707400

DE0007074007

KWS

Prime Standard

SDAX

Individual share certificates

6,600,000

Financial calendar

Date

November 24, 2015

December 17, 2015

February 25, 2016

May 26, 2016

October 25, 2016

December 15, 2016

KWS share

Key data of KWS SAAT SE

Securities identification number

ISIN

Stock exchange identifier

Transparency level

Index

Share class

Number of shares

Address

Grimsehlstrasse 31

P. O. Box 14 63

37555 Einbeck

Germany

Contact

Phone +49 (0) 5561 311 0

Fax +49 (0) 5561 311 322

info@kws.com

www.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:

Tomasz Ciesielski ■ Jan Eric Euler ■ Eberhard Franke ■ Frank Stefan Kimmel ■ Dominik Obertreis

KWS SAAT SE
Grimsehlstrasse 31
P.O. Box 1463
37555 Einbeck/Germany
www.kws.com