KWS Group Annual Report 2015

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FY2015 Annual Report · KWS Group

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Annual Report
2015 | 2016

KWS in Figures

The KWS Group (in € millions)

Net sales and income

Net sales

R&D intensity in %

EBIT

as a % of net sales (EBIT margin)

Net financial income/expenses

Net income for the year

Key figures on the financial position and assets

Capital expenditure

Depreciation and amortization

Equity

Equity ratio in %

Return on equity in %

Return on assets in %

Net debt1

Total assets

Capital employed (avg.)2

ROCE (avg.) in %3

Cash flow from operating activities

Employees

Number of employees (avg.)4

Personnel expenses

Key figures for the share

Earnings per share

Dividend per share

Segments (in € millions)

2015/2016

2014/2015

2013/2014

1,036.8

17.6

112.8

10.9

14.8

85.3

99.6

48.2

767.9

53.5

11.9

7.0

87.9

1,436.6

906.9

12.4

125.9

4,843

232.2

12.92

3.00

986.0

17.7

113.4

11.5

16.7

84.0

132.5

45.9

738.7

55.2

13.6

7.8

105.9

1,337.1

851.0

13.3

48.1

4,691

216.9

12.53

3.00

923.5

16.2

118.3

12.8

7.5

80.3

69.4

41.2

637.8

54.7

12.8

7.8

31.6

1,165.0

737.5

16.0

76.0

4,150

189.9

11.69

3.00

Corn

Sugarbeet

Cereals

Corporate

+5.4%

795

754

+12.5%

440

391

–24.5%

+27.5%

119

+6.0%

111 118

–25.0%

Net sales

EBIT

Net sales

EBIT

Net sales

EBIT

2014/2015

2015/2016

Reconciliation (in € millions)

Net sales

EBIT

1 Short-term + long-term borrowings – cash and cash equivalents – securities
2 Total capital employed at the end of the quarters (intangible assets + property, plant and equipment + inventories + trade receivables – trade payables) / 4
3 EBIT / capital employed (avg.)
4 Average number of employees in the year under review

–2.4%

Net sales

EBIT

–51 –50

+2.1%

Segments Reconciliation

KWS Group

1,356.8

141.1

–320.0

–28.3

1,036.8

112.8

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Contents

To our Shareholders

Foreword of the Executive Board

Report of the Supervisory Board

The KWS Share

Corporate Sustainability

Spotlight Topic

Combined Management Report

Fundamentals of the KWS Group

Employees

Economic Report

Report on Events after the Balance Sheet Date

Opportunity and Risk Report

Forecast Report

Corporate Governance

KWS SAAT SE (Explanations in Accordance to the HGB)

Annual Financial Statements

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

To our
Share
holders

Foreword of the Executive Board

Seed is a matter of trust, and we continue to

strengthen our customers’ trust in the performance

of our products – year after year. Systematic en-

hancement of our varieties’ yields, the quality of the

seed itself and expert support in cultivation through

close personal contacts are what make KWS unique

and successful over the long term. These qualities

are all the more important in times when the agri-

cultural industry faces major and lasting challenges.

Low consumer prices, declining cultivation areas for

important crops and negative exchange rate influ-

ences again shaped KWS’ economic environment

in international markets. Exceptional efforts were

needed for us to achieve our mission of ensuring that

KWS still grew profitably under these circumstances.

Thanks to our well-diversified product portfolio and

our independence as a family-owned company, we

have been able to continue to implement our long-term

strategy. That included expanding our research and

breeding programs in particular. We obtained around

400 new marketing approvals in fiscal 2015/2016 and

again reaped the fruit of our many years of work.

Foreword of the Executive Board | To our Shareholders

KWS Group | Annual Report 2015/2016The global seed market’s potential fell in 2015 by

We are optimistic about the future. We still expect

around 8% to approximately €37 billion US dollars.

to achieve net sales growth of more than 5% and

Total cultivation area hardly declined at all. However,

at least a double-digit EBIT return in the medium to

intensive competition, greater use of farm-saved

long term. In the short term, we do not anticipate any

seed for growing cereals and a switch to crops with

easing in the economic environment. In all likelihood,

lower seed prices, such as soybean or rapeseed,

we will not quite achieve our medium-term target of

had a negative impact.

at least 5% growth in net sales in fiscal 2016/2017.

However, we expect to improve our profitability (EBIT

The pesticide and seed sector overall is still under-

margin). You can find more information on that on

going a process of consolidation and integration.

pages 56 to 57.

Several large takeovers or mergers of agrochemical

companies are currently on the agenda. With a busi-

Research and development and closeness to our

ness model that specializes in plant breeding, KWS

customers remain vital to KWS, even in its 160th

is largely unaffected by these developments. We

year. That is why we will keep focusing our efforts on

have more than doubled net sales and profits in the

these fields in the future. Finally, I would like to thank

past ten years by our own efforts and remain one of

our employees, shareholders, partners and custom-

the world’s leading companies in the field of variety

ers for the business success we achieved last year.

development.

We look forward to a successful future together.

Seed is at the start of the food supply chain. In more

With best regards from Einbeck on behalf of the

developed economic regions, food has become a

entire Executive Board.

question of individual lifestyle. People define them-

selves more and more by what they eat: flexitarian,

vegetarian, vegan, food combining or low-carb – the

range of diets is diverse. Some abstain from eating

Dr. Hagen Duenbostel

meat, while others avoid cereals or dairy products.

Chief Executive Officer

Yet whatever diet is preferred, modern agriculture

produces crops to meet that demand. With their

knowledge, good ideas and cutting-edge technolo-

gies, farmers ensure that we consumers will continue

to be offered high-quality food now and in the future.

As part of that, they always work with an eye to using

resources efficiently – out of economic and ecologi-

cal considerations.

As a plant breeding company, KWS is part of this

modern agriculture. Our focal objective is always to

help farmers to be successful. The two-page photo

spreads and Spotlight Topic in this Annual Report

reflect what counts: closeness and trust.

To our Shareholders | Foreword of the Executive Board

Annual Report 2015/2016 | KWS GroupReport of the Supervisory Board

In what was, all in all, a turbulent economic climate

velopment of the various businesses, market trends

in the agricultural sector, numerous intended acqui-

and the competitive environment, research and

sitions in the pesticide and seed industry were the

breeding and, along with important individual proj-

subject of public debate in fiscal 2015/2016. They are

ects, risk management at the KWS Group were the

expected to result in changes in KWS’ competitive

subject of detailed discussions. The Chairman of the

environment. In this connection, KWS was neither a

Supervisory Board continued the bilateral discus-

takeover target, nor do we currently aim to make any

sions with the Chief Executive Officer and individual

acquisitions of our own. Preserving our company’s

members of the Executive Board in regular talks

independence remains a key concern of the family

outside the meetings of the Supervisory Board. In

shareholders. In particular, the long-term product de-

addition, there were monthly meetings between the

velopment cycles in plant breeding require a stable

Chairman of the Supervisory Board and the Execu-

base and strategic planning security. In this spirit, the

tive Board as a whole, where the company’s current

Supervisory Board and Executive Board once again

business development and, in particular, its strategy,

cooperated successfully in the past fiscal year.

occurrences of special importance and individual

aspects were dealt with. The Chairman of the Super-

The Supervisory Board discharged the duties incum-

visory Board informed the Supervisory Board of the

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

results of these meetings. The Supervisory Board

Articles of Association and the bylaws, regularly

did not make use of its right to conduct an examina-

advised and monitored the Executive Board in its

tion granted by Section 111 (2) AktG (German Stock

activities and satisfied itself that the company was

Corporation Act) since the reporting by the Executive

run properly and in compliance with the law and that

Board meant there was no reason to do so.

it was organized efficiently and cost-effectively. The

Supervisory Board decided on all significant busi-

Focal areas of deliberations

ness transactions requiring its consent and carefully

The full Supervisory Board held six meetings in fis-

accompanied the Executive Board in all fundamen-

cal 2015/2016. All members participated in all of

tal decisions of importance to the company. The

the meetings, with the exception of the meeting on

Supervisory Board discussed the information and

June 22, 2016, where one member was excused and

assessments that influenced its decisions together

not in attendance. In a special meeting on Septem-

with the Executive Board. Both boards continued

ber 22, 2015, the Supervisory Board dealt with the

their constructive and trusted cooperation as in the

subject of licensing in genetically improved traits for

past. Among other things, this was demonstrated by

corn. In order to strengthen the technology platforms

the fact that, as is customary, the Supervisory Board

of KWS and Vilmorin & Cie (a listed company of

was involved in all decisions of vital importance to

Limagrain), long-term agreements with a leading trait

the company at an early stage. The Supervisory

and seed producer were then concluded. KWS and

Board was provided with the necessary informa-

Vilmorin have since been authorized to make world-

tion in written and oral form regularly, promptly and

wide commercial use of all current and future corn

comprehensively. This included all key information

traits from its portfolio. Along with the existing trait

on relevant questions of strategy, planning, the busi-

agreements, this one enabled KWS to successfully

ness performance and the situation of the company

complement and expand its trait portfolio in the future.

and the KWS Group, including the risk situation, risk

management and compliance. Business transactions

The meeting of the Supervisory Board to discuss

requiring consent were submitted to, and discussed

the financial statements on October 14, 2015, was

and approved by, the Supervisory Board in compli-

devoted to examining and approving the financial

ance with the bylaws for the Executive Board. The

statements of KWS SAAT SE and the consoli-

company’s business policy, corporate and financial

dated financial statements of the KWS Group as

planning, profitability and situation, the general de-

of June 30, 2015. The Supervisory Board also

Report of the Supervisory Board | To our Shareholders

KWS Group | Annual Report 2015/2016 discussed any impacts of the intended acquisitions

by the Executive Board and the Supervisory Board

in the industry on KWS.

in accordance with Section 161 AktG (German

The meetings on December 16 and 17, 2015, focused

Commission for the Corporate Governance Code”

on strategic planning covering a ten-year time frame,

(cf. Clause 7.2.3 (2) of the German Corporate Gover-

Stock Corporation Act) with respect to the “German

as well as the regulatory framework in Europe, in

nance Code).

particular for new plant breeding technologies. The

Supervisory Board also approved acquisition of the

The Supervisory Board received and discussed

remaining stake in the Brazilian corn company RIBER

the financial statements of KWS SAAT SE and the

KWS. The meeting additionally adopted a resolution

consolidated financial statements and Combined

to sell the seed potato operations to the Dutch com-

Management Report of KWS SAAT SE and the KWS

pany Stet Holland B.V. In its meeting on March 16,

Group, along with the report by the independent au-

2016, the Supervisory Board heard detailed reports

ditor of KWS SAAT SE and the KWS Group and the

on the progress of product development. In addition,

proposal on utilization of the net profit for the year

a resolution was adopted to conduct a public tender-

made by KWS SAAT SE, in due time. Comprehen-

ing process as part of appointment of an indepen-

sive documents and drafts were submitted to the

dent auditor.

members of the Supervisory Board as preparation.

For example, all of them were provided with the an-

On June 22, 2016, the agenda as usual includ-

nual financial statements, Combined Management

ed adoption of the corporate planning for fiscal

Report, audit reports by the independent auditors,

2016/2017, including medium-term planning up to

corporate governance report, compensation report

2019/2020. At the meeting, the Supervisory Board

and the proposal by the Executive Board on the ap-

also discussed the results of its efficiency review and

propriation of the profits. The Supervisory Board also

conducted the survey of the Supervisory Board with

held detailed discussions of questions on the agenda

the aim of avoiding and identifying fraud. The Super-

at its meeting to discuss the financial statements on

visory Board is not aware of any relevant acts.

October 24, 2016. The auditor took part in the meet-

ing. It reported on the main results of the audit and

Annual and consolidated financial statements

was also available to answer additional questions

and auditing

and provide further information for the Supervisory

Deloitte GmbH Wirtschaftsprüfungsgesellschaft,

Board. According to the report of the independent

Hanover, the independent auditor chosen at the An-

auditor, there were no material weaknesses in the

nual Shareholders’ Meeting on December 17, 2015,

internal control and risk management system in re-

and commissioned by the Audit Committee, has

lation to the accounting process. There were also no

audited the financial statements of KWS SAAT SE

circumstances that might indicate a lack of impartial-

that were presented by the Executive Board and pre-

ity on the part of the independent auditor. The small

pared in accordance with the provisions of the Ger-

extent of services additionally provided by the inde-

man Commercial Code (HGB) for fiscal 2015/2016

pendent auditor can be seen from the Notes.

and the financial statements of the KWS Group (IFRS

consolidated financial statements), as well as the

In accordance with the final results of its own exam-

Combined Management Report of KWS SAAT SE

ination, the Supervisory Board endorsed the results

and the KWS Group Management Report, includ-

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

ing the accounting reports, and awarded them its

preliminary examination by the Audit Committee, and

unquali fied audit certificate. In addition, the auditor

did not raise any objections. The Supervisory Board

concluded that the audit of the financial statements

gave its consent to the annual financial statements

did not reveal any facts that might indicate a mis-

of KWS SAAT SE, which were prepared by the Exec-

statement in the declaration of compliance issued

utive Board, and to the consolidated financial state-

To our Shareholders | Report of the Supervisory Board

Annual Report 2015/2016 | KWS Groupments of the KWS Group, along with the Combined

The Supervisory Board regularly addressed the

Management Report of KWS SAAT SE and the

question of any conflicts of interest on the part of

KWS Group. The financial statements are thereby

its members and those of the Executive Board. In

approved. The Supervisory Board also endorses

the year under review, there were no such conflicts

the proposal by the Executive Board to the Annual

of interests that had to be disclosed immediately to

Shareholders’ Meeting on the appropriation of the

the Supervisory Board and reported to the Annual

net retained profit of KWS SAAT SE after having

Shareholders’ Meeting.

examined it.

Supervisory Board Committees

Corporate Governance

The Audit Committee convened for three joint

The Supervisory Board conducted its efficiency re-

meetings in fiscal 2015/2016. It also held three tele-

view in accordance with Clause 5.6 of the German

phone conferences – on all occasions with all its

Corporate Governance Code for fiscal 2014/2015 and

members in attendance, with the exception of the

2015/2016, accompanied and supported by Ernst

telephone conference on November 19, 2015, where

& Young GmbH Wirtschaftsprüfungsgesellschaft.

one member was excused and not in attendance. In

According to the final report by Ernst & Young, the

its meeting on September 28, 2015, the Audit Com-

results of the evaluation of the Supervisory Board of

mittee discussed the annual financial statements

KWS SAAT SE meet the benchmark; no fundamental

and accounting of KWS SAAT SE and consolidated

weaknesses were identified by the persons ques-

financial statements of the KWS Group for the fiscal

tioned.

year 2014/2015. The annual compliance report, risk

manage ment and the results of the auditing projects

The Supervisory Board discussed compliance with

were on the agenda at its meeting on March 16,

the recommendations of the “German Commission

2016. The audit plan for fiscal 2016/2017 was also

for the Corporate Governance Code.” As regards

discussed and adopted. The subjects discussed

setting a limit on the length of time members can

at the meeting on June 22, 2016, included the new

serve on the Supervisory Board of KWS SAAT SE in

quarterly reporting standards and the results of the

accordance with Clause 5.4.1 of the German Corpo-

Supervisory Board’s efficiency review. The quar-

rate Governance Code, the Supervisory Board stuck

terly reports and the semiannual report for fiscal

by its decision to continue not to comply with these

2015/2016 were discussed in detail in three tele-

recommendations by the German Corporate Gover-

phone conferences and their publication was ap-

nance Code, since they would significantly restrict

proved.

the rights of a business with a tradition of family own-

ership like KWS, whose family shareholders hold a

majority stake.

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 2015/2016The Audit Committee convened on September 22,

candidate also named by the Audit Committee – was

2016, to discuss the current annual financial state-

confirmed and resolved by the Supervisory Board.

ments of KWS SAAT SE and KWS’ consolidated

financial statements and accounting. The indepen-

The Committee for Executive Board Affairs re-

dent auditor explained the results of its audit of the

viewed the compensation paid to members of the

2015/2016 financial statements and pointed out that

Executive Board in the year under review. As part of

– in its opinion – there were no circumstances that

that, it proposed increasing the fixed compensation

could have led to a lack of impartiality on its part.

of Dr. Peter Hofmann to the level of the other Exec-

The Audit Committee also dealt with the proposal by

utive Board members. Peter Hofmann has served

the Executive Board on the appropriation of the net

on the Executive Board of KWS SAAT SE since

retained profit of KWS SAAT SE and recommended

October 1, 2014, but has been responsible since

that the Supervisory Board approve it. It addition-

2005 for the Sugarbeet Segment, which has recently

ally dealt with the results of the examination of the

held its own very well in a tough market environment.

2014/2015 financial statements by the German Finan-

In view of that and his many years of successful work

cial Reporting Enforcement Panel (FREP), which was

for the company, the committee proposed converting

based on spot checks and produced no objections.

the contract of Peter Hofmann – before the end of its

existing term and with effect January 1, 2016 – into

In addition, the Audit Committee obtained the state-

a five-year contract with the same terms and condi-

ment of independence from the auditor in accor-

tions for variable compensation as for the other ordi-

dance with Clause 7.2.1 of the German Corporate

nary members of the Executive Board. The Supervi-

Governance Code, ascertained and monitored the

sory Board endorsed the committee’s proposals.

auditor’s independence, examined its qualifications

and defined the focal areas of the audit. The Audit

In October 2015, Dr. Arend Oetker informed KWS

Committee also satisfied itself that the regulations on

that he had transferred his shares in KWS to the next

internal rotation were observed by the independent

generation of his family as part of an anticipated

auditor and dealt with the services rendered addi-

inheritance. At the same time, he transferred entre-

tionally by the independent auditor.

preneurial responsibility for the stake in KWS held

by the Oetker family to his daughter Dr. Marie Theres

In addition, the Audit Committee dealt in its meetings

Schnell, Munich. In addition, the Deputy Chairman of

with preparing the resolution on the appointment of

the Supervisory Board considered resigning his seat

the independent auditor for fiscal year 2016/2017 to

on the Supervisory Board of KWS SAAT SE at the

be proposed to the Annual Shareholders’ Meeting on

end of 2016. The Nominating Committee convened

December 15, 2016. In order to select the independent

on May 28, 2016, and discussed filling the post that

auditor to be proposed to the Annual Shareholders’

was likely to become vacant. The shareholder fam-

Meeting, the Audit Committee conducted a tendering

ilies Büchting/Oetker had proposed Marie Theres

process in the period from March 31, 2016, to Septem-

Schnell as the representative of the family of Arend

ber 22, 2016, in accordance with the provisions of the

Oetker.

new EU Regulation on independent auditors that has

been in force since June 17, 2016. After the documents

After completing secondary school, Marie Theres

submitted by a total of nine auditing firms were inten-

Schnell (born in 1976) studied communications in

sively discussed and assessed, the Audit Committee

Salzburg and Gothenburg and completed her uni-

recommended to the Supervisory Board that Ernst &

versity education by gaining a doctorate in Zurich in

Young GmbH Wirtschaftsprü fungs gesellschaft,

2007. She gained professional experience as assis-

Hanover, be proposed to the Annual Shareholders’

tant to the board of management at a large digital

Meeting for appointment as the independent auditor.

publishing house and as part of a trainee program

At its meeting of October 24, 2016, this recommen-

in the food industry in Spain. She then worked as a

dation – following consideration of an alternative

freelance media consultant. In addition to this inter-

To our Shareholders | Report of the Supervisory Board

Annual Report 2015/2016 | KWS GroupAndreas J. Büchting, Chairman of the Supervisory Board

national activity, she was able to gain diverse expe-

Schnell. The Nominating Committee arrived at the

rience at the companies of the Arend Oetker Group,

conclusion that Marie Theres Schnell was qualified to

not only in the fields of agriculture, retailing and food,

hold a position on the Supervisory Board and would

but also in her work on various shareholder bodies.

be an excellent enrichment for it. On September 20,

Coming from a family with a long tradition of entre-

2016, Dr. Arend Oetker informed the Chairman of the

preneurship, she contributes experience, a sense of

Supervisory Board that he would resign as a member

responsibility, vision and sound judgment.

of the Supervisory Board of KWS SAAT SE effec-

tive the end of the Annual Shareholders’ Meeting

The Nominating Committee examined her candidacy,

on December 15, 2016. The Nominating Committee

taking into account the relevant regulations of the

then recommended in accordance with Clause 5.3.3

German Corporate Governance Code. Accordingly,

of the German Corporate Governance Code that

the committee satisfied itself that Ms. Schnell also

Dr. Marie Theres Schnell be proposed as a candidate

had the time expected for her to discharge her du-

for election of his successor to the Annual Share-

ties on the board. In addition, the Supervisory Board

holders’ Meeting on December 15, 2016.

aims to ensure that half of its shareholder represen-

tatives are independent within the meaning of the

The Supervisory Board expresses its thanks to the

German Corporate Governance Code. The departure

Executive Board and all employees of KWS SAAT SE

of Arend Oetker and election of Marie Theres Schnell

and its subsidiaries for their great commitment and

in his place would mean that the situation on the

efforts yet again in helping KWS continue its gratify-

board would remain the same in this respect. The

ing development.

Board would thus still meet the target it has set itself.

The aspect of diversity should be taken into account

Einbeck, October 24, 2016

in filling posts on the Supervisory Board. In this con-

text, the Supervisory Board decided in accordance

with Section 111 (5) AktG (German Stock Corporation

Act) that the ratio of female members on the Supervi-

Dr. Drs. h.c. Andreas J. Büchting

sory Board of KWS SAAT SE should not be less than

Chairman of the Supervisory Board

16.6% by June 20, 2017. That figure would increase

to 33.3% overall and 50% in terms of shareholder

representatives with the appointment of Marie Theres

Report of the Supervisory Board | To our Shareholders

KWS Group | Annual Report 2015/2016Companions

Personal Consulting

Seed is a matter of trust. That is why personal consulting and close

contact between our seed experts and farmers in their region is

very near to our heart. Choosing the variety adapted to the location

in question lays the foundation for successful cultivation. However,

our consultants’ work is by no means done once a variety is select-

ed – on the contrary. Throughout the entire vegetation period, they

are a reliable partner, maintaining close contact with their farmers

and discussing agricultural matters with them: from tilling methods,

the right time for sowing, the use of pesticides and fertilizers to the

ideal time to harvest crops and suitable storage conditions. As a

result, we live up to our responsibility at the beginning of the value

chain even after selling our seed.

The KWS Share

Performance: Greater volatility – share

for the year. KWS’ share recovered strongly after that

performs strongly long-term

to close at almost the same level of the previous year

While KWS was able to expand its business activity

at the end of the fiscal year (€297.80; –0.6%). That

in the year under review, the agricultural sector is

is a very good performance for the industry. Almost

again confronted by a surplus supply of agricultural

all listed competitors fared worse in the same peri-

raw materials, low commodity prices and regional

od – despite major consolidation projects with prices

adjustments in the cultivation area, as well as polit-

well above the stock market values for the affected

ical and economic uncertainties. The nervousness

companies. The DAX fell by around 14% and the

of capital market players is reflected in the volatility

EURO STOXX 50 index by even approximately 18%

of KWS’ share price. It rose sharply year on year,

in this period, although there were slight gains for the

although the average daily fluctuation between the

MDAX (around 2%) and SDAX (around 1%). Looking

highest and lowest price (on a small trading volume)

at the share’s performance over the past five years

was €5.62 (4.33)1 – despite KWS’ solid business

(July 1, 2011, to June 30, 2016), the KWS share price

performance. The share reached an all-time high at

increased by 93%. The SDAX rose by 61% and the

€313.55 in July 2015. The general stock market slump

DAX by around 31% in the same period.

in January 2016 meant its price fell to a low of €235.10

The KWS share’s performance
over 5 years

250 %

200 %

150 %

100 %

50 %

+93%

+61%

+31%

July 1, 2011

KWS

SDAX

DAX

June 30, 2016

Listing: KWS still in a mid-range position in

Stock program: KWS employees take the

the SDAX

opportunity to participate in their company

The share still occupies a mid-range position in the

For more than 40 years KWS has offered its employ-

SDAX, Germany’s index for small caps. Measured in

ees the chance to become a shareholder in the com-

terms of free float market capitalization at the relevant

pany and thus share in its success and identify more

key date of June 30, 2016, the KWS share ranked 18th

strongly with it. The content of our Employee Share

(18th) in the index, which comprises 50 companies,

Program remained unchanged in the year under

and 39th (35th) in terms of trading volume over the

review. Our employees were able to buy up to 500

period under review. KWS SAAT SE’s market capital-

KWS shares at a price of €217.60 (214.40), including a

ization was €1,964 (1,970) million or, solely on the basis

20% discount, which the individual employees must

of the proportion of free float, €565 (569) million.

pay tax on. A total of 395 (401) employees in ten

1 If not otherwise specified, the figures in parentheses give the previous year’s figure.

To our Shareholders | The KWS Share

Annual Report 2015/2016 | KWS GroupShareholder structure at September 27, 2016

Free float 32.1%

Tessner Beteiligungs GmbH 15.4%

52.5% Families Büchting, Arend Oetker

(nine) Euro pean countries took up this offer and pur-

KWS SAAT SE’s shareholders. With a dividend pay-

chased a total of 7,541 (9,878) shares, corresponding

out ratio of 23.2% (23.6%) of the KWS Group’s net

to an average stake per employee of 19 (25) shares.

income for the year, the company would stick to its

The acquired shares are subject to a lock-up period

earnings-oriented dividend policy of a payout in the

of four years. They cannot be sold, transferred or

long-term target range of 20% to 25%.

pledged during this period. As in previous years, the

shares used for the Employee Share Program were

acquired in accordance with Section 71 (1) No. 2 of

the German Stock Corporation Act (AktG). A total of

€1.9 (2.7) million was used to buy back the compa-

ny’s own shares, giving an average purchase price

per share of €258.85 (271.73).

Planned appropriation of profits: Proposed

dividend stable at €3.00

Key figures for the KWS share

ISIN

Number of shares

Closing price

June 30, 2016

June 30, 2015

DE0007074007

6,600,000

in €

297.80

298.50

Trading volume (avg.)

in shares/day

The KWS Group increased its net sales last fiscal

year by 5.2% to €1,036.8 (986.0) million. In what was,

all in all, a turbulent economic environment in the

2015/2016

2014/2015

2,068

2,211

agricultural sector, among other things with declining

Market capitalization

in € millions

cultivation areas and higher costs of sales as well as

non-recurring costs, EBIT was €112.8 (113.4) million,

June 30, 2016

June 30, 2015

1,965

1,970

almost at the level of the previous year, although it was

impacted by positive exchange rate effects. Net finan-

cial income/expenses fell; that and a lower tax rate

meant that net income for the year was €85.3 (84.0)

million. The return on sales after tax fell to 8.2% (8.5%),

although it would have been lower had it not been for

the positive exchange rate effects.

The Executive Board and Supervisory Board will

therefore propose payment of an unchanged dividend

of €3.00 (3.00) for fiscal year 2015/2016 to the Annual

Shareholders’ Meeting on December 15, 2016. Some

€19.8 (19.8) million would thus again be distributed to

The KWS Share | To our Shareholders

KWS Group | Annual Report 2015/2016Generations trust in a brand – that is the result of continuous breeding progress and personal customer
care and support.

Corporate Sustainability

Corporate sustainability means orientation to the

Dialogue with stakeholders

future in what we do, i.e., striving to create lasting

We intend to keep on systematizing the process for

value and economic success – true to our 160-year

determining the key issues relating to our long-term

tradition as a family business.

corporate development. To enable that, we plan

to expand our dialogue with stakeholders, which

The prime goal of our corporate strategy is to en-

has been conducted to date at our headquarters in

sure KWS’ independence, which is why it is geared

Einbeck, and make it more international in the com-

toward profitable growth. Proactive planning and

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

action is vital to achieve that strategy and is thus a

various markets and can also discuss critical issues

core principle of our corporate governance. Plant

with the relevant local stakeholders and gain knowl-

breeding is a costly and time-consuming business:

edge to enable our company’s further development.

It takes up to ten years for each new variety to be

developed. That means we have to carefully address

Sustainability reporting

the economic, ecological and social challenges of to-

The latest sustainability report for fiscal year

day and tomorrow so as to identify and anticipate the

2015/2016 is based on the international reporting

resultant opportunities and risks. We align our com-

specifications of the Global Reporting Initiative (GRI

pany strategically and operationally on that basis.

G4) and is available on the company’s Internet site at

www.kws.com/ir. We are currently working to interna-

tionalize our sustainability reporting, with the objective

of expanding it so that it covers the main aspects of

sustainability for the entire KWS Group and integrating

it fully in the Annual Report in the medium term.

To our Shareholders | Corporate Sustainability

Annual Report 2015/2016 | KWS GroupCore sustainability issues

Economy and products

Governance

■■ Economic success: Key factors in our economic

■■ Employment, social and environmental stan-

success are the clear focus on our core business –

dards: As a responsible, internationally growing

i.e., breeding new, high-yielding varieties to enable

company we have to establish values, rules, guide-

resource-sparing, efficient agriculture – coupled

lines and standards in the fields of employment,

with rigorous customer orientation, profitable

protection of the environment and social welfare,

growth, financial independence and sufficient

and ensure they are put into practice at all subsid-

liquidity.

iaries. We must also define them for our business

■■ Product innovations: Our research and develop-

partners in the supply chain and prevent violations

ment focuses on new varieties that address global

of them.

trends such as climate change and the limited

■■ Compliance: We support observance of the law

availability of natural resources (such as soil and

and company requirements by means of effective

water), as well as the occurrence of plant diseas-

compliance management.

es and pests.

■■ Modern breeding methods: The use of modern

Employees

breeding methods is indispensable to enable

Our company’s success is founded on the achieve-

goal- oriented, efficient plant breeding. Apart from

ments of all our employees. We make intensive ef-

traditional methods, KWS therefore uses biotech-

forts to recruit good employees and have introduced

nology methods such as genome editing methods

a process to identify and further develop our junior

or genetic transfer.

staffers.

■■ Seed quality and safety: KWS seed is quality

seed that enables plants’ genetic potential to be

Work safety and protection of the environment

fully leveraged after sowing in the field. We ensure

We strive to surpass statutory requirements relating

that our seed is safe for people and the environ-

to work safety and environmental protection, as well

ment by means of technical and organizational

as to the efficient use of resources, such as water,

measures and furnish proof of that in extensive

energy and pesticides, as far as our influence allows.

tests and analyses in compliance with official re-

quirements – whether it is ecological, conventional

Social commitment

or genetically improved seed.

We are particularly committed to strengthening the

■■ Protection of intellectual property: Protecting

regional and local attractiveness of our locations

intellectual property is vital for us to recoup our

on the cultural and social planes. We support both

high expenditure on research and development.

young academicians (through Deutschlandstipen-

Variety protection is a tried-and-tested instrument

dien and interships) and top-flight researchers. We

for protecting our plant varieties and, thanks to the

encourage our people to get involved in their own

breeder’s exemption, safeguards access to plant

social areas. Many KWS employees have become

genetic resources for further breeding. We also wel-

actively involved in aid for refugees, for example.

come patent protection to protect our investments

in state-of-the-art technologies. We believe it is

important to have unhindered access to biological

starting material as well as protection of our intellec-

tual property in the form of innovative plant varieties

and new breeding technologies.

Corporate Sustainability | To our Shareholders

KWS Group | Annual Report 2015/2016Ground personnel

Field Days

The 2016 Field Days held by the German Agricultural Society (DLG)

in the town of Hassfurt, in Lower Franconia, attracted 21,632 visitors

over its three days. After ten months of preparation for this event,

KWS showcased its entire portfolio there. Sugarbeet, corn, cereals,

rapeseed, catch crops, organic seed – almost 60 varieties were

exhibited on the demonstration plots, offering farmers, consultants

and other interested persons a good opportunity to learn more

about KWS’ broad range of services and varieties directly at the

plants’ location. Many took this chance to discuss the latest trends

and developments in plant breeding and modern agriculture with

KWS’ experts on the spot. In the evening, we welcomed more than

1,000 guests to our CultiVent party.

Spotlight
Topic

To harvest or to wait?

KWS’ consulting is based on knowledge

transfer and trust

Leonard Dempfle has a problem. The farmer from the

German Allgäu region planted corn as feed for his 70

cows on an area of about 20 hectares, and now it is

fully mature – in mid-September, almost two weeks

before the normal time for harvesting. The long dry

spell this summer sped up the maturing process.

Should he harvest it now or wait a while? To help him

decide, Dempfle picks a few corn plants by hand

from different spots and takes these samples to his

regional KWS consultant in the village of Burtenbach,

25 kilometers away. He wants to have the consultant

determine the current dry matter content of his corn

plants. Ernst-Arthur Bommer, head of KWS’ consult-

ing office for Bavaria and Württemberg, has his hands

full. In his area of responsibility alone, he and his team

analyze some 1,000 corn samples a week before the

harvest between mid-August and the beginning of

October. “Dry matter monitoring enables us to deter-

mine the corn’s maturity precisely and recommend an

ideal time to harvest it,” explains Bommer. If the dry

matter content is between 32% and 35%, it is time to

bring in the corn.

Bommer relies on close dry matter monitoring at many

locations for his region, which has very different soil

and climatic conditions and thus large differences

in ripening times. KWS not only offers this service in

southern Germany, but also at more than 250 loca-

tions nationwide for the most important corn varieties.

All farmers who are registered with CultiVent, KWS’

of up to €500 a hectare,” says Bommer in describing

digital consulting platform, regularly receive the re-

the economic consequences of late harvesting, which

sults of dry matter monitoring and harvesting recom-

may even threaten a farmer’s livelihood. Just a few

mendations tailored precisely to their cultivation area

minutes later, Leonard Dempfle has the results for

by e-mail.

his samples in his hands and now knows that he will

begin chopping his corn the next day.

In the case of silage corn for dairy cattle, which

Dempfle grows, it is especially important to harvest

Dry matter monitoring is just one example of the wide

it at the ideal time. “Tastiness and starch content are

range of consulting and services KWS offers. Personal

vital. If the corn is too old, lower fresh weight yield

contact with the farmer and customized advice are

from the field means that the basic feed intake of the

also of great importance in consulting on varieties and

cattle is reduced and farmers have to use more of the

cultivation of all other crops from KWS’ product port-

expensive concentrate feed. That can mean losses

folio, such as sugarbeet, cereals or rapeseed. Trust

To our Shareholders | Spotlight Topic

Annual Report 2015/2016 | KWS Groupis a vital component of the relationship between the

seed producer, dealers and farmers.

The foundations for creating extensive value added

are laid by consulting with farmers on choosing the

right variety for different regional and climatic de-

mands. With its above-average expenditure on contin-

uously developing new varieties, KWS strives to live up

to its special responsibility of providing farmers with

the best-possible seed for the crops in its portfolio.

Breeding progress in practice is enabled by delivering

varieties that produce higher and higher yields and are

adapted to very different climatic and soil conditions.

A mature performance – the KWS consultant and farmer together determine the best time
to pick corn so that all the farmer’s efforts are rewarded with a good yield.

The vitality of a particular era does
not so much depend on the harvest,
but more on the seed it sows.

Ludwig Börne (1786–1837),
journalist and literary critic

Spotlight Topic | To our Shareholders

KWS Group | Annual Report 2015/2016What factors impact a harvest?

Environmental
influences

Tilling
Crop rotation

Variety selection
Time of sowing
Seed quality

Pesticides
Use of fertilizer

Harvest

Storage

KWS accompanies farmers from sowing to harvesting

As the example of dry matter monitoring shows, KWS

The sharing of diverse knowledge and experience in a

does much more than advise farmers on choosing the

spirit of trust between KWS’ consultants and farmers

right varieties for their individual needs. Just over a

not only creates the basis for reliable yields that safe-

quarter of our approximately 4,800 employees world-

guard the farmer’s livelihood. This initial interface in

wide take care of the needs and worries of our cus-

the value chain of modern agriculture and nutrition is

tomers in their sales work. A closely knit regional net-

also the foundation for the high quality of the food we

work of KWS consultants also provides farmers with

love to eat at the end of that chain.

support in agricultural matters – from tilling, sowing,

pesticide and harvesting, through to storage. Only in

that way can the yield potential inherent in the seed’s

genetic makeup be leveraged as much as possible.

Cooking and eating are no longer just

That means we work hand in hand with farmers to

about nourishment, but have long

reliably ensure increases in yield and quality.

since become an expression of our

personal lifestyle. Modern agriculture,

In addition to personal one-on-one contact, we con-

with its diverse products, ensures that

tinuously gather the latest pioneering findings on key

everyone can eat to suit their taste.

questions of modern agriculture for our customers.

But how exactly does it do that? A

We share our knowledge at diverse information and

new website www.moderne-land-

educational events, some of which are seen on the

wirtschaft.de provides a vivid and

two-page photo spreads in this report. They include

entertaining look at this subject – and

Agricultural Forums that KWS regularly holds nation-

at who does what (German only).

wide and the biennial Field Days held by the German

Agricultural Society (DLG).

To our Shareholders | Spotlight Topic

Annual Report 2015/2016 | KWS Group22

Fundamentals of the KWS Group

Group Structure and Business Activity

Objectives and Strategies

Control System

Research and Development

Employees

Economic Report

Business Performance

Earnings, Financial Position and Assets

Earnings

Financial Situation

Assets

Segment Reports

Reconciliation with the KWS Group

Corn Segment

Sugarbeet Segment

Cereals Segment

Corporate Segment

Report on Events after the Balance Sheet Date

Opportunity and Risk Report

Forecast Report

Corporate Governance

Corporate Governance Report and Declaration on Corporate Governance

Compliance Declaration in Accordance with Section 161 AktG

(German Stock Corporation Act)

Compensation Report

Disclosures in Accordance with Sections 289 (4) and 315 (4) of the German

Commercial Code (HGB) and the Explanatory Report of the Executive Board

KWS SAAT SE (Explanations in Accordance to the HGB)

t
r
o
p
e
R

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n
e
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g
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o
C

Combined Management Report

Compared with the previous year, there have not been any significant changes in the fundamentals of the KWS Group as

presented in the following.

Fundamentals of the KWS Group

Group Structure and Business Activity

soybean, sunflower and sorghum. Its operating per-

Since it was founded in 1856, KWS has specialized in

formance depends significantly on the spring sowing

developing, producing and distributing high-quality

season in the northern hemisphere. That means

seed for agriculture. From our beginnings in sugar-

most of the segment’s net sales are generated in the

beet breeding, we have evolved into an innovative

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

and international supplier with an extensive portfolio

segment generates a lower share of its revenue in

of crops. We cover the complete value chain of a

the first two quarters, mainly from winter rapeseed in

modern seed producer – from breeding of new va-

Europe and corn varieties in South America.

rieties, multiplication and processing, to marketing

of the seed and consulting for farmers. KWS’ core

The Sugarbeet Segment comprises sugarbeet seed

competence lies in breeding new, high-performance

production and distribution. Our high-quality sugar-

varieties that are adapted to regional needs, such as

beet varieties are some of the highest-yielding in the

climatic and soil conditions. Every new variety deliv-

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

ers added value for the farmer. Our business model

sugarbeet seed with a global market share of 55%.

is based on this added value – which is ultimately at-

Our main sales markets are North America, a region

tributable to breeding progress, optimization of seed

where genetically improved, herbicide-tolerant sugar-

quality and consulting founded on a spirit of trust.

beet varieties are used almost exclusively, and the EU,

where KWS likewise has a very good market position

Organization and segments of the KWS Group

with conventionally bred, multiple-resistant varieties.

KWS SAAT SE is the parent company and holding

Sugarbeet is sown in the spring, which means that net

company of the KWS Group. It is responsible for

sales in this segment are largely generated in the sec-

strategic management and, among other things,

ond half of our fiscal year (January to June).

multiplies and distributes sugarbeet and corn seed.

It finances basic research and breeding of the main

The Cereals Segment includes production and dis-

range of varieties at the KWS Group and provides

tribution of seed for rye, wheat, barley and rapeseed.

its subsidiaries with new varieties every year for the

Hybrid rye accounts for the largest share of revenue

purpose of multiplication and distribution. An over-

from cereals (more than 40%), followed by wheat and

view of the subsidiaries and associated companies

barley (each around 20%). We generate the remain-

included in the consolidated financial statements of

der from other crops such as rapeseed or triticales.

the KWS Group is provided in the Notes on pages

In our core markets for cereal seed (Germany, Po-

86 to 87.

land, the UK and France), farmers predominantly sow

their crops in the fall. Consequently, we generate

The KWS Group’s operational business is conducted

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

in the three product segments corn, sugarbeet and

our fiscal year (July to December).

cereals:

The Corn Segment is the KWS Group’s largest

segments with research and development activities

division in terms of net sales. It covers production

and provides central functions for controlling the

and distribution of corn seed, as well as rapeseed,

group. Its relatively low net sales come from the

The Corporate Segment supports the operating

22 Combined Management Report | Fundamentals of the KWS Group

Annual Report 2015/2016 | KWS Group revenue from our own farms. Since all cross-seg-

ment function costs and research expenditure is

charged to this segment, its income at the end of the

fiscal year is usually negative to a significant extent.

Information on the net sales and income contributed

by the segments, including our joint ventures, can be

found in our segment reports starting on page 41.

Locations and sales markets

KWS SAAT SE’s headquarters are located in

Einbeck, Lower Saxony. We have 62 subsidiaries and

associated companies at present, operating in more

than 70 countries, largely in the moderate climatic

zone. You can find a detailed breakdown of net sales

by region on page 37.

KWS employees are not stuck indoors all the time. They get to know our
products personally.

Products and consulting on varieties

new variety. Thanks to our large network of breeding

We offer our customers – farmers – a broad range of

and trial stations in all the world’s key markets, we

agricultural crops that have been adapted by breed-

can test the individual candidates under a wide range

ing to the conditions of their specific location. These

of climatic and local conditions to determine whether

crops include corn, sugarbeet, the cereals rye, wheat

the varieties are suitable for cultivation. In many mar-

and barley, oil plants such as sunflower, soybean

kets, variety development ends in an official approval

and rapeseed as well as catch crops. The varieties

process in which candidates have to meet high qual-

are mainly adapted to the moderate climatic zones.

ity standards, usually for at least three years. Only

Since we entered the Brazilian market in 2012, variet-

then can we distribute the varieties to our customers

ies for subtropical regions have also been part of our

via the various channels.

portfolio. In addition to selling seed, our field staff

is also on hand to offer farmers free consulting on

External factors that impact our business

choosing and cultivating varieties.

Our breeding and seed multiplication activities are

subject to weather influences that cannot always

Breeding is the essential business process

be quickly compensated for with countermeasures.

KWS’ breeding processes are geared toward exploit-

Economic policy decisions in the agricultural indus-

ing plants’ potential as much as possible and lever-

try, which is strongly regulated worldwide, may also

aging it to handle the challenges of modern, sustain-

impact our business. You can find more details on

able agriculture. Whether it is plants for producing

these external factors in our opportunity and risk

food, fodder or energy, conventional, organic or gen-

report on pages 49 to 55.

etically improved, we offer farmers the ideal variety

for their purposes. It takes up to ten years to breed a

Fundamentals of the KWS Group | Combined Management Report

KWS Group | Annual Report 2015/2016Significant changes in the KWS Group’s

Objectives and Strategies

composition

Our strategic planning is the foundation of the KWS

We sold our conventional seed potato business

Group’s further development. It defines strategic

to Stet Holland B.V. in the year under review. An

objectives, initiatives and core measures for existing

agreement to this effect was signed on April 11,

activities and for potential new fields of business.

2016. The business generated net sales of around

The planning is based on a long-term horizon (ten

€28 million and was run in the Sugarbeet Segment.

years) and includes an analysis and assessment of

market trends, competitors and the KWS Group’s

In line with the planned expansion of our business

position. Strategic planning is carried out every

activities, we took over all the remaining shares in our

three years on a rolling basis. We believe that stra-

Brazilian subsidiary RIBER KWS SEMENTES at the

tegic success factors are, in particular, our intensive

end of the calendar year 2015. It had already been

research, breeding of new, high-yielding varieties

fully consolidated in the Corn Segment before the

and continuous expansion of our global footprint so

purchase option was exercised.

that we are on the ground in regional markets with

their special climatic conditions.

As announced in the last Annual Report, KWS MAIS

GMBH was merged with KWS SAAT SE effective

Corporate objectives of the KWS Group

July 1, 2015. The company’s reintegration marked one

Due to the fact that the equity method (IFRS 11)

of several planned steps in simplifying the Group’s

was applied to our joint ventures for the first time

structure. The merger will also enable us to make in-

last year, we have adjusted our key indicator “R&D

ternal processes more efficient and reduce our admi n-

intensity,” which is measured relative to net sales.

istrative overhead. The structure and controlling of our

This change was necessary because the earnings

segments will not be affected by this measure.

contributed by the equity-accounted joint ventures

are now only allowed to be included in net financial

income/expenses at the Group level. We have

retained the other objectives without any changes.

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

Objectives

Profitable growth

Research and development

Internationalization

Sustainability

■■ Increase in consolidated net sales by an average of 5%

to 10% p.a.

■■ EBIT margin ≥10%

■■ R&D intensity of around 17% of consolidated net sales
■■ 1% to 2% progress in yields p.a. for our customers and

development of tolerances and resistances

■■ Expansion of the portfolios of varieties for subtropical markets

■■ Integration of international subsidiaries in KWS’ sustainability

reporting

Dividend

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

net income for the year

24 Combined Management Report | Fundamentals of the KWS Group

Annual Report 2015/2016 | KWS GroupOur investments and expenditure for research and

mance over the past years, we have been able to pay

development are the foundation for profitable

our shareholders an annual dividend of 20% to 25%

growth. We aim to increase the KWS Group’s net

of the KWS Group’s net income for the year. This

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

policy is to be retained in the future.

an EBIT margin of at least 10%. In line with the prin-

ciples of our long-term corporate strategy, we use

Developments in 2015/2016

our earnings strength to expand research and devel-

In the past fiscal year, our business performance

opment in particular, as well as for our distribution

was in line with the above-mentioned medium- to

operations. As a result, we bolster the KWS Group’s

long-term objectives. Our net sales growth was in

potential and lay the foundation for future growth.

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

intensity. We continued to increase our foreign sales,

The objective of our research and development is

including in our subtropical market Brazil. We plan to

to obtain new varieties that are tailored to different

expand our sustainability reporting to all significant

needs and changing agricultural requirements. Our

international subsidiaries and associated companies

most important objectives across all crops are to

by fiscal 2017/2018. Preparations for that were com-

increase yield, breed resistance to plant diseases

menced in the year under review. The dividend ratio

and pests and improve plants’ quality of processing.

of the payout in December 2015 was 23.6% and thus

Conservation of plant genetic resources is also a key

within our target range.

concern of ours. Expressed in hard and fast figures,

the new varieties we supply to our customers deliver

Control System

an average yield progress of 1% to 2% a year.

Detailed annual and medium-term operational

plans, which also include our joint ventures pro-

We will push further ahead with internationalization

portionately, are used to control the Group and the

of our company. Our commitment in the subtropical

three segments corn, sugarbeet and cereals. The

market of Brazil as well as the joint venture with our

medium-term plan covers the time frame of the an-

partner Kenfeng in China are part of that. Markets

nual plan plus the three subsequent fiscal years. In

such as Brazil, with multiple harvests a year, not only

turn, the medium-term plan is derived from our stra-

offer attractive sales potential – especially for our

tegic corporate planning, which covers a timescale

corn business – but also enable us to cushion the

of ten years.

highly seasonal nature of our business in the medium

to long term.

The targets set in the annual and medium-term

planning are arrived at on the basis of the strategic

KWS’ business model is geared toward sustainable

planning, regional economic and legal situation,

success. We are currently working to internationalize

anticipated market trends and assessments of the

our sustainability reporting, with the objective of

company’s position in the market and the potential

expanding it so that it covers the entire KWS Group

product performance. In a subsequent bottom-up

by fiscal 2017/2018. You can find more information on

process, which also includes the development of

the current reporting on pages 14 to 15.

our joint ventures, we use these premises to define

figures for sales volumes and net sales, production

The KWS Group’s profitable growth is the basis of

capacities and quantities, the allocation of resources

our dividend policy. Thanks to our successful perfor-

(including capital spending and personnel), the level

Fundamentals of the KWS Group | Combined Management Report

KWS Group | Annual Report 2015/2016Just how does that work? Around 100 participants in the “KWS Showcase on Modern Sugarbeet Breeding” learned more about successful
breeding methods directly in the field.

of material costs and internal charge allocation and

units. The main indicators for the KWS Group are net

the resultant balance sheet data, along with the fi-

sales, operating profitability (EBIT margin) and R&D

nancial budget. In principle, part of the planning doc-

intensity. KWS’ product segments, which are divided

umentation is also an opportunity/risk assessment

into Business Units, are in turn geared toward the

that every manager must conduct for his or her unit.

main indicators of net sales and EBIT margin.

The planning is compared every quarter with the com-

Management and control

pany’s actual business performance and the updated

KWS SAAT SE has a system of dual management and

estimates of the underlying general conditions. If nec-

supervision, consisting of the Executive Board and the

essary, we initiate suitable countermeasures and make

Supervisory Board. Both bodies have strictly sepa-

adjustments. We update the forecast for the current

rated responsibilities and different members. While

fiscal year at the end of each quarter. At the end of

the Executive Board manages the company, the Su-

each fiscal year, all the units conduct a detailed vari-

pervisory Board supervises and advises the Executive

ance analysis of the budgeted and actual results. That

Board. These responsibilities have also been retained

serves to optimize our internal planning processes.

following the company’s conversion into a European

Stock Corporation (Societas Europaea/SE). The dec-

Controlling is responsible for coordinating and doc-

laration on corporate governance in accordance with

umenting all planning processes and our current

Section 289a of the German Commercial Code (HGB)

expectations. It monitors compliance with adopted

contains detailed information on the extensive and

budgets and analyzes the efficiency and cost-effec-

close cooperation between the Executive Board and

tiveness of business processes and measures. The

the Supervisory Board and has been published at

Controlling team also advises decision-makers on

www.kws.com/ir.

economic optimization measures. In particular the

heads of the three product segments, the regional

Guidelines for the companies’ day-to-day work

directors and the heads of research and development

Our guiding principles define the framework for our

activities and the central functions are responsible for

goal of creating sustainable and profitable growth

the content of the planning and current forecasts.

for our customers, employees and investors. Our

The Executive Board uses various indicators for

tional business are guided by the following company

strategic decisions and day-to-day actions in opera-

planning, controlling and monitoring the business

principles:

performance of the KWS Group and its operating

26 Combined Management Report | Fundamentals of the KWS Group

Annual Report 2015/2016 | KWS Group■■ We increase genetic potential through outstanding

ensure a continuous increase in yield. To enable that,

research and first-class breeding programs.

we continue to invest in expanding our research and

■■ We supply our farmers with seed of the very best

breeding capacities. In fiscal 2015/2016 alone, our

quality.

R&D expenditure totaled €182.4 million. The result

■■ We aim to be a strong partner who earns the trust

was that new KWS varieties were awarded around

of our customers.

400 marketing approvals.

■■ We create entrepreneurial freedom and help

people unfold their talents.

Plant breeding is a very research-intensive and

long-term business. Promising parent lines have to

The KWS Group owes its innovativeness and suc-

be crossed for each new variety and their progeny

cess to a growing workforce worldwide. With our

examined and selected with regard to the desired

central policy framework – Rules, Guidelines and

traits over a period of several years. At the end of the

Procedures ( RGPs) – we create a common under-

development process come variety tests in which the

standing of the freedoms and decision-making

traits of new varieties are determined and compared

processes within KWS. The RGPs are continuously

with standard varieties. An average of ten years

improved by means of constant monitoring and

elapse between the first crossing and the actual mar-

feedback. They complement our existing guiding

keting of a variety.

principles, with the objective of preserving KWS’

unmistakable profile, also against the backdrop of

To develop new varieties, we maintain our own long-

the Group’s increasing internationalization.

term breeding programs organized in a crop-specific

Research and Development

global network of various breeding and trial stations.

The objective of our research and development work

That means candidate varieties can be tested un-

is to create high-performance varieties that meet var-

der the location-specific conditions in their target

ious environmental and application requirements and

markets.

structure. Our breeders are assisted in that by a

Breeding and distribution activities in over 70 countries

Breeding stations
Test locations for trial cultivation

Fundamentals of the KWS Group | Combined Management Report

KWS Group | Annual Report 2015/2016The long road to a new variety

Determination of
suitable parent lines

Crossing, selection and
examination at different locations

Ofﬁcial
variety testing

From the whole
genetic variation

Repeated over about 4 to 6 years: Crossing, testing of
progeny in the lab and in different environments, and
selection of the best plants

Variety approval and
variety protection

New variety

Number of trial candidates

about 10 years

As part of our own research activities, scientists at

New licensing agreement for corn breeding

KWS continuously work on new molecular biology,

KWS carries out breeding work in countries where

IT or technical approaches that enable us to develop

genetically modified traits are vital to the successful

new, improved product traits and further optimize

market launch of commercial varieties. A long-term

our breeding methods. So that the latest scientific

licensing agreement now ensures that KWS has

findings and methods can be integrated faster in our

worldwide access to the portfolio of such traits from

breeding work, we also complement our research

a leading provider for its corn breeding work.

activities with partnerships with public research insti-

tutes and private enterprises.

By integrating these traits in our own breeding ma-

Activities in the past fiscal year

for the North and South American markets in the

Nagoya Protocol: Implementation of national

Argentina, where we already have commercial varie-

requirements at KWS

ties under an earlier agreement.

medium term. We have made very good progress in

terial, we hope to obtain new, competitive varieties

The new statutory regulations under the Nagoya

Protocol came into effect last fall. KWS supports the

Progress in developing products to combat

Nagoya Protocol, whose goals are the sustainable

weeds

use and fair sharing of the benefits from plant genetic

The herbicide-tolerant CONVISO® SMART sugarbeet

resources. We have undertaken great efforts to im-

we developed for conventional cultivation in coopera-

plement the complex provisions of the Nagoya Pro-

tion with Bayer CropScience has achieved an important

tocol. To enable that, we have implemented a system

milestone on the path to market launch. Various varie-

that provides us with efficient access to plant genetic

ties were registered for the official performance tests in

resources in compliance with guidelines and enables

the markets of relevance to us, such as the European

our scientists worldwide to document the origin of all

Union, Eastern Europe or Turkey, in 2016. The cho-

genetic material for their product development work.

sen varieties are adapted to the specific conditions

However, we are also committed to expanding and

of the countries and bring together not only the new

strengthening the proven “International Treaty on

technol ogy for herbicide tolerance, but also various

Plant Genetic Resources for Food and Agriculture”.

resistances to plant diseases and pests, such as rhizo-

It is an efficient and pragmatic instrument governing

mania, rhizoc tonia, cercospora and nematodes. As a

the use of plant genetic resources.

result, we are ideally prepared to enter the market when

the first CONVISO® SMART varieties obtain approval.

28 Combined Management Report | Fundamentals of the KWS Group

Annual Report 2015/2016 | KWS GroupIn the U.S. sugarbeet market, there is increasing de-

In order to drive development of technology and se-

mand for genetically modified varieties that have mul-

cure access to important technology components,

tiple tolerance to herbicides. To address this trend and

we also launched a cooperation in the year under

maintain our excellent market position, we are develop-

review with a research group that is a world leader in

ing a successor product to the successful ROUNDUP

the field of genome editing at the Chinese Academy

READY® sugarbeet. The second generation of herbi-

of Sciences in Beijing.

cide-tolerant sugarbeets will have threefold tolerance

to the active substances glyphosate, glufosinate and

Rye breeding program established for Russia

dicamba, and will be ready for the market in the middle

Rye is grown on 5 million hectares throughout the

of the next decade.

world. Some 1.5 million hectares of that figure are in

Russia. Hybrid varieties adapted specifically to the

New breeding technologies at KWS

region’s severe winters and short vegetation periods

KWS always strives to apply innovative approaches

are required in most of the country.

and technologies in order to improve breeding meth-

ods and the quality of its varieties. The past years

So as to develop hybrid varieties for this challenging

have seen the development of several precise, molec-

region, we began establishing a breeding program at

ular biology methods that open up new prospects for

KWS’ station in Doktorovo near Lipetsk in 2008. In the

plant breeding and are growing in importance for us.

meantime, the testing network has been expanded to

Some of these methods can be used to develop plant

include several more locations and the selection capac-

varieties with desired traits very precisely and in a far

ities have thus been significantly improved. The test in-

shorter time. The results are nature-identical and the

frastructure is also supplemented by a selection system

plants do not differ from conventionally bred ones in

for tolerance to frost and snow mold under controlled

terms of their genetic makeup or traits.

conditions at our German breeding station in Petkus.

We have therefore identified “new breeding technol-

While establishing the infrastructure, we were able to

ogies” and, in particular, genome editing methods as

set up a product development program that enables

a field of research that is important to us and are in-

faster development of varieties. The first winter-hardy

vesting in their application and further development.

KWS candidates are already undergoing assessment

and in the first year exhibited a higher yield compared

to local standards varieties. We expect to market initial

varieties with superior winter hardiness in fiscal year

2019/2020.

in %

in € millions

in %

2015/2016

2014/2015

1,830

38.0

182.4

17.6

397

1,777

38.0

174.6

17.7

429

+/–

+3.0%

+4.5%

–7.5%

Key figures for research & development

R&D employees1

Ratio of R&D employees

R&D expenditure

R&D intensity2

Marketing approvals for new varieties

1 Average number of employees
2 In % of net sales

Fundamentals of the KWS Group | Combined Management Report

KWS Group | Annual Report 2015/2016Field patrol

AgroService

Advice on varieties tailored to the farmer’s individual needs is

effective only if our consultants know what varieties produce the

best performance under what local conditions. For the past 25

years, our AgroService has worked to find the answer to that and

pass along its knowledge. It is the link between sales, science and

breeding, and creates on the basis of scientific findings and its

own trials the foundation for professionally sound advising. The

AgroService Corn visits the trial locations throughout Germany

several times a year, for example. That means our employees travel

in pairs to more than 35,000 plots a year. All the information they

obtain helps further increase value added for farmers.

Employees

For 160 years, KWS’ employees have been renowned

training at the local level, above all to help them

for their innovative thinking and pioneering ideas.

enhance their professional expertise. Consistent

They keep on setting higher standards in all our

parameters for the performance and career devel-

markets and developing sustainable solutions to the

op ment review ensure continuous dialogue between

challenges of today and tomorrow.

employee and manager throughout the company.

KWS’ work culture of respect is key to that achieve-

The “Sparring Circles” and “KWS on Board” are

ment. The strong roots of our family business provide

proven development programs for all executives at

secure support. They also give every employee the

the KWS Group. Sparring Circles enable a profitable

opportunity and latitude to unfold their individual

sharing of ideas, while KWS on Board provides an

potential and enjoy entrepreneurial freedom. At the

extensive insight into our corporate strategy, culture

same time, we demand a high degree of personal

and values, and shows what we expect from an

initiative from every employee. Flat hierarchies, open

executive at KWS.

doors and quick, direct communication ensure that

we achieve our goal together: Seeding the Future.

The current focus of our activities is on successor

and talent management at KWS. The Group-wide

Seeding the Future in a pioneering spirit:

process has been expanded significantly on the

Integrated employee development

basis of our strategic alignment and shared values.

Global growth and regional markets mean that a

Thanks to the intensive commitment of executives

high degree of adaptivity is always required. In order

from all areas of the company, potential experts and

to help employees purposefully tackle the diverse

managers can now be identified early on across all

requirements in this market environment, KWS has

locations, segments and functions and pinpointed

established an integrated development environment.

development measures can be initiated for them.

Challenging tasks enable our employees to develop

the personal and professional skills they need and to

Our Orientation Center is a development program

unfold their individual potential to the full.

that enables us to verify individual potential and offer

effective development plans. For its part, the Inter-

Throughout the group, we offer our employees the

national Development Program offers experts and

chance to take part in an extensive range of further

executives an additional opportunity to enhance their

Our employees are the key to our success. Creative and committed people keep coming up with innovations to
generate new growth.

32 Combined Management Report | Employees

Annual Report 2015/2016 | KWS GroupEmployees by region1

Germany

Europe (excluding Germany)

Americas

Rest of world

Total

1 Average number of employees.

2015/2016

2014/2015

1,908

1,449

1,280

206

4,843

1,868

1,401

1,234

188

4,691

+/–

2.1%

3.4%

3.7%

9.6%

3.2%

personal and professional strengths in the interna-

an attractive employer in the eyes of potential employ-

tional environment.

ees. We nurture intensive contacts with professional

groups of importance to us and have an extensive

Seeding the Future in a motivating spirit:

network.

Targeted development of junior employees

Good training for our employees is a basic necessity

We continue to pursue a rigorous policy of developing

so that KWS can remain successful in the future. In

junior staffers at an early stage. School pupils and stu-

fiscal 2015/2016, KWS employed 97 young people in

dents can learn more about the various task areas and

six business administration, agricultural technological

the company KWS in internships or on excursions, for

science and industrial vocations in Germany. Nine

example. We have intensified our commitment in the

instructors and around 120 training officers ensure

area of scholarships. Apart from various Deutschland-

a high quality of training. We offer university gradu-

stipendien and the KWS UK scholarship, we started

ates two introductory programs: There is very great

awarding the Ferdinand von Lochow scholarship at

demand for our tried-and-tested internal Trainee

the agricultural departments of three German universi-

Program and for the “Breeders Academy,” which is

ties this fiscal year.

tailored specifically to plant breeding.

We give all career starters at KWS extensive insight

close and trusted cooperation, team spirit and per-

into our globalized, highly networked business pro-

sonal responsibility, dependability and vision. Our

cesses. We also attach particular importance to

employees can rely on these cornerstones of how we

developing professional qualifications as well as

interact. Flextime models are family-friendly and a firm

As an employer, KWS stands for qualities such as

personal skills.

part of our working world. As part of our Employee

Share Program, we help employees acquire shares in

Seeding the Future in a sustainable spirit: An

their own company.

attractive employer for everyone – externally

and internally

Our employees know that we care about their well-be-

We have an international presence on the labor market

ing. We promote their health extensively with our

with our employer brand. Our clear positioning and the

“KWS Healthy Working World” initiative. There are

authentic way we address our target groups make us

activities tailored to the needs of the various locations,

Employees by function
Number of employees 4,843

Administration 14%

Production 26%

38% Research & Development

22% Distribution

Employees | Combined Management Report

KWS Group | Annual Report 2015/2016dis advantaged families in the U.S. and seriously ill

children in Russia. We attach importance to our aid

being geared to local needs.

Seeding the Future in a cosmopolitan manner:

A colorful mix

KWS operates in more than 70 countries. This inter-

national range means more than that a variety of dif-

ferent languages are spoken at KWS. Different cul-

tures, disciplines and personal backgrounds join to

enrich our working climate. We value this individuality

and give it our appreciation, support and respect.

KWS also implements the statutory requirements on

equal participation of women and men in manage-

ment positions.

Teamwork and creativity are needed – in the NEWCOMER project, KWS trainees have
taken over joint responsibility for the KWS Art Lounge that was opened in 2015.

such as medical checkups, dietary advice, sports

Seeding the Future in a spirit of partnership:

courses and support in stress management. In Sep-

Constructive dialogue with the Works Committees

tember 2015, KWS SAAT SE was presented with the

The working relationship with our Works Committees

Corporate Health Award, which is under the patron-

is close and trusted. In meetings with management,

age of the German Ministry of Health, in the category

issues are discussed openly and common solutions

“Excellence”: Our company was cited as “exemplary

are found constructively.

in how it is committed to promoting the health, fitness

and capabilities of its employees and in the proactive,

KWS has had a new employee representative body

sustainable HR policy it pursues.”

since this fiscal year: the European Employee Com-

We also support our employees in their involve-

affecting the relevant rights and obligations of em-

ment in non-profit organizations or work for social

ployees from at least two EU counties are discussed.

causes. Among other things, the projects aim to

That reflects the greater internationalization of KWS

help refugees in Germany, the homeless or socially

and the legal form of our company.

mittee. It always becomes actively involved if matters

Key figures for employees (in Germany)

Number of employees in Germany1

of which part-time employees

Ratio of men

Ratio of women

Number of trainees

Trainee ratio

Average age (in years)

Length of service (in years)

1 Average number of employees.

2015/2016

2014/2015

1,908

1,868

392

50.9

49.1

5.1

40.5

13.2

367

50.9

49.1

100

5.3

40.4

13.0

in %

+/–

2.1%

6.8%

–3%

1.5%

34 Combined Management Report | Employees

Annual Report 2015/2016 | KWS GroupEconomic Report

Business Performance

final result was mainly attributable to the very good

performance of the Sugarbeet Segment, as well

General developments and business

as positive effects from measurement of balance

performance of the KWS Group

sheet items denominated in foreign currency on the

In some cases, sharp declines in cultivation area in

reporting date, a factor that is difficult to anticipate.

the regions, volatile exchange rates and prices for

The EBIT margin was 10.9%. As a result, the KWS

agricultural raw materials that remained at a low lev-

Group turned in a successful business performance

el defined the economic climate in fiscal 2015/2016.

for the year as a whole – and bucked the in part

Nevertheless, KWS increased its net sales within

lower trend for net sales in the industry in the same

the forecast range by 5.2% to €1,036.8 (986.0) mil-

period.

lion, mainly thanks to the success of the Sugarbeet

Segment. All in all, the performance of the Brazilian

General developments and business

real and the Russia ruble had a particularly negative

performance of the segments

impact on net sales. Research and development

KWS regularly generates around 20% of its annu-

expenditure rose slightly and was thus in line with

al net sales in the first and second quarters (July

our forecast, with R&D intensity coming in as ex-

to December). The fall sowing season for cereals

pected at 17.6% (17.7%). The KWS Group’s earnings

mainly determines its business performance in this

strength remained virtually constant with EBIT at

period. Demand for high-quality cereal varieties re-

the level of the previous year. We had assumed a

mained low throughout the industry in the year under

much lower EBIT in the third quarterly report. The

review, which had a negative impact on the Cereal

Seeds industry – sales development
Growth rates per quarter (compared with previous-year’s level, effective)

45%

30%

15%

–15%

Q1 2013

KWS

Bayer CropScience, Dow AgScience, DuPont (Pioneer), Monsanto, Syngenta

Q2 2016

Economic Report | Combined Management Report

KWS Group | Annual Report 2015/2016
Segment’s net sales and income. However, we had

largely taken that into account in our guidance, so

we did not have to make any significant changes to

it during the year. We generate most of our annual

net sales in the third and fourth quarters (January

to June), mainly from our hybrid corn and sugarbeet

crops. The net sales predominantly come from re-

gions in the moderate climatic zone, such as North

America, Europe and China. The biggest increases in

net sales at the Corn Segment in the year under re-

view were in North and South America. However, our

performance in Europe was weaker than anticipated.

Gains in market share only partially compensated for

declining cultivation areas and low demand for corn.

In addition, special effects that are difficult to fore-

see, such as negative exchange rate effects – includ-

ing the devaluation of the Brazilian real – reduced the

segment’s growth in net sales. These developments

during the course of the year were the main reasons

why we reduced our guidance for the Corn Segment

during the year. However, demand in the Sugarbeet

Segment was higher than anticipated – and so our

business performance in all regions significantly

We invest over 17% of our net sales in research and development.
That’s where the foundations for our company’s future are laid.

surpassed our expectations, leading us to raise our

many countries. In the Corporate Segment, there

guidance for this segment during the year. We were

were positive exchange rate effects on the reporting

helped by the positive performance of the US dollar

date and lower expenditures for individual central

and unexpected increases in cultivation area in the

functions. EBIT was thus more positive than antici-

EU. We expanded our already high market shares in

pated in May 2016.

Guidance versus actual business performance of the KWS Group

Results for
2014/2015

Guidance for
2015/2016

Adjustments to the guidance
during the year

Results for
2015/2016

Annual
Report
(10/15/2015)

1st Quarterly
Report
(11/24/2015)

2nd Quarterly
Report
(02/25/2016)

3rd Quarterly
Report
(05/26/2016)

Net sales

R&D intensity

EBIT margin

€986.0
million

+5 to 10%

17.7% Around 17%

–

11.5%

≥ 10.5%

≥10.0%

–

– €1,036.8 million;
+5.2%

–

17.6%

10.9%

36 Combined Management Report | Economic Report

Annual Report 2015/2016 | KWS Group
Earnings, Financial Position and Assets

Earnings

Increase in net sales

this increase. The higher net sales from sugarbeet

seed were mainly from our business activity in

North America, Northern and Eastern Europe and

The KWS Group successfully expanded its busi-

the Middle East (Turkey). Significant factors in that

ness activity in the year under review. Although the

were increased market share, expanded cultivation

market environment remained volatile and challeng-

areas and the advantageous performance of the

ing and was characterized by exchange rate fluctu-

US dollar. The increase in net sales from corn seed

ations and low prices for agricultural raw materials,

was achieved in particular in Brazil. As expect-

net sales rose by €50.8 million to €1,036.8 (986.0)

ed, however, our revenue from cereals grew only

million, an increase of 5.2%. After adjustment for

slightly due to low cereal prices and the generally

exchange rate effects, net sales would have been

low demand for high-quality cereal seed. The fall

€1,070.7 million. All product segments, but mainly

in demand for hybrid rye seed also had a negative

sugarbeet and corn seed business, contributed to

impact.

Net sales by region 2015/2016
Total net sales €1,036.8 million

Rest of world 8%

North and South America 27%

22% Germany

43% Europe (excluding Germany)

Operating income at the level of the previous year

(174.6) million. General and administrative expenses

The cost of sales rose by 6.0% to €480.9 (453.5)

increased less than proportionately rela tive to net

million in the year under review. This figure includes

sales by 2.1% to €76.4 million. The balance of other

higher material costs due to poor weather conditions

operating income and other operating expenses was

for seed multiplication, as well as costs from amorti-

€12.5 (19.3) million. It thus fell 35.2% year on year as

zation of the genetically modified traits we acquired.

a result of low reversals of allowances on receivables

The gross margin in the year under review was thus

and lower other operating income. The related indi-

53.6% (54.0%). We increased our distribution activ-

vidual items are explained in detail in the Notes on

ities in order to further expand and strengthen our

pages 114 to 115. All in all, the KWS Group posted

business activity, in particular in growth regions.

EBIT of €112.8 (113.4) million, almost at the same lev-

Consequently, our selling expenses in the past fiscal

el as the previous year. The EBIT margin was 10.9%

year increased by 4.1% to €196.8 million, giving a

(11.5%).

selling expense ratio of 19.0% (19.2%). Research and

development expenditure rose by 4.5% to €182.4

Earnings, Financial Position and Assets | Combined Management Report

KWS Group | Annual Report 2015/2016Joint ventures increase contributions to

and thus a one time gain from revaluation of the exist-

earnings – net income for the year slightly up

ing shares was included in the previous fiscal year. A

from the previous year

further component of net financial income/expenses

Income from equity-accounted financial assets is

is the interest result, which fell to € –11.7 (–10.8) million,

part of the net income from equity investments. It in-

among other things because a new borrower’s note

creased to €26.5 (23.7) million in the year under review

loan of €70 million was raised. Net financial income/

– due to the fact that our joint ventures in North Amer-

expenses was thus €14.8 (16.7) million. Earnings

ica expanded their business activity and initial income

before taxes were €127.6 (130.1) million and income

was generated by our Chinese joint venture KEN-

taxes totaled €42.3 (46.1) million, meaning that the

FENG – KWS SEEDS CO., LTD. – and was thus 11.5%

tax rate fell to 33.1% (35.4%). The KWS Group’s net

above the level of the previous year. Other net income

income for the year was €85.3 (84.0) million. Earnings

from equity investments fell, since SOCIETE DE

per share consequently rose to €12.92 (12.53).

MARTINVAL was acquired in full in September 2014

Abridged income statement

Net sales

Operating income

Net financial income/expenses

Result of ordinary activities

Income taxes

Net income for the year

Earnings per share

EBIT margin

2015/2016

2014/2015

in € millions

1,036.8

986.0

113.4

16.7

130.1

46.1

84.0

+/–

5.2%

–0.5%

–11.4%

–1.9%

–8.2%

1.5%

112.8

14.8

127.6

42.3

85.3

12.92

12.53

3.1%

10.9

11.5

in € millions

in €

in %

Financial Situation

KWS Group is run from headquarters in Einbeck.

The task of financial management at the KWS

This central controlling increases transparency and

Group is to secure the company’s financial assets

helps minimize risks. The KWS Group uses financ-

long-term and ensure adequate earnings strength.

ing, investment and hedging instruments as part of

Only then is KWS Group always able to operate with

financial management. Derivatives are used primar-

financial independence as well as flexibly shape

ily to hedge the risk of interest rate changes and

its growth activities. Financial management at the

currency risks.

Total capital expenditure by segment

Cereals 9.2%

Corporate 14.6%

Sugarbeet 17.3%

58.9% Corn

38 Combined Management Report | Earnings, Financial Position and Assets

Annual Report 2015/2016 | KWS Group
Total capital expenditure by region

North and South America 15.6%

Rest of world 2.8%

49.2% Germany

32.4% Europe (excluding Germany)

Cash earnings were €107.3 (92.1) million and thus

higher than in the previous year, due to the higher net

income for the year before depreciation and amor-

tization and lower other non-cash income. The far

lower capital tie-up year on year as a result of a re-

duction in trade receivables was a major factor in the

fact that net cash from operating activities rose to

€125.9 (48.1) million. The net cash from investing ac-

tivities totaled € –92.2 (–123.8) million. In September

2014, the acquisition of SOCIETE DE MARTINVAL

resulted in higher payments. The figure for the pre-

vious year was consequently higher. We success-

fully issued a borrower’s note loan of €70 million in

December 2015. Due to lower borrowings overall,

the net cash from financing activities fell slightly to

The KWS family is growing and becoming more and more international.
Around 60% of our employees now work outside Germany.

€21.4 (48.4) million. The KWS Group’s cash funds at

Total capital spending fell by 24.9% year on year

June 30, 2016, rose sharply to €163.9 (108.2) million.

and was €99.6 (132.5) million in fiscal 2015/2016. The

biggest single investments related to the already men-

A syndicated loan with a total volume of €200 mil-

tioned licensing agreement for corn trait technology

lion and running until October 2020 still exists with

and expansion of our production and breeding ca-

KWS SAAT SE’s principal bankers to finance operat-

pacities. Our investments in Germany included a new

ing resources during the year.

breeding station and a new greenhouse complex. De-

preciation and amortization were €48.2 (45.9) million.

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

in € millions

2015/2016

2014/2015

163.9

125.9

–92.2

21.4

108.2

48.1

–123.8

48.4

+/–

51.5%

>100.0%

25.5%

–55.8%

Earnings, Financial Position and Assets | Combined Management Report

KWS Group | Annual Report 2015/2016100% attention to their “plant children” by our employees is a mainstay of our
commercial success.

Assets

management. As a result, net borrowings at the end of

The KWS Group’s total assets increased by 7.4% in

the fiscal year fell to €87.9 (105.9) million, despite the

fiscal 2015/2016 to €1,436.6 (1,337.1) million. Non-

additional borrower’s note loan of €70 million.

current assets rose to €667.9 (633.0) million, mainly

due to planned investments in new production plants

On the other side of the balance sheet, equity rose

and research and development capacities. Current

by 4.0% to €767.9 (738.7) million, mainly due to the

assets at the balance sheet date were €768.7 (704.1)

increase in retained earnings. As a result, noncurrent

million. This increase was attributable, in particular, to

assets were fully covered by equity. Raising of the

much higher cash and cash equivalents, which were

borrower’s note loan in December 2015 meant that

impacted by the reversal of securities positions and

noncurrent liabilities rose to €393.6 (316.7) million.

earlier receipts of payments. The earlier receipts of

As a result, the KWS Group’s equity ratio is 53.5%

payment were also the reason for the decline in trade

(55.2%). The balance sheet thus reflects a solid fi-

receivables. The increase in inventories was not as

nancing structure. We also do not plan to make any

sharp as in the previous year thanks to intensive stock

significant changes to our financial policy in the future.

Abridged balance sheet

Assets

Noncurrent assets

Current assets

Equity and liabilities

Equity

Noncurrent liabilities

Current liabilities

06/30/2016

06/30/2015

+/–

in € millions

667.9

768.7

767.9

393.6

275.1

633.0

704.1

738.7

316.7

281.7

5.5%

9.2%

4.0%

24.3%

–2.3%

Total assets

in € millions

1,436.6

1,337.1

7.4%

40 Combined Management Report | Earnings, Financial Position and Assets

Annual Report 2015/2016 | KWS GroupSegment Reports

Reconciliation with the KWS Group

and EBIT are lower than the total for the segments.

The KWS Group’s consolidated financial state

The earnings contributed by the joint ventures are

ments are prepared in accordance with the Inter

instead included under net financial income/ex

national Financial Reporting Standards (IFRS).

penses. In addition, their assets are included in the

The segments are presented in the Management

KWS Group’s balance sheet as equityaccounted

Report in line with our internal corporate con trol

financial assets. So as to retain transparency on

ling structure in accordance with GAS 20. The

our operational development, the joint ventures are

main difference is that we can no longer carry the

included in the segment reports. The difference

revenues and costs of our joint ventures in the

from the KWS Group’s statement of comprehensive

statement of comprehensive income (in accor

income is summarized for a number of key indica

dance with IFRS 11), so the KWS Group’s net sales

tors in the reconciliation table:

Reconciliation table

Disclosures

Net sales

EBIT

Number of employees

Capital expenditure

Total assets

in € millions

avg.

in € millions

Segments Reconciliation

KWS Group

1,356.8

–320.0

1,036.8

141.1

5,472

159.7

–28.3

–629

–60.1

112.8

4,843

99.6

1,563.2

–126.6

1,436.6

The reconciliation between the KWS Group’s state

America, which also affected the reconciliation. The

ment of comprehensive income and the reporting by

Chinese joint venture KENFENG – KWS SEEDS CO.,

segments in fiscal 2015/2016 is impacted by our joint

LTD. was awarded its business license in the year

ventures in the North American and Chinese corn

under review, so it was able to generate net sales

markets. That applies to all key figures in the above

for the first time and was carried at equity in the

table, with the main influences coming from North

KWS Group’s annual financial statements.

America. Net sales and EBIT increased in North

Segment Reports | Combined Management Report

KWS Group | Annual Report 2015/2016Corn Segment

Key figures

Net sales

EBIT

EBIT margin

Capital expenditure

Capital employed (avg.)

ROCE (avg.)

in € millions

in %

in € millions

in %

2015/2016

2014/2015

795.2

63.6

8.0

119.1

654.4

9.7

754.4

84.2

11.2

44.5

585.4

14.4

+/–

5.4%

–24.5%

>100.0%

11.8%

The segment’s performance: Net sales grown –

corn cultivation areas: The area increased in North

earnings impacted by the eco nomic climate

and South America, but declined in Europe and Asia,

We grew the Corn Segment’s operational busi

in some cases in important cultivation regions.

ness and increased its net sales by 5.4% to

€795.2 (754.4) million. The growth in net sales in

The regions: Net sales grow in North and South

North and South America offset the slight decline in

America – area in Europe declines

Europe. With the exception of the US dollar, most for

The corn cultivation area in the U.S. was roughly

eign currencies, such as the Russian ruble, Ukrainian

38.1 million hectares, one of the highestever figures.

hryvnia, Brazilian real and Argentinean peso, fell in

Our 50:50 joint ventures there with the French com

value against the euro, which had a nega tive impact

pany Vilmorin & Cie (a listed company of Limagrain)

overall in view of the contributions these countries

expanded their business activity in the year under

make to net sales. After adjustment for exchange

review. As a result, prorata net sales from North

rate effects, the segment’s net sales would have ris

America increased by 14.7% to €312.1 (272.1) million.

en by around 7.4% to €810.0 million.

The performance of the US dollar also had a positive

impact on net sales.

We accomplished our main research and develop

ment projects as planned in the year under review.

In Brazil, we pressed ahead with changing the port

We also expanded our distribution activities further.

folio over to our own varieties. Revenue from corn

The additional expenses for that totaled €9.5 million.

seed rose despite the devaluation of the Brazilian

The negative impact of the weather on seed produc

real, and KWS’ market share increased by almost

tion resulted in quality and volumerelated problems

2%. We also increased our market share in Argentina

and thus ultimately in higher cost of sales. In addition,

by around 3%, despite the fact that cultivation area

amortization of the acquired trait technology reduced

there fell.

the segment’s earnings. All in all, the segment’s EBIT

fell sharply by 24.5% to €63.6 (84.2) million. The EBIT

Low commodity prices not only put pressure on the

margin was thus 8.0% (11.2%).

cultivation area for grain corn in Europe, but also

resulted in restrictions to the area used for growing

Economic environment: Agricultural markets

silage corn in some regions. These effects could not

remain turbulent

be offset everywhere by gains in market share and

The economic climate did not change compared to

so there were slight declines in net sales.

the previous year and was still characterized by in

tense competition. Global stocks of agricultural raw

The pace of growth in China was a little lower than

materials were still at the high levels of the previous

last year, also due to a decline in cultivation area,

year. Consumer prices for corn therefore remained

especially in the northeast of the country. We ex

low and volatile. There were differing trends regarding

panded our local business structures. For the first

42 Combined Management Report | Segment Reports

Annual Report 2015/2016 | KWS GroupCorn

time, our joint venture KENFENG – KWS SEEDS CO.,

LTD. prepared complete annual financial statements,

which were included proportionately in the seg

ment’s results.

Oil seed business in Europe increases net sales

– capital expenditure increases due to licensing

agreement

The oil and field seed business in the Corn Segment

includes soybeans, winter rapeseed, sunflowers and

sorghum. Revenue from this business rose by a total

of 6.3% to €94.2 (88.6) million. Our European winter

rapeseed business went very well, increasing by

18.2%. Other oil seed business – primarily North and

South American soybean revenue – grew by 5%.

The segment’s capital expenditure amounted to

€119.1 (44.5) million. The biggest single investment

related to the licensing agreement for new corn tech

nology concluded in October 2015. Capital expendi

ture on property, plant and equipment mainly related

to construction or expansion of production plants,

such as in Ukraine and China. In North America, we

also acquired the corn and sorghum business of

Golden Acres together with Vilmorin & Cie.

Mighty corn – one hectare of silage corn supplies
the basic feed needed for three to four cows per
year and in its growth phase “recycles” the CO2
emitted by a car driving 60,000 km.

KWS Group | Annual Report 2015/2016Sugarbeet Segment

Key figures

Net sales

EBIT

EBIT margin

Capital expenditure

Capital employed (avg.)

ROCE (avg.)

in € millions

in %

in € millions

in %

2015/2016

2014/2015

439.5

118.6

27.0

17.2

242.9

48.8

390.5

93.0

23.8

24.0

236.1

39.4

+/–

12.5%

27.5%

–28.3%

2.9%

The segment’s performance: KWS expands

inventories were lower than in previous years. The

its market leadership

segment ultimately posted a sharp increase in EBIT

KWS specializes in breeding regionally adapted

of 27.5% to €118.6 (93.0) million.

sugarbeet varieties and for years has provided its

customers with varieties that turn in firstclass perfor

Economic environment: Demand for sugar

mance. New highperformance varieties and streng

outstrips supply

thening of our sales teams in the segment’s growth

Due to constantly growing demand, the global sugar

regions were again the foundation for our successes

price climbed to more than 550 US dollars per ton

in the year under review. We grew our net sales from

of white sugar in June 2016 – its highest level since

sugarbeet seed in just about all regions, mainly on

2012. Cultivation areas in Europe and Asia increased

the back of gains in market share. The growth was

slightly, following declines in the previous year. The

particularly significant in North Ameri ca, Northern

exchange rate of currencies against the US dollar

and Eastern Europe and the Middle East (Turkey). As

had a positive impact for the segments. The eco

a result, we were able to increase the segment’s net

nomic climate in Russia and Ukraine remained tough,

sales by 12.5% to €439.5 (390.5) million. Our good

in particular because of their volatile currencies.

performance was underpinned by positive exchange

The Turkish lira also fell slightly in value. The sugar

rate effects, all in all, and greater cultivation areas in

market regime in the EU will no longer apply as of

Europe and Asia. The negative exchange rate effects

October 2017. The sugar production from the 2016

from Eastern Europe were more than compensated

sugarbeet harvest, which will be marketed in the

for, in particular by the performance of the US dollar.

2016/2017 sugar year, will thus be the last to be pro

After adjustment for exchange rate effects, the seg

duced under the existing market regime. Our expec

ment’s net sales were €437.6 million. Overall, the

tations for the segment can be found in the forecast

segment achieved a glo bal share of 55% (53%) in the

report on pages 56 to 57.

sugarbeet seed market in the year under review. That

means KWS remains the world’s clear market leader

The regions: Increase in revenue in all main

by far.

cultivation regions

Outside the EU 28, revenue from sugarbeet seed in

The segment’s earnings rose, mainly as a result of

creased sharply again, in particular in North America,

expanded business and higher market share. We re

Eastern Europe and the Middle East. We improved

duced our selling expense ratio by means of targeted

our very good market position further thanks to good

cost management. Research and development ac

variety performance and expansion of distribution

tivities increased in line with our mediumterm plan

activities. On the back of stable market share, net

ning, while administrative expenses again remained

sales in North America benefited especially from

stable. Thanks to improved stock management,

the performance of the US dollar. Cultivation area in

the expenses from writing down and destroying

the EU 28 rose by approximately 8%, which had a

44 Combined Management Report | Segment Reports

Annual Report 2015/2016 | KWS GroupSugarbeet

positive impact on our business. We increased our

net sales in the UK, the Netherlands, Sweden and

Germany. There were also increases in cultivation

area in Eastern Europe, a region with great growth

potential for the segment. Here too, additional dis

tribution activities and good variety performance

helped us improve our market position.

Improvement in the quality of seed – focus on

hybrid potato breeding

The segment’s capital expenditure totaled €17.2

(24.0) million. It mainly went to renovating seed pro

duction plants. In North America, we completed

modernization of our sugarbeet seed production

plant in Tangent, Oregon, a project that took several

years and in which we invested a total of more than

€35 million. Apart from higher seed quality, we will

also boost efficiency in the future. At the same time,

the entire software landscape in North America was

pooled and simplified. Other capital spending related

to modernization of cold stores for breeding activ

ities, construction of a greenhouse complex in the

U.S. and development of a new technology for har

vesting beet in trials. We will increase the capacity

of the seed production and processing plants in Ein

beck in the coming years, and also prepare them for

being able to handle CONVISO® SMART sugarbeet.

In the potato business segment, we will focus in the

future on developing hybrid potatoes. We sold our

conventional seed potato business to Stet Holland

B.V. during the fiscal year. Seed potato business

contributed net sales of €27.9 (26.1) million and nega

tive income to the segment in the year under review.

Sweet as sugar – one sugarbeet delivers an
average of around 40 sugar cubes.

KWS Group | Annual Report 2015/2016Cereals Segment

Key figures

Net sales

EBIT

EBIT margin

Capital expenditure

Capital employed (avg.)

ROCE (avg.)

in € millions

in %

in € millions

in %

2015/2016

2014/2015

118.0

9.0

7.6

9.2

120.7

7.5

111.3

12.0

10.8

44.4

109.0

11.0

+/–

6.0%

–25.0%

–79.3%

10.7%

The segment’s performance: Net sales grow

Eastern Europe, this resulted in low consumer prices

as a result of acquisition

for milk, meat and cereals. Farmers therefore suf

The segment’s net sales increased year on year by

fered perceptible reductions in their liquidity. Against

6.0% to €118.0 (111.3) million. This rise is attribut

this backdrop, demand for highquality cereal seed

able to the acquisition of the remaining shares in

also fell in the segment’s core regions. Farmers tend

SOCIETE DE MARTINVAL (MOMONT) in France in

ed to use farmsaved seed from the harvests of pre

September 2014. MOMONT’s entire earnings were

vious years. Low meat prices also led to a reduction

recognized in the segment for the first time in the

in livestock, which had a negative impact on demand

year under review. Hybrid rye business, which is

for cereals for fodder. In seed production, the good

important for the Cereals Segment, declined as

weather conditions and other factors resulted in high

expected, in particular because the differences in

inventories on a scale not planned.

selling prices between rye and wheat were higher

than in previous years. Moreover, weatherrelated

The regions: KWS still has good market positions

factors kept the advantages of hybrid rye from be

Germany is the most important single market for our

ing fully realized. Royalties from licensing of winter

Cereals Segment. We generate around 40% of net

wheat also declined. However, our net sales from

cereal sales there, mainly from hybrid rye, wheat and

barley varieties rose, among other things for malting

barley. Domestic net sales declined slightly in the

barley. The segment’s income was impacted in par

year under review, in particular due to the difficult

ticular by pinpointed expenditure on research and

hybrid rye business. Nevertheless, KWS remained

development and distribution, which was increased

the clear market leader there, with a share of some

by around €10.1 million. The decline in hybrid rye

60%. In addition, our product pipeline contains

business entailed higher expenditure on inventories

highperformance hybrid rye varieties that we expect

and far lower contributions to earnings overall. The

to be awarded market approval soon.

segment’s EBIT thus fell to €9.0 (12.0) million. The

EBIT margin was 7.6% (10.8%).

We were able to grow net sales in our Northern

Europe region, in particular in the Benelux countries,

Economic environment: Prices for agricultural

Scandinavia and the UK. It accounted for around

raw materials remain low

30% of the segment’s net sales. The declines in

Multiple factors had a negative impact on our cereal

wheat licensing business were more than compen

operations in the year under review. The consistently

sated for by very good barley business.

good weather and cultivation conditions ensured

that there was still a strong supply of agricultural

In France, we successfully completed integration

raw materials. In conjunction with influences that

of the MOMONT Group. The acquisition had a pos

restrained demand, such as barriers to trade in

itive impact on net sales in the region. However,

46 Combined Management Report | Segment Reports

Annual Report 2015/2016 | KWS GroupCereals

the increase was lower than expected. The main

reasons for that were lower demand industrywide

for highquality cereal seed and greater use of farm

saved seed by farmers. In this climate, we were able

to maintain our market position in the crops that are

important in France, namely wheat, barley and rape

seed. Net sales in the region were almost 10% of the

segment’s net sales.

Capital expenditure continued – strong variety

pipeline for the near future

The segment’s capital expenditure totaled €9.2

(44.4) million. We invested primarily in expanding

and modernizing breeding stations and production

plants in the year under review. These activities are

in line with our longterm corporate planning and are

intended to maintain or further improve the quality of

our seed and varieties. Capital expenditure was high

er in the previous year due to the acquisition of the

remaining shares in MOMONT.

Apart from the development of new varieties, our

breeding activities include longterm research and

development projects, such as establishment of

hybrid breeding for barley and wheat. Another ob

jective is to develop hybrid rye varieties that are

adapted to growth conditions in Eastern Europe and

North America. We are also working on alternative

uses of rye for fodder, for example. These activi

ties are intended to help us tap additional market

potential in the medium term. In the short term, we

expect to improve our competitive position with new

highperformance varieties, in particular in the field

of hybrid rye.

Ear, ear – roughly 10,000 loaves of bread can be
baked from the harvest of one hectare of wheat.

KWS Group | Annual Report 2015/2016Corporate

A real eye-catcher – the new company logo with claim on the KWS campus in Einbeck.

Corporate Segment

Key figures

Net sales

EBIT

Capital expenditure

in € millions

2015/2016

2014/2015

4.1

–50.1

14.3

4.2

–51.2

20.1

+/–

–2.4%

2.1%

–28.9%

The Corporate Segment’s net sales are generated

net sales cannot cover these expenses. As a result,

from our farms in Germany. In the past fiscal year

the segment’s income (EBIT) is always clearly neg

they were €4.1 (4.2) million. All crosssegment costs

ative. It was positively impacted by exchange rate

are also allocated to the segment. They include ex

effects on the reporting date and was € –50.1 (–51.2)

penses for all central functions of the KWS Group

million in the year under review.

and for longterm research projects. The segment’s

48 Combined Management Report | Segment Reports

Annual Report 2015/2016 | KWS GroupReport on Events after the
Balance Sheet Date

There were no events after June 30, 2016, that can

be expected to have a significant impact on the KWS

Group’s earnings, assets and financial position.

Opportunity and Risk Report

As an international seed company, the KWS Group

So that we succeed in achieving sustainable, profit

operates in a dynamically changing environment.

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

That results in risks as well as opportunities, which

be to retain and increase our innovativeness. The

we have to weigh as the foundation for our entrepre

latter is expressed in seed business by continuous

neurial decisions.

Opportunities

increases in the yields of new varieties. The plants’

yield potential can either be increased or their resis

tance to detrimental influences, of what ever type,

We define an opportunity as a development that could

can be improved. Our target is to offer our customers

have a positive impact on our earnings, financial posi

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

tion and assets. At the KWS Group, opportunity man

new varieties. That is why we constantly expand our

agement is an integral component of the established

research and development activities. A measure of

controlling system between the subsidiaries/associ

our innovativeness is the number of newly approved

ated companies and company management. Strate

varieties. In the approval processes, our varieties are

gic opportunities of major importance, such as joint

compared directly with rival products in official per

ventures and acquisitions, are handled by the KWS

formance tests.

Group’s Executive Board. Even though the strategic

orientation is based on organic growth, acquisitions

Market opportunities also result from our intensified

also offer KWS opportunities.

activities in subtropical regions. Our corn activities

in Brazil and China will enable us to tap additional

Operational opportunities are identified and exploit

sales potential for the KWS Group in the medium to

ed in the Business Units of the segments, since they

long term, including in other subtropical markets, by

have the most comprehensive knowledge of their

developing varieties tailored precisely to their climatic

markets and products. Targeted measures are for

conditions. In particular in China, there is a good op

mulated together with the Executive Board so that

portunity to participate in the government’s declared

strengths can be leveraged and strategic growth

increase in performance in the corn market.

potentials tapped. Extensive strategic planning

covering a tenyear time frame is the basis for op

Investing in the expansion of our production capaci

portunity management. In keeping with our growth

ties and modernization of our seed processing offers

strategy, we exploit industryspecific and strategic

additional opportunities to grow further. Further de

opportunities by means of pinpointed investments

velopment of our variety portfolio and expansion of

in production capacities, research and development

capacities are accompanied by expansion of our in

activities, and expansion of distribution.

ternational distribution structures to enable even more

tailored and intensive information and advice for our

We see diverse opportunities for the KWS Group to

customers on the possible uses of our seed, and thus

develop the company further in line with our strategy.

allow us to leverage further sales potential. In addition,

Report on Events after the Balance Sheet Date | Opportunity and Risk Report | Combined Management Report

KWS Group | Annual Report 2015/2016

continuous optimization of processes offers the

Structure of the risk management system

KWS Group the opportunity to increase productivity

The Executive Board is responsible for risk man

and optimize cost structures.

agement. The Group functions Corporate Finance,

Risks

Corporate Compliance Office, Corporate Develop

ment & Communications and Corporate Controlling

We define a risk as a potential future event that might

share the tasks (see the table). In addition, the Cor

have a negative impact on our business.

porate Management Circle (first and second man

agement levels) form the Risk Committee of KWS.

Objectives and strategies in risk management

A vital aspect of risk management at KWS is to

Our risk management system is based on the inter

include all employees, who assess and are respon

nationally recognized COSO II model (Committee

sible for risks on the ground. This enables risks to

of Sponsoring Organizations of the Treadway Com

be identified, assessed, controlled and reported on

mission). The principles of risk management are

promptly. The risk management system supports and

enshrined in our groupwide “Rules, Guidelines &

monitors this process. With proactive strategies, we

Procedures.” Core contents of it define the scope

reduce or avoid negative impacts on our business so

of application, responsibilities and reporting lines.

that we can survive and thrive on the world market.

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
■■ Auditing

■■ Planning/budget
■■ Current expectation

■■ Integrated Management System
■■ Rules, Guidelines & Procedures (RGPs)
■■ Internal audits
■■ Excellence Through Stewardship (ETS)

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

50 Combined Management Report | Opportunity and Risk Report

Annual Report 2015/2016 | KWS GroupAs part of its audit of the annual financial state

Corporate Finance reports to the Risk Committee

ments for fiscal year 2015/2016, Deloitte GmbH

on the current risk situation at the KWS Group and

Wirtschaftsprüfungsgesellschaft confirmed that our

the business segments every quarter. The Risk

system for early detection of risks complies with the

Committee then uses this report as the basis for

requirements under the German Stock Corporation

discussing how risks will develop in the future.

Act. It also enables early identification of risks that

jeopardize the company’s existence. Identified weak

Risk management and the internal control

nesses are reported to the Executive Board and the

system in the accounting process

Supervisory Board and rectified in the continuous

The risk management and internal control system

improvement process.

comprises structures and processes designed to

make sure that business transactions are included

Risk management process

in accounting promptly, consistently and correctly.

The risk management process at KWS consists of

The following are examined regularly: the complete

the phases of identification, assessment, control and

ness of financial reporting, the Group’s uniform

monitoring of risks and risk reporting. By risk iden

accounting, measurement and account allocation

tification, we mean that the persons responsible for

stipulations, and the authorization and access

a risk process and area record the potential risks in

regulations for IT systems used in accounting.

an electronic platform for sharing information. The

IntraGroup transactions are consolidated appropri

identified risks are plausibilized and summarized in a

ately and in full.

risk control matrix. Our risk inventory currently con

tains around 100 risks and almost as many control

The Group functions Corporate Finance, Group

activities.

Accounting and Corporate Controlling are respon

sible for consolidated accounting at KWS. The

As part of risk assessment, the risks are first ana

Group’s own service centers help the subsidiaries in

lyzed. They are measured after the countermeasures

preparing their annual financial statements. A uniform

have been concluded. The risks are classified by

system tool subject to the Group’s regulations on

their likelihood of occurrence and extent of damage

accounting makes it easier to ensure that the consoli

and prioritized according to a traffic light system. The

dated financial statements comply with the rules.

“expected damage rating” resulting from the likeli

hood of occurrence and extent of damage is relevant

for assessing a risk’s materiality.

Risk controlling comprises instruments with which

we aim to reduce risks. It comprises measures to

reduce risks, constant monitoring of risks and risk

transfer. Systematic reviews are conducted to de

termine whether controlling is effective; they are

documented with the internal control system (ICS).

The persons in charge of the processes examine

the controls at least once a year to determine that

they are effective. In addition, experienced indepen

dent auditors examine compliance with the controls

using a riskbased approach. A report on the ICS’

effectiveness is given to the Audit Committee of the

Supervisory Board every year.

We talk to each other – open communication is vital to identifying risks at
an early stage.

Opportunity and Risk Report | Combined Management Report

KWS Group | Annual Report 2015/2016Risk categories

“Product risks.” The overview and subsequent

We divide our risks into nine categories, which

explanation give a more detailed description of the

have been expanded compared with the previous

categories whose expected damage rating is at

year. For example, we have created a new category:

least “significant.”

Assessment of the risk categories

Risk category

Market risks

■■ Political instability
■■ Fall in sales volumes

and/or prices

■■ Barriers to market access
■■ Currency depreciation
■■ Change in interest rates
■■ Consolidation in the industry

Production risks

■■ Influence of the weather on
multiplication in the field

■■ Outage of production

systems

■■ Product liability

Procurement risks

Product risks

■■ Adverse effects in connec

tion with genetic engineering

■■ Lack of access to

technologies

■■ Lack of patent protection

for traits

Environmental risks

Liquidity risks

Legal risks

■■ Breaches of contract
■■ Antitrust proceedings
■■ Corruption
■■ Violation of data protection
■■ Violation of the law
■■ Changes to the law
■■ Infringement of intellectual

property rights

Personnel risks

IT risks

■■ Nonavailability of

IT systems

■■ Hacking
■■ Data theft
■■ Authorization conflicts

Likelihood of
occurrence1

Extent of damage2

Expected damage
rating3

Possible

Substantial

Significant

Possible

Substantial

Significant

Possible

Low

Moderate

Unlikely

Existential

Significant

Unlikely

Low

Moderate

Likely

Moderate

Significant

Unlikely

Low

Moderate

Possible

Substantial

Significant

1 Rarely: 1–5%; unlikely: 5–15%; possible: 15–30%; likely: 30–60%; almost certainly: 60–99%
2 Immaterial: < €250,000; low: €250,000 to €500,000; moderate: €0.5 to €4.5 million; substantial: €4.5 to €15 million; critical: ≥ €15 million
3 Moderate: < €1 million; significant: €1 to €4.5 million; existential: ≥ €4.5 million

52 Combined Management Report | Opportunity and Risk Report

Annual Report 2015/2016 | KWS GroupDrawing from natural resources to the fullest – but always responsibly.

Market risks

on our net sales and income. We address these chal

KWS faces political risks in the strongly regulated in

lenges with systematic analyses of the market and

ternational agricultural industry. For example, uncer

the competition and by developing highquality seed

tainty continues in Ukraine and the sanctions against

all over the world.

Russia are still in place. Both of these factors have

the potential to negatively impact our business ac

Currency risks arise from fluctuations in exchange

tivities there. We generated net sales totaling €59.9

rates, in particular for receivables and liabilities de

(59.5) million in the two countries in fiscal 2015/2016.

nominated in foreign currency. There are interest

Other growth countries of importance for us, such as

rate risks as a result of potential changes to market

Brazil and China, are currently grappling with eco

interest rates. The interest payable on financial obli

nomic and political difficulties. The economic impact

gations with a variable rate of interest may increase.

of the United Kingdom’s decision to leave the EU

We address currency risks and the risk of interest

(Brexit) in the recent referendum is not significant for

rate changes to a reasonable extent through the

our business as far as can be seen at present.

usual hedging instruments, such as derivatives and

forward exchange deals, to reduce the influence on

Our business success depends, among other things,

the KWS Group’s earnings and assets situation. In

on the type of market access, our own variety per

fiscal 2015/2016, we hedged our research and devel

formance and the competitive environment. How

opment expenditure and intercompany loans almost

ever, the global economy has an indirect influence

completely in order to avoid exchange rate risks.

Opportunity and Risk Report | Combined Management Report

KWS Group | Annual Report 2015/2016We counter the outage of seed processing plants by

means of regular maintenance, risk inspections and

organizational and technical damage prevention pro

grams. To cover economic loss, we have Groupwide

property and business interruption insurance.

We have established checks and tests to determine

the performance and quality of our seed. Quality

controls, such as germination and sprouting strength

tests, are conducted at all stages of production. The

aim of that is to avoid claims for damages due to

product liability.

Product risks

Our quality controls include an examination of con

ventional seed, among other things to determine that

it is free of GMOs. Strict requirements must be met

regarding handling of genetically modified products,

in particular, to prevent GMOs becoming mixed with

conventional seed. In the absence of a standardized

legal threshold value, a number of European coun

tries practice a policy of zero tolerance. KWS is a

member of the “Excellence Through Stewardship”

(ETS) initiative. This is an internationally standardized

quality management program relating to the use of

Experts in dialog – quality is a hallmark of our seed, but
also of our consulting.

The outcome of the current process of consolidation

genetically modified plant material throughout the

in the agricultural industry is still open at present. We

product life cycle. By becoming a member, we signal

do not expect any negative impact on our business

our clear commitment to the responsible use of

in the short term. There are opportunities and risks

transgenic plant material.

from market consolidation in the medium to long

term. For example, market opportunities may arise

The acquisition or licensing of technologies is cus

for KWS as a result of carveouts and divestments

tomary and necessary in the industry. We reduce

by the new groups for antitrust reasons.

the related risks by developing our own innovations,

which may also be attractive to competitors.

Production risks

Seed production is dependent on the weather. We

Legal risks

reduce the effects of crop failures by multiplying

KWS faces risks from official proceedings and legal

seed in separate locations and regions in Europe,

disputes. Legal disputes are possible, in particular,

North and South America and Asia. We can carry out

with suppliers, customers, employees, lenders and

contraseasonal multiplication in the winter halfyear

investors, and may result in payments or other obliga

in the southern hemisphere if there are bottlenecks

tions. There were no significant legal proceedings in

in the volume of seed produced.

fiscal 2015/2016.

54 Combined Management Report | Opportunity and Risk Report

Annual Report 2015/2016 | KWS GroupUnder our compliance policy and the Code of Busi

constantly examine our IT security and system

ness Ethics, we obligate our employees to undertake

authorizations in order to perform an objective risk

to act in accordance with laws, contracts, internal

assessment and provide recommendations for optimi

guidelines and our corporate values. In addition,

zation measures.

we regularly hold international compliance training

courses.

IT risks

Overall statement on the risk situation by the

Executive Board

Our risk situation increased slightly in fiscal 2015/2016.

The KWS Group’s business and production pro

The most important risks are still related to products

cesses, as well as its internal and external commu

and the market. The increasing share of our business

nications, are run on globally networked IT systems.

in emerging countries and in foreign currency harbors

Any outages in them can result in a significant in

additional political and currency risks. However, they

terruption to business operations here and there. In

do not jeopardize the existence of the KWS Group,

addition, theft of sensitive data can entail a loss of

neither individually nor in their entirety.

reputation for us.

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

On the basis of our IT security policies, our IT secu

novative strength and the quality of our products,

rity organization monitors and controls access to

we can seize opportunities and successfully count

sensitive company data. Firewall and antivirus and

er risks as they arise. However, we cannot rule out

software programs are kept up to date and are de

the possibility that further factors that are currently

signed to avoid losses and damage as a result of

unknown or which are not assessed as significant

hacking and malware. There is also an extensive

may jeopardize the continued existence of the KWS

authorization concept. External IT service providers

Group in the future.

Contraception by paper bag prevents uncontrolled pollination. Breeding progress requires maximum care in every work step.

Opportunity and Risk Report | Combined Management Report

KWS Group | Annual Report 2015/2016Research and development is a must, since the future belongs to innovative varieties that are resistant
to pests and offer high yields.

Forecast Report

The expectations of management outlined here are

Forecast for the KWS Group’s statement of

based on our corporate planning and the informa

comprehensive income

tion it takes into account, including market expec

The high stocks of agricultural raw materials world

tations, strategic decisions, regulatory measures

wide suggest that no recovery in the agricultural

or exchange rate trends. They are subject to the

industry’s economic situation can be expected in the

same premises as the consolidated financial state

coming fiscal year. Moreover, it looks like there will

ments and forecast our business performance up to

be a record corn harvest in North America, which

June 30, 2017. In our forecast for the KWS Group’s

will put even more pressure on prices for agricul

statement of comprehensive income, we specify

tural raw materials. We therefore anticipate that the

the anticipated net sales, EBIT and R&D intensity

economic environment will remain difficult. There

excluding the contribution our joint ventures make to

is only limited potential for shifts in cultivation area

net sales and income (in accordance with IFRS 11).

in favor of KWS’ important crops, such as corn or

You can find the net sales and EBIT expectations in

sugarbeet, and competition remains very intense. We

the forecast for the segments. In line with our inter

specifically expect lower net sales in our sugarbeet

nal corporate controlling structure, the contributions

seed business in North America. Despite the fact

made by our joint ventures are included proportion

that there will no longer be any net sales in Europe

ately in the segment reports.

from our operational potato business as a result of

56 Combined Management Report | Forecast Report

Annual Report 2015/2016 | KWS Group
its sale, we expect net sales in Europe to remain

We will probably not be able to repeat the exception-

stable or increase slightly. All in all, we expect the

al success of the Sugarbeet Segment in 2015/2016

KWS Group’s net sales to be below our medium- to

in the coming fiscal year. The sale of our operational

long-term growth target of at least 5%. At the same

potato business means that KWS will focus on de-

time, we expect the EBIT margin to increase slightly

veloping hybrid potatoes in the future. As a result,

compared to the previous year (10.9%), despite the

there will no longer be any revenue from the sale of

fact that profit contributions from the sugarbeet seed

seed potatoes. We generated net sales of around

business in North America will probably be lower.

€28 million in this field in the year under review. In

We will increase expenditure on ensuring our future

view of our already very large share of the market, we

growth, maintaining an R&D intensity of around

do not see any possibility for further growth in North

17%. Our capital spending on property, plant and

America. We anticipate a slight decline in net sales

equipment in the coming fiscal year will relate mainly

there. The EU’s Sugar Market Regime will expire in

to the construction of new or expansion of existing

September 2017, which means a new situation for the

production plants, such as increasing the capacity of

2017 spring sowing season. Due to declining sugar

sugarbeet seed production in Einbeck.

stocks, we currently expect cultivation area in the EU

to increase slightly. All in all, the segment’s net sales

Forecast for the segments

are expected to fall by 5% to 10%. The segment’s

The Corn Segment is expected to grow its net sales

income will probably be lower and the EBIT margin

by between 5% and 10% in the coming year. As far

slightly below that of the previous year.

as can be seen at present, all regions will contribute

to that. We will successfully expand our business in

For the fall sowing season in the second half of 2016,

Europe, assuming that there are no further declines

the current level of consumer prices for cereals con-

in the corn cultivation area. Net sales in North Amer-

tinues to mean low earnings prospects for farmers. In

ica will only increase slightly and the high yields from

such an environment, demand for high-quality cereal

the 2016 harvest mean that expansion of the cultiva-

seed will also tend to be lower than in times of high

tion area is unlikely. In Argentina, we expect a sharp

cereal prices. The Cereals Segment is therefore

increase in the corn cultivation area under the new

expected to post net sales on a par with the previous

agricultural policy, and we expect to benefit from

year. The segment’s income will improve, among

that. In Brazil, we will further increase the share of

other things due to lower expenditure on inventory

our own corn varieties and grow net sales as a whole

management. We currently anticipate an EBIT margin

– albeit not as strongly as in previous years. Despite

of just over 10%.

further expansion of research and distribution, the

segment’s income will improve as far as can be seen

Revenue from our farms in Germany is grouped in

at present. We expect the segment to generate an

the Corporate Segment. It should again be around

EBIT margin of around 10%.

€4 million. All cross-segment costs of the KWS

Group are allocated to this segment, which regularly

means that its EBIT is negative. It will likely be be-

tween € –55 and € –60 million.

Forecast for the 2016/2017 fiscal year

Statement of comprehensive income
of the KWS Group

Net sales growth

EBIT margin

R&D intensity

< 5%

≥ 11%

Around 17%

Forecast Report | Combined Management Report

KWS Group | Annual Report 2015/2016Digital Farming

Smartphones and tablets are now mobile accessories and constant

companions for many farmers. That’s why, in addition to personal

contact, KWS’ online platform CultiVent offers digital consulting on

topics related to growing crops. Uptodate information for the par

ticular season and digital services support farmers – from cultiva

tion to harvesting and beyond. Farmers can use the “KWS mobile”

app to control the population density or calculate the current level

of nutrient removal – quickly and easily, right in the field. The

“ damage pattern finder” gives farmers tips on suitable strategies

to combat diseases and pests. Backed by this knowledge, farmers

can not only increase their yield and thus their income, but also use

resources in a more efficient and ecofriendly way.

Harvest workers

Corporate Governance

Corporate Governance Report and Declaration

tion of compliance was issued to the effect that the

on Corporate Governance1

company complies almost fully with the code’s rec

Responsible corporate governance has always been

ommendations.

of great importance at KWS SAAT SE. Since it was

founded 160 years ago, our company’s successful

You can find detailed information on corporate gov

development has been based on thinking in the long

ernance, also with the contents in accordance with

term and acting in terms of sustainability. The Exec

Clause 3.10 of the German Corporate Governance

utive Board and the Supervisory Board run and ac

Code, in our corporate governance report (which

company KWS with the goal of ensuring that it creates

is also the declaration on corporate governance in

sustainable value added. They once again examined

accordance with Section 289a of the German Com

in the year under review whether the company com

mercial Code (HGB)), which is available in full on our

plies with the stipulations of the German Corporate

website at www.kws.com/ir. You can find the com

Governance Code. As a result, the following declara

pensation report on the next page.

Compliance Declaration in Accordance with Section 161 AktG (German Stock Corporation Act)1

The Executive Board and the Supervisory Board of

In accordance with Clause 5.4.1 (2) Sentence 1

KWS SAAT SE declare, in compliance with Section

of the German Corporate Governance Code, the

161 AktG (German Stock Corporation Act), that the

Supervisory Board is to set a limit on the length of

company has complied with the recommendations

time members can serve on the Supervisory Board.

of the German Corporate Governance Code in the

This recommendation is not complied with, since in

version dated May 5, 2015, since the last compliance

a business with a tradition of family ownership like

declaration in October 2015, and does now comply,

KWS it would significantly restrict the rights of the

and will comply with them in the future, with the fol

family shareholders, who hold a majority stake in the

lowing exceptions:

company.

In accordance with Clause 4.2.2 (2) Sentence 3

Clause 7.1.2 Sentence 4 of the German Corporate

of the German Corporate Governance Code, the

Governance Code states that the consolidated finan

Supervisory Board shall consider the relationship

cial statements shall be publicly accessible within 90

between the compensation of the Executive Board

days of the end of the fiscal year and interim reports

and that of senior management and the workforce

within 45 days of the end of the reporting period.

overall, particularly in terms of its development over

KWS SAAT SE publishes its consolidated financial

time, whereby the Supervisory Board shall determine

statements and interim reports within the period of

how senior managers and the relevant staff are to

time defined in the regulations for the Prime Stan

be differentiated. This recommendation is not com

dard of the German Stock Exchange. The company’s

plied with, since the compensation of the Executive

seasonal course of business means that it cannot

Board, senior management and staff is based on

ensure compliance with the recommended periods in

variable criteria that defy rigid definition. These cri

the German Corporate Governance Code.

teria include not only generally applicable yardsticks

such as degree of responsibility, tasks, personal

Einbeck, October 2016

performance, expertise and the like for the Executive

Board, but also the company’s economic situation,

The Supervisory Board

The Executive Board

success and future prospects.

1 Not part of the audited Combined Management Report

60 Combined Management Report | Corporate Governance

Annual Report 2015/2016 | KWS Group
Compensation Report

The basic annual salary in the year under review for all

The compensation report contains explanations on

Executive Board members was €300 thousand. The Chief

the salient features, structure and level of the com

Executive Officer receives an extra “CEO bonus” of 25%

pensation paid to members of the Executive Board

on top of the basic annual salary. The basic compensa

and the Supervisory Board of KWS SAAT SE. It is

tion is paid as a monthly salary. The basic fixed annual

based on the relevant statutory provisions and ori

salary of Dr. Peter Hofmann was adjusted to the level of

ented toward the pertinent recommendations of the

the basic salary of the other Executive Board members

German Corporate Governance Code.

(€300 thousand per fiscal year) effective July 1, 2015;

the other components of Dr. Hofmann’s compensation

Compensation for members of the Executive

remain unchanged. Pursuant to the resolution adopted

Board

by the Supervisory Board on December 17, 2015, Dr. Pe

The compensation of members of the Executive

ter Hofmann was reappointed for a term of five years

Board was set by the Supervisory Board and ap

effective January 1, 2016, before the end of his existing

proved by the Annual Shareholders’ Meeting. It is

term. The other components of his compensation were

based on the size and activity of the company, its

adjusted to fully match that of the other Executive Board

economic and financial situation and the level and

members at that time.

structure of compensation for managing board

members at comparable companies.

The total compensation of the Executive Board

comprises the following components:

1. A basic fixed annual salary (if applicable with

a CEO bonus)

2. Fringe benefits

3. A variable payment in the form of a

performancerelated bonus

4. A variable payment in the form of a longterm

incentive (LTI) based on the KWS stock price

5. Any special payments

6. Pension arrangements

The performancerelated bonus (including fringe

benefits), the LTI payment and the total compensa

tion of every member of the Executive Board is limit

ed individually to a maximum overall amount.

The all-important pellet. Every single seed embodies our knowledge
and mission to deliver maximum performance and quality.

Corporate Governance | Combined Management Report

KWS Group | Annual Report 2015/2016Apart from these fixed salaries, there is also

of the Executive Board is obligated to invest a freely

nonmonetary compensation in the form of fringe

selectable amount ranging between at least 20%

benefits (such as a company car and a mobile

and at most 50% of the gross performancerelated

phone), contributions to health and nursing care

bonus payment in shares of KWS SAAT SE. The

insurance, and accident insurance in favor of mem

longterm incentive (LTI) is paid in the form of cash

bers of the Executive Board.

compensation after a holding period of five years. It

will be paid for the first time at the beginning of 2017.

The variable payment for Executive Board members

This payment is calculated on the basis of the share’s

(performancerelated bonus) depends on the compa

performance over the holding period and on the aver

ny’s performance over three years – the sustainable

age return on sales (ROS, based on segment report

net income. It is calculated on the basis of a fixed per

ing), measured as the ratio of operating income to

centage of the average net income of the KWS Group

net sales. The LTI payment is limited to a maximum

for the past three fiscal years. The object of that is for

of oneandahalf times (two times for Dr. Hagen

the compensation to reflect the company’s perfor

Duenbostel) of the capital used to acquire the shares.

mance, positive or negative. Additional payments for

any duties performed in subsidiaries and associated

Additional special payments were not granted to the

companies are offset against the variable payment

members of the Executive Board in the year under

(performancerelated bonus). This – including the

review.

fringe benefits – is limited to an amount of €500 thou

sand for each Executive Board member (€300 thou

Pension obligations are granted in the form of a

sand for Dr. Peter Hofmann until December 31, 2015)

direct obligation to provide benefits, with the annual

per fiscal year. If sustainable net incomes of more than

anticipated pensions ranging between €13 thousand

€100 million in each year are generated in two succes

and €130 thousand, and a defined contribution plan.

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

In fiscal 2015/2016, €306 (279) thousand was paid to

€600 thousand for each Executive Board member as

a provident fund backed by a guarantee for pension

of the following fiscal year.

commitments to members of the Executive Board. A

further €423 (143) thousand was allocated to the pen

Since fiscal year 2010/2011, there has also been

sion provisions in accordance with IAS 19 (of which

a stock-based bonus system (the first reference

€24 thousand was interest expenses and €399 thou

point for which was in January 2012). It is intended

sand from revaluation effects). Pension provisions to

to act as a longterm incentive and thus support the

taling €1,384 (960) thousand were thus formed for the

company’s sustainable development. Every member

members of the Executive Board of KWS SAAT SE.

Pension commitments

in €

Dr. Hagen Duenbostel

Dr. Peter Hofmann

Total

06/30/2016

06/30/2015

Interest
expenses

Revaluation
effects

1,015,005.00

682,379.00

17,059.00

315,567.00

368,618.00

278,114.00

6,953.00

83,551.00

1,383,623.00

960,493.00

24,012.00

399,118.00

62 Combined Management Report | Corporate Governance

Annual Report 2015/2016 | KWS GroupThe total compensation to be reported for the Ex

basic annual salary, including fringe benefits, 45.4%

ecutive Board in accordance with Section 314 (1)

(46.8%) by annual variable components and 15.8%

No. 6a of the German Commercial Code (HGB) in

(17.6%) by multiyear variable components. The ta

conjunction with German Accounting Standard No.

bles below provide an overview of the total compen

17 (GAS 17) was €3,531 (3,803) thousand in fiscal

sation granted in the fiscal year on an individualized

2015/2016. 38.8% (35.6%) was accounted for by the

basis (excluding pension costs).

Total compensation for the Executive Board 2015/2016

in €

Cash compensation

LTI FV 1

Total

LTI

Basic
compensation

Fringe
benefits

Performance-
related bonus

Total

Grant

Cost

Dr. Hagen Duenbostel

375,000.00

21,522.58

421,671.27

818,193.85 205,561.20 1,023,755.05 252,034.89

Dr. Léon Broers

300,000.00

23,126.34

421,671.27

744,797.61 205,561.20

950,358.81 202,245.34

Dr. Peter Hofmann

300,000.00

22,835.78

337,337.02

660,172.80

64,567.30

724,740.10

6,470.38

Eva Kienle

Total

300,000.00

27,966.54

421,671.27

749,637.81

82,224.48

831,862.29

20,096.09

1,275,000.00

95,451.24

1,602,350.83 2,972,802.07 557,914.18 3,530,716.25 480,846.70

Total compensation for the Executive Board 2014/2015

in €

Cash compensation

LTI FV 1

Total

LTI

Basic
compensation

Fringe
benefits

Performance-
related bonus

Total

Grant

Cost

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

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. Peter Hofmann

187,499.97

15,905.68

195,114.84

398,520.49

0.00

398,520.49

0.00

Eva Kienle

Phillip von dem
Bussche

300,000.00

26,995.92

433,588.53

760,584.45

54,366.70

814,951.15

5,449.04

135,000.00

9,131.94

282,868.06

427,000.00 159,035.30

586,035.30 232,368.96

Total

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

1 Long term incentive fair value

Compensation of former members of the Executive

Executive Board, as incurred in the year under review

Board and their surviving dependents amounted to

and in the previous year in accordance with the rec

€1,334 (1,693) thousand, of which €97 (97) thousand

ommendations in Clause 4.2.5 (3) of the German Cor

was payment under a consultancy agreement. Pen

porate Governance Code (DCGK) in the version dated

sion commitments in accordance with IAS 19 (2011)

May 5, 2015.

recognized for this group of persons amounted to

€8,027 (7,131) thousand as of June 30, 2016. The pen

The target compensation, including the agreed lower

sion commitments for three former members of the

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

Executive Board are backed by a guarantee. No loans

awards are assessed at the present value at the time

were granted to members of the Executive Board and

of acquisition of the last tranche of shares. The details

the Supervisory Board in the year under review.

on the receipts show the payments actually made

to a member of the Executive Board in fiscal years

In the tables below, we present the individual awards

2014/2015 and 2015/2016.

and receipts separately for each member of the

Corporate Governance | Combined Management Report

KWS Group | Annual Report 2015/2016
Executive Board compensation in keeping with Clause 4.2.5 (3) of the German Corporate Governance Code (DCGK)

in €

Grant

Receipt

2015/2016

2014/2015

2015/2016

2014/2015

min.

max.

Dr. Hagen Duenbostel (Chief Executive Office)

Fixed payment

Fringe benefits

Subtotal

Annual variable payment
( performancerelated bonus)

375,000.00

337,500.00

375,000.00

337,500.00

21,522.58

20,350.50

21,522.58

20,350.50

396,522.58

357,850.50

396,522.58

357,850.50

419,876.27

0.00

478,477.42

421,424.46

421,671.27

433,588.53

Total cash compensation

816,398.85

396,522.58

875,000.00

779,274.96

818,193.85

791,439.03

Multiyear variable payment

LTI 2013/2014

LTI 2014/2015

Subtotal

Pension costs1

205,561.20

0.00

433,215.59

240,839.40

1,021,960.05

396,522.58

1,308,215.59

1,020,114.36

818,193.85

791,439.03

107,059.00

98,048.00

107,059.00

98,048.00

Total compensation

1,129,019.05

503,581.58

1,415,274.59

1,118,162.36

925,252.85

889,487.03

Maximum compensation2

1,765,000.00

Dr. Léon Broers

Fixed payment

Fringe benefits

Subtotal

Annual variable payment
( performancerelated bonus)

300,000.00

23,126.34

21,902.68

23,126.34

21,902.68

323,126.34

321,902.68

323,126.34

321,902.68

419,876.27

0.00

476,873.66

421,424.46

421,671.27

433,588.53

Total cash compensation

743,002.61

323,126.34

800,000.00

743,327.14

744,797.61

755,491.21

Multiyear variable payment

LTI 2013/2014

LTI 2014/2015

Subtotal

Pension costs1

205,561.20

0.00

324,911.69

216,196.55

948,563.81

323,126.34

1,124,911.69

959,523.69

744,797.61

755,491.21

72,000.00

Total compensation

1,020,563.81

395,126.34

1,196,911.69

1,031,523.69

816,797.61

827,491.21

Maximum compensation2

Dr. Peter Hofmann

Fixed payment

Fringe benefits

Subtotal

Annual variable payment
( performancerelated bonus)

1,547,000.00

300,000.00

187,499.97

300,000.00

187,499.97

22,835.78

15,905.68

22,835.78

15,905.68

322,835.78

203,405.65

322,835.78

203,405.65

335,901.02

0.00

377,164.22

189,641.01

337,337.02

195,114.84

Total cash compensation

658,736.80

322,835.78

700,000.00

393,046.66

660,172.80

398,520.49

Multiyear variable payment

LTI 2013/2014

LTI 2014/2015

Subtotal

Pension costs1

64,567.30

0.00

102,055.60

723,304.10

322,835.78

802,055.60

393,046.66

660,172.80

398,520.49

78,953.00

60,663.00

78,953.00

60,663.00

0.00

Total compensation

802,257.10

401,788.78

881,008.60

453,709.66

739,125.80

459,183.49

Maximum compensation2

1,047,000.00

635,250.00

1 In accordance with IAS 19R from commitments for pensions and other pension benefits; this relates to costs for the company, not the actual entitlement or payment
2 The total compensation is limited individually to a maximum overall amount per fiscal year

64 Combined Management Report | Corporate Governance

Annual Report 2015/2016 | KWS Group

Executive Board compensation in keeping with Clause 4.2.5 (3) of the German Corporate Governance Code (DCGK)

in €

Eva Kienle

Fixed payment

Fringe benefits

Subtotal

Grant

Receipt

2015/2016

2014/2015

2015/2016

2014/2015

min.

max.

300,000.00

27,966.54

26,995.92

27,966.54

26,995.92

327,966.54

326,995.92

327,966.54

326,995.92

Annual variable payment
( performancerelated bonus)

419,876.27

0.00

472,033.46

421,424.46

421,671.27

433,588.53

Total cash compensation

747,842.81

327,966.54

800,000.00

748,420.38

749,637.81

760,584.45

Multiyear variable payment

LTI 2013/2014

LTI 2014/2015

Subtotal

Pension costs1

82,224.48

0.00

129,964.68

54,366.70

830,067.29

327,966.54

929,964.68

802,787.08

749,637.81

760,584.45

72,000.00

Total compensation

902,067.29

399,966.54

1,001,964.68

874,787.08

821,637.81

832,584.45

Maximum compensation2

1,247,000.00

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

Fixed payment

Fringe benefits

Subtotal

Annual variable payment
( performancerelated bonus)

Total cash compensation

Multiyear variable payment

LTI 2013/2014

LTI 2014/2015

Subtotal

Pension costs1

Total compensation

Maximum compensation2

135,000.00

9,131.94

144,131.94

282,868.06

427,000.00

159,035.30

586,035.30

135,000.00

9,131.94

144,131.94

282,868.06

427,000.00

Compensation for members of the

company’s longterm development. In keeping with

Supervisory Board

that, members of the Supervisory Board receive

The Supervisory Board’s compensation was set by

€400 for each full €0.10 by which the average con

the Annual Shareholders’ Meeting on December 17,

solidated annual earnings per share before minority

2009, and has remained unchanged since then. It

interests for the past three fiscal years, starting

is based on the size of the company, the duties and

with the fiscal year for which the compensation is

responsibilities of the members of the Supervisory

granted, exceeds the amount of €4.00. The perfor

Board and the company’s economic situation. The

mancerelated payment is limited to the amount of

remuneration includes not only a fixed payment of

the fixed payment.

€28 thousand p.a. and a fixed payment for work

on committees, but also a performancerelated

The Chairman of the Supervisory Board receives

component. This component is geared toward the

three times and his or her deputy oneandahalf

Corporate Governance | Combined Management Report

KWS Group | Annual Report 2015/2016

times the fixed compensation of an ordinary mem

– including valueadded tax – that they incur while

ber. There is no extra compensation for them for

carrying out the duties of their position.

work on committees. The Chairman of the Audit

Committee receives €25 thousand p.a. Ordinary

The compensation for the Supervisory Board in the

members of the Supervisory Board receive €5 thou

year under review was unchanged over the previous

sand p.a. for their work on the Committee for Exec

year. Total compensation was €516 thousand exclu

utive Board Affairs and €10 thousand p.a. for their

sive of value added tax. In all, 46% (46%) or €238

work on the Audit Committee. The members of the

(238) thousand of the total compensation is perfor

Supervisory Board are reimbursed for all expenses

mancerelated.

Total compensation for the Supervisory Board

in €

Dr. Andreas J. Büchting1

Dr. Arend Oetker2

Fixed

84,000.00

42,000.00

Work on
committees

Performance-
related

Total
2015/2016

Total
2014/2015

0.00

84,000.00

168,000.00

42,000.00

84,000.00

Hubertus von Baumbach3

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 ClaasMühlhäuser

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

238,000.00

40,000.00

238,000.00

516,000.00

1 Chairman
2 Deputy Chairman
3 Chairman of the Audit Committee

Disclosures in Accordance with Sections 289 (4)

Shareholders’ Meeting and exercise their voting rights

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

are authorized to exercise the voting rights conferred

and the Explanatory Report of the Executive Board

by all the shares they hold and have registered. If

members of the Executive Board or executive employ

Composition of the subscribed capital

ees have acquired shares as part of the longterm in

The subscribed capital of KWS SAAT SE is €19.8 mil

centive programs, these shares are subject to a lock

lion. It is divided into 6.6 million bearer shares. Each

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

share grants the holder the right to cast one vote at

the quarter in which they were acquired. The lockup

the Annual Shareholders’ Meeting.

period for shares that employees have acquired as

part of the Employee Stock Programs runs until the

Restrictions relating to voting rights or the

end of the fourth year as of when they are posted to

transfer of shares

the employee’s securities account.

There may be restrictions relating to voting rights or

the transfer of shares as a result of statutory or con

Direct and indirect participating interests in

tractual provisions. For example, shareholders are

excess of 10% of the voting rights

barred from voting under certain conditions pursuant

The company has been informed by shareholders of

to Section 136 of the German Stock Corporation Act

the following direct or indirect participating interests

(AktG) or Section 28 of the German Securities Trading

in the capital of KWS SAAT SE in excess of 10% of

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

the voting rights in accordance with Section 21 and

company on the basis of the shares it holds (Section

Section 22 of the German Securities Trading Act

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

(WpHG) or elsewhere:

contractual restrictions relating to voting rights or

transfer of shares. If there are no restrictions to voting

The voting shares, including mutual allocations, of

rights, all shareholders who register for the Annual

the members and companies of the families Büchting

Shareholders’ Meeting in time and have submitted

und Arend Oetker listed below each exceed 10% and

proof of their authorization to participate in the Annual

total approximately 52.5%:

66 Combined Management Report | Corporate Governance

Annual Report 2015/2016 | KWS Group■■ Dr. Drs. h. c. Andreas J. Büchting, Germany

on the Statute for a European Company (SE Regu

■■ Christiane Stratmann, Germany

■■ Dorothea Schuppert, Germany

lation), Article 46 of the Council Regulation on the

Statute for a European Company (SE Regulation)

■■ Michael C.E. Büchting, Germany

and Sections 84 and 85 AktG (German Stock Cor

■■ Annette Büchting, Germany

■■ Stephan O. Büchting, Germany

■■ Christa Nagel, Germany

■■ Bodo Sohnemann, Germany

poration Act). Section 6 of KWS SAAT SE’s Articles

of Association also contains provisions that relate to

the appointment of members of the Executive Board

by the Supervisory Board and that correspond to the

■■ Matthias Sohnemann, Germany

statutory regulations.

■■ Malte Sohnemann, Germany

■■ Arne Sohnemann, Germany

■■ AKB Stiftung, Hanover

Amendments to the Articles of Association

The company’s Articles of Association can be amend

■■ Büchting Beteiligungsgesellschaft mbH, Hanover

ed by a resolution adopted by the Shareholders’

■■ Zukunftsstiftung Jugend, Umwelt und Kultur, Einbeck

Meeting in accordance with Article 59 of the Council

■■ Kommanditgesellschaft Dr. Arend Oetker Vermö

Regulation on the Statute for a European Company

gensverwaltungsgesellschaft mbH & Co., Berlin

(SE Regulation) and Section 179 (1) AktG (German

■■ Dr. Marie Theres Schnell, Germany

Stock Corporation Act). In accordance with Article 51

■■ Johanna Sophie Oetker, Germany

of the SE Implementation Act (SEAG), Section 179 (2)

■■ Leopold Heinrich Oetker, Germany

AktG (German Stock Corporation Act) and Section

■■ Clara Christina Oetker, Germany

■■ Ludwig August Oetker, Germany

18 of the Articles of Association of KWS SAAT SE,

amendments to the Articles of Association require that

at least half the capital stock be represented and that

The voting shares, including mutual allocations, of

a resolution be adopted by the Shareholders’ Meeting

the members and companies of the families Büchting

by a simple majority of the capital stock represented in

and Arend Oetker listed above each exceed 10% and

adoption of the resolution, unless obligatory statutory

total approximately 53.1% for

regulations specify otherwise. If at least half the capital

■■ Dr. Arend Oetker, Germany

to amend the Articles of Association, the resolution

must be passed with a majority of at least twothirds

The voting shares, including mutual allocations, of

of the votes cast. The power to make amendments to

the shareholders stated below each exceed 10% and

the Articles of Association that only affect the wording

stock is not represented in adoption of the resolution

total 15.4%.

(Section 179 (1) Sentence 2 AktG) has been conferred

on the Supervisory Board in accordance with Section

■■ HansJoachim Tessner, Germany

22 of the Articles of Association of KWS SAAT SE.

■■ Tessner Beteiligungs GmbH, Goslar

■■ Tessner Holding KG, Goslar

Powers of the Executive Board, in particular in

relation to issuing or buying back shares

Shares with special rights and voting control

The Executive Board is not currently authorized to

Shares with special rights that grant powers of control

issue or buy back shares.

have not been issued by the company. There is no

special type of voting control for the participating in

Significant agreements in the event of a change

terests of employees. Employees who have an interest

of control, compensation agreements

in the company’s capital exercise their control rights

Significant agreements subject to the condition of

in the same way as other shareholders.

a change in control pursuant to a takeover bid have

not been concluded. The compensation agreements

Appointment and removal of members of the Ex-

between the company and members of the Execu

ecutive Board

tive Board governing the case of a change in control

Members of the Executive Board of KWS SAAT SE

stipulate that any such compensation will be limited

are appointed and removed in accordance with Ar

to the applicable maximum amounts specified by the

ticle 9 (1) and Article 39 (2) of the Council Regulation

German Corporate Governance Code.

Corporate Governance | Combined Management Report

KWS Group | Annual Report 2015/2016Crowd-puller

Information Events

Crowds of people normally only seen at the Annual Shareholders’

Meeting gathered at the Biotechnology Center on January 29, 2016.

Over 500 customers of KWS flocked to the Agricultural Forum

in Einbeck. As at 30 other Agricultural Forums held throughout

Germany, farmers were able to get firsthand information on

the latest topics in breeding, agricultural policy, markets and

agricultural trials. In the course of the year, KWS offers many other

opportunities for people to learn more about plant breeding and

about our company – at conferences, Field Days or trade shows,

for example. There is also great demand for tours of our headquar

ters in Einbeck. In fiscal 2015/2016, more than 7,400 visitors took

the opportunity to get a closeup insight into seed production, the

greenhouses and research labs.

KWS SAAT SE (Explanations in Accordance to the HGB)

References to KWS SAAT SE in the KWS Group’s

tains the compliance declaration in accordance with

Annual Report

Section 161 AktG (German Stock Corporation Act),

The Management Reports of KWS SAAT SE and the

has been published in the Internet at www.kws.com/ir.

KWS Group are combined. The declaration on corpo

The following disclosures are identical to those of the

rate governance in accordance with Section 289a of

KWS Group and are printed in this Annual Report:

the German Commercial Code (HGB), which also con

References to KWS SAAT SE in the Annual Report of the KWS Group

Disclosures

On the Compensation Report, in accordance with Section 289 (4) of the German Commercial
Code (HGB) and explanatory report of the Executive Board

On business activity, corporate strategy, corporate controlling and management, as well as
explanations on business performance

On the dividend

On research and development

On the sustainability report

Page(s)

61 to 67

22 to 48

27 to 29

KWS SAAT SE is the parent company and holding

multiplies and distributes sugarbeet and corn

company of the KWS Group. It is responsible for

seed. It finances basic research and breeding of

strategic management and, among other things,

the main range of varieties at the KWS Group and

provides its subsidiaries with new varieties every

year for the purpose of multiplication and distri

bution. KWS SAAT SE and KWS LOCHOW GMBH

concluded a profit and loss transfer agreement on

October 15, 2015, which will apply retroactively as

of July 1, 2015. The Shareholders’ Meeting of KWS

LOCHOW on October 15, 2015, and the Annual

Shareholders’ Meeting of KWS SAAT SE on Decem

ber 17, 2015, approved conclusion of the profit and

loss transfer agreement; as a result, KWS LOCHOW

paid a profit of €10.6 million to the company for the

first time for fiscal year 2015/2016 on the basis of the

agreement. As announced in the last annual report,

KWS MAIS GMBH was merged with KWS SAAT SE

effective July 1, 2015. The profit from the merger

was €67.7 million and is recognized as extraordinary

income. The reintegration of KWS MAIS GMBH

marked one of several planned steps in simplify

ing the Group’s structure in order to make internal

processes more efficient and reduce our adminis

trative overhead. The structure of our segments

Breeding new varieties and developing new technologies takes a long
time – and calls for focus and perseverance.

70 Combined Management Report | KWS SAAT SE (Explanations in Accordance to the HGB)

Annual Report 2015/2016 | KWS Groupwas not affected by this measure. In order to permit

ties to banks to €225.1 (150.0) million, mainly due to the

better comparability, the figures from the previous

issue of a further borrower’s note loan of €70.0 million.

year include the relevant contributions by KWS

In addition, liabilities to affiliated companies rose to

MAIS GMBH. More information is published in the

€237.3 (161.7) million, mainly due to financing activities.

annual financial statements of KWS SAAT SE at

KWS SAAT SE’s total liabilities were €493.0 (345.6)

www.kws.de/ir (German only).

million.

Earnings

Employees

KWS SAAT SE’s net sales increased in fiscal

An average of 1,424 (1,326) people were employed at

2015/2016 by 1.4% to €458.0 (451.8) million. This rise

KWS SAAT SE in the year under review, of whom 116

is mainly attributable to the increase in revenue from

(124) were trainees and interns.

sugarbeet seed and the positive performance of win

ter rapeseed business. Research and development

Risks and opportunities

expenditure, which is pooled at KWS SAAT SE, was

The risks and opportunities at KWS SAAT SE are es

increased to €158.0 (155.1) million. Selling expenses

sentially the same as at the KWS Group. It shares the

fell slightly to €59.2 (61.3) million. Most of the admin

risks of its subsidiaries and associated companies in

istrative functions for the KWS Group are located in

accordance with its respective stake in them. You can

KWS SAAT SE. Administrative expenses were €57.0

find a detailed description of the opportunities and

(55.9) million. The balance of other operating income

risks and an explanation of the internal control and risk

and other operating expenses rose by €0.9 million

management system (Section 289 (5) of the German

to €33.2 million. Overall, KWS SAAT SE’s operating

Commercial Code (HGB)) on pages 49 to 55.

income was thus €18.1 (8.4) million. Net financial in

come/expenses is made up of the net income from

Forecast report

equity investments from eight (seven) companies

KWS SAAT SE generates the main part of its net sales

and the interest result. It fell to €18.0 (36.7) million, in

from sugarbeet and corn seed business and royalties

particular due to expenses from operational potato

from basic corn seed. The further development of

business and a rise in interest expense. Taking into

sugarbeet seed business depends, to a major extent,

account tax expenditures, net income for the year

on developments in our growth markets in Eastern

was €100.7 (32.5) million.

Europe and cultivation areas in our key markets. We

currently anticipate a slight increase in net sales from

Assets and financial situation

this business. Corn business will probably increase

KWS SAAT SE’s total assets increased in the year

slightly as well, with the result that, all in all, we expect

under review by 21.8% to €885.2 (727.0) million. Fixed

KWS SAAT SE to grow its net sales slightly year on

assets at the balance sheet date were €485.4 (420.8)

year. KWS SAAT SE’s operating income is mainly im

million or 54.8% (57.9%) of total assets. The increase

pacted by income from European sugarbeet and corn

in fixed assets is mainly due to a rise in intangible as

business, the costs of central Group functions and the

sets and financial assets. At the same time, current

KWS Group’s crosssegment research and develop

assets rose by 30.6% to €398.4 (305.1) million, mainly

ment activities. In view of the anticipated challenging

due to the increase in cash and cash equivalents to

market environment in the EU, we assume at present

€105.1 (12.8) million. Inventories rose by 13.5% to €67.0

that income from corn and sugarbeet business will

(59.0) million, while receivables and other assets fell

decline slightly. That, along with a slight increase in

to €206.4 (226.2) million. KWS SAAT SE’s equity in

costs for the central Group functions, means that

creased to €266.4 (253.0) million, giving an equity ratio

KWS SAAT SE’s EBIT is expected to fall slightly.

of 30.1% (34.8%). There was an increase in the liabili

KWS SAAT SE (Explanations in Accordance to the HGB) | Combined Management Report

KWS Group | Annual Report 2015/2016Annual Financial Statements
for the KWS Group 2015/2016

74 Statement of Comprehensive Income

75 Balance Sheet

76 Statement of Changes in Equity

78 Cash Flow Statement

79 Notes for the KWS Group 2015/2016

113

119

120

123

1. General Disclosures

2. Disclosures on the Annual Financial Statements

3. Segment Reporting for the KWS Group

4. Notes to the Balance Sheet

5. Notes to the Income Statement

6. Notes to the Cash Flow Statement

7. Other Notes

8. Declaration by Legal Representatives

124 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

July 1 to June 30

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 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 €)

74 Annual Financial Statements | Statement of Comprehensive Income

Note no.

2015/2016

2014/2015

(19)

1,036,774

(20)

(21)

(22)

(23)

(26)

(11)

480,864

555,910

196,818

182,360

76,402

70,372

57,938

986,015

453,498

532,517

188,991

174,627

74,756

87,960

68,686

112,764

113,417

2,662

14,347

26,466

14,784

127,548

42,271

85,277

1,621

12,401

23,747

3,722

16,689

130,106

46,058

84,048

354

–172

–18,743

–469

–18,858

–17,049

–35,907

49,370

85,261

85,277

50,681

–1,311

49,370

24,606

21,223

45,657

– 8,956

36,701

120,749

82,712

1,336

84,048

120,282

467

120,749

12.92

12.53

Annual Report 2015/2016 | KWS GroupBalance Sheet

Assets

in € thousand

Intangible assets

Property, plant and equipment

Equity-accounted financial assets

Financial assets

Noncurrent tax assets

Other noncurrent financial 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 financial 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.

06/30/2016

06/30/2015

(2)

(3)

(4)

(5)

(6)

(23)

(7)

(8)

(9)

(10)

(8)

95,098

378,639

147,511

2,192

3,382

41,039

667,957

185,783

12,496

293,881

30,679

133,224

55,451

45,070

12,090

85,661

351,856

153,018

2,465

3,976

35,910

632,912

177,990

12,344

309,665

66,973

41,211

57,549

26,732

11,756

768,674

704,220

1,436,631

1,337,132

Note no.

06/30/2016

06/30/2015

19,800

5,530

740,197

2,432

767,959

136,515

228,712

1,413

9,447

681

16,885

393,653

80,914

23,078

75,014

21,062

13,990

60,961

275,019

668,672

19,800

5,530

705,720

7,668

738,718

110,641

181,783

1,600

9,686

539

12,482

316,731

87,355

32,283

59,658

30,111

15,687

56,589

281,683

598,414

(12)

(11)

(23)

(13)

(14)

Total equity and liabilities

1,436,631

1,337,132

Balance Sheet | Annual Financial Statements

KWS Group | Annual Report 2015/2016Statement of Changes in Equity

July 1 to June 30

in € thousand

Subscribed
capital

Capital
reserve

Accumulat-
ed Group
equity from
Earnings

Parent company

Minority interest

Group equity

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

07/01/2014

Dividends paid

Net income for the year

Other comprehensive income
after tax

Total consolidated gains
(losses)

Change in shares of
minority interests

06/30/2015

Dividends paid

Net income for the year

Other comprehensive income
after tax

Total consolidated gains
(losses)

Change in shares of
minority interests

06/30/2016

19,800

5,530

662,031

–19,800

82,712

–22,230

–11,293

594

629,706

9,088

–1,021

–4

8,063

25,463

21,223

82,712

25,463

21,223

–160

–8,956

19,800

5,530

724,943

3,233

9,930

–91

–33,751

1,456

731,050

10,424

–1,878

862

–19,800

85,261

–17,395

85,261

–17,395

–469

333

–17,049

19,800

5,530

794,000

–14,162

9,461

242

–50,800

1,456

765,527

3,596

Revaluation

of defined

benefit

plans

–24,795

Other

trans-

actions

Adjustments

from currency

translation

Revaluation

of defined

benefit

plans

Other

trans-

actions

1,336

–19,800

82,712

37,570

120,282

1,336

–857

–329

–19,800

85,261

–34,580

–1,348

50,681

–1,348

3,596

–6,728

3,383

3,132

–94

1,336

–869

467

–862

7,668

–329

–1,327

–1,311

–3,596

2,432

–12

–862

–878

–857

637,769

–19,800

84,048

36,701

120,749

738,718

–20,129

85,277

–35,907

49,370

767,959

76 Annual Financial Statements | Statement of Changes in Equity

Annual Report 2015/2016 | KWS Group

Adjustments

from currency

translation

of equity-

accounted

financial

assets

–11,293

Reserve for

available-

for-sale

financial

assets

Adjustments

from currency

translation

–22,230

Statement of Changes in Equity

July 1 to June 30

in € thousand

Subscribed

capital

Capital

reserve

Accumulat-

ed Group

equity from

Earnings

07/01/2014

Dividends paid

Net income for the year

Other comprehensive income

after tax

(losses)

Total consolidated gains

Change in shares of

minority interests

06/30/2015

Dividends paid

Net income for the year

Other comprehensive income

after tax

(losses)

Total consolidated gains

Change in shares of

minority interests

06/30/2016

662,031

–19,800

82,712

–19,800

85,261

3,596

Parent company

Minority interest

Group equity

Comprehensive other

Group income

Comprehensive other
Group income

Total

Minority
interest

Comprehensive other
Group income

Total

Revaluation
of defined
benefit
plans

Other
trans-
actions

Adjustments
from currency
translation

Revaluation
of defined
benefit
plans

Other
trans-
actions

19,800

5,530

–24,795

594

629,706

9,088

–1,021

25,463

21,223

82,712

25,463

21,223

–160

–8,956

1,336

–19,800

82,712

37,570

120,282

1,336

–857

19,800

5,530

724,943

3,233

9,930

–91

–33,751

1,456

731,050

10,424

–1,878

862

–17,395

85,261

–17,395

–469

333

–17,049

19,800

5,530

794,000

–14,162

9,461

242

–50,800

1,456

765,527

–329

–19,800

85,261

–34,580

–1,348

50,681

–1,348

3,596

–6,728

3,383

3,132

–94

–4

8,063

1,336

–869

467

–862

7,668

–329

–1,327

–1,311

–3,596

2,432

–12

–862

–878

–857

637,769

–19,800

84,048

36,701

120,749

738,718

–20,129

85,277

–35,907

49,370

767,959

Statement of Changes in Equity | Annual Financial Statements

KWS Group | Annual Report 2015/2016

Cash Flow Statement

July 1 to June 30

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

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

Proceeds from disposals of intangible assets

Payments (–) for capital expenditure on intangible assets

Proceeds from disposals of financial assets

Payments (–) for capital expenditure on financial assets

Receipts from the disposal of consolidated subsidiaries and other
business units

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

Note no.

2015/2016

2014/2015

85,277

84,048

48,187

1,184

–27,351

107,297

–551

849

45,911

–1,192

– 36,704

92,063

14,027

–160

–26,973

– 72,809

19,560

25,682

125,864

1,101

–67,745

–29,699

348

–266

4,000

–92,174

–47,215

144,758

–71,066

–5,092

21,385

55,075

644

108,184

163,903

2,841

12,157

48,119

1,741

– 82,108

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

(1)

(2)

(3)

(4)

78 Annual Financial Statements | Cash Flow Statement

Annual Report 2015/2016 | KWS Group

Notes for the KWS Group 2015/2016

The KWS Group is a consolidated group as defined by the

off against each other, provided the requirements defined

relevant accounting regulations. The consolidated financial

in IAS 12 have been met. The previous year’s figures have

statements of the KWS Group as of June 30, 2016, have

been adjusted to enable better comparison.

been prepared by KWS SAAT SE in accordance with the

International Financial Reporting Standards (IFRS) pub-

Unless otherwise stated, all the figures in the Notes are

lished by the International Accounting Standards Board

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

(IASB), London, taking into account the interpretations of the

in accordance with standard commercial practice.

International Financial Reporting Interpretations Committee

(IFRIC) and in addition the commercial law regulations to be

In addition, the following standards had to be applied for

applied pursuant to Section 315 a (1) HGB (German Com-

the first time in fiscal year 2015/2016: Amendments to IAS

mercial Code).

19 (2011) – Employee Benefits: Em ployee Contributions;

Annual Improvements to the International Financial Report-

KWS SAAT SE is an international company based in

ing Standards (2010 – 2012 cycle); Annual Improvements to

Germany and has its headquarters at Grimsehlstrasse 31,

the International Financial Reporting Standards (2011 – 2013

37574 Einbeck, Germany.

cycle). The new standards and interpretations to be applied

did not result in any significant impact.

The statements were prepared under the assumption

that the operations of the company will be continued. The

The following standards and interpretations, or revisions of

accounting and measurement methods have generally

standards or interpretations, were not applied in the year

been retained without change, except for the recognition of

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

deferred tax assets and deferred tax liabilities, which – as

EU or application of them for fiscal 2015/2016 was not yet

is customary internationally – are shown after being netted

mandatory:

To be applied in the future

Financial reporting standards and interpretations

Mandatory first-time application

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

Fiscal 2016/2017

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

Fiscal 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

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

Fiscal 2016/2017

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

Fiscal 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

Amendments to IAS 12 – Recognition of Deferred Tax Assets for Unrealized Losses At the earliest in fiscal year 2017/2018

Amendments to IAS 7 – Statement of Cash Flows: Disclosure Initiative

At the earliest in fiscal year 2017/2018

Amendments to IFRS 2 – Classification and Measurement of Share-based
Payment Transactions

At the earliest in fiscal year 2018/2019

IFRS 15 – Revenue from Contracts with Customers

IFRS 9 – Financial Instruments

IFRS 16 – Leases

At the earliest in fiscal year 2018/2019

At the earliest in fiscal year 2019/2020

The impact of the standards and interpretations on the

any significant effects on the consolidated financial state-

consolidated financial statements of the KWS Group are

ments from application of new or amended standards, with

currently being examined and determined. On the basis of

the exception of application of IFRS 16 – Leases.

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

Notes for the KWS Group 2015/2016 | Annual Financial Statements

KWS Group | Annual Report 2015/20161. General Disclosures

Companies consolidated in the KWS Group

According to IAS 36, goodwill is not amortized, but test-

The consolidated financial statements of the KWS Group in-

ed for impairment at least once a year (impairment-only

clude the single-entity financial statements of KWS SAAT SE

approach). Investments in unconsolidated companies are

and its subsidiaries in Germany and other countries, as

carried at cost.

well as joint ventures and associated companies, which are

carried using the equity method, and a joint operation. A

Joint ventures are consolidated using the equity method in

company is a subsidiary if KWS SAAT SE has existing rights

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

that give it the current ability to control its relevant activi-

ture is a contractual agreement with a third party to manage

ties. Relevant activities are the activities that significantly

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

affect the company’s returns. Control therefore only exists

parties who exercise joint management have rights to the

if KWS SAAT SE has the ability to use its power to affect

net assets of the agreement.

the amount of the variable returns. Control can usually be

derived from holding a majority of the voting rights direct-

In the case of joint ventures measured in accordance with

ly or indirectly. Subsidiaries and joint ventures that are

the equity method, the carrying amount is increased or re-

considered immaterial for the presentation and evaluation

duced annually by the equity capital changes corresponding

of the financial position and performance of the Group are

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

not included. Details on the changes in the consolidated

idation of equity investments using the equity method, dif-

group are provided in Section 2. “Disclosures on the annual

ferences from first-time consolidation are treated in accor-

financial statements – Consolidated group and changes in

dance with the principles of full consolidation. The changes

the consolidated group.”

Consolidation methods

in the proportionate equity that are recognized in profit or

loss are included, along with impairment of goodwill, under

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

The single-entity financial statements of the individual sub-

the net financial income/expenses.

sidiaries included in the consolidated financial statements

and the single-entity financial statements of the joint ven-

Associated companies in which a stake between 20% and

tures and associated companies included using the equity

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

method and of the joint operation were uniformly prepared

on the basis of the accounting and measurement methods

Subsidiaries are always consolidated if such recognition is

applied at KWS SAAT SE; they were audited by indepen-

considered material for the fair presentation of the financial

dent auditors. For fully or proportionately consolidated

position and results of operations of the KWS Group. As

units acquired before July 1, 2003, the Group exercised

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

the option allowed by IFRS 1 to maintain the consolidation

receivables, liabilities and provisions are netted between the

procedures chosen to date. The goodwill reported in the

consolidated companies. Intercompany profits not realized

HGB financial statements as of June 30, 2003, was therefore

at Group level are eliminated from intra-Group transactions.

transferred unchanged at its carrying amount to the opening

Sales, income and expenses are netted between consoli-

IFRS balance sheet. For acquisitions made after June 30,

dated companies, and intra-Group distributions of profit are

2003, capital consolidation follows the purchase method by

eliminated.

allocating the cost of acquisition to the Group’s interest in

the subsidiary’s remeasured equity at the time of acquisi-

Deferred taxes on consolidation transactions recognized

tion. Any excess of interest in equity over cost is recognized

in income are calculated at the tax rate applicable to the

as an asset, up to the amount by which fair value exceeds

company concerned. These deferred taxes are aggregated

the carrying amount. Any goodwill remaining after first-time

with the deferred taxes recognized in the separate financial

consolidation is recognized under intangible assets.

statements.

80 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 1. General Disclosures

Annual Report 2015/2016 | KWS GroupMinority interests are recognized in the amount of the imput-

currency method and rounded in accordance with standard

ed percentage of equity in the consolidated companies.

commercial practice as follows:

Currency translation

■■ Income statement items at the average exchange rate for

Under IAS 21, the financial statements of the consolidated

the year;

foreign group companies that conduct their business as

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

financially, economically and organizationally indepen-

sheet date.

dent entities are translated into euros using the functional

Exchange rates for main currencies

1 EUR/

ARS

BRL

GBP

RUB

UAH

USD

Argentina

Brazil

Russia

Ukraine

USA

The following exchange rates were applied in the consoli-

dated financial statements for the main foreign currencies

relative to the euro:

Rate on balance sheet date

Average rate

06/30/2016

06/30/2015

2015/2016

2014/2015

16.67190

10.16290

13.58600

10.27994

3.61730

0.82615

71.21020

27.56354

1.11430

3.49470

0.71153

61.52060

23.54140

1.11840

4.11588

0.75290

74.54532

26.60710

1.10631

3.20855

0.75716

59.64182

20.80004

1.19175

The difference resulting from the application of annual

All estimates and assessments as part of accounting and

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

measurement are continually reviewed; they are based on

statement is taken directly to equity. According to IAS 21,

historical patterns and expectations about the future regard-

exchange differences resulting from loans to foreign subsid-

ed as reasonable in the particular circumstances.

iaries are reported in Other comprehensive income and are

not recognized in profit or loss.

Recognition of income and expenses

Net sales include sales of products and services, less

Classification of the statement of

revenue reductions. Net sales from the sale of products are

comprehensive income

realized at the time at which the opportunities and risks pass

The costs for the functions include all directly attributable

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

costs, including other taxes. Research and development

nized at the time at which the outcome of the transaction can

expenses are reported separately for reasons of transparen-

be reliably estimated in accordance with the percentage of

cy. Performance-based government grants are not deduct-

completion. Other income, such as interest, royalties and divi-

ed from the costs to which they relate, but reported gross

dends, is recognized in the period it accrues as soon as there

under other operating income.

is a contractual or legal entitlement to it.

Accounting policies

Performance-based public grants are carried under the other

Consistency of accounting policies

The accounting policies are unchanged from the previous

Operating expenses are recognized in the income statement

year.

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

operating income as part of profit/loss.

which they occur.

1. General Disclosures | Notes for the KWS Group 2015/2016 | Annual Financial Statements

KWS Group | Annual Report 2015/2016Intangible assets

impairment loss on property, plant and equipment no

Purchased intangible assets are carried at cost less

longer applies, its value is increased to up to the amount

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

that would have resulted if the impairment loss had not oc-

sary to examine whether the useful life of intangible assets

curred, taking depreciation into account. In accordance with

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

IAS 20, government grants are deducted from the costs of

Goodwill and intangible assets with an indefinite useful life

the asset. Any deferred income is not recognized.

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

year. The procedure for the impairment test is explained in

Financial instruments

the notes to the balance sheet. Intangible assets acquired

Financial instruments are, in particular, financial assets and

as part of business combinations are carried separately

financial liabilities. The financial assets consist primarily of

from goodwill if they are separable according to the defini-

bank balances and cash on hand, trade receivables, other

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

receivables, other financial assets and securities. The credit

The service life of intangible assets is as follows:

ognized in the balance sheet is net of allowances for receiv-

risk mainly comprises trade receivables. The amount rec-

Useful life of intangible assets

Breeding material, proprietary rights
to varieties and trademarks

Other rights

Software

Distribution rights

Trait licensing agreements

Property, plant and equipment

Useful life

10 years

5 – 10 years

3 – 8 years

5 – 20 years

15 years

ables 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 giv-

en 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.

Property, plant and equipment is measured at cost less

Available-for-sale financial assets are carried at fair value if

straight-line depreciation and impairment losses. In addition

that can be reliably measured. Unrealized gains and loss-

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

es, including deferred taxes, are recognized directly in the

or equipment also includes a proportion of the overheads

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

and depreciation/amortization.

Allowances are recognized immediately through the income

Useful life of property, plant and equipment

Buildings

Operating equipment and other
facilities

Technical equipment and machinery

Laboratory and research facilities

Other equipment, operating and office
equipment

Useful life

10 – 50 years

5 – 25 years

5 –15 years

5 –13 years

3 –15 years

statement. Financial assets belonging to this category of

financial instruments are measured at cost, since there is no

active market. The financial assets include shares in uncon-

solidated subsidiaries and securities classified as noncurrent

assets. They are subsequently measured at amortized cost.

Borrowings are carried at amortized cost.

The carrying amount of receivables, fixed-income securities

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

and the fixed-interest structure of the investments.

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

The financial liabilities comprise, in particular, trade payables,

they are reported as additions and disposals in the year

borrowings and other liabilities.

of purchase in the statement of changes in fixed assets.

Impairment losses on property, plant and equipment are

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

recognized according to IAS 36 whenever the recover-

interest rate is determined as present values of the payments

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

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

The recoverable amount is the higher of the fair value less

balance sheet date.

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

82 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 1. General Disclosures

Annual Report 2015/2016 | KWS GroupDerivative instruments are measured at fair value in accor-

designated hedging instruments in accordance with IAS 39.

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

They are measured at fair value. Changes in value are rec-

derivative financial instruments are essentially used to hedge

ognized in income. Securities are derecognized after being

interest rate and foreign currency risks. The fair value of the

sold on the settlement date.

derivative financial instruments is measured on the basis of

■■ Available-for-sale financial assets

the market information available on the balance sheet date

This category covers all financial assets that have not been

and using recognized mathematical models, such as present

assigned to one of the above categories. In principle, se-

value or Black-Scholes, to calculate option values, taking

curities are classed as available for sale, unless a different

their volatility, remaining maturity and capital market interest

classification is required due to the fact that they have an

rates into account. The instruments must also be classified in

explicit purpose. Equity instruments, such as shares in

a level of the fair value hierarchy.

(unconsolidated) affiliated companies, which are measured

at amortized cost, and shares held in listed companies, are

Financial instruments in level 1 are measured using quoted

also included in this category. In principle, financial instru-

prices in active markets for identical assets or liabilities. In

ments in this category are measured at their fair value in

level 2, they are measured by directly observable market

subsequent recognition. The changes to their fair value in

inputs or derived indirectly on the basis of prices for similar

subsequent recognition are recognized as unrealized gains

instruments. Finally, input factors not based on observable

and losses directly in equity in the reserve for available-for-

market data are used to calculate the value of level 3 financial

sale financial assets. The realized gains or losses are not

instruments.

recognized as profit or loss until they are disposed of. If

there is objective evidence of permanent impairment on the

Subsequent measurement of the financial instruments de-

balance sheet date, the instruments are written down to the

pends on their classification in one of the following categories

lower value. Any subsequent decreases in the impairment

defined in IAS 39:

loss are recognized directly in equity.

■■ Financial liabilities measured at amortized cost

■■ Loans and receivables

All financial liabilities, with the exception of derivative finan-

This category mainly comprises trade receivables, other

cial instruments, are measured at amortized cost using the

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

effective interest method. The liabilities are derecognized at

term securities. Loans are measured at cost. Loans that

the time they are settled or when the reason why they were

carry no interest or only low interest are measured at their

formed no longer exists.

present value. Discernible risks are taken into account by

■■ Financial liabilities at fair value

recognition of an impairment loss. After their initial recog-

This category covers derivative financial instruments that

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

have a negative market value and are categorized in prin-

sured at amortized cost using the effective interest method,

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

minus impairments. Receivables that carry no interest

Changes in value are recognized in income. Derivatives that

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

are designated hedging instruments in accordance with

months are discounted. Necessary value impairments are

IAS 39 are excluded from this provision.

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

rate impairment accounts. Receivables are derecognized

Securities are generally classified as available for sale, which

if they are settled or uncollectible. Other financial assets

is why changes in their fair values that require reporting are

are derecognized at the time they are disposed of or if they

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

have no value.

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

■■ Financial assets at fair value

fair values are directly included in the net income for the

Held-for-trading securities acquired with the intention of

period.

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

Derivate financial instruments with a positive market value

are also categorized as held for trading, unless they are

1. General Disclosures | Notes for the KWS Group 2015/2016 | Annual Financial Statements

KWS Group | Annual Report 2015/2016

Derivatives

The provisions for semi-retirement include obligations from

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

concluded semi-retirement agreements. Payment arrears and

designated as a hedging instrument. They are measured at

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

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

tions to the statutory pension insurance program are recog-

nized in the income statement. Derivatives are derecognized

nized in measuring them.

on their day of settlement.

Other provisions

Inventories and biological assets

Provisions are set up if current obligations have accrued from

Inventories are measured at the lower of cost or net realiz-

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

able value less an allowance for obsolescent or slow-moving

it must be possible to estimate the amount of the anticipated

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

obligation reliably.

sales also includes indirect labor and materials including

depreciation under IAS 2. Under IAS 41, biological assets

Provisions are measured at their expected amount or most

are measured at fair value less the estimated costs to sell.

likely amount, depending on whether they comprise a large

Immature biological assets are carried as inventories as of the

number of items or constitute a single obligation. Provisions

time they are harvested. The measurement procedure used is

are reviewed regularly and adjusted to reflect new findings or

based on standard industry value tables.

changes in circumstances. Long-term provisions are dis-

Deferred taxes

counted taking into account future cost increases and using

capital market interest rates for matching maturities, insofar

Deferred taxes are calculated in accordance with IAS 12.

as the interest effect is material.

Deferred taxes are calculated on differences between the

carrying amounts of assets and liabilities in the consolidated

Contingent liabilities

balance sheet and their tax base, and on carried-forward tax

The contingent liabilities result from debt obligations where

losses. Deferred tax assets are netted off against deferred tax

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

liabilities, provided they relate to the same tax creditor and

ligation cannot be estimated with sufficient reliability, or from

have the same due date. Deferred tax assets are recognized

obligations for loan amounts drawn down by third parties as

if it can be assumed that they will be used in future. Deferred

of the balance sheet date.

tax liabilities must be set up for all taxable temporary differ-

ences. All deferred taxes must be assessed individually at

Borrowing costs

each balance sheet date. Under IAS 12, deferred taxes are

In accordance with IAS 23, borrowing costs are capitalized if

calculated on the basis of the applicable local income tax an-

they can be classified as qualifying assets.

ticipated at the time of reversal. No discounting is carried out.

Discretionary decisions and estimates

Provisions for income taxes

The measurement approaches and amounts to be carried in

The provisions for income taxes comprise obligations from

these IFRS financial statements are partly based on estimates

current income taxes. They are measured on the basis of a

and specifically defined specifications. This relates in partic-

best-possible assessment of the future amount to be paid.

ular to:

Deferred taxes are carried in a separate balance sheet item.

■■ Determination of the useful life of the depreciable asset

Provisions for pensions and other employee benefits

■■ Definition of measurement assumptions and future results

The provisions for pensions and other employee benefits are

in connection with impairment tests, above all for capital-

calculated using actuarial principles in accordance with the

ized goodwill

projected unit credit method. Actuarial gains and losses re-

■■ Determination of the net selling price for inventories

sulting from revaluation of the net liability must be recognized

■■ Definition of the parameters required for measuring pen-

directly in equity in Other comprehensive income. If there are

sion provisions

planned assets, they are netted off against the associated

■■ Selection of parameters for the model-based measurement

obligations.

of derivatives

84 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 1. General Disclosures

Annual Report 2015/2016 | KWS Group■■ Determination whether tax losses carried forward can be

Despite careful estimates, the actual development may devi-

used

ate from the assumptions.

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

gible assets and liabilities acquired as part of a business

The Executive Board of KWS SAAT SE prepared the con-

combination and determination of the service lives of the

solidated financial statements on September 27, 2016, and

purchased intangible assets and tangible assets

released them for distribution to the Supervisory Board. The

■■ Measurement of other provisions

Supervisory Board has the task of examining the consolidat-

ed financial statements and declaring whether it approves

them.

2. Disclosures on the Annual Financial Statements

Number of companies including KWS SAAT SE

Fully consolidated

Equity method

Joint operation

Total

Domestic

Foreign

Total

Domestic

Foreign

Total

06/30/2016

06/30/2015

Consolidated group and changes in

Assets of KWS POTATO B.V. – mainly varieties, rights

the consolidated group

and the customer base – with a total carrying amount of

KWS MAIS GMBH was merged with KWS SAAT SE effec-

€3,881 thousand were sold as part of an asset deal in

tive July 1, 2015. In addition, KWS SERVICOS E PARTICI-

June 2016. The breeding station and its land are still owned

PACOES SOUTH AMERICA LTDA. acquired the remaining

by the company, whose purpose is to provide breeding ser-

shares in RIBER KWS SEMENTES S.A. in December 2015.

vices. Its distribution activities have been discontinued.

On January 25, 2016, SOCIETE DE MARTINVAL S.A.S.,

A total of 59 (62) companies were fully consolidated in the

LABOGERM S.A.R.L. and MOMONT HENNETTE S.A.

consolidated financial statements at June 30, 2016. Three

merged and the resultant company was renamed KWS

(four) joint ventures and associated companies were mea-

MOMONT S.A.S. S.A.R.L. ADRIEN MOMONT ET FILS was

sured using the equity method. One (zero) joint operation

also renamed KWS MOMONT RECHERCHE S.A.R.L. on the

has been included proportionately. This is GENECTIVE S.A.

same date.

KANT-HARTWIG & VOGEL GMBH was included in the con-

solidated companies for the first time effective April 1, 2016.

Our second sugarbeet company in the U.S. was merged

with BETASEED INC. effective April 21, 2016.

2. Disclosures on the Annual Financial Statements | Notes for the KWS Group 2015/2016 | Annual Financial Statements

KWS Group | Annual Report 2015/2016List of shareholdings in accordance with Section 313 HGB (German Commercial Code)

Fully consolidated subsidiaries1

Sugarbeet

100%

93%

100%

BETASEED INC.2
Bloomington, MN, U.S.
KWS FRANCE S.A.R.L.
Roye, France
DELITZSCH
PFLANZENZUCHT GMBH9
Einbeck, Germany
O.O.O. KWS RUS11
Lipetsk, Russia
O.O.O. KWS R&D RUS10
Lipetsk, Russia
KWS ITALIA S.P.A.
Forli, Italy
KWS POLSKA SP.Z O.O.
Poznan, Poland
KWS SCANDINAVIA A/S9
Guldborgsund, Denmark
KWS SEMILLAS IBERICA S.L.9
Zaratán, Spain
SEMILLAS KWS CHILE LTDA.
Rancagua, Chile
KWS SRBIJA D.O.O.
New Belgrade, Serbia
KWS SUISSE SA
Basle, Switzerland
BETASEED FRANCE S.A.R.L.17
Bethune, France
KWS UKRAINE T.O.V.11
Kiev, Ukraine
KWS TÜRK TARIM TICARET
A.S.8
Eskisehir, Turkey
BETASEED GMBH
Frankfurt, Germany
KWS POTATO B.V.16
Emmeloord, Netherlands
DYNAGRI S.A.R.L.15
Casablanca, Morocco
KWS Podillya T.O.V. 21
Kiev, Ukraine

Corn

100%

99%

51%

100%

KWS BENELUX B.V.
Amsterdam, Netherlands
KWS SEMENA S.R.O.
Bratislava, Slovakia
KWS MAIS FRANCE S.A.R.L.
Champol, France
KWS AUSTRIA SAAT GMBH
Vienna, Austria
KWS SJEME D.O.O.
Pozega, Croatia
KWS OSIVA S.R.O.
Velke Mezirici, Czech Republic
KWS BULGARIA E.O.O.D.
Sofia, Bulgaria
Formerly: KWS Semena
Bulgaria E.O.O.D.
AGROMAIS GMBH
Everswinkel, Germany
KWS MAGYARORSZÁG KFT.
Györ, Hungary
KWS SEMINTE S.R.L.12
Bucharest, Romania
KWS ARGENTINA S.A.
Balcarce, Argentina
RAZES HYBRIDES S.A.R.L.3
Alzonne, France
KWS MELHORAMENTO E
SEMENTES LTDA.19
Curitiba, Brazil
RIBER KWS SEMENTES S.A.20
Patos de Minas, Brazil
KWS PERU S.A.C.7
Lima, Peru
KWS R&D China LTD.14
Hefei, China

Cereals

Corporate

100 % KWS LOCHOW GMBH

Bergen, Germany

100 % KWS UK LTD.6

Thriplow, UK

100 % KWS LOCHOW

POLSKA SP.Z O.O.6
Kondratowice, Poland

100 % KWS MOMONT S.A.S.6
Mons-en-Pévèle, France
KWS MOMONT RECHER-
CHE S.A.R.L.13
Mons-en-Pévèle, France

100 %

100% KWS LANDWIRTSCHAFT

GMBH *
Einbeck, Germany
100% KWS INTERSAAT GMBH
Einbeck, Germany
100% KWS SEEDS INC.8

Bloomington, MN, U.S.

100% GLH SEEDS INC.2

Bloomington, MN, U.S.

100%

100% KWS SAATFINANZ GMBH
Einbeck, Germany
RAGIS KARTOFFELZUCHT-
UND HANDELS-
GESELLSCHAFT MBH
Einbeck, Germany

100% KWS KLOSTERGUT

WIEBRECHTSHAUSEN
GMBH
Northeim-Wiebrechtshausen,
Germany

100% EURO-HYBRID

100%

GESELLSCHAFT FÜR
GETREIDEZÜCHTUNG MBH
Einbeck, Germany
KWS SERVICOS E
PARTICIPACOES
SOUTH AMERICA LTDA.18
São Paulo, Brazil

100% KWS GATEWAY RESEARCH

100%

CENTER LLC.2
St. Louis, MO, U.S.
KWS SERVICES
DEUTSCHLAND GMBH
Einbeck, Germany

100% KWS SERVICES EAST

GMBH
Vienna, Austria

100% KWS SERVICES WEST S.L.U.

Barcelona, Spain
100% KWS SERVICES NORTH
AMERICA LLC.
Bloomington, MN, U.S.
100% BEIJING KWS AGRICULTURE

TECHNOLOGY CO., LTD.14
Beijing, China

100% KWS CEREALS USA LLC.2

Champagne, IL, U.S.
100% KWS SERVICES NORTH B.V.

100%

Rotterdam, Netherlands
KANT-HARTWIG & VOGEL
GMBH
Einbeck, Germany

Equity-accounted joint ventures1

Equity-accounted
associated companies1

Joint operation
(proportionately consolidated)1

Corn

50%

AGRELIANT GENETICS LLC. 5

49%

KENFENG – KWS SEEDS CO., LTD.

Westfield, IN, U.S.

50% AGRELIANT GENETICS INC.

Chatham, Ontario, Canada

Beijing, China

50% GENECTIVE S. A.
Chappes, France

86 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 2. Disclosures on the Annual Financial Statements

Annual Report 2015/2016 | KWS Group

Unconsolidated subsidiaries1

Sugarbeet

67%

VAN RIJN BALCAN S.R.L.15
Vulcan, Romania

Cereals

74%

LOCHOW-PETKUS BELGIUM
N.V.6
Linter, Belgium

Corn

100%

50%

KWS SEEDS THAILAND CO.,
LTD.14
Chiang Mai, Thailand
KWS R&D PRIVATE LIMITED11
Hyderabad, India
KWS PARAGUAY S.R.L.22
Asuncion, Paraguay
GENECTIVE CANADA INC.4
Montreal, Canada
GENECTIVE TAIWAN LTD.4
Taipei City, Taiwan
GENECTIVE USA CORP.4
Weldon, U.S.
GENECTIVE JAPAN K.K.4
Chiba, Japan
GENECTIVE KOREA4
Sangdaewon-dong, Korea

* 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 GENECTIVE S.A.
5 Investee of GLH SEEDS INC.
6 Subsidiary of KWS LOCHOW GMBH
7 Subsidiary of KWS CHILE LTDA. and KWS SERVICOS E PARTICIPACOES SOUTH AMERICA LTDA.
8 Subsidiary of KWS INTERSAAT GMBH and KWS SAAT SE
9 Subsidiary of KWS INTERSAAT GMBH
10 Subsidiary of O.O.O. KWS RUS
11 Subsidiary of EURO-HYBRID GMBH and KWS SAATFINANZ GMBH
12 Subsidiary of KWS SAAT SE and KWS SAATFINANZ GMBH
13 Subsidiary of KWS MOMONT S.A.S.
14 Subsidiary of EURO-HYBRID GMBH
15 Subsidiary of KWS POTATO B.V.
16 Subsidiary of RAGIS GMBH
17 Subsidiary of BETASEED GMBH
18 Subsidiary of KWS INTERSAAT GMBH and KWS SAATFINANZ GMBH
19 Subsidiary of KWS SERVICOS E PARTICIPACOES SOUTH AMERICA LTDA. and KWS INTERSAAT GMBH
20 Subsidiary of KWS SERVICOS E PARTICIPACOES SOUTH AMERICA LTDA.
21 Subsidiary of KWS UKRAINE T.O.V.
22 Subsidiary of KWS SERVICOS E PARTICIPACOES SOUTH AMERICA LTDA. and KWS MELHORAMENTO E SEMENTES LTDA.

Status: June 30, 2016

2. Disclosures on the Annual Financial Statements | Notes for the KWS Group 2015/2016 | Annual Financial Statements

KWS Group | Annual Report 2015/20163. Segment Reporting for the KWS Group

In accordance with its internal reporting system, the KWS

Cereals

Group is primarily organized according to the following

The lead company of this segment, which essentially con-

business segments:

■■ Corn

■■ Sugarbeet

■■ Cereals

■■ Corporate

cerns the production and distribution of hybrid rye, wheat

and barley, as well as oil and field seed, is KWS LOCHOW

GMBH with its four (six) foreign subsidiaries in France, the

UK and Poland.

Corporate

Apart from revenue from our farms and services for third

Considered a core competency for the KWS Group’s entire

parties, net sales from strategic projects are reported in this

product range, plant breeding, including the related biotech-

segment. The segment also assumes the costs of all central

nology research, is essentially concentrated at the parent

holding functions and expenses for long-term research proj-

company KWS SAAT SE in Einbeck. The breeding material,

ects that have not yet reached market maturity.

including the relevant information and expertise about how

to use it, is owned by KWS SAAT SE with respect to sugar-

It also includes all management services of KWS SAAT SE,

beet and corn and by KWS LOCHOW GMBH with respect

such as the holding company and administrative functions,

to cereals. Product-related R&D costs are carried directly in

which are not directly charged to the product segments or

the product segments Corn, Sugarbeet and Cereals. Cen-

indirectly allocated to them by means of an appropriate cost

trally controlled corporate functions are grouped in the Cor-

formula.

porate Segment. The distribution and production of oil and

field seed are reported in the Cereals and Corn Segments,

Segment information

in keeping with the legal entities currently involved.

The Executive Board as the main decision-making body

Description of segments

Corn

is responsible for allocating resources and assessing the

earnings strength of the business segments. The segments

and regions are defined in compliance with the internal

controlling and reporting systems (management approach).

Following the merger with KWS MAIS GMBH, the produc-

The accounting policies used to determine the information

tion and distribution activities of this segment are managed

for the segments are basically the same as used for the

by KWS SAAT SE. The activities relate to corn for grain and

KWS Group. The only exception relates to consolidation

silage corn, and to oil and field seed, and are conducted by

of the equity-accounted joint ventures that are assigned to

one (one) German company, 15 (15) foreign subsidiaries, two

the Corn Segment, namely AGRELIANT GENETICS LLC.,

(three) joint ventures, one (one) associated company and

AGRELIANT GENETICS INC. and KENFENG – KWS SEEDS

one (zero) joint operation of the KWS Group.

CO., LTD. In accordance with internal controlling practic-

es, they are included proportionately as part of segment

Sugarbeet

reporting.

The results of the multiplication, processing and distribution

activities for sugarbeet seed, as well as our seed potato

The segment net sales, segment income, depreciation and

business, are reported under the Sugarbeet Segment.

amortization, other noncash items, operating assets, oper-

Under the leadership of KWS SAAT SE, 17 (18) foreign

ating liabilities and capital expenditure on noncurrent assets

subsidiaries and two (two) subsidiaries in Germany are

by segment have been determined in accordance with the

active in this segment.

internal operational controlling structure, with the joint ven-

tures and associated company consolidated proportionately

(management approach). In order to permit better compara-

bility, they have been reconciled with the figures in the IFRS

consolidated financial statements.

88 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 3. Segment Reporting for the KWS Group

Annual Report 2015/2016 | KWS GroupSegment sales contains both net sales from third par-

Technology revenues from genetically modified properties

ties (external sales) and net sales between the segments

(“tech fees”) are paid as a per-unit royalty on the basis of

(intersegment sales). The prices for intersegment sales are

the number of units sold, due to their growing competitive

determined on an arm’s-length basis. Uniform royalty rates

importance.

per segment for breeding genetics are used as the basis.

Sales per segment

in € thousand

Corn

Sugarbeet

Cereals

Corporate

Segments acc. to
management approach

Elimination of equity-accounted
financial assets

Segments acc. to consolidated
financial statements

Segment sales

Internal sales

External sales

2015/2016

2014/2015

2015/2016

2014/2015

2015/2016

2014/2015

795,320

439,635

754,458

390,646

119,046

113,207

17,921

18,133

162

1,095

13,811

795,158

439,547

754,442

390,547

1,939

13,981

117,951

111,268

4,110

4,152

1,371,922

1,276,444

15,156

16,035

1,356,766

1,260,409

–319,992

–274,394

1,036,774

986,015

The Corporate Segment generates 77.1% (77.1%) of its sales

The Corn Segment is the largest contributor of external

from the other segments. As in the previous year, the sales

sales, accounting for 58.6% (59.9%) of external sales,

of this segment represent 0.3% of the Group’s external

followed by Sugarbeet with 32.4% (31.0%) and Cereals with

sales.

8.7% (8.8%).

Earnings, depreciation and amortization and other noncash items per segment

in € thousand

Segment earnings

Depreciation and
amortization

Other noncash items

Corn

Sugarbeet

Cereals

Corporate

Segments acc. to management
approach

Elimination of equity-accounted
financial assets

Segments acc. to consolidated
financial statements

2015/2016

2014/2015

2015/2016

2014/2015

2015/2016

2014/2015

63,570

118,571

9,028

84,184

92,998

12,019

–50,102

– 51,186

23,199

14,193

8,192

10,343

19,525

14,974

7,284

9,840

16,080

11,002

5,862

1,555

– 4,517

15,199

4,143

22,150

141,067

138,015

55,927

51,623

34,499

36,975

–28,303

–24,598

–7,740

–5,712

–21,328

8,680

112,764

113,417

48,187

45,911

13,171

45,655

Net financial income/expenses

14,784

16,689

Earnings before taxes

127,548

130,106

The income statements of the consolidated companies

Depreciation and amortization charges of €55,927

are assigned to the segments by means of profit center

(51,623) thousand allocated to the segments relate ex-

allocation. Operating income, the most important internal

clusively to intangible assets and property, plant and

parameter and an indicator of the earnings strength in the

equipment.

KWS Group, is used as the segment result. The operating

income of each segment is reported as the segment result.

The other noncash items recognized in the income

The segment results are presented on a consolidated basis

statement relate to noncash changes in the allowances on

and include all directly attributable income and expenses.

inventories and receivables, and in provisions.

Items that are not directly attributable are allocated to the

segments on the basis of an appropriate formula.

3. Segment Reporting for the KWS Group | Notes for the KWS Group 2015/2016 | Annual Financial Statements

KWS Group | Annual Report 2015/2016Operating assets and operating liabilities per segment

in € thousand

Corn

Sugarbeet

Cereals

Corporate

Segments acc. to management approach

Elimination of equity-accounted financial assets

Segments acc. to consolidated financial statements

Others

Operating assets

Operating liabilities

2015/2016

2014/2015

2015/2016

2014/2015

717,419

262,555

118,283

108,600

644,909

274,238

120,291

102,719

1,206,857

1,142,157

–240,961

–204,640

965,897

470,735

937,517

399,615

163,694

136,624

91,227

25,772

90,508

371,201

–78,981

292,220

376,452

668,672

70,233

23,490

91,213

321,560

–63,698

257,862

340,552

598,414

KWS Group acc. to consolidated financial statements

1,436,631

1,337,132

The operating assets of the segments are composed of in-

Capital expenditure on assets was increased year on year

tangible assets, property, plant and equipment, inventories,

by 20.0% to €159,711 (133,073) thousand. Capital expendi-

biological assets and trade receivables that can be charged

ture in the Corn Segment (€119,072 thousand; previous

directly to the segments or indirectly allocated to them by

year: €44,528 thousand) related mainly to the trait licensing

means of an appropriate formula.

agreement and the production plant in Ukraine. The capital

expenditure in the Sugarbeet Segment totaled €17,199 thou-

The operating liabilities attributable to the segments include

sand following €24,026 thousand in the previous year,

the borrowings reported on the balance sheet, less provi-

that of the Cereals Segment €9,174 thousand following

sions for taxes and the portion of other liabilities that cannot

€44,399 thousand in the previous year, and that of the Cor-

be charged directly to the segments or indirectly allocated

porate Segment €14,266 thousand following €20,120 thou-

to them by means of an appropriate formula.

sand in the previous year.

Investments in long-term assets by segment

in € thousand

Corn

Sugarbeet

Cereals

Corporate

Segments acc. to management approach

Elimination of equity-accounted financial assets

Segments acc. to consolidated financial statements

2015/2016

2014/2015

119,072

17,199

9,174

14,266

159,711

–60,426

99,285

44,528

24,026

44,399

20,120

133,073

– 8,061

125,012

Disclosures by region

The external net sales by sales region are broken down on

The disclosures on the regional composition of net sales,

the basis of the country where the customer is based. No

capital expenditure and operating assets have been made

individual customer accounted for more than 10% of total

in accordance with the accounting policies to be applied to

net sales in the current or past fiscal year.

the consolidated financial statements of the KWS Group,

and thus, without proportionate consolidation of the equity-

accounted financial investments.

90 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 3. Segment Reporting for the KWS Group

Annual Report 2015/2016 | KWS GroupExternal 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

A total of 65.1% (67.5%) of total sales are recorded in Europe

(including Germany).

Investments in long-term 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

2015/2016

2014/2015

223,971

450,817

(107,067)

282,999

(78,557)

(180,288)

78,986

1,036,774

223,885

441,526

(107,263)

254,709

(66,316)

(164,571)

65,895

986,015

2015/2016

2014/2015

48,945

32,220

(10,681)

15,531

(2,441)

(9,745)

2,589

99,285

33,859

64,630

(44,305)

22,834

(2,871)

(17,067)

3,689

125,012

A total of 49.3% (27.1%) of the capital spending was made in

made in North and South America, 32.5% (51.7%) in Europe

Germany. Of the further capital spending, 15.6% (18.2%) was

(ex cluding Germany) and 2.6% (3.0%) in the rest of the world.

Long-term 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

2015/2016

2014/2015

214,217

163,994

(71,889)

234,253

(37,603)

(184,839)

10,976

623,440

185,651

156,084

(67,629)

240,965

(48,073)

(181,296)

10,300

593,000

3. Segment Reporting for the KWS Group | Notes for the KWS Group 2015/2016 | Annual Financial Statements

KWS Group | Annual Report 2015/20164. Notes to the Balance Sheet

Statement of changes in fixed assets

in € thousand

Gross book values

Amortization/depreciation

Net book values

Change in
conso
lidated
compa
nies

Cur rency
trans
lation

Additions
of equity
account
ed assets

Addi
tions

Dis
posals

Dis posals
of equity
ac
counted
assets

Trans
fers

06/30/2016

07/01/2015

06/30/2016 06/30/2016

06/30/2015

Cur rency

trans

lation

Planned

additions

Value

impair

ments

Dis

posals

Trans

fers

07/01/2015

Patents, industrial
property rights
and software

Goodwill

110,543

–829

36,975

–7,712

Intangible assets

147,518

–8,541

29,538

11,507

16,558

10,037

31,645

69,747

247

23,625

5,451

29,076

1,896

6,631

6,268

1,359

4,888

6,247

116,986

28,700

145,686

56,405

5,452

61,857

–23

11,434

2,181

19,538

5,452

–23

11,434

2,181

24,990

129

50,588

66,398

28,700

95,098

54,138

31,523

85,661

6,495

295,023

80,407

–535

9,365

1,598

1,484

89,122

205,901

203,841

12,277

230,095

120,161

–506

16,097

5,921

742

130,573

99,522

91,049

–792

94,145

58,004

–623

9,110

5,552

–1,714

59,225

34,920

32,485

228

–17,295

38,298

38,296

24,481

15,023

685

657,561

258,574

–1,664

34,572

13,071

512

278,922

378,639

351,856

26,466

25,682

–5,865

155,904

378

156

2,827

8,393

370

296

8,393

147,511

153,018

635

2,192

2,465

99,576

26,466

44,477

25,682

1,223

961,979

329,194

–1,391

46,006

2,181

38,092

641

338,539

623,440

593,000

284,248

–5,331

211,210

–3,319

90,489

679

24,483

–307

610,430

–8,278

161,411

2,835

–470

–32

922,194

–17,321

07/01/2014

06/30/2015

07/01/2014

06/30/2015 06/30/2015 06/30/2014

88,375

–2,819

21,511

4,460

Goodwill

34,365

2,610

Intangible assets

122,740

–2,819

24,121

4,460

235,426

3,584

6,118

26,163

173,546

1,193

6,017

23,741

81,818

1,441

106

14,002

28,185

589

20,283

518,975

6,807

12,241

84,189

585

1,744

2,582

7,454

–399

110,543

36,975

–399

147,518

43,411

5,452

48,863

–973

10,561

3,905

–973

10,561

3,905

478

–21

56,405

5,452

61,857

54,138

31,523

85,661

44,964

28,913

73,877

14,701

284,248

72,244

1,130

8,729

1,640

–56

80,407

203,841

163,182

9,295

211,210

108,178

298

13,563

1,962

120,161

91,049

65,368

576

90,489

54,658

1,200

9,153

58,004

32,485

27,160

403

–24,171

24,483

24,481

28,183

12,183

401

610,430

235,082

2,628

31,445

10,602

258,574

351,856

283,893

134,523

21,223

–13,278

7,353

23,747

3,048

–116

182

331

12,157

779,286

25,095

23,136

96,184

23,747

13,099

12,157

161,411

2,835

922,194

8,393

348

123

8,393

153,018

126,130

370

2,465

2,700

292,686

1,778

42,006

3,905

11,181

329,194

593,000

486,600

Land and
buildings

Technical
equipment and
machinery

Operating and
office equipment

Payments on
account

Property, plant
and equipment
Equityaccounted
financial assets
Financial assets

Assets

Patents, industrial
property rights
and software

Land and
buildings

Technical
equipment and
machinery

Operating and
office equipment

Payments on
account

Property, plant
and equipment
Equityaccounted
financial assets
Financial assets

Assets

7,000

101

–7

92 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 4. Notes to the Balance Sheet

Annual Report 2015/2016 | KWS Group4. Notes to the Balance Sheet

Statement of changes in fixed assets

in € thousand

Change in

conso

lidated

compa

nies

Cur rency

trans

lation

Additions

of equity

account

Dis posals

of equity

Addi

Dis

counted

Trans

tions

ed assets

posals

assets

fers

Cur rency
trans
lation

Planned
additions

Value
impair
ments

Dis
posals

Trans
fers

07/01/2015

06/30/2016

07/01/2015

06/30/2016 06/30/2016

06/30/2015

Gross book values

Amortization/depreciation

Net book values

1,359

4,888

6,247

116,986

28,700

145,686

6,495

295,023

Intangible assets

147,518

–8,541

110,543

–829

36,975

–7,712

284,248

–5,331

211,210

–3,319

90,489

679

24,483

–307

610,430

–8,278

161,411

2,835

–470

–32

922,194

–17,321

29,538

11,507

16,558

10,037

31,645

69,747

247

56,405

5,452

61,857

–23

11,434

2,181

19,538

5,452

–23

11,434

2,181

24,990

129

50,588

66,398

28,700

95,098

54,138

31,523

85,661

80,407

–535

9,365

12,277

230,095

120,161

–506

16,097

–792

94,145

58,004

–623

9,110

228

–17,295

38,298

15,023

685

657,561

258,574

–1,664

34,572

26,466

25,682

–5,865

155,904

378

156

2,827

8,393

370

296

1,598

1,484

89,122

205,901

203,841

5,921

742

130,573

99,522

91,049

5,552

–1,714

59,225

34,920

32,485

38,296

24,481

13,071

512

278,922

378,639

351,856

8,393

147,511

153,018

635

2,192

2,465

99,576

26,466

44,477

25,682

1,223

961,979

329,194

–1,391

46,006

2,181

38,092

641

338,539

623,440

593,000

07/01/2014

06/30/2015

07/01/2014

06/30/2015 06/30/2015 06/30/2014

88,375

–2,819

21,511

4,460

Goodwill

34,365

2,610

Intangible assets

122,740

–2,819

24,121

4,460

–399

110,543

36,975

–399

147,518

43,411

5,452

48,863

–973

10,561

3,905

–973

10,561

3,905

478

–21

56,405

5,452

61,857

54,138

31,523

85,661

44,964

28,913

73,877

Patents, industrial

property rights

and software

Goodwill

Land and

buildings

Technical

equipment and

machinery

Operating and

office equipment

Payments on

account

Property, plant

and equipment

Equityaccounted

financial assets

Financial assets

Assets

Patents, industrial

property rights

and software

Land and

buildings

Technical

equipment and

machinery

Operating and

office equipment

Payments on

account

Property, plant

and equipment

Equityaccounted

financial assets

23,625

5,451

29,076

1,896

6,631

6,268

585

2,582

7,454

331

161,411

2,835

922,194

235,426

3,584

6,118

26,163

1,744

14,701

284,248

72,244

1,130

8,729

173,546

1,193

6,017

23,741

9,295

211,210

108,178

298

13,563

81,818

1,441

106

14,002

576

90,489

54,658

1,200

9,153

28,185

589

20,283

403

–24,171

24,483

518,975

6,807

12,241

84,189

12,183

401

610,430

235,082

2,628

31,445

Financial assets

3,048

–116

182

134,523

21,223

–13,278

7,353

23,747

12,157

8,393

348

123

1,640

–56

80,407

203,841

163,182

1,962

120,161

91,049

65,368

7,000

–7

58,004

32,485

27,160

24,481

28,183

10,602

258,574

351,856

283,893

Assets

779,286

25,095

23,136

96,184

23,747

13,099

12,157

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

101

4. Notes to the Balance Sheet | Notes for the KWS Group 2015/2016 | Annual Financial Statements

KWS Group | Annual Report 2015/2016(1) Assets

loss is recognized if the recoverable amount of an entity is

The statement of changes in fixed assets contains a break-

less than its carrying amount. The recoverable amount is

down of assets summarized in the balance sheet and shows

the higher of the fair value less costs to sell and the value in

how they changed in 2015/2016. Capital expenditure on prop-

use of a cash-generating unit. The impairment tests to be

erty, plant and equipment and intangible assets was €99,285

carried out for fiscal 2015/2016 determine the recoverable

(125,011) thousand. The Combined Management Report

amount on the basis of the value in use of the respective

describes the significant additions to assets. Depreciation

cash-generating unit.

and amortization and value impairments amounted to €48,187

(45,911) thousand.

(2) Intangible assets

The impairment test uses the expected future cash flows on

which the medium-term plans of the companies are based;

these plans, which cover a period of four years, have been

This item includes purchased varieties, rights to varieties

approved by the Executive Board. They are based on

and distribution rights, software licenses for electronic

historical patterns and expectations about future market

data processing and goodwill. The current additions of

development.

€29,538 (4,460) thousand related to software licenses and

patents as well as trait licensing agreements (€25,338 thou-

For the European and American markets, the key assump-

sand). Amortization of intangible assets amounted to

tions on which corporate planning is based include as-

€13,615 (14,466) thousand, of which €2,181 (3,905) thou-

sumptions about price trends for seed, in addition to the

sand were value impairments. Depending on the operation-

development of market shares and the regulatory frame-

al use of the intangible assets, these charges are included

work. Company-internal projections take the assumptions

in the selling expenses to an amount of €1,737 thousand

of industry-specific market analyses and company-related

and in the research and development costs to an amount of

growth perspectives into account.

€444 thousand.

The discount rate at the KWS Group has been derived as

One major intangible asset is the trait licensing agree-

the weighted average cost of capital (WACC) and for the

ment. Its carrying amount at the balance sheet date was

cash-generating units is 4.48% (5.46%) after tax. A growth

€24,050 thousand. Its remaining useful life is 14 years.

rate of 1.5% (1.5%) has been assumed here beyond the

detailed planning horizon in order to allow for extrapolation

The goodwill recognized as an asset relates mainly to

in line with the expected inflation rate.

the Brazilian companies RIBER KWS SEMENTES S.A. –

€15,660 (21,686) thousand; KWS MELHORAMENTO E SE-

The impairment tests conducted at the end of fiscal year

MENTES LTDA. – €2,722 (4,115) thousand; and the French

2015/2016 confirmed that the existing goodwill is not

breeding company GENECTIVE S.A. – €4,888 (4,888) thou-

impaired. Sensitivity analyses were also carried out for all

sand. In the Cereals Segment, the goodwill of KWS

cash-generating units to which goodwill is allocated. In our

MOMONT S.A.S. is recognized to an amount of €2,600

opinion, realistic changes in the basic assumptions would

(2,600) thousand and that of KWS UK LTD. to an amount of

not result in the need to recognize an impairment loss at

€1,399 (1,693) thousand.

any cash-generating unit whose goodwill is significant rela-

tive to the total carrying amount of goodwill.

In order to meet the requirements of IFRS 3 in combination

with IAS 36 and to determine any impairment of goodwill,

The impairment test for KWS POTATO B.V. in the previous

cash-generating units have been defined in line with in-

year revealed the need for a write-down, which was re-

ternal reporting guidelines. At the KWS Group, these are

flected in a reduction in the value of the intangible assets

generally the legal entities, with the exception of our potato

by €3,905 thousand. A total of €2,237 thousand has been

unit, which as a whole represents the cash-generating unit.

allocated to the research and development costs and

To test for impairment, the carrying amount of each entity is

€1,668 thousand to the selling expenses, since a number

determined by allocating the assets and liabilities, including

of varieties, customer relationships and industrial property

attributable goodwill and intangible assets. An impairment

rights were relinquished. This value impairment has been

charged to the Sugarbeet Segment.

94 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 4. Notes to the Balance Sheet

Annual Report 2015/2016 | KWS Group(3) Property, plant and equipment

classified as a significant joint venture. From the Group

Capital expenditure amounted to €69,747 (96,430) thousand

perspective, AGRELIANT GENETICS INC. was classified as

and depreciation amounted to €34,572 (31,445) thousand.

an insignificant joint venture.

The Combined Management Report describes the signif-

icant capital expenditure. Property, plant and equipment

The two joint ventures are operating units. The main busi-

– mainly assets under construction – to an amount of

ness activity of the two joint ventures is the production and

€3,111 thousand are held as security for liabilities.

sale of corn and soybean seed in North America.

(4) Equityaccounted financial assets

The following disclosures on the joint ventures in accor-

Equityaccounted joint ventures

12.B12-B13 are only slightly influenced by the insignificant

The joint ventures AGRELIANT GENETICS LLC. and AGRE-

joint ventures. If individual items of the information present-

LIANT GENETICS INC., which KWS operates together with

ed are materially influenced by the insignificant joint ven-

its joint venture partner Vilmorin, are recognized at equity.

tures, this information is presented separately.

dance with IFRS 12.21 (a) and (b) in conjunction with IFRS

In the year under review, AGRELIANT GENETICS LLC. was

Disclosures on equityaccounted joint ventures (with the partner Vilmorin)

in € thousand

Stake in the joint venture

Current assets

Thereof cash and cash equivalents1

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 comprehensive income

Comprehensive income (100%)

Comprehensive income (50%)

Group share of comprehensive income

Dividend payment

1 Thereof AGRELIANT GENETICS LLC.: €5,878 (23,594) thousand

06/30/2016

06/30/2015

50%

310,658

(23,428)

206,013

253,654

(74,624)

3,674

259,343

129,672

8,802

138,474

637,976

15,478

48,004

24,002

51,364

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

22,146

23,408

4. Notes to the Balance Sheet | Notes for the KWS Group 2015/2016 | Annual Financial Statements

KWS Group | Annual Report 2015/2016Equityaccounted associated companies

accordance with IFRS 12.21 (c) in conjunction with

The disclosures on insignificant associated companies in

IFRS 12.B16 are as follows:

Disclosures on insignificant associated companies accounted for using the equity method

in € thousand

Carrying amount for the stake in insignificant associated companies (aggregated)

Net income for the year

Other comprehensive income

Comprehensive income (100%)

06/30/2016

06/30/2015

9,059

5,029

7,120

In the year under review, this relates to our Chinese joint

account also includes other interest-bearing loans totaling

venture KENFENG – KWS SEEDS CO., LTD., which is includ-

€230 (466) thousand. The other financial assets totaling

ed in the KWS Group’s consolidated financial statements

€379 thousand are reported at their amortized cost, since

as an associated company in accordance with the equity

the fair value cannot be reliably determined.

method.

(6) Noncurrent tax assets

Proportionately consolidated joint operations

This mainly relates to the present value of the corporate

Joint operations are based on joint arrangements that al-

income tax credit balance of the German Group compa-

ways exist when the KWS Group jointly conducts operations

nies, which was last determined at December 31, 2006,

managed together with a third party pursuant to a con-

and has been paid in ten equal annual amounts since

tractual agreement. The operation is jointly managed only

September 30, 2008.

if decisions on significant activities require the unanimous

consent of the parties involved. The assets and liabilities

(7) Inventories and biological assets

and revenue and expenses from the joint operations are in-

Inventories and biological assets increased by €7,945 thou-

cluded proportionately (at 50%) in the consolidated financial

sand, or 4.2%, a figure that includes cumulative impair-

statements. The main activity of the proportionately consol-

ment losses on the net realizable value totaling €49,947

idated GENECTIVE S.A. is development of its own traits for

(51,244) thousand. Inventories to an amount of €5,225 thou-

genetically improving crops.

(5) Financial assets

sand are held as security for liabilities. Immature biologi-

cal assets relate to living plants in the process of growing

(before harvest). The field inventories of the previous year

Investments in unconsolidated subsidiaries totaling

have been harvested in full and the fields have been newly

€439 (39) thousand and shares in cooperatives, GmbHs

tilled in the year under review. Public subsidies of €1,368

and other securities classified as noncurrent assets that

(1,443) thousand, for which all the requirements were met

are of minor significance are reported, in principle, at their

at the balance sheet date, were granted for the total area

amortized cost totaling €692 (1,871) thousand since the

under cultivation of 4,240 (4,246) ha and were recognized

fair value cannot be reliably determined. Listed shares

in income. Future public subsidies depend on the further

are carried at their fair value of €452 (89) thousand. This

development of European agricultural policy.

Inventories and biological assets

in € thousand

Raw materials and consumables

Work in progress

Immature biological assets

Finished goods

06/30/2016

06/30/2015

18,041

52,206

12,496

115,536

198,279

18,263

48,921

12,344

110,806

190,334

96 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 4. Notes to the Balance Sheet

Annual Report 2015/2016 | KWS Group (8) Current receivables

Current receivables

in € thousand

Trade receivables

Current tax assets

Other current financial assets

Other current assets

06/30/2016

06/30/2015

293,881

309,665

55,451

45,070

12,090

57,549

26,732

11,756

406,492

405,702

Trade receivables were €293,881 thousand following

includes €1,386 (3,022) thousand in receivables from joint

€309,665 thousand in the previous year. This amount

ventures and joint operations.

Development of current financial assets and trade receiveables by overdue

in € thousand

06/30/2016

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

293,881

268,656

15,656

2,748

1,257

Other current
financial assets

06/30/2015

45,070

338,951

34,559

303,215

15,656

2,748

1,257

Trade receivables

309,665

254,682

45,630

3,442

2,285

Other current
financial assets

26,732

336,397

21,996

276,678

45,635

1,108

4,550

2,286

134

4,521

1,402

The already overdue trade receivables that have been partly

Receivables to an amount of €4,147 thousand are held as

written down amount to €1,043 (2,224) thousand. There are

security for liabilities.

no indications on the balance sheet date that customers

who owe trade receivables that have not been written down

The following allowances have mainly been made for possi-

and are not overdue will not meet their payment obligations.

ble risks of nonpayment of trade receivables:

Change in allowances on receivables

in € thousand

2015/2016

2014/2015

The receivables include an amount of €450 (361) thousand

due after more than one year.

07/01

Addition

Disposal

Reversal

22,627

27,393

9,466

7,305

1,317

1,219

4,040

10,852

06/30

26,736

22,627

4. Notes to the Balance Sheet | Notes for the KWS Group 2015/2016 | Annual Financial Statements

KWS Group | Annual Report 2015/2016(9) Securities

consolidated financial statements, minus dividends paid to

Securities amounting to €30,679 (66,973) thousand relate

shareholders. The differences from currency translation,

primarily to debt securities and fund shares.

the reserve for available-for-sale financial assets and the

reserve for revaluation of net liabilities/assets from defined

(10) Cash and cash equivalents

benefit plans, as well as the reserve for currency translation

Cash and cash equivalents of €133,224 (41,211) thousand

for equity-accounted financial assets, are also carried here.

consists of balances with banks and cash on hand. The

cash flow statement explains the change in this item com-

Differences from translation of the functional currency of

pared with the previous year, together with the change in

foreign business operations into the currency used by the

securities.

(11) Equity

Group in reporting (euro) are essentially carried in the item

Adjustments from currency translation. The item Revaluation

of net liabilities/assets from defined benefit plans includes

The fully paid-up subscribed capital of KWS SAAT SE is still

the actuarial gains and losses from pensions and other

€19,800 thousand. The no-par bearer shares are certificated

employee benefits. Differences from translation of the func-

by a global certificate for 6,600,000 shares. The company

tional currency of equity-accounted foreign business units

does not hold any shares of its own.

into the currency used by the Group in reporting (euro) are

essentially carried in the reserve for currency translation for

The capital reserves essentially comprise the premium ob-

equity-accounted financial assets.

tained as part of share issues.

The tax effects on other comprehensive income are as

The revenue reserves essentially comprise the net income

follows:

generated in the past by the companies included in the

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

2015/2016

2014/2015

Before
taxes

Tax effect After taxes

Before
taxes

Tax effect After taxes

–18,752

–106

–18,858

45,606

460

–106

354

–223

–18,743

–469

–24,652

–43,404

–18,743

24,606

–469

7,603

–17,049

7,603

7,497

–17,049

–35,907

21,223

–12,945

32,661

3,989

4,040

45,657

–172

24,606

21,223

–8,956

36,701

The objective of KWS’ capital management activities is to

minority interests) is €85,261 (82,712) thousand. However,

pursue the interests of shareholders and employees in ac-

there was a total dividend payout of €19,800 (19,800) thou-

cordance with the corporate strategy and earn a reasonable

sand in December 2015. This ensures the adequate inter-

return on investment. One main goal is to retain the trust

nal financing of further operating business expansion in

of investors, lenders and the market, so as to strengthen

the long term. Equity increased by €29,241 thousand to

the company’s future business development. KWS’ cap-

€767,959 (738,718) thousand. This figure includes a re-

ital management activities intend to optimize the average

duction of €19,212 thousand (previous year: increase of

cost of capital. Another goal is a balanced mix of equity

€45,829 thousand) in the reserve for currency translation

and debt capital. Consolidated income (after taxes and

for foreign subsidiaries and equity-accounted joint ventures

98 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 4. Notes to the Balance Sheet

Annual Report 2015/2016 | KWS Groupand associated companies. Please refer to the statement of

An important indicator in capital management is the equity

changes in equity for further effects not recognized in the

ratio. It was 53.5% (55.2%) at June 30, 2016, and thus at a

income statement.

Capital structure

in € thousand

Equity

Long-term financial borrowings

Other noncurrent liabilities

Short-term borrowings

Other noncurrent liabilities

Total capital

good and solid level. The capital structure is as follows:

06/30/2016

767,959

228,712

164,941

23,078

251,941

1,436,631

Share of
total capital

53.5%

Share of
total capital

55.2%

06/30/2015

738,718

181,783

134,948

32,283

249,400

1,337,132

The focus in selecting financial instruments is on financing

The accumulated interests in RIBER KWS SEMENTES

with matching maturities, which is achieved by controlling

S.A. in the previous year were €5,576 thousand and have

the maturities. Long-term financial borrowings increased by

been carried under minority interests. The voting rights

€46,929 (68,029) thousand. This is mainly due to the increase

on June 30, 2015, corresponded to 49.99%. The share of

in long-term financial loans from banks.

minority interests in this company’s net income for the year

(12) Minority interest

The acquisition of the remaining shares in RIBER KWS

The disclosures on significant minority interests in accor-

SEMENTES S.A. means that the KWS Group does not have

dance with IFRS 12.12 in conjunction with IFRS 12.B10 are

any minority interests that are assessed as being significant.

as follows for the previous year:

was €1,263 thousand.

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.,
Patos de Minas, Brazil

06/30/2015

11,152

69,164

16,259

44,300

29,971

65,804

2,525

–2,465

1,446

–2,237

2,868

4. Notes to the Balance Sheet | Notes for the KWS Group 2015/2016 | Annual Financial Statements

KWS Group | Annual Report 2015/2016In addition, DYNAGRI S.A.R.L., KWS ARGENTINA S.A.

(13) Noncurrent liabilities

and RAZES HYBRIDES S.A.R.L. have minority interests,

Noncurrent liabilities increased by €76,922 thousand. That

although these are assessed as being insignificant.

is mainly attributable to the increase in long-term financial

borrowings from banks totaling €76,178 thousand. At the

same time, other noncurrent financial liabilities decreased

by €29,249 thousand.

Noncurrent liabilities

in € thousand

Long-term provisions

Long-term borrowings

Trade payables

Deferred tax liabilities

Other noncurrent financial liabilities

Other noncurrent liabilities

The trade payables and other long-term liabilities are due for

payment in between one and five (one and five) years.

Longterm provisions

in € thousand

06/30/2015

06/30/2016

06/30/2015

136,515

228,712

1,413

9,447

681

16,885

393,653

110,641

181,783

1,600

9,686

539

12,482

316,731

06/30/2016

Changes in
the consoli
dated group,
currency

Interest
expenses
from com
pounding

Addition

Consump
tion

Reversal

Pension provisions

102,201

–186

2,538

26,356

Tax provisions

Other provisions

1,392

7,048

110,641

114

1,582

1,762

–150

2,652

29,700

4,478

1,341

501

6,320

126,431

1,636

8,448

136,515

The other provisions mainly comprise provisions by the Ger-

is assumed in Germany. The discount rate in Germany was

man companies for semi-retirement and loyalty bonuses.

1.30% compared with 2.50% the year before, 3.60% in the

The pension provisions are based on defined benefit obli-

1.05% and 3.00% in the rest of the world.

gations, determined by years of service and pensionable

compensation. They are measured using the projected unit

The following mortality tables were used at June 30, 2016:

U.S. compared with 4.60% the year before, and between

credit method under IAS 19 (2011), on the basis of as-

sumptions about future developments. The assumptions in

■■ In Germany: The 2005G mortality table of Klaus Heubeck

detail are that wages and salaries in Germany will increase

■■ Abroad: RP-2000 Mortality Table Scale AA

by 3.00% (3.00%) annually, in the U.S. by 3.75% (3.75%)

annually and in the rest of the world by 2.00% (2.00%)

A retirement age of 63 years is imputed for Germany, where-

annually. An annual increase in pensions of 2.00% (2.00%)

as a retirement age of 65 years is imputed for the U.S.

100 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 4. Notes to the Balance Sheet

Annual Report 2015/2016 | KWS GroupNature 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 insur-

the planned assets.

ance company toward three former members of the Exec-

utive Board, the planned assets of €10,217 (9,446) thou-

Life expectancy

sand correspond to the present value of the obligation. In

The present value of the defined benefit obligation from the

accordance with IAS 19 (2011), the pension commitments

plan is calculated on the basis of the best-possible estimate

are netted off against the corresponding assets (planned

using mortality tables. An increase in the life expectancy

assets).

Abroad

of the entitled employees results in an increase in the plan

liabilities.

The defined benefit obligations abroad mainly relate to pen-

Salary and pension trends

sion commitments in the U.S. Share funds and bonds were

The present value of the defined benefit obligation from the

mainly invested in to cover them. All employees who have

plan is calculated on the basis of future salaries/pensions.

reached the age of 21 are entitled to benefits. In addition,

Consequently, increases in the salary and pension of the en-

each employee must have worked at least one year and at

titled employees results in an increase in the plan liabilities.

least 1,000 working hours to earn an entitlement.

In previous years, KWS countered the usual risks of direct

The following benefits are granted from the pension plan:

obligations by converting the pension obligations from

defined benefit to defined contribution plans. As a result,

■■ An old-age pension at the age of 65

subsequent benefits will be provided by a provident fund

■■ An early retirement pension before the age of 65 – to be

backed by a guarantee. The existing obligations, which are

eligible, the employee must be at least 55 and the mini-

partly covered by planned assets, are funded from the oper-

mum vesting period must be five years

ating cash flow and are subject to the familiar measurement

■■ A pro-rata pension if the employee reaches the minimum

risks.

vesting period of five years, but is below 55

4. Notes to the Balance Sheet | Notes for the KWS Group 2015/2016 | Annual Financial Statements

101

KWS Group | Annual Report 2015/2016
The tables below show the changes in the accrued benefit

and planned assets:

Changes in accrued benefit entitlements

in € thousand

2015/2016

2014/2015

Germany

Abroad

Total

Germany

Abroad

Total

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

in € thousand

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

Fair value of the planned assets
on June 30

106,837

18,408

125,245

95,942

13,865

109,807

787

2,608

21,388

917

761

1,704

3,369

3,792

25,180

691

2,713

12,402

21,229

3,389

24,618

12,010

159

–5,013

403

–541

–124

562

–5,554

–124

392

–4,911

698

671

986

747

239

–678

2,365

501

1,389

3,384

13,388

12,757

631

–5,589

2,365

501

126,607

23,262

149,869

106,837

18,408

125,245

Germany

Abroad

Total

Germany

Abroad

Total

2015/2016

2014/2015

9,446

229

1,133

–591

13,598

23,044

601

830

–605

–485

528

–1,076

9,275

260

491

–580

10,698

19,973

603

863

–47

–485

2,309

520

444

–1,065

2,309

520

10,217

13,221

23,438

9,446

13,598

23,044

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

in € thousand

2015/2016

2014/2015

Germany

Abroad

Total

Germany

Abroad

Total

Accrued benefit entitlements from
retirement obligations on June 30

Fair value of the planned assets
on June 30

Balance sheet values on June 30

126,607

23,262

149,869

106,837

18,408

125,245

10,217

116,390

13,221

10,041

23,438

126,431

9,446

97,391

13,598

23,044

4,810

102,201

102 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 4. Notes to the Balance Sheet

Annual Report 2015/2016 | KWS GroupThe following amounts were recognized in the statement of

comprehensive income:

Effects on the statement of comprehensive income

in € thousand

Service cost

Net interest expense (+)/income (–)

Amounts recognized in the income
statement

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

Actuarial gains (–)/losses (+) due to a
change in 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

787

2,379

917

159

2015/2016

Total

1,704

2,538

Germany

Abroad

691

2,452

3,166

1,076

4,242

3,143

2014/2015

Total

1,389

2,520

3,909

698

766

–1,133

605

–528

–491

–444

21,229

3,390

24,618

12,011

159

403

562

392

747

239

12,758

631

20,255

4,397

24,652

11,912

1,033

12,945

23,421

5,473

28,894

15,055

1,799

16,854

The service cost is recognized in operating income in the

The fair value of the planned assets was split over the fol-

respective functional areas by means of an appropriate

lowing investment categories:

formula. Net interest expenses and income are carried in the

interest result.

Breakdown of the planned assets by investment category

in € thousand

Corporate bonds

Equity funds

Consumer industry

Finance

Industry

Technology

Health care

Other

Cash and cash equivalents

Reinsurance policies

Planned assets on June 30

Germany

Abroad

3,510

8,842

1,935

956

656

1,514

986

2,795

869

10,217

13,221

2015/2016

Total

3,510

8,842

Germany

Abroad

2014/2015

Total

3,646

9,071

881

9,446

3,646

9,071

2,010

1,068

698

1,396

1,337

2,562

881

13,598

23,044

869

10,217

23,438

9,446

The planned assets abroad relate mainly to the U.S. There

The following sensitivity analysis at June 30, 2016, shows

is no active market for the reinsurance policies in Germany.

how the present value of the obligation would change given

There is an active market for the other planned assets: the

a change in the actuarial assumptions. No correlations

fair value can be derived from their stock market prices. A

between the individual assumptions were taken into account

total of 82.3% (79.2%) of the corporate bonds have an AAA

in this, i.e., if an assumption varies, the other assumptions

rating.

were kept constant. The projected unit credit method used

to calculate the balance sheet values was also used in the

sensitivity analysis.

4. Notes to the Balance Sheet | Notes for the KWS Group 2015/2016 | Annual Financial Statements

103

KWS Group | Annual Report 2015/2016
Sensitivity analysis

in € thousand

Discount rate

Anticipated annual pay increases

Anticipated annual pension increase

Life expectancy

Effect on obligation in 2015/2016

Effect on obligation in 2014/2015

Change in
assumption

+/– 100
basis points

+/– 50
basis points

+/– 25
basis points

+/– 1 year

Decrease

Increase

28,975

–22,459

–1,325

1,437

–4,654

–5,471

4,846

5,592

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

The following undiscounted payments for pensions

(with their due dates) are expected in the following years:

Anticipated payments for pensions

in € thousand

2015/2016

in € thousand

2014/2015

Germany Abroad

2016/2017

2017/2018

2018/2019

2019/2020

2020/2021

5,042

4,979

4,921

5,027

4,941

2021/2022 – 2025/2026

24,333

600

686

789

834

1,083

5,465

Total

5,642

5,665

5,710

5,861

6,024

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

29,798

2020/2021 – 2024/2025

24,425

4,713

29,138

The weighted average time at which the pension obligations

have to be set up for them, since there are no further ob-

are due is 16.6 (15.2) years in Germany and 17.3 (16.0) years

ligations above and beyond payment of the contributions

abroad.

(defined contribution plans). These comprise benefits that

are funded solely by the employer and allowances for con-

Defined contribution plans

version of earnings by employees.

Apart from the above-described pension obligations, there

are other old-age pension systems. However, no provisions

The total pension costs for fiscal 2015/2016 were as follows:

Pension costs

in € thousand

Germany

Abroad

Cost for defined contribution plans

2,266

1,302

Service cost for the defined benefit
obligations

Pension costs

787

3,053

917

2,219

2015/2016

2014/2015

Total

3,568

1,704

5,272

Germany

Abroad

2,070

1,095

691

2,761

698

1,793

Total

3,165

1,389

4,554

104 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 4. Notes to the Balance Sheet

Annual Report 2015/2016 | KWS GroupIn addition, contributions of €13,724 (12,947) thousand were

obligation from salary conversion was backed by a guaran-

paid to statutory pension insurance institutions.

tee that exactly matches the present value of the obligation

of €3,581 (4,048) thousand (defined contribution plan).

The costs for defined contribution plans in Germany mainly

related to the provident fund backed by a guarantee. The

The long-term financial borrowings include loans from banks

contributions to this pension plan were €2,016 (1,649) thou-

amounting to €228,712 (152,534) thousand. They have re-

sand. The return and income from the planned assets de-

maining maturities through 2025.

pend on the reinsurance policy, which yields guaranteed in-

terest of between 1.25% and 2.25%. In addition, the benefit

(14) Current liabilities

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

Trade payables to joint ventures

Other trade payables

Trade payables

Tax liabilities

Other current financial liabilities

Other current liabilities

Shortterm provisions

06/30/2016

06/30/2015

80,914

22,684

329

87,355

31,857

308

118

23,078

32,283

74,969

75,014

21,062

13,990

60,961

1,108

58,550

59,658

30,111

15,687

56,589

275,019

281,683

in € thousand

06/30/2015

06/30/2016

Changes in
the consoli
dated group,
currency

Addition

Consump
tion

Reversal

Obligations from sales transactions

73,152

–1,249

61,121

67,463

2,677

62,884

Obligations from purchase
transactions

Other obligations

5,395

8,808

87,355

–1,773

4,242

1,220

1,792

7,869

788

3,452

70,782

71,703

742

3,321

6,740

3,884

14,146

80,914

The obligations from sales transactions essentially relate

The tax liabilities of €21,062 (30,111) thousand include

to provisions for licenses and returns. The obligations from

amounts for the year under review and the period not yet

purchase transactions include provisions for procurement

concluded by the external tax audit.

transactions, such as compensation for breeding areas. The

other obligations relate to litigation risks and other provi-

sions that cannot be assigned to the group of sales transac-

tions or the group of purchase transactions.

4. Notes to the Balance Sheet | Notes for the KWS Group 2015/2016 | Annual Financial Statements

105

KWS Group | Annual Report 2015/2016(15) Derivative financial instruments

Hedging transactions

in € thousand

Currency hedges

Interest-rate hedges

Commodity hedges

Nominal
volume

143,735

34,000

162

06/30/2016

06/30/2015

Carrying
amounts

Fair value

Nominal
volume

Carrying
amounts

Fair value

2,027

–485

2,027

–485

95,003

34,000

148

1,182

–130

1,182

–130

177,897

1,551

129,151

1,052

Of the currency hedges, hedges with a nominal volume

and the greatest business activity, is used to calculate the

of €140,625 (89,248) thousand have a remaining maturity

fair value. If this market does not exist for the asset or liabil-

of less than one year, and hedges with a nominal volume

ities in question, the market that maximizes the amount that

of €3,110 (5,755) thousand have a remaining maturity of

would be received to sell the asset or minimizes the amount

between one and five years. In the previous year, hedg-

that would be paid to transfer the liability, after taking into

es for interest-rate derivatives with a nominal volume of

account transaction costs, is used. These are active and

€19,000 thousand had a remaining maturity of less than

accessible markets for identical assets and liabilities, where

one year. Of the interest-rate derivatives, hedges with a

the fair value results from quoted prices that are observable

nominal volume of €29,000 (0) thousand will mature with-

(level 1 input factors). At the KWS Group, this relates to se-

in one to five years, and hedges with a nominal value of

curities in the category “Available-for-sale financial assets”,

€5,000 (15,000) thousand will mature in more than five years.

as well as fund shares at banks and other financial assets

The commodity hedges have remaining maturities of less

whose price is likewise quoted in active markets.

than one (one) year.

(16) Financial instruments

The level 2 input factors relate to derivative financial instru-

ments that have been concluded between KWS companies

In general, the fair values of financial assets and liabilities

and banks. The prices can thus be derived indirectly from

are calculated on the basis of the market data available on

active market prices for similar assets and liabilities. The

the balance sheet date and are assigned to one of the three

level 3 input factors cannot be derived from observable

hierarchy levels in accordance with IFRS 13. The principal

market information.

market, i.e., the market with the largest volume of trading

106 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 4. Notes to the Balance Sheet

Annual Report 2015/2016 | KWS GroupThe 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:

06/30/2016

in € thousand

Financial assets

Other noncurrent financial
assets

of which derivative
financial instruments

Trade receivables

Securities

Cash and cash equivalents

Other current financial assets

of which derivative
financial instruments

Total

06/30/2015

in € thousand

Financial assets

Other noncurrent financial
assets

of which derivative
financial instruments

Trade receivables

Securities

Cash and cash equivalents

Other current financial assets

of which derivative
financial instruments

Total

Fair values

2,192

(96)

293,881

30,679

133,224

45,070

(2,950)

505,142

Fair values

2,465

(26)

309,665

66,973

41,211

26,732

(2,976)

447,072

Financial instruments

Carrying amounts

Loans and
receivables

Financial assets
held for trading

Availableforsale
financial assets

Total
carrying
amount

(0)

293,881

133,224

42,120

(0)

469,225

(96)

2,950

(2,950)

3,046

2,192

(0)

30,679

(0)

32,871

(96)

293,881

30,679

133,224

45,070

(2,950)

505,142

Financial instruments

Carrying amounts

Loans and
receivables

Financial assets
held for trading

Availableforsale
financial assets

Total
carrying
amount

(0)

309,665

41,211

23,756

(0)

374,632

(26)

2,976

(2,976)

3,002

2,465

(0)

66,973

(0)

69,438

(26)

309,665

66,973

41,211

26,732

(2,976)

447,072

4. Notes to the Balance Sheet | Notes for the KWS Group 2015/2016 | Annual Financial Statements

107

KWS Group | Annual Report 2015/2016The fair value of financial assets (equity instruments) mea-

The fair values of securities classified as current assets are

s ured 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 to

shares in unconsolidated subsidiaries and associated com-

The fair value of derivative financial instruments is the present

panies. It is assumed that the carrying amounts are the same

values of the payments related to these balance sheet items.

as the fair values. In addition, the financial assets include

These instruments are mainly forward exchange deals. They

securities classified as noncurrent assets, whose fair value is

are measured on the basis of quoted exchange rates and

measured by their prices on the stock market (level 1).

yield curves available from the market data and allowing for

The fair value of trade receivables, other current financial

assets, and cash and cash equivalents is the same as the

The carrying amounts and fair values of the financial lia-

carrying amounts as a result of the short time in which these

bilities (financial instruments), split into the measurement

instruments are due.

categories in accordance with IAS 39, are as follows:

counterparty risks (level 2).

06/30/2016

in € thousand

Fair values

Financial
liabilities
measured at
amortized cost

Financial
liabilities held
for trading

Financial instruments

Carrying amounts

Disclo
sure 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

Other noncurrent financial liabilities

of which derivative financial instruments

Short-term borrowings

Short-term trade payables

Other current financial liabilities

of which derivative financial instruments

233,558

228,712

(0)

1,413

681

(533)

23,078

75,014

13,990

(964)

(0)

1,413

148

(0)

23,078

75,014

13,026

(0)

Total

347,734

341,391

(0)

533

(533)

964

(964)

1,497

228,712

(0)

1,413

681

(533)

23,078

75,014

13,990

(964)

342,888

108 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 4. Notes to the Balance Sheet

Annual Report 2015/2016 | KWS Group06/30/2015

in € thousand

Financial liabilities

Long-term borrowings

of which outstanding purchase price
obligations for consolidated subsidiaries

Long-term trade payables

Other noncurrent financial liabilities

of which derivative financial instruments

Short-term borrowings

Short-term trade payables

Other current financial liabilities

of which derivative financial instruments

Fair values

Financial
liabilities
measured at
amortized cost

Financial
liabilities held
for trading

Financial instruments

Carrying amounts

Disclo
sure in
acc. with
IFRS 7

Total
carrying
amount

183,428

152,534

29,249

181,783

(29,249)

1,600

539

(265)

32,283

59,658

15,687

(1,684)

(0)

1,600

274

(0)

32,283

59,658

14,003

(0)

265

(215)

1,684

(1,684)

1,949

(29,249)

(0)

1,600

539

(215)

32,283

59,658

15,687

(1,684)

29,249

291,550

Total

293,195

260,352

The fair value of long-term borrowings was calculated on the

Due to the generally short times by which trade payables

basis of discounted cash flows. To enable that, interest rates

and other financial liabilities (excluding derivatives) are due,

for comparable transactions and yield curves were used

it is assumed that their carrying amounts are equal to the

(level 2).

fair value.

The outstanding purchase price obligation for consolidated

None of the reported financial instruments will be held to

subsidiaries that was recognized in the previous year must

maturity.

be carried at the present value of the anticipated future

purchase price payments for minority interests. This was

derived from the anticipated operating income of the sub-

sidiary and a risk-adjusted discount rate (level 3).

4. Notes to the Balance Sheet | Notes for the KWS Group 2015/2016 | Annual Financial Statements

109

KWS Group | Annual Report 2015/2016The table below shows the financial assets and liabilities

measured at fair value:

Assets and liabilities measured at fair value

in € thousand

06/30/2016

06/30/2015

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

3,046

32,421

3,046

1,497

3,046

3,002

32,421

69,104

35,467

69,104

3,002

1,497

1,949

3,002

69,104

72,106

1,949

The table below presents the net gains/losses carried in the

income statement for financial instruments in each measure-

ment category:

Net gain/losses of financial instruments

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

06/30/2016

06/30/2015

–262

–1,349

–12,228

1,158

141

2,141

3,854

–10,644

–1,471

The net income from available-for-sale financial assets in-

In order to control the credit risk resulting from receivables

cludes income from equity investments in cooperatives and

from customers, a regular creditworthiness analysis is

income from securities.

conducted by the responsible credit manager in accor-

dance with the credit volume. Security is available for some

The net gains from financial assets held for trading and

of these receivables and is used depending on the local

financial liabilities held for trading solely comprise changes

circumstances. This includes, in particular, credit insurance,

in the market value of derivative financial instruments.

down payments and guarantees. In general, reservation of

The net gain/loss from loans and receivables mainly

it limits are defined for all customers. Credit risks from

includes effects from changes in the allowances for

financial transactions are controlled centrally by Corporate

ownership of goods is agreed with our customers. Cred-

impairment.

Finance/Treasury. In order to minimize risks, financial trans-

actions are exclusively conducted within defined limits with

The net losses from financial liabilities measured at amor-

banks and partners who always have an investment grade.

tized cost result mainly from interest expense.

Compliance with the risk limits is constantly monitored. The

Interest income from financial assets that are not measured

ject to the approval of the regional or divisional management

at fair value and recognized in the income statement was

and the Executive Board.

limits are adjusted depending on the credit volume only sub-

€2,278 (1,480) thousand. Interest expenses for financial

borrowings were €12,228 (10,644) thousand.

110 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 4. Notes to the Balance Sheet

Annual Report 2015/2016 | KWS GroupLiquidity is managed in the eurozone by the central Treasury

There are unutilized credit lines totaling €271 million. The

unit using a cash-pooling system. Liquidity requirements are

syndicated loan of €200 million runs until October 2019,

generally determined by means of cash planning and are

with the option of extending it up to October 2021. This loan

covered by cash and promised credit lines.

only contains one financial covenant. In the case of financial

covenants, the dynamic gearing ratio is used as a finan-

KWS SAAT SE raised a borrower’s note loan for an amount

cial indicator. Compliance with the covenants is regularly

of €70 million for financing purposes in December 2015. The

reviewed by KWS SAAT SE’s Treasury unit and reported to

tranches have a maturity of five and seven years; part of the

the banks every quarter in connection with the quarterly and

loan has a variable interest rate, but most of it (€43 million)

annual financial statements.

has a fixed interest rate.

The table below shows the KWS Group’s liquidity analysis

for nonderivative and derivative financial liabilities. The table

is based on contractually agreed, undiscounted payment

Fiscal year 2015/2016

in € thousand

flows:

Book value

Liquidity analysis of financial liabilities

06/30/2016

06/30/2016
Total

Financial liabilities

Trade payables

Other financial liabilities

251,790

257,621

76,427

13,174

76,427

13,174

Due in
> 1 year and
< 5 years

Cash flows

Due in
> 5 years

124,519

105,606

1,202

148

210

Due in
< 1 year

27,496

75,014

13,026

Nonderivative financial liabilities

341,391

347,221

115,536

125,869

105,816

Payment claim

Payment obligation

Derivative financial liabilities

1,497

Fiscal year 2014/2015

in € thousand

Book value

21,052

23,225

2,173

20,237

21,961

1,724

815

1,264

449

Liquidity analysis of financial liabilities

06/30/2015

06/30/2015
Total

Financial liabilities

Trade payables

Other financial liabilities

214,066

237,027

61,258

14,542

61,258

14,542

Due in
< 1 year

42,285

59,658

14,268

Due in
> 1 year and
< 5 years

138,416

1,189

274

Cash flows

Due in
> 5 years

56,326

411

Nonderivative financial liabilities

289,866

312,827

116,211

139,879

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

4. Notes to the Balance Sheet | Notes for the KWS Group 2015/2016 | Annual Financial Statements

111

KWS Group | Annual Report 2015/2016The cash flows of the derivative financial liabilities mainly

In order to assess the risk of interest rate changes, the

relate to forward exchange deals and include both inter-

sensitivity of interest rates to fluctuations was determined.

est payments and redemption payments. These derivative

The average rate of interest in the fiscal year was nega-

financial instruments are settled in gross.

tive. An increase in the rate of interest of one percentage

The following sensitivity analyses show the impact on

interest income canceling each other out (previous year:

income and equity. The calculated figures relate to the port-

additional income of €0.1 million); equity would therefore not

folio at the balance sheet date and show the hypothetical

be impacted (previous year: an improvement of €0.1 million).

point would result in additional interest expense and higher

effect for one year.

A reduction in the rate of interest to zero percentage points

would add a further €0.6 (1.1) million in income to the interest

In order to assess the risk of exchange rate changes, the

result. Equity would increase by €0.4 (0.7) million in the

sensitivity of a currency to fluctuations was determined.

event of such a change in the rate of interest.

After the euro, the US dollar is the most important currency

in the KWS Group. All other currencies are of minor impor-

The Management Report addresses possible risks resulting

tance. The average exchange rate in the fiscal year was

from agreements regarding financial dependencies.

1.11 (1.19) USD/EUR. If the US dollar depreciated by 10%, the

financial instruments would be worth €199 (233) thousand. If

(17) Contingent liabilities

the US dollar appreciated by 10%, the financial instruments

As in the previous year, there are no contingent liabilities to

would have a value of €244 (285) thousand. The net income

report at the balance sheet date.

for the year and equity would change accordingly.

Due to seasonally related fluctuations in borrowing require-

There was a €13,211 (11,875) thousand obligation from

ments, the impact of changes in market interest rates is cal-

uncompleted capital expenditure projects, mainly relating

culated across the board on the basis of the current interest

to property, plant and equipment. The largest item is the

(18) Other financial obligations

result.

obligations from investments of €2.0 million in expanding the

greenhouse complex and of €1.9 million in expanding the

Forum at Einbeck.

Obligations under rental agreements and leases

in € thousand

Due within one year

Due between 1 and 5 years

Due after 5 years

06/30/2016

06/30/2015

16,520

21,353

6,002

43,875

15,063

20,788

7,530

43,381

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 €5,556 (4,544) thousand was paid in the

112 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 4. Notes to the Balance Sheet

Annual Report 2015/2016 | KWS Group5. Notes to the Income Statement

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

2015/2016

2014/2015

in € millions % of sales in € millions % of sales

1,036.8

480.9

555.9

196.8

182.4

76.4

70.4

57.9

112.8

100.0

46.4

53.6

19.0

17.6

7.4

6.8

5.6

10.9

986.0

453.5

532.5

189.0

174.6

74.8

88.0

68.7

113.4

100.0

46.0

54.0

19.2

17.7

7.6

8.9

7.0

11.5

1.7

Net financial income/expenses

14.8

1.4

16.7

Result of ordinary activities

127.6

12.3

130.1

13.2

Taxes

Net income for the year

Share of minority interest

Net income after minority interest

(19) Net sales and function costs

By product category

in € thousand

Certified seed sales

Royalties income

Basic seed sales

Services fee income

Other sales

42.3

85.3

0.0

85.3

4.1

8.2

0.0

8.2

46.1

84.0

1.3

82.7

4.7

8.5

0.1

8.4

2015/2016

2014/2015

918,471

877,494

73,006

19,411

3,513

22,373

1,036,774

72,626

14,318

780

20,797

986,015

5. Notes to the Income Statement | Notes for the KWS Group 2015/2016 | Annual Financial Statements

113

KWS Group | Annual Report 2015/2016By region

in € thousand

Germany

Europe (excluding Germany)

North and South America

Rest of world

2015/2016

2014/2015

223,972

450,817

282,999

78,986

1,036,774

223,885

441,526

254,709

65,895

986,015

For further details of sales, see segment reporting. Sales are

The cost of sales increased by 6.0% to €480,864

recognized when the agreed goods or services have been

(453,498) thousand, or 46.4% (46.0%) of sales. The total

supplied and the risk and title pass to the buyer. Any rebates

cost of goods sold was €290,480 (272,836) thousand.

or discounts are taken into account.

July 1 to June 30

in € thousand

Impairment losses

Decreases in impairment loss

The impairment losses on inventories and the decreases

in the impairment loss, which are carried as a reduction in

the cost of materials in the period, are as follows for each

segment:

Total

9,350

6,777

The €7,827 thousand increase in selling expenses to

amounted to €182,360 (174.627) thousand. Development

€196,818 (188,991) thousand is attributable to the creation

costs for new varieties are not recognized as an asset

and expansion of distribution structures. This is 19.0% of

because evidence of future economic benefit can only be

net sales, down from 19.2% the year before.

provided after the variety has been officially certified.

Research and development is recognized as an expense

General and administrative expenses increased by

in the year it is incurred; in the year under review, this

€1,646 thousand to €76,402 thousand, representing 7.4%

of sales, after 7.6% the year before.

(20) Other operating income

July 1 to June 30

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

2015/2016

2014/2015

445

6,748

28,050

4,636

5,924

8,925

132

15,512

70,372

877

6,427

36,640

10,852

4,845

8,227

862

19,230

87,960

The other operating income mainly comprises foreign ex-

other operating income. The performance-based govern-

change gains and income from interest rate hedges, as well

ment grants mainly relate to breeding allowances and farm

as income from the reversal of provisions and miscellaneous

payments.

114 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 5. Notes to the Income Statement

Annual Report 2015/2016 | KWS Group(21) Other operating expenses

July 1 to June 30

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

2015/2016

2014/2015

944

8,263

3,293

28,986

1,294

1,741

239

13,178

57,938

1,712

8,478

44,304

717

1,199

238

12,030

68,686

In the year under review, allowances for receivables

€7,244 (2,591) thousand at the Sugarbeet Segment and

and counterparty defaults of €4,132 (5,644) thousand

€180 (251) thousand at the Cereals Segment.

were recognized as an expense at the Corn Segment,

(22) Net financial income/expenses

July 1 to June 30

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

Income from equity investments

Gain from revaluation of the existing shares in SOCIETE DE MARTINVAL S.A.

Net income from equity investments

Net financial income/expenses

2015/2016

2014/2015

2,618

11,679

2,547

114

–11,685

26,466

26,469

14,784

1,480

9,709

141

2,518

158

–10,780

23,747

3,722

27,469

16,689

Net income from equity investments fell year on year by

result of €–11,685 (–10,780) thousand, net financial

€1,000 thousand. Income from equity-accounted financial

income/expenses fell by €1,905 thousand to €14,784

assets rose from €23,747 thousand to €26,466 thousand,

(16,689) thousand. The interest effects from pension pro-

but was not able to fully compensate for the non-recur-

visions comprise interest expenses (compounding) and the

ring effect from remeasurement of the existing shares in

planned income.

SOCIETE DE MARTINVAL S.A. Together with an interest

5. Notes to the Income Statement | Notes for the KWS Group 2015/2016 | Annual Financial Statements

115

KWS Group | Annual Report 2015/2016(23) Taxes

Income tax expense is computed as follows:

Income tax expenses

in € thousand

Actual income taxes

In Germany

Abroad

Thereof from previous years

Deferred taxes

In Germany

Abroad

Income taxes

2015/2016

2014/2015

40,803

4,666

36,137

–267

1,468

2,831

–1,363

42,271

51,954

15,723

36,231

294

–5,896

–634

–5,262

46,058

KWS pays tax in Germany at a rate of 29.1%. Corporate in-

German Group companies carried these claims as assets

come tax of 15.0% (15.0%) and solidarity tax of 5.5% (5.5%)

at their present value totaling €2,470 (3,706) thousand at

are applied uniformly to distributed and retained profits. In

June 30, 2016. A total of €1,236 (1,235) thousand was re-

addition, trade tax is payable on profits generated in Germa-

covered in the year under review and recognized directly in

ny. Trade income tax is applied at a weighted average rate of

equity.

13.3% (13.3%), resulting in a total tax rate of 29.1% (29.1%).

The profits generated by Group companies outside Ger-

The “Law on Tax Measures Accompanying Introduction

many are taxed at the rates applicable in the country in

of the Societas Europaea and Amending Further Tax

which they are based. The tax rates in foreign countries vary

Regulations” (SEStEG), which was passed at the end of

between 10.0% (10.0%) and 39.0% (39.0%).

2006, means that the corporate income tax credit bal-

ance at December 31, 2006, can be realized. It will be paid

The deferred taxes that are recognized relate to the follow-

out in ten equal annual amounts from 2008 to 2017. The

ing balance sheet items and tax loss carryforwards:

Deferred taxes

in € thousand

Intangible assets

Property, plant and equipment

Financial assets

Inventories

Current assets

Noncurrent liabilities

of which pension provisions

Current liabilities

Deferred taxes recognized (gross)

Tax loss carryforward

Consolidations

Setting off

Deferred taxes recognized (net)

Deferred tax assets

Deferred tax liabilities

2015/2016

2014/2015

2015/2016

2014/2015

786

612

1,738

8,122

1,618

27,549

(22,734)

14,463

54,888

5,588

1,249

–20,686

41,039

273

515

1,655

9,645

4,760

18,145

(15,754)

11,547

46,540

6,660

1,119

–18,409

35,910

5,957

17,703

1,013

4,026

1,420

(11)

8,118

15,375

187

3,363

954

(92)

30,122

28,085

–20,686

–18,409

9,447

9,686

There is a deferred tax expense of €1,616 (1,308) thousand

from the allowance for deferred taxes on tax loss carryfor-

No deferred taxes were formed for tax loss carryforwards

wards and temporary differences in the year under review.

totaling €24,987 (13,595) thousand that have not yet been

The write-up of deferred taxes results in deferred tax

utilized. Of these, €4,627 (5,266) thousand must be utilized

income of €95 (0) thousand.

within a period of 5 years and €5,715 (0) thousand within a

116 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 5. Notes to the Income Statement

Annual Report 2015/2016 | KWS Group
period of nine years. Low carryforwards totaling €14,645

assumed that the companies in question will post taxable

(8,330) thousand can be utilized without any time limit.

profits in the future. The fact is taken into account here that

the KWS Group may realize income with a delay due to the

No deferred taxes were formed for deductible temporary

long-term nature of research and development spending.

differences totaling €543 (1,540) thousand.

The reconciliation of the expected income tax expense to

Temporary differences of €120,336 thousand are connected

the reported income tax expense is derived on the basis of

to shares in subsidiaries for which no deferred tax liabilities

the consolidated income before taxes and the nominal tax

are formed pursuant to IAS 12.39.

rate for the Group of 29.1% (29.1%), taking into account the

In the year under review, there were surpluses of deferred

tation in the tax reconciliation has been changed and the

tax assets from temporary differences and loss carryfor-

previous year’s figures have been adjusted accordingly.

wards totaling €30,677 (13,864) thousand at Group com-

panies that made losses in the past period or the previous

Other taxes, primarily real estate tax, are allocated to the

period. These were considered recoverable, since it is

relevant functions.

following effects. In order to improve clarity, the presen-

Reconciliation of income taxes

in € thousand

Earnings before income taxes

Expected income tax expense1

Reconciliation with the reported income tax expense

Differences from the Group`s tax rate

Effects of changes in the tax rate

Tax effects from:

Expenses not deductible for tax purposes and other additions

tax-free income

other permanent deviations

Reassessment of the recognition and measurement of deferred tax assets

Tax credits

Taxes relating to previous years

Other effects

Reported income tax expense

Effective tax rate

1 Tax rate in Germany: 29.1%

2015/2016

2014/2015

127,548

37,148

11,709

–393

4,255

–13,155

–330

3,567

–245

–2,385

2,100

42,271

33.1%

130,106

37,861

4,228

6,654

–5,573

–778

3,646

–313

–79

412

46,058

35.4%

(24) Personnel costs/employees

Personnel costs went up by €15,310 thousand to

July 1 to June 30

in € thousand

Wages and salaries

Social security contributions,
expenses for pension plans
and benefits

2015/2016

2014/2015

188,170

176,088

44,013

40,785

232,183

216,873

€232,183 thousand, an increase of 7.1%. The number of

employees increased by 152 to 4,843, or by 3.2%.

Compensation increased by 6.9% from €176,088 thousand

in the previous year to €188,170 thousand. Social security

contributions, expenses for pension plans and benefits

were €3,228 thousand higher than in the previous year.

5. Notes to the Income Statement | Notes for the KWS Group 2015/2016 | Annual Financial Statements

117

KWS Group | Annual Report 2015/2016Employees1

Germany

Europe (excluding Germany)

North and South America

Rest of world

Total

1 Annual average

2015/2016

2014/2015

1,908

1,449

1,280

206

4,843

1,868

1,401

1,234

188

4,691

Longterm incentive (LTI)

The stock-based compensation plans awarded at the

KWS Group are recognized in accordance with IFRS 2

“Share-based Payment.” The incentive program, which

was launched in fiscal 2009/2010, involves stock-based

payment transactions with cash compensation, which

are measured at fair value at every balance sheet date.

Members of the Executive Board are obligated to acquire

shares in KWS SAAT SE every year in a freely select-

able amount ranging between 20% and 50% of the gross

With our joint ventures, associated company and joint oper-

performance-related bonus. Along with that, all members

ation consolidated proportionately, the number of employ-

of the second management level can likewise take part

ees was 5,472 (5,322). The reported number of employees is

in an LTI program. As part of this program, they are obli-

greatly influenced by seasonal labor.

gated to invest in shares in KWS SAAT SE every year in a

(25) Sharebased payment

Employee Share Program

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

KWS has established a share program for employees. All

period 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). The

year without interruption and have a permanent employment

entitled persons are paid a long-term incentive (LTI) in the

relationship that has not been terminated at a KWS Group

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 compen-

20% is deducted from the purchase price, which depends

sation for members of the Executive Board is a maximum

on the price applicable on the key date. The shares are sub-

of one-and-half times (for the Chief Executive Officer two

ject to a lock-up period of four years beginning when they

times), and for members of the second management level a

are posted to the employee’s securities account. The right

maximum of two times their own investment (LTI cap). The

to a dividend, if KWS SAAT SE pays one out, exists during

costs of this compensation are recognized in the income

the lock-up period. Holders can also exercise their right to

statement over the period and were €510 (1,044) thou-

participate in the Annual Shareholders’ Meeting during the

sand in the period under review. The provision for it at

lock-up period. They can dispose freely of the shares after

June 30, 2016, was €2,680 (2,170) thousand. The LTI fair

the lock-up period.

values are calculated by an external expert.

A total of 7,541 (9,878) shares were repurchased for the Em-

(26) Net income for the year

ployee Share Program at a total price of €1,952 (2,684) thou-

The KWS Group’s net income for the year was €85,277

sand in the year under review. The total cost for issuing

(84,048) thousand on operating income of €112,764

shares at a reduced price was €311 thousand in the past

(113,417) thousand and net financial income/expenses of

fiscal year (previous year: €566 thousand).

€14,784 (16,689) thousand. The return on sales fell slightly to

8.2% (8.5%). Net income for the year after minority interest

was €85,261 (82,712) thousand. Earnings per share in the

year under review were €12.92 (12.53).

118 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 5. Notes to the Income Statement

Annual Report 2015/2016 | KWS Group6. Notes to the Cash Flow Statement

The cash flow statement, which has been prepared accord-

(3) Net cash from financing activities

ing to IAS 7, shows the changes in cash and cash equiva-

Financing activities resulted in cash proceeds of

lents of the KWS Group in the three categories of operating

€21,385 thousand (previous year: cash proceeds of

activities, investing activities and financing activities. The

€48,398 thousand). The dividend payments to parent share-

effects of exchange rate changes and changes in the con-

holders and other shareholders comprise the dividends

solidated group have been eliminated from the respective

of €19,800 (19,800) thousand paid to the shareholders of

balance sheet items, except those affecting cash and cash

KWS SAAT SE, as well as acquisition of the minority interest

equivalents.

(1) Net cash from operating activities

in Brazil of €27,086 thousand. In addition, net borrowings

totaling €68,600 (68,198) thousand were raised.

The cash proceeds from operating activities are substan-

(4) Supplementary information on the

tially determined by cash earnings. In the year under review

cash flow statement

they were €107,297 (92,063) thousand. The proportion of

Of the changes in cash and cash equivalents caused by

cash earnings included in sales was 10.3% (9.3%). Lower

exchange rate, consolidated group and measurement

working capital tie-up and higher liabilities meant that there

changes, a total of € –1,161 (6,879) thousand results from

were net cash proceeds of €26,973 thousand. The cash

exchange rate-related adjustments.

proceeds from operating activities also include interest

income of €2,609 (1,479) thousand and interest expense of

As in previous years, cash and cash equivalents are com-

€7,871 (6,843) thousand. Income tax payments amounted

posed of cash (on hand and balances with banks) and

to €46,916 (69,967) thousand. The dividends received from

current available-for-sale securities.

the joint ventures are also carried here and total €25,682

(12,157) thousand.

(2) Net cash from investing activities

A net total of €92,174 (123,761) thousand was required

to finance investing activities. An amount of €97,444

(86,576) thousand was paid for intangible and tangible

assets and an amount of €266 (7,535) thousand for financial

assets. Some €25,262 thousand was paid out to obtain the

trait licensing agreements. There were total cash receipts of

€1,536 (2,077) thousand for disposals of assets. There were

cash receipts of €4,000 thousand from the disposal of busi-

ness units. A total of €31,727 thousand was paid to acquire

shares in consolidated companies and other business units

in the previous year.

6. Notes to the Cash Flow Statement | Notes for the KWS Group 2015/2016 | Annual Financial Statements

119

KWS Group | Annual Report 2015/20167. Other Notes

Proposal for the appropriation of net retained profits

Shareholdings of members of the Supervisory Board

KWS SAAT SE posted operating income of €18,149 thou-

and the Executive Board (as of September 27, 2016)

sand compared with €–23,242 thousand for the previ-

Dr. Arend Oetker indirectly holds a total of 1,694,587

ous year. Allowing for net financial income/expenses

(1,650,010) shares and Dr. Andreas J. Büchting 108,030

of €17,991 (45,017) thousand and an extraordinary in-

(108,030) shares in KWS SAAT SE. The members of the Su-

come of €67,617 (0) thousand resulting from the merger

pervisory Board hold a total of 1,803,317 (1,758,735) shares

with KWS MAIS GMBH as well as income taxes to-

in KWS SAAT SE.

taling €3,032 (2,108) thousand, net income in accor-

dance with the German commercial law regulations was

All together, the members of the Executive Board hold

€100,725 (19,667) thousand. Adding the net profit of

16,107 (14,445) shares in KWS SAAT SE.

€66 (199) thousand brought forward from the previous year,

a net retained profit of €100,791 thousand is available for

Related party disclosures

distribution.

Transactions with related parties in accordance with IAS 24

are all business dealings that are conducted with the report-

A proposal will be made to the Annual Shareholders’ Meet-

ing entity by entities or natural persons or their close family

ing that, of KWS SAAT SE’s net retained profit, an amount

members, if the party or person in question controls the

of €80,950 thousand should be allocated to the revenue

reporting entity or is a member of its key management per-

reserves and €19,800 thousand should be distributed as a

sonnel, for example. There were no business transactions

dividend of €3.00 (3.00) for each of the 6,600,000 shares.

or legal transactions that required reporting for this group

The balance of €41 (66) thousand is to be carried forward to

KWS procures goods and services worldwide from a large

of persons in fiscal 2015/2016. As part of its operations,

the new account.

number of business partners. They also include companies

in which KWS has an interest and on which representa-

Total remuneration of the Supervisory Board

tives of KWS’ Supervisory Board exert a significant influ-

and Executive Board and of former members of

ence. Business dealings with these companies are always

the Super visory Board and Executive Board of

conducted on an arm’s-length basis and are not material

KWS SAAT SE

in terms of volume. As part of Group financing, short- and

The compensation of the members of the Superviso-

medium-term term loans are taken out from, and granted to,

ry Board consists of a fixed and a variable component,

subsidiaries at market interest rates. The compensation that

with the variable component being limited to the level

has to be disclosed in accordance with IAS 24 for manage-

of the fixed compensation. As in the previous year, the

ment in key positions at the Group comprises remuneration

total compensation for members of Supervisory Board

for the active Executive Board and the Supervisory Board.

amounts to €516 (516) thousand, excluding value-added

It is presented in the Group Management Report. No other

tax. Some €238 (238) thousand of the total compensation is

related parties have been identified for whom there is a spe-

performance-related.

cial reporting requirement under IAS 24.

In fiscal year 2015/2016, total Executive Board compen-

Disclosure

sation amounted to €3,531 (3,803) thousand. The variable

The following subsidiaries with the legal form of a corpo-

compensation, which is calculated on the basis of the net

ration within the meaning of Section 264 (3) of the German

profit for the period of the KWS Group, is made up of a

Commercial Code (HGB) have utilized the exemption pro-

bonus and a long-term incentive. The bonus totals €1,602

vided in Section 264 (3) of the German Commercial Code

(1,779) thousand; there are contributions from the long-term

(HGB) as regards preparation of financial statements and

incentive tranche for 2014/2015 totaling €558 thousand

publication:

(tranche for 2013/2014: €670 thousand).

Compensation of former members of the Executive Board

■■ KWS Landwirtschaft GmbH, Einbeck

■■ KWS LOCHOW GmbH, Bergen

and their surviving dependents amounted to €1,334

(1,693) thousand. Pension provisions recognized for this

group of persons amounted to €8,027 (7,131) thousand as

of June 30, 2016, before being netted off with the relevant

planned assets.

120 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 7. Other Notes

Annual Report 2015/2016 | KWS GroupRelated parties

in € thousand

Unconsolidated
subsidiaries

Equity-accounted
joint ventures

Joint operation

Other related parties

Deliveries and
services provided

Received deliveries
and services

Receivables

Payables

2015/2016 2014/2015 2015/2016 2014/2015 06/30/2016 06/30/2015 06/30/2016 06/30/2015

330

4,891

1,862

6,196

1,691

16,319

15,205

17,323

6,394

6,925

132

6,812

132

439

1,086

Audit of the annual financial statements

Declaration of compliance with the

On December 17, 2015, the Annual Shareholders’ Meeting

German Corporate Governance Code

of KWS SAAT SE elected the accounting firm Deloitte

KWS SAAT SE has issued the declaration of compliance

GmbH, Hanover, to be the Group’s auditors for fiscal year

with the German Corporate Governance Code required by

2015/2016.

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

Section 161 Aktiengesetz (AktG – German Stock Corpora-

tion Act) and made it accessible to its shareholders on the

company’s home page at www.kws.com/ir.

in € thousand

2015/2016 2014/2015

a) Audit of the consolidated

financial statements

b) Other certification services

c) Tax consulting

d) Other services

Total fee paid

674

109

783

741

795

For fiscal year 2016/2017, fees for consulting services

(excluding auditing) of up to €75 thousand are expected.

7. Other Notes | Notes for the KWS Group 2015/2016 | Annual Financial Statements

121

KWS Group | Annual Report 2015/2016Boards of the Company

Supervisory Board

Members

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

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

Hubertus von Baumbach
Ingelheim am Rhein
Businessman
Chairman of the Board of Managing Directors of
C. H. Boehringer Sohn AG & Co. KG, Ingelheim am Rhein

Jürgen Bolduan
Einbeck
Seed Breeding Employee
Chairman of the Central Works Council of KWS SAAT SE

Cathrina ClaasMühlhäuser
Frankfurt am Main
Businesswoman
Chairwoman of the Supervisory Board of
CLAAS KGaA mbH, Harsewinkel

Dr. Berthold Niehoff
Einbeck
Agricultural Scientist
Employee Representative

Mandates

Membership of comparable German and foreign oversight boards:
■■ Member of the Board of Directors of Ball Horticultural Company,

West Chicago, Illinois (U.S.)

Membership of other legally mandated Supervisory Boards:
■■ Schwartauer Werke GmbH & Co. KGaA, Bad Schwartau

(Chairman)

■■ Cognos AG, Hamburg (Chairman)

Membership of comparable German and foreign oversight boards:
■■ Leipziger Messe GmbH, Leipzig

Membership of other legally mandated Supervisory Boards:
■■ CLAAS KGaA mbH, Harsewinkel (Chairwoman)

Membership of comparable German and foreign oversight boards:
■■ CLAAS KGaA mbH, Harsewinkel

(Deputy Chairwoman of the Shareholders’ Committee)

Supervisory Board Committees

Committee

Audit Committee

Chairman

Hubertus von Baumbach

Committee for Executive
Board Affairs

Nominating Committee

Andreas J. Büchting

Members

Andreas J. Büchting
Jürgen Bolduan

Arend Oetker
Cathrina Claas-Mühlhäuser

122 Annual Financial Statements | Notes for the KWS Group 2015/2016 | 7. Other Notes

Annual Report 2015/2016 | KWS GroupMandates

Membership of comparable German and foreign oversight boards:
■■ Hero AG, Lenzburg, CH

(Member of the Board of Administration)

Executive Board

Members

Dr. Hagen Duenbostel
Einbeck
Chief Executive Officer
Corn, Corporate Development and Communication,
Corporate Compliance

Dr. Léon Broers
Einbeck
Research and Breeding

Dr. Peter Hofmann
Einbeck
Sugarbeet, Cereals, Marketing

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 consoli-

dated financial statements give a true and fair view of the

assets, financial position and earnings of the Group in com-

pliance with the generally accepted standards of consolidat-

ed accounting, and that an accurate picture of the course of

business, including business results, and the Group’s situ-

ation is conveyed by the Group Management Report, which

is combined with the Management Report of KWS SAAT SE,

and that it describes the main opportunities and risks of the

Group’s anticipated development.

Einbeck, September 27, 2016

KWS SAAT SE

THE EXECUTIVE BOARD

H. Duenbostel

L. Broers

E. Kienle

P. Hofmann

8. Declaration by Legal Representatives | Notes for the KWS Group 2015/2016 | Annual Financial Statements

123

KWS Group | Annual Report 2015/2016

Auditors’ Report

We have audited the annual financial statements of the

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 flow

statements of the companies included in the consolidated

statement, segment reporting and the statement of changes

financial statements, the definition of the companies con-

in equity – and the Combined Group Management Report

solidated, the accounting and consolidation principles used

for the fiscal year from July 1, 2015, to June 30, 2016, all of

and any significant estimates made by the Executive Board,

which were prepared by KWS SAAT SE, Einbeck. The prepa-

as well as the evaluation of the overall presentation of the

ration of the consolidated financial statements and the Group

consolidated financial statements and the Group Manage-

Management Report according to the International Financial

ment Report. We believe that our audit provides a reason-

Reporting Standards (IFRS) as applicable in the EU, and in

able basis for our opinion.

addition according to the commercial law regulations to be

applied pursuant to Section 315a (1) HGB (German Com-

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

mercial Code), is the responsibility of the Executive Board

of the company. Our task is to give, on the basis of the audit

In our opinion, pursuant to the findings gained during the au-

we have conducted, an opinion on the consolidated financial

dit, the consolidated financial statements of KWS SAAT SE,

statements and the Group Management Report.

Einbeck, comply with the IFRS as applicable in the EU, and

in addition with the commercial law regulations to be applied

We conducted our audit of the annual financial statements

pursuant to Section 315a (1) HGB, and give a true and fair

in accordance with Section 317 HGB and the generally

view of the assets, financial position and earnings of the

accepted standards for the audit of financial statements

Group, taking into account these regulations. The Group

promulgated by Institut der Wirtschaftsprüfer (the German

Management Report accords with the consolidated financial

Institute of Certified Public Accountants). According to these

statements, conveys overall an accurate view of the Group’s

standards, the audit must be planned and executed in such

position and accurately presents the opportunities and risks

a way that misstatements and violations materially affecting

of future development.

the presentation of the view of the assets, financial position

and earnings conveyed by the consolidated financial state-

Hanover, September 27, 2016

ments, taking into account the applicable regulations on

orderly accounting, and by the Group Management Report

Deloitte GmbH

are detected with reasonable certainty. Knowledge of the

Wirtschaftsprüfungsgesellschaft

business activities and the economic and legal operating

environment of the Group and evaluations of possible errors

are taken into account. The effectiveness of the internal

accounting control system and the evidence supporting the

disclosures in the consolidated financial statements and

(Kompenhans)

the Group Management Report are evaluated mainly on

Auditor

(Römgens)

Auditor

124 Annual Financial Statements | Notes for the KWS Group 2015/2016 | Auditors’ Report

Annual Report 2015/2016 | KWS Group

Report on the 1st quarter of 2016/2017

Annual Shareholders’ Meeting in Einbeck

Report on the 2nd quarter of 2016/2017

Report on the 3rd quarter of 2016/2017

Publication of 2016/2017 financial statements,
annual press and analyst conference in Frankfurt

Report on the 1st quarter of 2017/2018

Annual Shareholders’ Meeting

707400

DE0007074007

KWS

Prime Standard

SDAX

Individual share certificates

6,600,000

Financial calendar

Date

November 24, 2016

December 15, 2016

March 7, 2017

May 23, 2017

October 26, 2017

November 23, 2017

December 14, 2017

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 1463

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:

Uwe Aufderheide ■ Hollis Bennett ■ Dirk-Andre Betz ■ Eberhard Franke ■ Frank Stefan Kimmel ■ Landpixel ■ Julia Lormis ■

Dominik Obertreis ■■Spieker Fotografie ■■KWS Group archive

KWS SAAT SE
Grimsehlstrasse 31
P.O. Box 1463
37555 Einbeck/Germany
www.kws.com