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Annual Report
2016 | 2017
KWS in Figures
The KWS Group (in € millions)
Net sales and income
Net sales
EBIT
as a % of net sales (EBIT margin)
Net financial income/expenses
Net income for the year
Additional key figures on earnings
R&D intensity in %
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 in €
Dividend per share in € 5
Segments (in € millions)
2016/2017
2015/2016
2014/2015
2013/2014
1,075.2
131.6
1,036.8
112.8
12.2
16.6
97.7
17.7
63.3
49.4
836.9
56.0
13.1
7.3
48.5
10.9
14.8
85.3
17.6
99.6
48.2
767.9
53.5
11.9
7.0
87.9
1,495.2
1,436.6
990.1
13.3
122.4
4,937
247.0
14.78
3.20
906.9
12.4
125.9
4,843
232.2
12.92
3.00
986.0
113.4
11.5
16.7
84.0
923.5
118.3
12.8
7.5
80.3
17.7
16.2
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
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
+3.8%
825
795
+3.4%
440 455
–8.5%
64
58
+27.2%
–7.4%
119 151
118 109
+14.4%
9
10
Net sales
EBIT
Net sales
EBIT
Net sales
EBIT
+17.1%
4
5
Net sales
–21.0%
EBIT
–50 –61
2015/2016
2016/2017
Reconciliation (in € millions)
Net sales
EBIT
Segments Reconciliation
KWS Group
1,394.0
158.8
–318.8
–27.2
1,075.2
131.6
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.
5 The dividend for 2016/2017 is subject to the consent of the 2017 Annual Shareholders´ Meeting.
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Contents
2
To our Shareholders
2
5
14
16
20
Foreword of the Executive Board
Report of the Supervisory Board
The KWS Share
Corporate Sustainability
Spotlight Topic
23
Combined Management Report
24
34
39
53
60
64
74
Fundamentals of the KWS Group
Employees
Economic Report
Opportunity and Risk Report
Forecast Report
Corporate Governance
KWS SAAT SE (Explanations in Accordance with HGB)
77
Annual Financial Statements
Léon Broers Research and Breeding
Eva Kienle Finance, Controlling, Global Services, IT, Legal, Human Resources
Hagen Duenbostel (CEO) Corn, Corporate Development and Communications, Compliance
Peter Hofmann Sugarbeet, Cereals, Marketing
2
To our Shareholders | Foreword of the Executive Board
Annual Report 2016/2017 | KWS Group To our
Share-
holders
Foreword of the Executive Board
The good harvests worldwide, high inventories of
agricultural raw materials and low consumer prices
below the average of the past decade were the main
factors that shaped the continued muted trend in the
agricultural sector.
Returns on investment in the entire industry remain
under pressure in view of these fundamentals. The
net income earned by farmers in North America this
year is likely to be the second-lowest in the past
seven years, following 2016. The picture is similar in
Germany and other markets. With costs on the rise,
farmers in just about all cultivation regions world-
wide face low liquidity. They are forced to save on
operating resources and are investing far less than
they did a few years ago. At the same time, consum-
er expectations now pose diverse challenges for the
agricultural industry. Transparency and safety in pro-
duction, reduced use of limited resources, protection
of the environment, and new products for modern
nutrition to suit every lifestyle are demanded by
everyone and keep the pressure on costs high.
Foreword of the Executive Board | To our Shareholders
3
KWS Group | Annual Report 2016/2017 Looking ahead, no significant easing of the situation
investing in innovations and steadily increasing our
in the industry can be expected in the short term.
spending on breeding, so as to create value added
The UN and the OECD anticipate that growth in
for farmers. Together with our expert consulting and
global demand for food will weaken by the middle
great commitment, we aim to create trust through
of the next decade. The growth drivers of the past
our joint success and to be partners for farmers. In
– rising demand for meat from emerging and devel-
doing so, KWS is, and will remain, an independent
oping countries, or growth in the global bioenergy
family business.
sector – will no longer have the same impact as they
did in previous years. At the same time, crop yields
The fact that KWS has so many good things to
will increase and keep the level of supply high. As far
present in this Annual Report is owed to the pas-
as can be seen at present, the future prices of agri-
sion and responsible, thoughtful actions of our now
cultural raw materials will therefore not exhibit any
almost 5,000 employees worldwide and to their
significant upward movement and – despite a high
constant professional dedication. And so our deep
degree of volatility – will stagnate at the current level.
and heartfelt thanks go out to all of them, as well as
to our partners and shareholders.
These market conditions are making it tough for the
agricultural sector to keep up the growth rates of
Given its current business performance and on
past years. Consolidation projects in the pesticide
the basis of a medium- and long-term analysis of
and seed industry are largely aimed at strengthening
opportunities and risks, KWS continues to look to the
the business models in this arena by creating broad,
future with optimism. Successes – like failures – are
integrated product portfolios. In KWS’ view, how-
ideal springboards for further necessary efforts to
ever, creating economic strength through integra-
grow our position as a global breeding company in
tion does not offer an adequate solution to current
our various markets.
challenges on its own. Farmers will continue to use
their freedom of choice to select the best operating
I hope this Annual Report proves an informative and
resources from a range of different, independent
stimulating read. With best regards from Einbeck on
vendors – because every vendor has its own individ-
behalf of the entire Executive Board.
ual strengths and its own specialized products.
For generations, KWS has successfully developed
tailored, state-of-the-art plant varieties, thereby
Dr. Hagen Duenbostel
creating the foundation for its organic growth in the
Chief Executive Officer
past 160 years. And with every new plant generation,
breeders aim to improve a product further. New va-
rieties that offer rising yields, resistance to diseases
and pests, or lower consumption of limited resources
such as water, fertilizer or pesticides are already in
practical use or are achievable breeding objectives
for even more sustainable agriculture. KWS’ goal
is to provide farmers with specialized varieties and
thus offer them very specific ways of increasing their
yields and cutting costs – even under difficult market
conditions. Our response to the current situation in
the agricultural sector is therefore – largely without
regard to economic developments – to keep on
4
To our Shareholders | Foreword of the Executive Board
Annual Report 2016/2017 | KWS Group Report of the Supervisory Board
The past fiscal year was characterized by growing
in compliance with the bylaws for the Executive
volatility in agricultural markets, changing regulatory
Board. The company’s business policy, corporate
conditions, and increasing consolidation in the
and financial planning, profitability and situation, the
indus try. While the discontinuation of the European
general development of the various businesses, mar-
Sugar Market Regime stimulated our sugarbeet seed
ket trends and the competitive environment, research
business, the continuing low prices of agricultural
and breeding and, along with important individual
raw materials weighed on our Corn and Cereals Seg-
projects, risk management at the KWS Group were
ments. At the same time, the company had to decide
the subject of detailed discussions. The Chairman
whether to complement its largely organic growth by
of the Supervisory Board continued the bilateral dis-
means of selective acquisitions. Investments to en-
cussions with the Chief Executive Officer and individ-
able future growth were adopted and organizational
ual members of the Executive Board in regular talks
changes to the KWS Group initiated in the year under
outside the meetings of the Supervisory Board. In
review. All in all, KWS believes it is well positioned to
addition, there were monthly meetings between the
address future trends as a result.
Chairman of the Supervisory Board and the Execu-
tive Board as a whole, where the company’s current
The Supervisory Board discharged the duties incum-
business development and, in particular, its strategy,
bent on it in accordance with the law, the company’s
occurrences of special importance and individual
Articles of Association and the bylaws, regularly
aspects were dealt with. The Chairman of the Super-
advised and monitored the Executive Board in its
visory Board informed the Supervisory Board of the
activities and satisfied itself that the company was
results of these meetings. The Supervisory Board
run properly and in compliance with the law and that
did not make use of its right to conduct an examina-
it was organized efficiently and cost-effectively. The
tion granted by Section 111 (2) AktG (German Stock
Supervisory Board decided on all significant busi-
Corporation Act) since the reporting by the Executive
ness transactions requiring its consent and carefully
Board meant there was no reason to do so.
accompanied the Executive Board in all fundamen-
tal decisions of importance to the company. The
Focal areas of deliberations
Supervisory Board discussed the information and
The full Supervisory Board held six meetings in
assessments that influenced its decisions together
fiscal 2016/2017. All members participated in all of
with the Executive Board. Both boards continued
the meetings, with the exception of the meeting on
their constructive and trusted cooperation as in the
June 29, 2017, where one member was unable to
past. Among other things, this was demonstrated by
attend due to illness.
the fact that, as is customary, the Supervisory Board
was involved in all decisions of vital importance to
At the meeting to discuss the financial statements
the company at an early stage. The Supervisory
on October 24, 2016, the Supervisory Board dealt
Board was provided with the necessary informa-
with the recommendation by the Audit Committee on
tion in written and oral form regularly, promptly and
the appointment of a new independent auditor. The
comprehensively. This included all key information
Supervisory Board endorsed the recommendation
on relevant questions of strategy, planning, the busi-
by the Audit Committee and decided to propose the
ness performance and the situation of the company
appointment of Ernst & Young GmbH Wirtschaftsprü-
and the KWS Group, including the risk situation,
fungsgesellschaft, Hanover, at the 2016 Annual Share-
risk management and compliance. Business trans-
holders’ Meeting. Examination and approval of the
actions requiring consent were submitted to, and
financial statements of KWS SAAT SE and the consol-
discussed and approved by, the Supervisory Board
idated financial statements of the KWS Group were
Report of the Supervisory Board | To our Shareholders
5
KWS Group | Annual Report 2016/2017 also on that meeting’s agenda. The independent
Shareholders’ Meeting on December 14, 2017. How-
auditor also conducted the survey of the Super-
ever, employee representatives are elected by direct
visory Board with the aim of avoiding and identifying
vote by all KWS employees in the European Union
fraud. The Supervisory Board is not aware of any
(EU) in accordance with Sections 12 (a) and 15 et
relevant acts.
seq. of the Agreement on Employee Involvement at
KWS SAAT SE and Section 8.2 of KWS SAAT SE’s
The deliberations on December 14 and 15, 2016, fo-
Articles of Association.
cused on current developments relating to genetically
improved traits and new molecular biology methods
The Supervisory Board endorsed the recommen-
of plant breeding. The progress made in breeding
dations by the Nominating Committee at its meeting
drought tolerance was also presented. At its meetings
on October 25, 2017, and decided to propose
on March 23 and June 29, 2017, the Supervisory
that the following serving members of the Super-
Board discussed the KWS Group’s organizational
visory Board be reelected to the Supervisory
development and any acquisition opportunities as
Board: Dr. Drs. h. c. Andreas J. Büchting, Cathrina
part of the process of increasing consolidation in
Claas-Mühlhäuser and Dr. Marie Theres Schnell.
the industry. As usual, the Supervisory Board adopted
the annual planning for fiscal 2017/2018 and the
The current Deputy Chairman of the Supervisory
medium-term planning in June 2017.
Board, Hubertus von Baumbach, had announced
that he would not be standing for reelection. Likewise
At its meeting on October 25, 2017, the Supervisory
on the basis of the recommendation by the Nomi-
Board adopted a competence profile for the body
nating Committee, the Supervisory Board therefore
as a whole on the basis of the proposal by the
proposed electing the further candidate Mr. Victor
Nominating Committee.
W. Balli as a member of the Supervisory Board.
Mr. Balli is from Switzerland and has been CFO of
Since the members of the Supervisory Board of
the world-leading cocoa and chocolate manufac-
KWS SAAT SE are appointed for the period of time
turer Barry Callebaut AG since 2007. More details
up to the end of the Annual Shareholders’ Meeting
about him can be found in the Notice of the Annual
that ratifies the acts of the Supervisory Board for
Shareholders’ Meeting on December 14, 2017. As a
the fiscal year 2016/2017, new elections for the
financial expert, Victor Balli is to succeed Hubertus
shareholder representatives on the Supervisory
von Baumbach in his function as Chairman of the
Board of KWS SAAT SE are to be held at the Annual
Audit Committee.
6
To our Shareholders | Report of the Supervisory Board
Annual Report 2016/2017 | KWS Group Annual and consolidated financial statements
annual financial statements, Combined Management
and auditing
Report, audit reports by the independent auditors,
Ernst & Young GmbH Wirtschaftsprüfungs-
corporate governance report, compensation report
gesellschaft, Hanover, the independent auditor
and the proposal by the Executive Board on the
chosen at the Annual Shareholders’ Meeting on
appropriation of the profits. The Supervisory Board
December 15, 2016, and commissioned by the Audit
also held detailed discussions of questions on the
Committee, has audited the financial statements of
agenda at its meeting to discuss the financial state-
KWS SAAT SE that were presented by the Executive
ments on October 25, 2017. The auditor took part in
Board and prepared in accordance with the provi-
the meeting. It reported on the main results of the
sions of the German Commercial Code (HGB) for
audit and was also available to answer additional
fiscal 2016/2017 and the financial statements of the
questions and provide further information for the
KWS Group (IFRS consolidated financial statements),
Supervisory Board. According to the report of the in-
as well as the Combined Management Report of
dependent auditor, there were no material weaknesses
KWS SAAT SE and the KWS Group Manage ment
in the internal control and risk management system
Report, including the accounting reports, and
in relation to the accounting process. There were
awarded them its unqualified audit certificate. In
also no circumstances that might indicate a lack of
addition, the auditor concluded that the audit of the
impartiality on the part of the independent auditor.
financial statements did not reveal any facts that
There are no services additionally provided by the
might indicate a misstatement in the declaration of
independent auditor as can be seen in the Notes.
compliance issued by the Executive Board and the
Supervisory Board in accordance with Section 161
In accordance with the final results of its own exami-
AktG (German Stock Corporation Act) with respect
nation, the Supervisory Board endorsed the results
to the “German Commission for the Corporate Gov-
of the audit, among other things as a result of the
ernance Code” (cf. Clause 7.2.3 (2) of the German
preliminary examination by the Audit Committee,
Corporate Governance Code).
and did not raise any objections. The Supervisory
Board gave its consent to the annual financial state-
The Supervisory Board received and discussed
ments of KWS SAAT SE, which were prepared by the
the financial statements of KWS SAAT SE and the
Executive Board, and to the consolidated financial
consolidated financial statements and Combined
statements of the KWS Group, along with the Com-
Management Report of KWS SAAT SE and the
bined Management Report of KWS SAAT SE and the
KWS Group, along with the report by the indepen-
KWS Group. The financial statements are thereby
dent auditor of KWS SAAT SE and the KWS Group
approved. The Supervisory Board also endorses
and the proposal on utilization of the net profit for the
the proposal by the Executive Board to the Annual
year made by KWS SAAT SE, in due time. Compre-
Shareholders’ Meeting on the appropriation of the
hensive documents and drafts were submitted to the
net retained profit of KWS SAAT SE after having
members of the Supervisory Board as preparation.
examined it.
For example, all of them were provided with the
Report of the Supervisory Board | To our Shareholders
7
KWS Group | Annual Report 2016/2017 Corporate Governance
forward candidates for election to the Superviso-
The Supervisory Board conducts the efficiency re-
ry Board at the Annual Shareholders’ Meeting on
view recommended in Clause 5.6 of the German Cor-
December 14, 2017.
porate Governance Code every two years. The next
review is scheduled in fiscal 2017/2018.
The Supervisory Board regularly addressed the
question of any conflicts of interest on the part of
The Supervisory Board discussed compliance with
its members and those of the Executive Board. In
the recommendations of the “German Commission
the year under review, there were no such conflicts
for the Corporate Governance Code” and – after the
of interests that had to be disclosed immediately to
last compliance declaration in October 2016 – issued
the Supervisory Board and reported to the Annual
a new declaration of compliance with the German
Shareholders’ Meeting.
Corporate Governance Code in accordance with
Section 161 AktG (German Stock Corporation Act)
Supervisory Board committees
together with the Executive Board in October 2017. It
The Audit Committee convened for four joint meet-
is reproduced on page 64 of this Annual Report and
ings in fiscal 2016/2017. It also held three telephone
can also be obtained on the company’s website at
conferences – on all occasions with all its members
www.kws.com/corporate-governance. As regards
in attendance. In its meeting on September 22, 2016,
setting a limit on the length of time members can
the Audit Committee discussed the annual financial
serve on the Supervisory Board of KWS SAAT SE in
statements and accounting of KWS SAAT SE and
accordance with Clause 5.4.1 of the German Corpo-
consolidated financial statements of the KWS Group
rate Governance Code, the Supervisory Board stuck
for the fiscal year 2015/2016. In addition, this meeting
by its decision once more this year to continue not
assessed and intensively discussed the offers sub-
to comply with these recommendations of the Ger-
mitted by a total of nine auditing firms in the tender-
man Corporate Governance Code, since they would
ing process relating to selection of the independent
significantly restrict the rights of a business with a
auditor to be proposed to the Annual Shareholders’
tradition of family ownership like KWS, whose family
Meeting, which the Audit Committee had conducted
share holders hold a majority stake.
from March 31, 2016, to September 22, 2016 (among
other things at its meeting on August 24, 2016). As a
The Supervisory Board otherwise stuck to its tar-
result, the Audit Committee recommended that the
get composition, as well as to its assessment of
Supervisory Board propose that the company Ernst
the number of independent members – also taking
& Young GmbH Wirtschaftsprüfungsgesellschaft,
into account the company’s ownership structure.
Hanover, be appointed at the Annual Shareholders’
The Supervisory Board also took into consideration
Meeting, and also named an alternative candidate.
the competence profile for the body as a whole as
The Annual Shareholders’ Meeting on December 15,
proposed by the Nominating Committee in putting
2016, endorsed the proposal by the Supervisory
Supervisory Board Committees
Committee
Audit Committee
Chairman
Hubertus von Baumbach
Committee for Executive Affairs
Andreas J. Büchting
Nominating Committee
Andreas J. Büchting
Members
Andreas J. Büchting
Jürgen Bolduan
Hubertus von Baumbach
Cathrina Claas-Mühlhäuser
Marie Theres Schnell
Cathrina Claas-Mühlhäuser
8
To our Shareholders | Report of the Supervisory Board
Annual Report 2016/2017 | KWS Group Board and appointed the company Ernst & Young
Super visory Board approve it. The Audit Committee
GmbH Wirtschaftsprüfungsgesellschaft, Hanover,
also dealt with the results of auditing projects. The
as independent auditor of the financial statements
audit plan for fiscal 2017/2018 was also discussed
of KWS SAAT SE and the consolidated financial
and adopted.
statements. At its meeting on December 14, 2016,
the Audit Committee dealt with the results of the
In addition, the Audit Committee obtained the state-
follow-up audits and discussed the candidates for
ment of independence from the auditor in accor-
awarding the new contract for internal auditing. On
dance with Clause 7.2.1 of the German Corporate
the basis of the criteria defined by the Audit Commit-
Governance Code, ascertained and monitored the
tee, the Executive Board awarded the commission to
auditor’s independence, examined its qualifications
Baker Tilly GmbH Wirtschaftsprüfungsgesellschaft,
and defined the focal areas of the audit. The Audit
Düsseldorf. The Annual Compliance Report, as
Committee also satisfied itself that the regulations on
well as the new arrangements for the audit opinion
internal rotation were observed by the independent
and audit report, were on the agenda of the meet-
auditor and dealt with the services rendered addi-
ing of the Audit Committee on March 23, 2017. The
tionally by the independent auditor.
quarterly reports and the semiannual report for
fiscal 2016/2017 were discussed in detail in three
In addition, the Audit Committee in its meetings dealt
telephone conferences and their publication was
with preparing the resolution on the appointment of
approved.
the independent auditor for fiscal year 2017/2018 to
be proposed to the Annual Shareholders’ Meeting on
The Audit Committee convened on September 27,
December 14, 2017.
2017, to discuss the current annual financial state-
ments of KWS SAAT SE and KWS’ consolidated
The Nominating Committee dealt with the candi-
financial statements and accounting. The inde-
dates to stand as shareholder representatives in the
pendent auditor for fiscal 2016/2017 explained the
new elections to the Supervisory Board at the Annual
results of its audit of the 2016/2017 financial state-
Shareholders’ Meeting on December 14, 2017, and
ments and pointed out that there were no grounds for
proposed that the following serving members of the
assuming a lack of impartiality on the part of the inde-
Supervisory Board be reelected: Dr. Drs. h.c. Andreas
pendent auditor in its audit. The Audit Committee
J. Büchting, Ms. Cathrina Claas-Mühlhäuser and
also dealt with the proposal by the Executive
Dr. Marie Theres Schnell; in addition, Mr. Victor W. Balli
Board on the a ppropriation of the net retained
was proposed as a member to be elected to the
profit of KWS SAAT SE and recommended that the
Supervisory Board for the first time.
Report of the Supervisory Board | To our Shareholders
9
KWS Group | Annual Report 2016/2017 The committee satisfied itself that all the candidates
Change on the Supervisory Board during
also had the time expected for them to discharge
fiscal 2016/2017
their duties on the board. Moreover, the Nominating
Dr. Arend Oetker resigned as a member of the Super-
Committee took into account the Supervisory
visory Board of KWS SAAT SE effective the end of the
Board’s target composition and the competence
Annual Shareholders’ Meeting on December 15, 2016;
profile for the body as a whole in proposing candi-
the Annual Shareholders’ Meeting on December 15,
dates. The aspect of diversity should be taken into
2016, then appointed Dr. Marie Theres Schnell as a
account in filling posts on the Supervisory Board.
member of the Supervisory Board of KWS SAAT SE.
In this context, the Supervisory Board decided in
accordance with Section 111 (5) AktG (German
The departure of Arend Oetker marked the end of
Stock Corporation Act) that the ratio of female share-
an era that was of outstanding importance for KWS’
holder representatives on the Supervisory Board
development. Arend Oetker, a family business own-
of KWS SAAT SE should not be less than 25% by
er with a long-term approach, took over his equity
June 30, 2017. The Supervisory Board stuck to this
stake in KWS in 1994. In a pool with the shareholder
objective. In the future as well (with a deadline of
family Büchting, this formed a felicitous partnership
June 30, 2022), the percentage of women and that of
between the two families that has shaped KWS’ for-
men among the shareholders is to be at least 25%
tunes and guaranteed the company’s independence.
each. On the other hand, the Supervisory Board is
In January 1995, the Annual Shareholders’ Meeting
not charged with setting such targets for the employee
elected Dr. Arend Oetker to the Supervisory Board,
representatives. The regulations for the election of
on which he held the post of Deputy Chairman for
employee representatives to the Supervisory Board
17 years. In that function, he made a major contribution
do not contain target or minimum percentages for
to defining the company’s strategic direction and in
the proportions of women and men. This objective
making influential decisions. With him as a partner,
was also taken into account in proposing candidates
KWS was not only able to preserve its independence
for the new elections to the Supervisory Board to the
in the face of considerable resistance, but also made
Annual Shareholders’ Meeting on December 14, 2017.
significant advances in diversification.
As part of naming suitable candidates for the Super-
visory Board to propose as members to the Annual
That is especially true as regards expansion and inter-
Shareholders’ Meeting, the Nominating Committee
nationalization of the Corn Segment. Arend Oetker not
examined all the candidates and determined that
only played a part in shaping the company’s develop-
they were all very well qualified to hold a position on
ment, but also helped fund it. After all, the necessary
the Supervisory Board.
up-front investments for successfully establishing the
Corn Segment were possible only thanks to a cautious
For the first time since KWS SAAT AG was converted
dividend policy. In recognition of his great services to
into KWS SAAT SE, the employee representatives
our company, the Supervisory Board made him an
on the Supervisory Board were elected by all KWS
honorary member on December 15, 2016. On behalf
employees in the European Union. In accordance
of all shareholders, we would like to express our
with Part III Section 12 (a) of the Agreement on
great thanks for his trust in our common enterprise,
Employee Involvement at KWS SAAT SE, employees
for his commitment, his energy and, not least, his
in Germany stood for election for the second period
entrepreneurial vision on our board.
of office of the Supervisory Board of KWS SAAT SE in
accordance with the Articles of Association. Jürgen
Bolduan, the long-term Chair of the Central Works
Council of KWS SAAT SE and Christine Coenen, the
Chair of the European Employee Committee, were
elected to the Supervisory Board.
10
To our Shareholders | Report of the Supervisory Board
Annual Report 2016/2017 | KWS Group Andreas J. Büchting, Chairman of the Supervisory Board
The Supervisory Board expresses its thanks to the
Executive Board and all employees of KWS SAAT SE
and its subsidiaries for their great commitment and
efforts yet again in helping KWS continue its positive
development.
Einbeck, October 25, 2017
Dr. Drs. h. c. Andreas J. Büchting
Chairman of the Supervisory Board
Report of the Supervisory Board | To our Shareholders
11
KWS Group | Annual Report 2016/2017 We have been indepen-
dent since 1856. And will
remain so moving ahead.
Our independence. Our continuity. Your success. Doing something everyone can trust.
That is independence. KWS stands for long-term, sustainable success.
The KWS Share
Performance: Higher trading volume, less
Other stocks in the industry also performed similarly
volatility, 15% increase in share price
or better, among other things due to the progress
The stock market remained an attractive place to
made in consolidation projects by our competitors.
invest in the year under review. The new hike in the
The DAX and SDAX also performed positively in the
base rate by the U.S. Federal Reserve – the last one
same period, rising sharply by around 27% and 24%,
was to 1.25% on June 14, 2017 – did not put an end
respectively. The KWS share’s average daily fluc-
to the all-time highs on international stock exchanges,
tuation between the highest and lowest price – a
especially since the European Central Bank kept its
measure of volatility – fell year on year despite a
main interest rate at 0%. The DAX surged to a record
far higher volume of trading, and was €5.18 (5.62)
high of 12,951 points during trading on June 20, 2017.
or 1.50% (1.89%) relative to the closing price at
The KWS share likewise climbed to an all-time high
the end of the year under review. A look at its per-
of €375.00 in June 2017, far surpassing the consen-
formance over the past five years (July 1, 2012, to
sus estimate of equity analysts. Prior to that, we had
June 30, 2017) shows that KWS’ share price has in-
turned in a very good operating performance in corn
creased by 66%, and even by 167% over the past ten
seed business in South America and in global sugar-
years (July 1, 2007, to June 30, 2017). The SDAX has
beet seed business. In December 2016, the share
risen by 123% over the past five years and by 66%
was listed at a low for the year of €270.00. At the
over the past ten years, while the DAX has risen by
end of the fiscal year on June 30, 2017, it closed at
90% and 55% in the same periods.
€344.45 (297.80)1, around 16% higher year on year.
The KWS share’s performance
over 10 years
300%
250%
200%
150%
100%
50%
0%
+167%
+66%
+55%
July 1, 2007
KWS
SDAX
DAX
June 30, 2017
Listing: KWS remains a firm part of the SDAX
three places to 42nd (39th) in terms of trading volume
The KWS share continued to climb in the SDAX,
over the past twelve months. As a result, it still meets
Germany’s index for small caps, in terms of market
the criteria for being included in the SDAX. The
capitalization on the balance sheet date of June
market capitalization for the free float of 30.1% was
30, 2017. It ranked number 14 (18) among the 50
€684 (568) million.
companies in the index. However, the share fell
1 If not otherwise specified, the figures in parentheses give the previous year´s figure.
14
To our Shareholders | The KWS Share
Annual Report 2016/2017 | KWS Group
Shareholder structure at June 30, 2017
Free float 30.1%
Tessner Beteiligungs GmbH 15.4%
54.5% Families Büchting, Arend Oetker
Employee Stock Purchase Plan: Number of shares
2016/2017 to the Annual Shareholders’ Meeting
sold increases by more than 50%
on December 14, 2017; €21.1 (19.8) million would
For more than 30 years, KWS has offered its em-
thus be distributed to KWS SAAT SE’s shareholders.
ployees the chance to become a shareholder in the
That would correspond to a dividend payout ratio
company and thus share in its success and identify
of 21.6% (23.2%), once again in line with the KWS
more strongly with it. The content of our Employee
Group’s earnings- oriented policy of paying a dividend
Stock Purchase Plan remained unchanged in the
of 20% to 25% of its net income.
Key figures for the KWS share (Xetra®)
year under review. Our employees were able to buy
up to 500 KWS shares at a price of €225.60 (217.60),
including a 20% discount, which the individual em-
ployees must pay tax on. A total of 435 (395) em-
ployees in six (ten) European countries took up this
offer and purchased a total of 11,594 (7,541) shares,
corresponding to an average stake per employee
of 27 (19) shares. The acquired shares are subject
to a lock-up period of four years. They cannot be
sold, transferred or pledged during this period. As
in previous years, the shares used for the Employee
ISIN
Share class
Number of shares
Closing price
June 30, 2017
June 30, 2016
Stock Purchase Plan were acquired in accordance
High and low
with Section 71 (1) No. 2 of the German Stock
Corporation Act (AktG). A total of €3.4 (1.9) million
was used to buy back the company’s own shares,
High (June 22, 2017)
Low (December 6, 2016)
DE0007074007
Individual share
certificates
6,600,000
in €
344.45
297.80
in €
375.00
270.00
giving an average purchase price per share of
Trading volume (avg.)
in shares/day
€290.31 (258.85). More details have been published
in information released for the capital markets and
2016/2017
2015/2016
can be viewed on our website at www.kws.com/ir.
2,484
2,068
Market capitalization
in € millions
Planned appropriation of profits: increase in
the dividend to €3.20
We continued our earnings-oriented growth in
the past fiscal year. The KWS Group increased
its net sales and pretax profit. Its net income for
the year also rose by 14.5% to €97.7 million. The
Executive and Supervisory Boards will therefore
propose a divi dend of €3.20 (3.00) for fiscal year
June 30, 2017
June 30, 2016
Earnings per share
June 30, 2017
June 30, 2016
Volatility (avg.)
2016/2017
2015/2016
2,273
1,965
in €
14.78
12.92
in €/day
5.18
5.62
The KWS Share | To our Shareholders
15
KWS Group | Annual Report 2016/2017
Corporate Sustainability
Thinking and acting in terms of generations –
These are the basis for our sustainability reporting
corporate sustainability at KWS
and illustrate that long-term profitable growth poses
When KWS’ founders established the company
economic, ecological and social challenges for us as
in 1856, they created the basis for its sustainable
a company.
development that has now lasted more than 160
years. We owe this success to our continuous and
Sustainability reporting
profitable growth, which has forged us into a power-
You can find a detailed report on our core issues
ful, independent family-run business. Given that it
relating to corporate sustainability for Germany in the
takes more than ten years to develop a variety, long-
Sustainability Report for fiscal 2016/2017. The report
term thinking and acting has been a firm part of our
is based on the international GRI G4 specifications
corporate strategy. We regularly examine the broad
on sustainability reporting; it fulfills the “Core” option
range of success factors in order to keep our core
and can be obtained in the Internet on our website
sustainability issues up to date. We formulate these
at www.kws.com/ir. We plan to combine the Annual
core issues together with our internal and external
Report and Sustainability Report next fiscal year
stakeholders, looking at financial and non-financial
so as to link financial and non-financial topics more
aspects alike. As a result, we last identified five
closely with each other in the future.
subject areas with more than 40 individual topics.
No risk of being mistaken. Green containers transport dried sugarbeet seed,
while orange ones are ready to bring in the corn harvest.
Core sustainability issues
Economics and products
Governance
■■ Economic success: Key factors in our
■■ Employment, social and environmental
economic success are the clear focus on
standards: As a responsible, internationally
our core business – i.e., breeding new, high-
growing company we have established values,
yielding varieties to enable resource-sparing,
rules, guidelines and standards in the fields of
efficient agriculture – coupled with rigorous
employment, protection of the environment and
customer orientation, profitable growth, financial
social welfare, and ensure they are put into prac-
independence and sufficient liquidity.
tice at all subsidiaries. We will also define them
■■ Product innovations: Our research &
for our business partners in the supply chain and
development as part of creating new varieties
prevent violations of them.
focuses on addressing global trends such as
■■ Compliance: We support observance of the law
climate change and the limited availability of
and company requirements by means of effective
natural resources (such as soil and water), as well
compliance management.
as the occurrence of plant diseases 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 efforts
traditional methods, KWS therefore also uses
to recruit good employees and maintain a process to
biotechnology methods such as genome editing
identify and further develop our junior staffers.
methods or gene transfer.
■■ Seed quality and safety: KWS seed is quality
Work safety and protection of the environment
seed that enables plants’ genetic potential to
We strive to surpass statutory requirements relating
be fully leveraged after sowing in the field. We
to work safety and environmental protection, as well
ensure the high quality of our seed for people
as to the efficient use of resources, such as water,
and the environment by means of technical
energy and pesticides, as far as our influence allows.
and organizational measures, and demonstrate
that quality in extensive tests and analyses in
Social commitment
compliance with official requirements – regardless
One focus of our commitment is on strengthening
of whether it is ecological, conventional or
the regional and local attractiveness of our locations
genetically modified seed.
at the cultural and social level. We support young
■■ Protection of intellectual property: Protecting
scientists (by awarding Deutschlandstipendien and
intellectual property is vital for us in recouping our
through internships, for example), as well as top-
expenditure on research & development. Thanks
class research. We encourage our employees to
to the breeder’s exemption, variety protection
become actively engaged in their social environment.
safeguards access to plant genetic resources for
breeding new varieties. We also welcome patent
protection to protect our investments in state-of-
the-art technologies. It is important for us to have
unhindered access to biological starting material
and to protect our intellectual property in the form
of innovative plant varieties and new breeding
technologies.
Corporate Sustainability | To our Shareholders
17
KWS Group | Annual Report 2016/2017 We don’t do every-
thing. But what we
do, we do right.
Your foresight. Your curiosity. Our innovations. Reinventing yourself again and again. That is
independence. For this reason, we use state-of-the-art breeding for innovative seeds.
Passion and Performance
Insights into the cradle of sugarbeet breeding
at KWS
Sugarbeets and their breeding have been a core
competency of KWS for more than 160 years. We
again posted very good net sales and earnings for
sugarbeet this fiscal year – and that is due to a joint
effort by many hands. Our breeders sow the seed
for this value chain.
What’s so wonderful is that every-
one can truly make their own
decisions in their sphere of respon-
sibility and help shape things here
– and that goes for every level.
Andreas Loock,
Head of Sugarbeet Breeding at KWS
Spotlight
Topic
After germinating, the plants spent twelve weeks in a
cooling chamber at five to seven degrees – because
they would not form flowers without cold stimulus.
Breeders use this trick to shorten sugarbeet’s natural
two-year reproduction cycle to just one, and thus
speed up the breeding process. Since the 1960s,
sugarbeets have been bred solely by means of
hybrid breeding. First, inherently homozygous father
and mother lines with the desired traits are bred.
When, after many cycles, the best maternal and
paternal inbred lines are crossed with each other,
the result is the seed supplied to farmers.
That sounds simple, but it is in fact a lengthy and
arduous process in breeding practice. It takes ten to
twelve years for a sugarbeet variety to be ready for
the market. It took even longer for the new- generation
herbicide-tolerant varieties that will be launched next
year, initially in northern Europe, under the name
CONVISO® SMART: a new system in combination with
a broad-spectrum pesticide. In 2001, at the start of its
development, there was just one single plant cell out
of the millions tested in the lab that had the desired
herbicide tolerance as a result of natural mutation.
Glass, a lot of glass, and light, natural and artificial –
KWS’ largest and most modern greenhouse com-
Such a discovery is followed by what Loock de-
plex at Grimsehlstrasse in Einbeck is almost the size
scribes as a process that has largely the same pat-
of three soccer pitches. It is the heart of sugarbeet
tern as most of the now around 50 KWS research
breeding: sugarbeet plants in different stages of
and breeding projects for sugarbeet (in which ap-
growth stand in several of the countless large glass
proximately €45 million was invested in 2016/2017):
cells. Small plants in black plastic pots are growing
“We create genetic variety by means of conventional
in one of these chambers and have just formed the
crossbreeding, select the best candidates, create
first wreath of foliage. “That’s a completely normal
new variation, select the candidates again and so
program for breeding performance and sugar con-
on.” State-of-the-art biotechnology methods, such
tent,” explains Andreas Loock, Head of Sugarbeet
as intensive use of molecular markers, are now a
Breeding at KWS.
natural part of a sugarbeet breeder’s tools of the
20
To our Shareholders | Spotlight Topic
Annual Report 2016/2017 | KWS Group
It takes less than a year:
a 20,000-fold increase in just 180 days
Beta vulgaris
var. altissima
Botanically speaking, sugar-
beet belongs to
the goosefoot family
Sugar content
has increased tenfold over 200 years
1 20,000
From a kilogram of sugarbeet seed
comes as much as 20 tons of sugar
Innovative
50 KWS research and
breeding projects amounting
to
€ 45mill.
(Sugarbeet capital expenses 2016/2017)
Sugarbeet yield and
nutrient content
Increase and decrease in parallel
Cost of sugar
production
The gap is closing
20–25
years
50
t/ha
75
t/ha
N
– 60%
%
200
150
100
2005–2015
Sugarbeet
Sugar cane
≈11,000 qm²
The greenhouse
complex in
Einbeck is about
the size of three
soccer pitches
trade and speed up variety development significantly.
our work in the field and in the lab,” notes Loock.
Further development of, and creation of, new modern
His team comprises a total of 30 breeders and the
breeding methods, such as genome editing, will
same number of breeding assistants, who supervise
enlarge the breeder’s tool set and help accelerate
the different breeding programs in several working
breeding progress. Nevertheless, plant breeding still
groups. Foresight and vision are their constant
involves a lot of manual work.
companions – because the plants here in the green-
house are the starting material for a new variety in
The next chamber contains sugarbeet plants that are
around ten years’ time.
in blossom. A number of sprays of the around one-
and-a-half meter high inflorescences are covered
KWS’ breeders work with clear strategic targets
by bags made of what looks like sandwich wrap
and are tasked with developing variety components
paper. “The mother lines of the starting material are
with precisely defined traits and improvements in
sterilized and protected with these isolating bags in
yield. To do that, they need a good education, a
order to prevent self-pollination in this stage,” explains
sound understanding of genetics, statistics and the
Loock. To ensure that, each flower (up to 20 a bag) is
use of biotechnology methods, as well as passion,
opened by hand before maturity and the tiny anthers
a capacity for suffering and a lot of patience. “A
bearing the pollen are removed using tweezers. At
good breeder also has to be able to say goodbye to
the same time, the pollen on the male plants is like-
material. I start with 100 plants and end up with one.
wise collected in bags. Once the flowers are mature,
That’s a success rate of one percent. We throw
the isolating bags are removed, the bags containing
most away until finally the combination of the best
the pollen are put over them, and so the plants are
candidates produces the new variety.” Sugarbeet
systematically pollinated.
breeding has lost none of its fascination for Loock
even after 25 years. “What’s so wonderful is that
The best seed from this breeding step is then crossed
everyone can truly make their own decisions in their
with itself in several cycles. Around 50 plants, closely
sphere of responsibility and help shape things here –
packed together and completely wrapped in white
and that goes for every level. We not only act as
sheaths, are awaiting self- pollination in the next glass
an independent company in the eyes of outsiders.
room. The resultant homozygous parental lines are
This spirit of personal responsibility and teamwork
then tested in the field under different conditions. “The
is also practiced here – and that’s what makes my
wonderful thing is that we can always track and verify
work exciting and makes our company strong.”
The goal is sterility: To avoid
self-pollination, calm hands are
needed to open the sugar-
beet flower with tweezers and
remove the tiny anthers bearing
the pollen. The female part of
the flower on the intended male
plant is now ready to receive
the pollen. That is called hybrid
breeding.
24
Fundamentals of the KWS Group
24
26
27
29
Group Structure and Business Activity
Objectives and Strategies
Control System
Research & Development
34
Employees
39
Economic Report
39
41
Business Performance
Earnings, Financial Position and Assets
41
42
44
Earnings
Financial Situation
Assets
45
Segment Reports
45
46
48
50
52
Reconciliation with the KWS Group
Corn Segment
Sugarbeet Segment
Cereals Segment
Corporate Segment
53
Opportunity and Risk Report
60
Forecast Report
64
Corporate Governance
64
64
65
70
Corporate Governance Report and Declaration on Corporate Governance
Compliance Declaration in Accordance with Section 161 AktG
(German Stock Corporation Act)
Compensation Report
Explanatory Report of the Executive Board in accordance with Section 176 (1)
Sentence 1 AktG (German Stock Corporation Act) on the Disclosures in Accordance
with Sections 289 (4) and 315 (4) HGB (German Commercial Code)
74
KWS SAAT SE (Explanations in Accordance with HGB)
t
r
o
p
e
R
t
n
e
m
e
g
a
n
a
M
d
e
n
b
m
o
C
i
Combined Management Report
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
The Corn Segment is the KWS Group’s largest
Since it was founded in 1856, KWS has specialized in
division in terms of net sales and the market leader
breeding, producing and distributing high-quality va-
for silage corn in Europe. It covers production and
rieties and seed for agriculture. From our beginnings
distribution of seed for corn, rapeseed, soybean,
in sugarbeet breeding, we have evolved into an inno-
sunflower and sorghum. Its operating performance
vative, international supplier with an extensive port-
depends significantly on the spring sowing season
folio of crops. We cover the complete value chain of
in the northern hemisphere. That means most of the
a modern seed producer – from developing new vari-
segment’s net sales are generated in the second
eties, multiplication and processing, to marketing the
half of the fiscal year (January to June). The segment
seed and consulting for farmers. KWS’ core compe-
generates a lower share of its revenue in the first two
tence is in breeding new, high-performance varieties
quarters, mainly from corn varieties in South America
that are adapted to regional needs, such as climatic
and from winter rapeseed (which will be managed
and soil conditions. Every new variety delivers added
under the Cereals Segment as of fiscal 2017/2018;
value for the farmer. Our business model is based on
see the forecast report on page 61) in Europe.
this added value – which is ultimately attributable to
breeding progress, optimization of seed quality and
The Sugarbeet Segment comprises sugarbeet seed
consulting founded on a spirit of trust.
production and distribution, as well as the develop-
ment of diploid hybrid potatoes. Our high-quality
Organization and segments of the KWS Group
sugarbeet varieties are some of the highest yield-
KWS SAAT SE is the parent company of the
ing in the industry, which is why we are the clear
KWS Group. It is responsible for strategic manage-
leader in the field of sugarbeet seed, with a global
ment and, among other things, breeds, multiplies and
market share of 55%. Our main sales markets are
distributes sugarbeet and corn seed. It finances basic
North America, a region where genetically modi-
research and breeding of the main range of varieties
fied, herbicide-tolerant sugarbeet varieties are used
at the KWS Group and provides its subsidiaries with
exclusively, and the EU, Russia and Turkey, where
new varieties every year for the purpose of multiplica-
KWS likewise has a very good market position with
tion and distribution. An overview of the subsidiaries
conventionally bred, multiple-resistant varieties.
and associated companies included in the consoli-
Sugarbeet is sown in the spring, which means that
dated financial statements of the KWS Group is pro-
net sales in this segment are largely generated in the
vided in the Notes on pages 91 to 93.
second half of our fiscal year (January to June).
The KWS Group’s operational business is conducted
in the three product segments Corn, Sugarbeet and
Cereals.
24 Combined Management Report | Fundamentals of the KWS Group
Annual Report 2016/2017 | KWS Group The Cereals Segment includes production and dis-
Locations and sales markets
tribution of seed for rye, wheat, barley and rapeseed.
KWS SAAT SE’s headquarters are located in
Hybrid rye accounts for the largest share of revenue
Einbeck, Lower Saxony. We have 62 subsidiaries
from cereals (40%), followed by wheat and barley
and associated companies at present, operating
(each around 20%). We generate the remainder from
in more than 70 countries, largely in the moderate
other crops such as rapeseed, peas and triticales. In
climatic zone. You can find a detailed breakdown of
our core markets for cereal seed (Germany, Poland,
net sales by region on page 41.
the UK, France and Scandinavia), farmers predom-
inantly sow the crops in the fall. Consequently, we
Products and consulting on varieties
generate most of our revenue in this segment in the
We offer our customers – farmers – a broad range of
first half of our fiscal year (July to December).
agricultural crops that have been adapted by breeding
to the conditions of their specific location. These
The Corporate Segment supports the operating
crops include corn, sugarbeet, the cereals rye, wheat
segments with research activities and provides central
and barley, oil plants such as sunflower, soybean and
functions for controlling the group. Its relatively low
rapeseed, and catch crops. The varieties are mainly
net sales come from the revenue from our own farms.
adapted to the moderate climatic zones. Since we
Since all cross-segment function costs and research
entered the Brazilian market in 2012, corn and soybean
expenditure are charged to this segment, its income at
varieties for subtropical regions have also been part
the end of the fiscal year is regularly clearly negative.
of our portfolio. In addition to selling seed, our field
Information on the net sales and income contributed
choosing and cultivating varieties. We also offer digital
by the segments, including our joint ventures, can be
consulting with our KWS CULTIVENT Farm Service
found in our segment reports starting on page 45.
in mobile form or on our website www.kws.com.
staff is also on hand to offer farmers consulting on
What steps are involved in seed multiplication?
Planning
Field production
Seed processing
Cultivation
Up to three years elapse until cultivation.
Fundamentals of the KWS Group | Combined Management Report
25
KWS Group | Annual Report 2016/2017 Breeding is the essential business process
Significant changes in the KWS Group’s
KWS’ breeding processes are geared toward exploiting
composition
plants’ potential as much as possible and leveraging
The adjustments to the consolidated group are
it to tackle the challenges of modern sustainable
explained in the Notes to the annual financial state-
agriculture. Whether it is plants for producing food,
ments on page 91; they do not constitute significant
fodder or energy, conventional, organic or genetically
changes to the KWS Group’s composition.
modified, we offer farmers the ideal variety for their
purposes. It takes at least ten years to breed a new
New organizational structure
variety. Thanks to our large network of breeding and
KWS is gearing its global administrative organization
trial stations in all the world’s key markets, we can
more strongly toward functional responsibility – as
test the individual candidates under a wide range of
well as harmonizing and standardizing processes –
climatic and local conditions to determine whether the
to help it continue growing profitably and sustainably
varieties are suitable for cultivation. In most markets,
in the coming years. The new model will replace the
variety development ends in an official approval
current, region-based organization. The core objec-
process in which candidates have to meet high quality
tive is to bundle administrative services and control
standards, usually for three years. Only then can the
business processes for 70 countries more efficiently.
varieties be marketed to our customers via the various
The project, which was launched in 2016, is going
distribution channels.
according to plan. The structures for the individual
functions are currently being fleshed out in detail and
External influences on our business
the transformation will be accomplished in the com-
Our breeding and seed multiplication activities are
ing years. No job cuts are envisaged as part of the
subject to weather influences that cannot always
reorganization. KWS plans to create more than 300
be quickly compensated for with countermeasures.
additional jobs worldwide next fiscal year.
Economic policy decisions in the agricultural indus-
try, which is strongly regulated worldwide, may also
Objectives and Strategies
impact our business. You can find more details on
Our strategic planning is the foundation for the
these external factors in our opportunity and risk
KWS Group’s further development. It defines stra-
report beginning on page 53 to 59.
tegic objectives, initiatives and core measures for
existing activities and for potential new fields of busi-
ness. The planning is based on a long-term horizon
(ten years) and includes an analysis and assessment
of market trends, competitors and the KWS Group’s
position. Strategic planning is carried out regularly
The KWS Group’s medium- and long-term objectives
Objectives
Profitable growth
Research & 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% process in yields p.a. for our customers and
developmet 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 ration of 20% to 25% of the KWS Group´s
net income for the year
26 Combined Management Report | Fundamentals of the KWS Group
Annual Report 2016/2017 | KWS Group on a rolling basis. We believe that strategic success
KWS’ business model is geared toward sustainable
factors are, in particular, our intensive research,
success. We are currently working to internationalize
breeding of new, high-yielding varieties and continu-
our sustainability reporting, with the objective of
ous expansion of our global footprint so that we are
expanding it so that it covers the entire KWS Group
on the ground in regional markets with their special
and combining it in the Annual Report by fiscal
climatic conditions.
2017/2018. You can find more information on the cur-
rent reporting on pages 16 to 17.
Corporate objectives of the KWS Group
The corporate objectives listed on the previous page
The KWS Group’s profitable growth is the basis of
were retained without changes in the year under
our dividend policy. Thanks to our successful per-
review. Our business developed essentially in line
formance over the past years, we have been able to
with these objectives in the year under review. Only
pay our shareholders an annual dividend of 20% to
our net sales failed to reach the envisaged growth
25% of the KWS Group’s net income for the year.
target of at least 5%. We deal with this in more detail
This policy is to be retained in the future.
in the explanation of our business performance on
page 39.
Control System
Detailed annual and medium-term operational plans
Our investments and expenditure for research &
are used to control the Group and the three segments
development are the foundation for profitable
Corn, Sugarbeet and Cereals. The medium-term plan
growth. We aim to increase the KWS Group’s net
covers the time frame of the annual plan and the three
sales by an average of 5% to 10% each year and
subsequent fiscal years. It is linked to the strategic
achieve an EBIT margin of at least 10%. In line with
planning, which covers a timescale of ten years.
the principles of our long-term corporate strategy,
we use our earnings strength to expand research
The targets set in the annual and medium-term
& development, our production capacities and our
planning are arrived at on the basis of the strategic
distribution operations. As a result, we bolster the
planning, regional economic and legal situation,
KWS Group’s potential and lay the foundation for
anticipated market trends and assessments of the
future growth.
company’s position in the market and the potential
product performance. In a subsequent bottom-up
The objective of our research & development is
process, which also includes the development of our
to obtain new varieties that are tailored to different
joint ventures, we use these premises to define figures
needs and changing agricultural requirements. Our
for sales volumes and net sales, production capacities
most important objectives across all crops are to
and quantities, the allocation of resources (including
increase yield, breed resistance to plant diseases
capital spending and personnel), the level of material
and pests and improve plants’ quality of processing.
costs and internal charge allocation and the resultant
Conservation of plant genetic resources is also a key
balance sheet data, along with the financial budget. In
concern of ours. Expressed in hard and fast figures,
principle, part of the planning documentation is also
our goal with the new varieties we supply to our cus-
an opportunity/risk assessment that every manager
tomers is to deliver an average yield progress of 1%
must conduct for his or her unit.
to 2% a year.
We will push further ahead with the internationali-
zation of our company. Our commitment in the
subtropical market of Brazil and the joint venture
with our partner Kenfeng in China are part of that.
Markets such as Brazil, with several harvests a year,
not only offer attractive sales potential – especially
for our corn business – but also enable us to cushion
the highly seasonal nature of our business in the
medium to long term.
Fundamentals of the KWS Group | Combined Management Report
27
KWS Group | Annual Report 2016/2017 The planning is compared every quarter with the
performance of the KWS Group and its operating
company’s actual business performance and the
units. The main indicators for the KWS Group are net
updated estimates on the underlying general condi-
sales, operating profitability (EBIT margin) and R&D
tions. If necessary, we initiate suitable countermea-
intensity. KWS’ product segments, which are divided
sures and make adjustments. We update the forecast
into Business Units, are in turn geared toward the
for the current fiscal year at the end of every quarter.
main indicators of net sales and EBIT margin. Since
At the end of each fiscal year, all the units conduct a
the year under review, our Business Units have been
detailed variance analysis of the budgeted and actual
the cash-generating units in accordance with the
results. That serves to optimize our internal planning
actual management reporting structure. Please also
processes.
refer to our explanations in the Notes on page 100 of
Controlling is responsible for coordinating and
documenting all planning processes and our current
Management and control
the Annual Report.
expectations. It monitors compliance with adopted
KWS SAAT SE has a system of dual management and
budgets and analyzes the efficiency and cost-effec-
supervision, consisting of the Executive Board and the
tiveness of business processes and measures. Con-
Supervisory Board. Both bodies have strictly separat-
trolling also advises decision-makers on economic
ed responsibilities and different members. While the
optimization measures. In particular the heads of the
Executive Board manages the company, the Super-
product segments, the regional directors and the
visory Board supervises and advises the Executive
heads of research & development activities and the
Board. These responsibilities have also been retained
central functions are responsible for the content of the
following the company’s conversion into a European
planning and current forecasts.
Stock Corporation (Societas Europaea/SE). The
The Executive Board uses various indicators for
with Section 289a of the German Commercial Code
planning, controlling and monitoring the business
(HGB) contains detailed information on the extensive
declaration on corporate governance in accordance
Breeding and distribution activities of the KWS Group in over 70 countries
28 Combined Management Report | Fundamentals of the KWS Group
Breeding stations
Test locations for trial cultivation
Annual Report 2016/2017 | KWS Group Automated high throughput – a growing population, climate change and demand for sustainability make breeding increasingly complex.
and close cooperation between the Executive Board
Research & Development
and the Supervisory Board and has been published
The objective of our research & development work
at www.kws.com/corporate-governance.
is to create high-performance varieties that meet
various environmental and application requirements
Guidelines for the company’s day-to-day work
and ensure a continuous increase in yield. To enable
Our guiding principles define the framework for our
that, we continue to invest in expanding our research
goal of creating sustainable and profitable growth
and breeding capacities. In fiscal 2016/2017 alone,
for our customers, employees and investors. Our
our R&D expenditure totaled €190.3 (182.4) million.
strategic decisions and day-to-day actions in opera-
The result was that new KWS varieties were awarded
tional business are guided by the following company
around 357 (397) marketing approvals.
principles:
Plant breeding is a very research-intensive and
■■ We increase genetic potential through outstanding
long-term business. Promising parent lines have to
research and top-class breeding programs.
be crossed for each new variety and their progeny
■■ We supply our farmers with seed of the very best
examined and selected with regard to the desired
quality.
traits over a period of several years. At the end of the
■■ We aim to be a strong partner who earns the trust
development process come variety tests in which the
of our customers.
traits of new varieties are determined and compared
■■ We create entrepreneurial freedom and help people
with standard varieties. An average of more than ten
unfold their talents.
years elapse between the first crossing and the actu-
al marketing of a variety.
The KWS Group owes its innovativeness and
success to a growing workforce worldwide. With
To develop new varieties, we maintain our own long-
our central policy framework – Rules, Guidelines
term breeding programs organized in a crop-specific
and Procedures (RGPs) – we create a common
structure. Our breeders are assisted in that by a global
understanding of the freedoms and decision-making
network of various breeding and trial stations. That
processes within KWS. The RGPs are continuously
means candidate varieties can be tested under the
improved by means of constant monitoring and
location-specific conditions in their target markets.
feedback. They complement our existing guiding
principles, with the objective of preserving KWS’
As part of our own research activities, scientists at
unmistakable profile, also against the backdrop of
KWS continuously work on new molecular biology,
the Group’s increasing internationalization.
IT or technical approaches that enable us to develop
Fundamentals of the KWS Group | Combined Management Report
29
KWS Group | Annual Report 2016/2017 The 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
new, improved product traits and further optimize
Increase in sugarbeet’s competitiveness through
our breeding methods. So that the latest scientific
development of a powerful variety portfolio
findings and methods can be integrated faster in our
More and more combinations of resistances, coupled
breeding work, we also complement our research
with a stable and high sugar yield, are required
activities with partnerships with public research
for growing sugarbeet. In order to tackle increasing
institutes and private enterprises.
requirements, we have developed a wide-ranging
portfolio of high-yielding varieties that is a very good
Activities in the past fiscal year
fit for the individual markets. Resistance to rhizo-
mania – a viral disease that can cause losses in yield
Strengthening of KWS’ corn breeding activities
of up to 80% – is still the most important trait. KWS
We were able to strengthen our variety development
is protecting sugarbeet crops successfully by rolling
activities in Europe by establishing two new breeding
out a second resistance based on the new strategy
programs for southwest France and Serbia. As a re-
RIZO 2.0. Moreover, the varieties with tolerance
sult, we not only cover all maturity zones, but also the
to nematodes (threadworms), coupled with better
most important corn regions in Europe. Apart from
resistance to leaf diseases such as Cercospora,
their significance for the markets in southern France
contribute to sustainable and high-yielding sugar-
and Serbia, the new breeding programs are also
beet cultivation.
important for developing varieties in earlier maturity
groups and for improving tolerance to leaf diseases.
First milestones on the path to the hybrid potato
achieved
We were able to expand corn breeding in Argentina
KWS has pursued a long-term, research-intensive
by establishing a new breeding station near the city
goal since 2011, to develop diploid hybrid potatoes
of Cordoba and a second breeding program in the
that can be multiplied and marketed in the form of
country’s main northern cultivation region. We are
seed. Hybrid potato breeding and multiplication
thereby addressing the growing importance of a mar-
using seed instead of tubers is a completely new and
ket that has grown to 4.9 million hectares in the past
highly promising approach. Diploid potatoes permit
two years. We have already captured a market share
far more effective breeding. The cost and effort of
of 5% in Argentina with our own hybrids, which have
transporting seed potatoes and cold storage of them
additional traits for corn from our license agreement
would be eliminated. Seed is also at far less risk of
with one of the world’s leading providers.
being infested with pests.
30 Combined Management Report | Fundamentals of the KWS Group
Annual Report 2016/2017 | KWS Group We were able to achieve initial milestones last fiscal
Successful restructuring of wheat breeding
year. We have now successfully incorporated self-
in France
fertility, a vital requirement for developing diploid
France is one of the key markets for winter wheat in
inbred lines. We have also been able to create
Europe. Since acquiring Momont in full three years
powerful diploid breeding material, which will be
ago, we have therefore made considerable invest-
developed further in subsequent product-oriented
ments in our wheat breeding program, in order to
phases. As a result, the foundations for hybrid potato
improve our competitiveness. We have since been
breeding have been established. However, there is
able to significantly improve the program’s structure,
still a long way to go before it is ready for market.
for example, by splitting it up into different breed-
The first competitive varieties that can be sold in the
ing zones for northern France and for central and
form of seed are expected in ten years.
southern France. That permits more focused culti-
vation of the different market segments. In addition,
First commercial seed production operations
we expanded our breeding activities in the south of
for sunflower
the country. The breeding process was also further
We are now again producing seed for new commercial
optimized by intensive integration of state-of-the-art
sunflower varieties in 2017 – seven years after we
breeding methods, such as marker or double haploid
resumed breeding sunflower – so that sunflower
(DH) technology. We expect the breeding cycle to be
marketing can begin in southeastern Europe in the
reduced by one year in the future as a result of an
coming 2018 sowing season. A key requirement for
increase in DH production and other measures. As
that was successful approval of seven varieties for
a result, we have laid the foundation for improving
the southeastern and Eastern Europe regions, of
our competitive position and becoming one of the
which four are currently being prepared for marketing
leading companies in this important market segment
in 2018. The varieties have thus achieved competitive-
long term.
ness in terms of yield and agronomic characteristics
in the past years. Further successive strengthening
of these young product ranges is envisaged in the
coming years.
Key figures for research & development
in € millions
R&D employees
Ratio of R&D employees
R&D expenditure
R&D intensity1
Marketing approvals for new varieties
1 In % of net sales
avg.
in %
in %
2016/2017
2015/2016
1,889
38.3
190.3
17.7
357
1,830
37.8
182.4
17.6
397
+/–
3.2%
1.3%
4.3%
0.6%
–10.1%
Fundamentals of the KWS Group | Combined Management Report
31
KWS Group | Annual Report 2016/2017
Farmers are not
customers for us.
They’re partners.
Your crop. Your choice. Our dedication. Making decisions. That is independence.
You know what’s best for your farm. We have the fitting variety.
Can emotions always be captured in words? KWS employees at a “Make yourself grow” event.
Employees
Over six generations, our employees have made
38.3% of the total workforce. The average length
KWS what it is today: an innovative, world-leading
of service in Germany was 13.5 years. The ratio of
plant breeding company. That is due in great
women remained virtually unchanged.
measure to their skills, mindsets, ideas and their
satisfaction. As a family-run business, we attach
Employer brand
importance to a work culture of respect, foster
We pursue of a policy of positioning KWS clearly as
employees’ personal and professional development,
part of our presence in international labor markets.
yet also demand a high degree of personal initiative
In doing that, we address interests and needs that
from them. Openness, trust and team spirit define
are important to our current and future employees.
our culture.
Employment trends
Among other things, we are committed to fostering
employees’ personal and professional development
in a targeted manner as well as an appropriate work-
We employed an average of 4,9371 people world-
life balance. Our values of team spirit, closeness,
wide in the year under review, a slight increase of
reliability, independence and foresight accompany us
94; 1,911 (1,908), or around 39% of the workforce,
in all our internal and external activities. Establishing
were employed in Germany. While the headcount
networks and nurturing contacts with professional
in Europe (excluding Germany) remained virtually
groups of importance to us are key elements of our
unchanged, it rose in North and South America and
HR strategy. We launched a cooperation with the
in the rest of the world. Once again, the area that
prestigious Chinese Agricultural University in Beijing
accounted for the most employees was research &
in the last fiscal year, for example.
development: Our colleagues in this field made up
1 All details in this section do not include our equity-accounted companies. Including
these companies, the average headcount is 5,621 (+149).
34 Combined Management Report | Employees
Annual Report 2016/2017 | KWS Group Employees by function1
Number of employees 4,937
Administration 13.3%
Distribution 23.0%
38.3% Research & Development
25.5% Production
Employees by region1
Number of employees 4,937
Rest of world 5.8%
North and South America 26.1%
38.7% Germany
29.5% Europe (excluding Germany)
1 Average number of employees
Development of young talents
Advantages for employees
We give school pupils and students the chance to
KWS is a modern employer, offering its employees
gain initial insights into working life by means of
varied and attractive conditions. Flexible hours and
internships or excursions. We also support talents
the possibility of working from home are established
early on by awarding various scholarships. Like
everyday practices at KWS and help staff reconcile
every new employee, career starters are given a
work and private life. We promote a healthy working
comprehensive introduction to our global, strongly
world through local activities at our sites. Medical
networked business processes when they join us.
checkups, dietary advice and sports courses are
The training KWS offers helps employees develop
offered, for example. There is the opportunity to
practical skills. There are diverse options to choose
obtain “Job Bikes” or join fitness studios at special
from – from vocational training to a dual course
terms. Under our Employee Stock Purchase Plan,
of study. Our instructors and trainee supervisors
employees can acquire shares in their company at
supported a total of 95 young people in seven
preferential conditions. A family-friendly spirit is also
different fields of training on their path to gaining
writ large at KWS. Among other things, KWS gives
their vocational qualifications in fiscal 2016/2017. We
parents financial support for childcare. KWS won
offer university graduates two highly popular spring-
an award in Germany as a family-friendly company
boards for starting their careers – our international
in June 2017, for instance. We also support our
trainee program and the Breeders Academy, which
employees in their involvement in non-profit orga-
is geared specifically to plant breeding.
nizations or work for social causes by giving them
additional freedom to pursue these activities.
Employees | Combined Management Report
35
KWS Group | Annual Report 2016/2017 “Tea kitchen talk” – dialogue and communication are part and parcel of our company.
Employee development
There are also several development programs aimed
Global growth and regional markets mean that a high
at specific target groups. “Sparring Circles” enable
degree of adaptivity is always required. Our range
a profitable sharing of ideas, while “KWS on Board”
of further training measures is therefore open to
provides a comprehensive insight into our corporate
all employees. It is reviewed regularly to ensure it
strategy, culture and values, and shows what we
reflects practical needs and adapted if necessary.
expect from the employee group in question. The
The measures aim, in particular, to enhance our
“Orientation Center” enables us to verify individual
employees’ professional expertise and are discussed
potential and draw up pinpointed development plans.
and defined together with their supervisors in annual
For its part, the “International Development Program”
performance and career development reviews.
offers experts and executives an additional oppor-
tunity to enhance their personal and professional
strengths – also with the aid of internal mentors – in
the international environment.
36 Combined Management Report | Employees
Annual Report 2016/2017 | KWS Group Diversity
interests of KWS SAAT SE’s workforce, always be-
KWS operates in more than 70 countries. This inter-
comes actively involved if matters affecting employees
national range involves more than having a variety
from at least two EU countries are discussed. The first
of languages at KWS. Different cultures, disciplines
new elections to the EEC will be held in the fall of
and personal backgrounds join to enrich our working
2017, two years after it was founded. The period of
climate. We value this individuality and give it our ap-
office will be five years in the future.
preciation, support and respect. KWS also implements
the statutory requirements on equal participation of
At the national level, negotiations on the company
women and men in management positions.
collective bargaining agreement for Germany were
held between the construction, agricultural and
Dialogue with the Works Councils
environmental workers’ union Bauen Agrar Umwelt
The working relationship with our Works Councils
(IG BAU) and KWS SAAT SE in May 2017. Key as-
is close and based on trust. In meetings with man-
pects of the results were a non-recurring payment
agement, issues are discussed openly and common
of €1,500 for fiscal 2017/2018 and a pay increase
solutions are found constructively. Our European
of 3% effective July 1, 2018.
Employee Committee (EEC), which represents the
Welcome to KWS!
Around 1,300 employees
work at our Einbeck
location – the figure was
30% lower 10 years ago.
Employees | Combined Management Report
37
KWS Group | Annual Report 2016/2017 Occupational safety
pany’s needs and continuously improved by being
Early identification and initiation of measures relating
incorporated in the Integrated Management System,
to occupational safety and health for our employees
for example. In Germany, experts in occupational
has top priority for KWS. Work safety is pursued in a
safety and healthcare provide support in these fields.
structured manner, organized to reflect the com-
They are assisted by external service providers.
Key figures for employees in Germany1
Number of employees
of which part-time employees
Ratio of men
Ratio of women
Number of apprentices
Apprentice ratio
Average age (in years)
Length of service (in years)
1 Average number of employees
in %
in %
in %
2016/2017
2015/2016
1,911
1,908
415
51.3
48.7
95
5.0
40.8
13.5
392
50.9
49.1
97
5.1
40.5
13.2
+/–
0.2%
5.9%
0.8%
–0.8%
–2.1%
–2.0%
0.7%
2.3%
Ready, set, go! The motivational shout of “Dragon! Seed!” was raised back in 2014, when the paddles hit the water for the first
time. Apart from regular training, KWS’ “Dragonseeds” team also takes part in dragon boat races.
38 Combined Management Report | Employees
Annual Report 2016/2017 | KWS Group Economic Report
Business Performance
Guidance versus actual business performance
of the KWS Group
General developments and business perfor-
In November 2016, we lowered our guidance for
mance of the KWS Group
the KWS Group’s EBIT margin in our 1st Quarterly
KWS faced an economic environment similar to
Report for 2016/2017. That was due to additional
that of the previous year. There was still a high level
distribution projects and inventory write-downs. The
of supply on international commodity exchanges,
improvement in the KWS Group’s cost of sales ratio
which exerted pressure on prices of agricultural raw
anticipated at the start of the year under review was
materials and – to a varying extent for the different
also slightly lower at the time as a result of the higher
regions and crops – on cultivation area. An exception
cost of sales at the Corn Segment. The increase in
was the sometimes sharp rises in the price of sugar
sugarbeet area in the 2017 cultivation year was well
due to high demand and the increase in sugarbeet
above our expectations. That, and the good perfor-
cultivation area. The latter increased significantly in
mance of our varieties, had a positive effect on the
all important cultivation regions – with the exception
course of our business and was the main reason why
of North America – and also in the EU due to the end
we subsequently raised the net sales and margin
of the European Sugar Market Regime. Exchange
expectations for the KWS Group and for the level of
rates in the KWS Group’s business arena remained
earnings we ultimately generated. Our performance
volatile, with different trends regionally and in some
in Europe and South America in the fourth quarter
cases (in Brazil and Argentina) with a significant
was below expectations, causing the Group’s net
impact on the KWS Group’s net sales, which are
sales to fall below the anticipated 5% growth mark.
consolidated in euros. Political impact on our busi-
ness came from the reduction in state-guaranteed
prices for corn in China, resulting in a decline in the
cultivation area in an important region for KWS. The
Brexit vote had a negative impact, in particular on
cereals business, due to the sharp devaluation of
pound sterling.
Guidance versus actual business performance of the KWS Group
Results for
2015/2016
Guidance for
2016/2017
Adjustments to the guidance
during the year
Results for
2016/2017
Annual
Report
(10/25/2016)
Quarterly
Report Q1
(11/24/2016)
Semiannual
Report
(03/07/2017)
Quarterly
Report 9M
(05/23/2017)
Net sales
R&D intensity
EBIT margin
€1,036.8
million
<+5%
17.6% Around 17%
–
–
Still almost
+5%
Just over
+5%
€1,075.2 million;
+3.7%
–
–
17.7%
12.2%
10.9%
≥11% 10.0 – 10.5%
≥10.5%
≥11%
Economic Report | Combined Management Report
39
KWS Group | Annual Report 2016/2017
Searching for clues in the plant’s genetic makeup: We use cutting-edge chip technology
to uncover a daily trove of data so as to ensure breeding success.
Summary of the segments’ course of business
lowered our guidance for the segment’s EBIT margin
and comparison with the guidance 1
in November 2016. The increase in net sales in the
Every year, the fall sowing season determines the
year under review and the EBIT margin were ultimately
main business trends of the Cereals Segment. The
slightly below the guidance we last published. The
key crop in that is hybrid rye, which accounts for a
reason for that was that our performance in South
very significant share of the segment’s net sales and
America and Europe in the fourth quarter was below
earnings. Net sales of hybrid rye seed fell in the year
expectations.
under review, also due to declines in the cultivation
area in Germany. The devaluation of pound sterling
The main sales season for the Sugarbeet Segment is
also had a negative impact on net sales. These trends
in the third and fourth quarters (January to June). High
led us to adjust our net sales and earnings expecta-
demand for sugar, the related significant expansion in
tions for the Cereals Segment during the year.
the cultivation area for sugarbeet and the performance
of our sugarbeet varieties were the main factors that
In South America, the sales season for the Corn
influenced the successful course of the segment’s
Segment is in the first half of the fiscal year (June to
business. These trends surpassed our expectations
December), whereas we generate most of our sales
and were the reasons why we raised our guidance for
in the other regions in the spring due to the sowing
net sales and income during the year.
season there. The main increases in this segment’s net
sales were in South America. Our oil seed business
There were no adjustments to the guidance for the
in Europe also went well. A rise in the cost of sales,
Corporate Segment during the year. Its net sales and
higher inventory write-downs and additional research
earnings were largely in the range we expected.
& development projects were the reasons why we
1 Including equity-accounted companies. Details on the segments’ business
performance and their economic environment can be found in the segment reports.
40 Combined Management Report | Economic Report
Annual Report 2016/2017 | KWS Group Earnings, Financial Position and Assets
Earnings
the KWS Group was positive. Although the KWS
Group’s cost of sales rose to €493.9 (480.9) million,
Continued growth in net sales
the cost of sales ratio fell to 45.9% (46.4%). That was
We were able to continue the growth of the
the result of an improvement in the cost of sales
KWS Group and increase our net sales in the period
in the Sugarbeet and Cereals Segments. However,
under review by 3.7% to €1,075.2 (1,036.8) million.
the cost of sales ratio at the Corn Segment rose. We
That is mainly attributable to our successful busi-
increased our function costs aimed at securing our
ness performance in the Corn and Sugarbeet Seg-
future growth – i.e., expenditure on distribution and
ments. These gains were made in the regions South
on research & development – by a total of around
America (corn and soybean) and Europe (sugarbeet
€12 million and so in line with our planning. Addi-
and winter rapeseed). However, net sales in the
tional distribution activities focused on the growth
Cereals Segment fell, in particular due to the decline
regions of Brazil, Argentina and Russia. The planned
in hybrid rye business in Germany. Exchange rate
increase in research & development spending to
influences varied from region to region, but all in all
€190.3 (182.4) million resulted in an R&D intensity at
had a slightly positive impact on the KWS Group’s
17.7% (17.6%). Administrative expenses rose mod-
net sales as a result of the performance of the US
erately to €79.8 (76.4) million. The balance of other
dollar and Brazilian real. Assuming constant ex-
operating income and other operating expenses
change rates at the level of the previous year, net
increased by 68.8% to €21.1 (12.5) million. The re-
sales would have been €1,070.3 million.
lated individual items are explained in detail in the
Strong earnings – increase in EBIT
was lower expenses as part of receivables manage-
The weather is an external factor that impacts our
ment. All in all, in fiscal 2016/2017 the KWS Group’s
cost of sales, especially in our local seed production
EBIT increased by 16.7% to €131.6 (112.8) million, and
operations. There were various trends regionally in
the EBIT margin was at 12.2% (10.9%).
Notes on pages 120 to 121. One of the key factors
the year under review, but all in all the impact for
Net sales by segment
Total net sales €1,075.2 million
Corporate 0.4%
Cereals 10.2%
47.1% Corn
42.3% Sugarbeet
Net sales by region
Total net sales €1,075.2 million
Rest of world 6.2%
North and South America 29.5%
21.0% Germany
43.2% Europe (excluding Germany)
Economic Report | Combined Management Report
41
KWS Group | Annual Report 2016/2017 Abridged income statement
in € millions
Net sales
Operating income
Net financial income/expenses
Result of ordinary activities
Income taxes
Net income for the year
Earnings per share
EBIT margin
2016/2017
2015/2016
1,075.2
1,036.8
131.6
16.6
148.2
50.5
97.7
112.8
14.8
127.6
42.3
85.3
+/–
3.7%
16.7%
12.2%
16.1%
19.4%
14.5%
in €
in %
14.78
12.92
14.4%
12.2
10.9
Improvement in net financial income/expenses
Financial Situation
– stable tax rate – net income up well over the
The task of financial management is to ensure
previous year
the KWS Group’s earnings strength and secure
Our net financial income/expenses is made up of
its financial assets long-term. Among other things,
the net income from equity investments and the
extensive liquidity planning, monitoring of cash
interest result. One component of income from equity
flows and hedging the risk of interest rate changes
investments is the income from equity-accounted
and currency risks contribute to that.
financial assets, which fell to €24.9 (26.5) million
due to lower contributions to earnings from our
Higher net income year on year, before allowing
equity accounted companies. The interest result
for noncash expenses and income, coupled with a
improved to €–8.3 (–11.7) million, mainly due to
reduction in long-term provisions, resulted in a re-
better borrowing terms and the lower level of debt
duction in cash earnings to €105.4 (107.3) million. The
capital that was raised. Net financial income/expenses
increase in other liabilities and lower dividends from
was thus €16.6 (14.8) million. Earnings before taxes
our equity-accounted companies had a major impact
(EBT) rose by 16.1% to €148.2 (127.6) million. Income
on net cash from operating activities, which totaled
taxes were €50.5 (42.3) million, giving a tax rate of
€122.4 (125.9) million.
34.1% (33.1%). Overall, the KWS Group generated
net income of €97.7 (85.3) million in the year under
The net cash from investing activities totaled
review. The number of shares was unchanged,
€–64.8 (–92.2) million in fiscal 2016/2017. The main
giving earnings per share of €14.78 (€12.92).
focus of our capital spending in the year under review
was on erecting and expanding production and
research & development capacities. Among other
things, expansion of sugarbeet seed production
and of the greenhouse complex was completed
in Germany. A new corn seed plant was erected in
Ukraine. We also restructured our ERP license land-
scape in the year under review. Total capital spending
in fiscal 2016/2017 was €63.3 (99.6) million. Some of
the investments planned for the year under review
42 Combined Management Report | Economic Report
Annual Report 2016/2017 | KWS Group were shifted to fiscal 2017/2018, which is why our
investment planning for the coming year envisages a
sharp increase in capital spending. Depreciation and
amortization increased slightly to €49.4 million.
Since short-term commercial papers were issued
for the first time in the fiscal year in order to finance
business operations during the year and more capi-
tal debt was repaid than raised compared with the
previous year, the net cash from financing activities
was €–29.6 (21.4). Commercial papers have lower
interest terms than our available credit lines, which
enhances the attractiveness of this financing instru-
ment. The KWS Group’s cash and cash equivalents
at the end of fiscal 2016/2017 rose to €191.4 (163.9)
million.
A syndicated loan with a total volume of €200 million
and running until 2021 still exists with KWS SAAT SE’s
principal bankers to finance operating resources
during the year. It was not utilized in the year under re-
view; the covenants were fulfilled by KWS at all times.
Capital expenditure by segments
Total capital expenditure €63.3 million1
KWS’ transparent spirit is reflected in our building.
Corporate 33.3%
Cereals 7.8%
32.3% Corn
26.6% Sugarbeet
Capital expenditure by region
Total capital expenditure €63.3 million1
Rest of world 2.8%
North and South America 23.3%
41.8% Germany
32.0% Europe (excluding Germany)
1 Without capital expenditures of our at equity consolidated companies
Economic Report | Combined Management Report
43
KWS Group | Annual Report 2016/2017 Selected key figures on the financial position
in € millions
Cash and cash equivalents
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
2016/2017
2015/2016
191.4
122.4
–64.8
–29.6
163.9
125.9
–92.2
+/–
16.8%
–2.8%
–29.7%
21.4
< –100.0%
Assets
€194.9 (185.8) million, meaning their ratio relative
The KWS Group’s balance sheet is impacted by the
to total assets increased slightly. That was due to
seasonal nature of our business. In the course of the
good yields from our seed production operations.
year, there are usually balance sheet items that differ
Current assets at the balance sheet date totaled
significantly from the corresponding figures at the
€815.1 (768.7) million. Net debt at the end of the fis-
balance sheet date, in particular in relation to work-
cal year was €48.5 (87.9) million due to higher cash
ing capital.
and cash equivalents and repayments of borrowings.
Total assets at June 30, 2017, were €1,495.2 (1,436.6)
The allocation to the other reserves meant that equity
million. Changes in working capital had a particular
rose to €836.9 (767.9) million. As a result, noncurrent
impact here. Like in the previous year, the increase
assets were again fully covered by equity. Partial re-
in cash and cash equivalents is attributable to the
payment of the borrower’s note loan and repayment
expansion in our business activities and reversal of
of other long-term loans reduced noncurrent liabilities
securities positions. The increase in trade receiv-
to €358.8 (393.6) million. The equity ratio increased
ables to €302.6 (293.9) million was in line with the
to 56.0% (53.5%) as a result. We have consequently
growth in net sales. Inventories rose by 4.9% to
strengthened our solid financial structure even further.
Abridged balance sheet
in € millions
Assets
Noncurrent assets
Current assets
Equity and liabilities
Equity
Noncurrent liabilities
Current liabilities
Total assets
06/30/2017
06/30/2016
+/–
680.1
815.1
836.9
358.8
299.5
667.9
768.7
767.9
393.6
275.1
1.8%
6.0%
9.0%
–8.8%
8.9%
1,495.2
1,436.6
4.1%
44 Combined Management Report | Economic Report
Annual Report 2016/2017 | KWS Group Segment Reports
Reconciliation with the KWS Group
contributed by the equity-accounted companies are
The KWS Group’s consolidated financial statements
instead included under net financial income/ expenses.
are prepared in accordance with the International
In addition, their assets are included separately in the
Financial Reporting Standards (IFRS). The segments
KWS Group’s balance sheet. Our equity- accounted
are presented in the Management Report in line
companies are included proportionately in the segment
with our internal corporate controlling structure in
reports in line with our internal corporate controlling
accordance with GAS 20. The main difference is
structure.
that we no longer carry the revenues and costs of
our equity-accounted companies in the statement of
The difference from the KWS Group’s statement of
comprehensive income (in accordance with IFRS 11).
comprehensive income is summarized for a number
The KWS Group’s net sales and EBIT will therefore
of key indicators in the reconciliation table:
be lower than the total for the segments. The earnings
Reconciliation table
in € millions
Net sales
EBIT
Number of employees
Capital expenditure
Total assets
avg.
Segments Reconciliation
KWS Group
1,394.0
–318.8
1,075.2
158.8
5,621
67.9
–27.2
–684
–4.7
131.6
4,937
63.3
1,628.8
–133.6
1,495.2
The reconciliation between the KWS Group’s
from corn and EBIT were lower there in the year
statement of comprehensive income and the report-
under review, which therefore had an impact on the
ing by segments in fiscal 2016/2017 is impacted
reconciliation. The Chinese company KENFENG –
by our equity-accounted companies in the North
KWS SEEDS CO., LTD. Increased its contribution
American and Chinese corn markets. That applies
to net sales and income in the year under review,
to all key figures in the above table, with the main
although that still had a minor effect on the
influences coming from North America. Net sales
reconciliation.
Marke Eigenbau. In unserer
Werkstatt in Einbeck werden
mit einer zyklengesteuerten
Drehbank Ersatzteile für
Maschinen gefertigt.
Economic Report | Combined Management Report
45
KWS Group | Annual Report 2016/2017 Corn Segment
Key figures
in € millions
Net sales
EBIT
EBIT margin
Capital expenditure
Capital employed (avg.)
ROCE (avg.)
2016/2017
2015/2016
825.3
58.2
7.1
25.0
728.0
8.0
795.2
63.6
8.0
119.1
654.4
9.7
+/–
3.8%
–8.5%
–79.0%
11.2%
in %
in %
Economic environment: high level of supply
in the cultivation area there. All in all, exchange rate
in most markets
influences had a positive impact on net sales. If ex-
The situation on international corn markets continues
change rate effects had remained constant, the seg-
to be shaped by a high level of supply of goods for
ment’s net sales would have risen by 2.7% to €816.9
consumption. Corn prices on the commodity ex-
million.
changes therefore remained under pressure. Large
corn seed inventories at breeding and distribution
The segment’s income was €58.2 (63.6) million.
companies intensified the fierce competition already
There was a slightly above-proportionate increase in
prevailing. The corn cultivation area declined in
the cost of sales, due among other things to the sig-
Europe, mainly because growing other crops, such
nificant expansion in our corn activities in Brazil and
as oil seed (rapeseed, sunflower, soybean) proved
negative weather influences. The main factor influ-
more attractive for farmers. In China, a reduction in
encing income remained the increase in our function
state-guaranteed prices for corn led to a sharp drop
costs: We increased expenditure on distribution and
in the cultivation area in Heilongjiang, an important
on research & development – which are key to en-
province for us in the country’s northeast. In Argen-
abling our future growth – by a total of €15 million.
tina, however, there was a significant increase in the
corn cultivation area as a result of a change in agri-
The regions: flourishing business in South
cultural export policy. The uncertain political situation
America – high demand for oil seed
in Brazil has had hardly any effect on our business to
Following the extremely good harvest of the previ-
date. The Brazilian real appreciated significantly year
ous year, the corn cultivation area in North America
on year. The US dollar and Russian ruble also gained
came under pressure as a result of low consumer
in value on average for the year. In contrast, the Ar-
prices and fell by 3% to around 37 million hectares
gentinean peso, pound sterling and the Turkish lira
in the 2017 cultivation year. The cultivation area for
depreciated sharply.
soybean rose by 7% and almost has the size of the
area for corn. This climate meant that our corn busi-
The segment’s performance: continued increase
ness declined, while net sales of soybean increased.
in net sales
Our 50:50 joint venture AgReliant generated total net
In the year under review, we increased net sales in
sales of €307.4 million, a drop of 1%.
the Corn Segment – for the 18th time in a row. They
were €825.3 (795.2) million, an increase of 3.8%. We
We increased our net sales in Brazil to more than
generated most of the growth through our corn and
€100 million, among other things thanks to our
oil seed business in South America, although our
products’ good performance. The negative impact
winter rapeseed in Europe also helped increase net
of the weather resulted in good prices for corn for
sales. However, net sales of corn seed in Europe,
consumption and thus a sharp increase of more than
North America and China declined, reflecting the fall
10% in the cultivation area there. The significant
46 Combined Management Report | Economic Report
Annual Report 2016/2017 | KWS Group
Corn
appreciation in the Brazilian real made a significant
contribution to the rise in net sales. Growth in net
sales was dampened slightly by a fourth quarter that
came in below expectations. We grew our net sales
sharply in Argentina. We also benefited here from the
license agreement concluded with a leading provider
of corn traits in 2015, which had a positive effect on
the cost of sales.
In Europe, the Corn Segment was able to maintain its
net sales, despite the fact that the market environ-
ment remained difficult. The very good performance
of our oil seed business helped in that. However, our
net sales from corn seed dropped by 1.6%. In partic-
ular, our performance in the final quarter was below
expectations.
In China, the previously mentioned decline in area
in our important cultivation region in the country’s
northeast resulted in a sharp drop in net sales in
the year under review. However, our corn varieties
remained the leaders in the markets of relevance for
KENFENG – KWS SEEDS CO., LTD. We are making
good progress with developing new varieties and
expect further variety approvals and growth in sales
volumes in the coming years.
Sharp expansion in oil seed business – reduction
in capital spending
Oil seed business in the Corn Segment mainly
comprises the crops soybean (in North and South
America), as well as winter rapeseed and sunflower
(in Europe). There was high demand in all of KWS’
markets, resulting in an increase in net sales of 33.1%
to €125.5 (94.2) million. In particular, winter rapeseed
business in Europe went very well.
The segment’s capital spending was far lower year
on year at €25.0 (€119.1) million. That was mainly
due to the fact that the second tranche for corn
traits is due in fiscal 2017/2018. Capital expenditure
on property, plant and equipment mainly related to
completion of the seed production plant in Ukraine
and purchase of a soybean production plant in North
America.
Just one hectare of corn supplies the
annual oxygen needs of 50 to 60 people
as a by-product.
KWS Group | Annual Report 2016/2017 Sugarbeet Segment
Key figures
in € millions
Net sales
EBIT
EBIT margin
Capital expenditure
Capital employed (avg.)
ROCE (avg.)
2016/2017
2015/2016
454.6
150.9
33.2
16.8
260.4
58.0
439.5
118.6
27.0
17.2
242.9
48.8
+/–
3.4%
27.2%
–2.3%
7.2%
in %
in %
Economic environment: increasing cultivation
Following the decision made the previous year, sale
area
of our seed potato business to Stet Holland B.V. was
The European Sugar Market Regime came to an
successfully completed with the transfer of its as-
end on September 30, 2017, meaning there are no
sets in the UK, France, Poland and Russia. The dis-
longer any restrictions on production volumes, mini-
posal resulted in a reduction of around €27 million in
mum prices for sugarbeet or limits on imports and
net sales, although that was more than compensated
exports. Sugar produced from the 2017 sugarbeet
for by our successful sugarbeet seed business. After
harvest will therefore be marketed fully under the
adjustment for net sales from the potato business,
new conditions for the first time. By the end of 2016,
net sales from sugarbeet seed rose by 10.3%. We
the white sugar price in London increased to €550
grew our net sales mainly in the EU 28 and Eastern
per ton due to surplus demand on the world market,
Europe. A further factor in this success, apart from the
a factor that was given an additional boost by the
increase in the cultivation area and good variety per-
15% increase in the cultivation area in the EU. The
formance, was our adjusted distribution strategy. All in
cultivation area in Eastern Europe also increased,
all, we achieved a global market share of 55% (55%) in
whereas North America was the only large sugarbeet
the year under review. That means KWS remains the
cultivation region to record a fall in area. The perfor-
world’s market leader by far.
mance of the US dollar and the Russian ruble had a
positive impact on net sales, which are consolidated
The segment’s earnings improved, mainly as a re-
in euros. In contrast, the Turkish lira and pound ster-
sult of higher net sales. The cost of sales was also
ling fell in value year on year. All in all, however, there
impacted by special effects (see also the end of
were no appreciable exchange rate effects on the
the paragraph) and fell on the back of a rise in net
segment’s net sales.
sales. Selling expenses rose slightly due to additional
marketing projects, such as in the U.S. Research &
The segment’s performance: increase in net
development activities were expanded in line with
sales and income
our planning. Disease resistance will increase in im-
We again successfully grew our operational business
portance in the medium to long term – among other
in the Sugarbeet Segment and further strengthened
things because the use of pesticides may be further
our market leadership in the year under review,
restricted in the future. Administrative expenses
thanks to constantly good variety performance.
were kept stable. As part of our stock manage-
Net sales rose by 3.4% to €454.6 (439.5) million.
ment activities, expenses from write-downs and
48 Combined Management Report | Economic Report
Annual Report 2016/2017 | KWS Group
Sugar beet
destruction of inventories remained at the level of
the previous year. The segment increased its EBIT
to €150.9 (118.6) million. Positive special effects also
had a significant impact on that. The main ones were
the disposal of our potato business the year before
and a one-off credit as part of our seed production.
The regions: competitiveness thanks to strong
variety performance at a high level
In the segment’s key region, the EU 28, we grew
our net sales from sugarbeet seed by 22% to
€182.4 (149.7) million. Thanks to our consistently
high-yielding portfolio of varieties, the KWS brand
was able to maintain its high market share of
40% (40%). Our market share in North America
remained largely unchanged at well over 80%,
despite an approximately 3% decline in the cultivation
area and a slight fall in net sales. We gained market
share sharply in Eastern Europe thanks to good
variety performance and an adjusted distribution
strategy, and also benefited from a sharp increase
in the cultivation area. We also gained market share
in Turkey and the Middle East.
Investments in seed production – market launch
of CONVISO® SMART draws closer
We pressed ahead with renovating and expanding
our seed production plant at Einbeck in the year un-
der review. The first part of the project was accom-
plished with completion of the new logistics center.
Other investments were the construction of a new
cold store and expansion of a greenhouse complex
in the U.S.
Preparations to launch our new sugarbeet herbicide
technology CONVISO® SMART – a joint project with
Bayer CropScience – progressed further in the year
under review. For fiscal 2017/2018, plans call for the
start of successive launches in initial countries.
A square meter is not enough space for
a car to drive, but it can produce 1½ to
2 kilograms of sugar.
KWS Group | Annual Report 2016/2017 Cereals Segment
Key figures
in € millions
Net sales
EBIT
EBIT margin
Capital expenditure
Capital employed (avg.)
ROCE (avg.)
2016/2017
2015/2016
109.3
10.3
9.4
5.0
114.9
9.0
118.0
9.0
7.6
9.2
120.7
7.5
+/–
–7.4%
14.4%
–45.7%
–4.8%
in %
in %
Economic environment: Cereal commodity
The lower cost of sales year on year had a positive
prices remain low
impact on the segment’s earnings and was able to
The main external factors that influenced our cereal
more than offset the negative impact on them from
operations in the year under review included stag-
the reduction in net sales. That was mainly attribut-
nating cereal prices, devaluation of pound sterling
able to two effects: Negative weather influences in
as a result of the Brexit vote and the declining rye
the previous year led to higher material costs for
cultivation area in Germany. The generally low level
hybrid rye – a situation that returned to normal in the
of cereal prices – in particular that of rye compared
year under review – and there was also a positive
with bread wheat – meant that farmers in Germany
impact from a higher proportion of revenue from
tended to grow less rye, instead preferring wheat.
licenses. While selling expenses were reduced in line
However, the cultivation area for rye, wheat, bar-
with the decline in net sales, our research & develop-
ley and oil seed remained largely stable in other
ment expenditure remained at the level of the previ-
markets.
ous year. The segment’s EBIT rose to €10.3 (9.0) mil-
lion, giving an EBIT margin of 9.4% (7.6%).
The segment’s performance: slight decline in net
sales, but an increase in earnings
The regions: KWS still has good market positions
We were not able to compensate fully for the ef-
While we recorded steadily positive business in our
fects of the devaluation of pound sterling and lower
key markets of the UK, Poland, France and Scan-
net sales of rye in Germany with growth in other
dinavia – which accounted for just over 55% of the
markets, so net sales in the Cereals Segment de-
segment’s net sales – the decline in the segment’s
clined to €109.3 (118.0) million. If exchange rates
net sales was due in particular to lower demand
had remained constant, there would have been a
for hybrid rye seed in Germany. KWS remains the
lower reduction of 4.7% to €112.5 million. Our wheat
clear leader here with 50% of the market, despite a
business was able to follow up on the results of the
slight fall in its share. Our business performance in
previous year thanks to consistently good variety
our strategic growth markets of Ukraine, Russia and
performance and relatively good prices for wheat for
Canada was positive overall.
consumption compared to those for other types of
cereal. In contrast, our net sales from rye fell by 7.0%
France is one of the world’s largest cereal markets in
on the back of a sharp drop in rye cultivation area.
terms of cultivation area (around 5.6 million hectares
Net sales from rapeseed and barley also declined
of wheat and approximately 1.8 hectares of barley).
slightly, mainly due to the devaluation of pound
We successfully integrated the MOMONT Group
sterling. Rye remained the mainstay of the Cereals
in our Cereals Segment following its acquisition in
Segment, contributing 40% of net sales, followed by
September 2014 and can look back on a successful
wheat, barley and rapeseed.
operating performance there. We were able to
50 Combined Management Report | Economic Report
Annual Report 2016/2017 | KWS Group Cereals
cement our market share in a challenging environ-
ment. That was mainly attributable to our good
variety performance and establishment of the KWS
brand in our cereals activities. Our breeding pro-
grams for wheat were focused even more strongly on
addressing local market requirements, and we also
expanded our activities in southern France. We were
also able to launch highly promising new rapeseed
varieties on the market in the year under review.
Development of new cereal varieties – increase in
marketing approvals for the near future
Our capital spending on production plants and
breeding stations – their expansion and moderni-
zation – totaled €5.0 (9.2) million in the year under
review. Our focus remains on the quality of our vari-
eties and seed. With our investments, we are sticking
to our long-term strategy of developing new, con-
tinuously improved varieties to suit our customers’
needs. We also increased the number of new variety
approvals year on year.
Long-term research & development projects, along
with conventional breeding, are vital to the segment’s
future. The positive trends in Eastern Europe and
Canada are due to successful adaptation of our vari-
eties to the demanding growth conditions there. Our
focus in these highly promising regions is on tailored
hybrid rye varieties to tap further market potential.
Another long-term goal is to build and develop hybrid
breeding activities for barley and wheat. Our variety
candidates for hybrid rye occupy top rankings in
terms of yield in the official tests, so we have good
prospects to keep on growing our strong market
position in Germany and other EU countries in the
short term.
Wheat – all a question of type? Wheat’s high
starch content means it has excellent baking
properties; it is the number one staple food
in many countries.
KWS Group | Annual Report 2016/2017 Corporate
Building bridges, bringing people together and fostering communication – that’s the goal of
this building on the KWS campus in Einbeck.
Segment Corporate
Key figures
in € millions
Net sales
EBIT
Capital expenditure
2016/2017
2015/2016
4.8
–60.6
21.1
4.1
–50.1
14.6
+/–
17.1 %
–21.0 %
44.5 %
The Corporate Segment’s net sales are generated
net sales cannot cover these expenses. As a result,
mainly from our farms in Germany. In the past fiscal
the EBIT reported by the segment is impacted every
year they were €4.8 (4.1) million. All cross-segment
fiscal year by regularly increasingly costs, depending
costs are also allocated to the segment. They include
on our business activity. It was €–60.6 (–50.1) million
expenses for all central functions of the KWS Group
at the end of the year under review.
and for long-term research projects. The segment’s
52 Combined Management Report | Economic Report
Annual Report 2016/2017 | KWS Group
Opportunity and Risk Report
As an international seed company, the KWS Group
We see diverse opportunities for the KWS Group to
operates in a dynamically changing environment.
develop the company further in line with our strategy.
That results in risks as well as opportunities, which
To succeed in achieving sustainable, profitable
we have to weigh as the foundation for our entrepre-
growth in the future as well, our prime goal must
neurial decisions.
Opportunities
be to retain and increase our innovativeness. The
latter is expressed in seed business by continuous
increases in the yields of new varieties. The plants’
We understand an opportunity as a development
yield potential can be increased or their resistance
that might have a positive impact on our earnings,
to detrimental influences, of whatever type, can
financial position and assets. At the KWS Group,
be improved. Our goal is to offer our customers an
opportunity management is an integral component
increase in yield of 1% to 2% per annum with our
of the established controlling system between the
new varieties. That is why we constantly expand our
subsidiaries/associated companies and company
research & development activities. In the approval
management. Strategic opportunities of major im-
processes, our varieties are compared directly with
portance, such as joint ventures and acquisitions,
rival products in official performance tests.
are jointly discussed by the KWS Group’s Executive
Board. Even though the strategic orientation is main-
There are also market opportunities as a result of our
ly based on organic growth, selective acquisitions
intensified activities in subtropical regions. Our corn
may also round out KWS’ portfolio.
activities in Brazil and China will enable us to tap
Operational opportunities are identified and exploited
medium to long term, including in other subtropical
in the Business Units of the segments, since they
markets, by developing varieties tailored precisely to
additional sales potential for the KWS Group in the
have the most extensive knowledge of their markets
their climatic conditions.
and products. Targeted measures are formulated
together with the Executive Board so that strengths
Investing in expansion of our production capacities
can be leveraged and strategic growth potentials
and modernization of our seed processing offers
tapped. Extensive strategic planning covering a 10-
additional opportunities to grow further. Further
year time frame is the basis for opportunity manage-
development of our variety portfolio and expansion
ment. In keeping with our earnings-oriented growth
of capacities are accompanied by expansion of our
strategy, we exploit the industry-specific and strate-
international distribution structures to enable even
gic opportunities that arise by means of pinpointed
more tailored and intensive information and advice
investments in production capacities, research &
for our customers on the possible uses of our seed,
development activities, and expansion of distribution.
and so allow us to leverage further sales potential. In
addition, continuous optimization of processes offers
the KWS Group the opportunity to increase produc-
tivity and optimize cost structures.
Opportunity and Risk Report | Combined Management Report
53
KWS Group | Annual Report 2016/2017
Risks
Our risk management system is based on the inter-
We define a risk as a potential future event that might
nationally recognized COSO II model (Committee
have a negative impact on our earnings, financial
of Sponsoring Organizations of the Treadway Com-
position and assets.
mission). The principles of risk management are
enshrined in our Group-wide “Rules, Guidelines &
Organizational structure of the risk
Procedures.” Core contents of it define the scope
management system
of application, responsibilities and reporting lines.
Responsibility for risk management lies with the
Opportunity management is not part of the risk
Executive Board. The group functions Corporate
management system.
Finance, Corporate Compliance Office, Corporate
Development & Communications and Corporate
As part of its audit of the annual financial statements
Controlling operate actively and report to the
for fiscal year 2016/2017, Ernst & Young GmbH
Executive Board (see the figure). The Corporate
Wirtschaftsprüfungsgesellschaft confirmed the
Management Circle, consisting of the first
working order of our system for early detection of
and second management tiers, forms the Risk
risks in accordance with Section 91 (2) of the German
Committee of KWS.
Stock Corporation Act (AktG).
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
■■ Internal revision
■■ Planning/budget
■■ Current expectation
■■ Integrated Management System
■■ Rules, Guidelines & Procedures (RGPs)
■■ Auditing and Case Management
■■ Excellence Through Stewardship (ETS)
■■ Compliance Management System
■■ Compliance Risk Assessment
■■ Compliance training
■■ Auditing
■■ Examinations
54 Combined Management Report | Opportunity and Risk Report
Annual Report 2016/2017 | KWS Group
Our commitment to you – a preview. Corn seed production at our Serbian plant.
Objectives and brief description of the
of assessment has been changed from the expected
risk management system
damage rating method to a new system. It assesses
The objective of the risk management system is to
risks as moderate, significant or critical on the basis
record and assess all the main risks. Moreover, the
of their potential level of damage and likelihood of
identified risks are to be countered by appropriate,
occurrence.
proactive measures to reduce or avoid negative
impacts on our corporate objectives so that we can
Risk management process
survive and thrive on the world market.
The risk management process at KWS consists of
the phases of identification, assessment, control and
The persons responsible for the Group companies
monitoring of risks and risk reporting. As part of risk
and specific functions within the Group are integrat-
identification, the persons responsible for the Group
ed in KWS’ risk management system. They identify
companies and specific functions record individual
and quantify the risks in their sphere of responsi-
risks in their sphere of responsibility on an electronic
bility and formulate measures to control them. This
platform. In doing so, they quantify the likelihood of
enables risks to be identified, quantified, assessed,
the risk occurring and its potential financial impact
reported on and controlled promptly. Risk Manage-
measured by its effect on EBIT.
ment coordinates this process and supports the de-
partments. Risks are assessed by Risk Management
The individual risks are classified as follows as part
and the Risk Committee. Since last year, the method
of the assessment:
Assessment of the risk categories
Very low
< €1 million
1
k
s
i
r
T
B
E
I
Low
€1 million – €2.5 million
Middle
€2.5 million – €10 million
High
≥ €10 million
1 Before measures
Low
< 20%
Moderate
Likelihood of occurrence
Moderate
20% – 60%
Moderate
High
≥ 60%
Moderate
Moderate
Moderate
Substantial
Substantial
Substantial
Critical
Critical
Critical
Critical
Opportunity and Risk Report | Combined Management Report
55
KWS Group | Annual Report 2016/2017
Appropriate countermeasures are formulated and
Overview of the risks
analyzed for all risks where possible. They may be
The table below presents the risks, aggregated into
measures to reduce risks, constant monitoring of
risk categories.
them or taking out insurance. The measures are
weighed on the basis of economic aspects and initi-
Assessment of the risk categories
ated. The individual risks are analyzed in aggregated
form using risk categories and assessed, taking the
Risk category
Likelihood of
occurrence
Extent of
damage
initiated measures into account.
Risks are controlled systematically by regular checks,
which review whether they are still appli cable and
whether the measures and control activities are
effec tive. In addition, experienced independent
auditors examine compliance with the measures
and controls using a risk-based approach. A report
on the status and the process is given to the Audit
Committee of the Supervisory Board every year.
The Group function Corporate Finance reports
regu larly to the Risk Committee on the current risk
Market risks
High
Production risks High
Procurement
risks
Product risks
Environmental
risks
Liquidity risks
Low
Low
Low
Low
Legal risks
Moderate
Personnel risks Moderate
High
Moderate
Low
High
High
Low
High
Low
IT risks
Low
Moderate
situation at the KWS Group and business segments.
In addition, the following deals with the risk catego-
On that basis, the Risk Committee discusses how
ries that we see as having a greater influence on our
to deal with the risks and provides stimuli on how to
future business performance.
control them.
Market risks
Risk management and the internal control
KWS faces regional political risks due to the regulat-
system in the accounting process
ed nature of the agricultural industry in many coun-
The risk management and internal control system
tries. There is uncertainty in Ukraine, and continued
comprises structures and processes designed to
sanctions against Russia might negatively impact
make sure that business transactions are included in
our business activities there. We generated net sales
accounting consistently, promptly and correctly. The
totaling €68.3 (59.9) million in these two countries in
following are examined regularly: the completeness
fiscal 2016/2017. Other important growth countries,
of financial reporting, the Group’s uniform account-
such as Brazil and China, currently face economic
ing, measurement and account allocation stipula-
and political difficulties, too. The economic impact of
tions, and the authorization and access regulations
the United Kingdom’s decision to leave the EU (Brexit)
for IT systems used in accounting. Intra-Group trans-
is not significant for our business as far as can be
actions are consolidated appropriately and in full.
seen at present.
The Group functions Corporate Finance, Group
Our business success depends, among other things,
Accounting and Corporate Controlling are respon-
on the type of market access, our own variety perfor-
sible for consolidated accounting at KWS. A con-
mance and the competitive environment. However,
sistent system tool that is subject to the Group’s
the global economy has an indirect influence on our
regulations on accounting makes it easier to ensure
net sales and income. We address these challeng-
that the consolidated financial statements comply
es with systematic analyses of the market and the
with the rules.
competition and by developing high-yielding varieties
optimized for different climatic zones.
56 Combined Management Report | Opportunity and Risk Report
Annual Report 2016/2017 | KWS Group Currency risks arise in particular from receivables and
Production risks
liabilities denominated in foreign currency. There are
Seed production is dependent on the weather. We
interest rate risks as a result of potential changes to
reduce the risk of crop failures by multiplying seed
market interest rates. The interest payable on financial
in separate locations and regions in Europe, North
obligations with a variable rate of interest may in-
and South America and Asia. In order to prevent
crease. We address currency risks and the risk of in-
and avoid bottlenecks in seed production, we main-
terest rate changes to a reasonable extent through the
tain appropriate stocks and can carry out contra-
usual hedging instruments, to reduce the influence
seasonal multiplication in the winter half-year in the
on the KWS Group’s earnings and assets situation.
southern hemisphere.
In fiscal 2016/2017, we hedged our research & devel-
opment expenditure and intra-group loans to a large
We counter the outage of seed processing plants by
part in order to avoid exchange rate risks.
means of preventive maintenance, risk inspections
and organizational and technical damage prevention
Some of the consolidation projects in the agricultural
programs. To cover economic loss, we have Group-
industry have now been completed. We do not expect
wide property and business interruption insurance.
any negative impact on our business in the short
term. There are opportunities and risks from further
We have established detailed checks and tests to
market consolidation in the medium to long term. For
determine the performance and quality of our seed.
example, market opportunities may arise for KWS in
Quality controls, such as germination and sprouting
general as a result of carve-outs and divestments by
strength tests, are conducted at all stages of produc-
the new groups due to antitrust considerations.
tion. The aim of that is to avoid claims for damages
To grow into a plant under a layer of soil, a seed needs enough strength –
our mighty cereals being tested.
The acquisition or licensing of technologies is cus-
tomary and necessary in the industry. We reduce
the related risks by developing our own innovations,
which may also be attractive to competitors.
Legal risks
KWS faces risks from official proceedings and legal
disputes. Legal disputes are possible, in particular,
with suppliers, licensors, customers, employees, lend-
ers and investors, and may result in payments or other
obligations. There were no significant legal proceed-
ings in fiscal 2016/2017.
Under our compliance policy and the Code of Busi-
ness Ethics, we not only obligate our employees to
undertake to act in accordance with laws, contracts,
internal guidelines and our corporate values, but also
ensure they have the requisite awareness for such
issues. In addition, we regularly hold international
compliance training courses.
Manual detail work is also vital in research into and
development of new, high-yielding varieties.
due to product liability. We also have product liability
Personnel risks
insurance to defend against unjustified claims and to
Our HR strategy aims to recruit and keep qualified
settle justified claims.
Product risks
employees at KWS. KWS also faces the increasingly
challenging task of competing for staff with compa-
nies from outside the industry, too. That may result
Our quality controls of conventional seed include
in the risk of losing employees or not being able to fill
an examination to determine that it is free of GMOs.
vacancies promptly. We counter these risks by con-
Very strict requirements must be met regarding
tinuously further developing our HR strategy. Among
management of genetically modified products, in
other things, we are committed to fostering talents,
particular, to prevent GMOs becoming mixed with
growing our brand as an attractive employer, and
conventional seed. In the absence of a standardized
expanding the KWS Group at new locations in urban
legal threshold value, a number of European coun-
centers.
tries practice a policy of zero tolerance. KWS is a
member of the “Excellence Through Stewardship”
IT risks
(ETS) initiative, an internationally standardized qual-
The KWS Group’s business and production process-
ity management program. It defines how genetically
es, as well as its internal and external communica-
modified plant material is used throughout the prod-
tions, are run on globally networked IT systems. Any
uct lifecycle. By being a member, we signal our clear
outages or attacks can sometimes result in significant
commitment to the responsible use of transgenic
interruptions to business operations. In addition, theft
plant material.
of sensitive data can entail a loss of reputation for us.
58 Combined Management Report | Opportunity and Risk Report
Annual Report 2016/2017 | KWS Group On the basis of our IT security policies, our IT secu-
in personnel risks as a result of the challenging con-
rity organization monitors access to company data.
ditions for finding and keeping qualified employees.
Firewall, antivirus and other programs are kept up
The most important risks are still related to the mar-
to date to avoid losses and damage as a result of
ket and products. Our business in emerging countries
hacking and malware. There is also an extensive
and in foreign currency continues to grow in impor-
authorization concept. We commission IT service
tance and harbors additional, yet calculable currency
providers to constantly examine our IT security and
and political risks. The identified risks do not jeopar-
system authorizations in order to obtain recommen-
dize the existence of the KWS Group, neither individ-
dations for optimization measures through an external
ually nor in their entirety.
risk assessment.
Overall statement on the risk situation by the
novative strength and the quality of our products,
Executive Board
we can seize opportunities and successfully counter
Our risk situation remained essentially the same in
risks as they arise. Risks that jeopardize the compa-
fiscal 2016/2017. There has been a further increase
ny’s existence are not currently discernible.
We feel sure that, thanks to our global footprint, in-
Every plant is different – every variety is special. Finding the right one for you is our goal, motivation and focus.
Opportunity and Risk Report | Combined Management Report
59
KWS Group | Annual Report 2016/2017 Forecast Report
The expectations of management outlined here are
horizon. The signs for our corn business in South
based on our corporate planning and the information
America remain positive and we expect to continue
it takes into account, including market expecta-
to grow net sales there. There is a high level of sup-
tions, strategic decisions, regulatory measures or
ply in the European corn seed market, accompanied
exchange rate trends. They are subject to the same
by continuing pressure on seed prices. Nevertheless,
premises as the consolidated financial statements
we also assume here that our corn seed business
and forecast our business performance up to the end
will grow its net sales slightly. In fiscal 2017/2018, we
of fiscal 2017/2018 on June 30, 2018. In our forecast
will probably not be able to maintain the very good
for the KWS Group’s statement of comprehensive
net sales and earnings from our sugarbeet seed
income in accordance with IFRS, we deal with the
business, meaning net sales and earnings will likely
KWS Group’s anticipated net sales, EBIT and R&D
be lower. In our cereals business, we expect to grow
intensity. Our forecast for the segments contains
revenue from hybrid rye and wheat seed.
comments on our net sales and EBIT expectations,
including the contributions made by our equity-
Due to the strongly seasonal nature of our business
accounted companies, which are included pro-
as a result of the great importance of the spring
portionately in the segment reports in line with our
sowing season and external factors that are difficult
internal corporate controlling structure.
to anticipate, such as the weather and fluctuations
in cultivation area, detailed statements on our net
Changes in the KWS Group’s composition that
sales and earnings performance cannot yet be made
are significant for the forecast
with sufficient reliability. All in all, we currently expect
From fiscal 2017/2018 on, we will pool our rapeseed
the KWS Group to increase its net sales slightly over
activities, which have been managed so far partly
fiscal 2016/2017 and to post a double-digit EBIT mar-
in the Corn Segment and partly in the Cereals Seg-
gin, albeit below the previous year’s 12.2%. As far as
ment, in one unit and transfer it completely to the
can be seen at present, our research & development
Cereals Segment. Consequently, all net sales and
projects will result in an increase in the R&D intensity.
earnings contributed by our rapeseed business will
We are also increasing our capital spending sig-
be allocated to the Cereals Segment.
nificantly. Among other things, we are beginning to
Forecast for the KWS Group’s statement of
tinuing expansion of the sugarbeet seed production
comprehensive income
plant and modernizing a sugarbeet breeding station
expand a research complex at the Einbeck site, con-
We do not expect any significant change to the eco-
in North America.
nomic environment in the coming fiscal year. We also
anticipate largely similar exchange rate influences as
Forecast for the segments
in the previous year – although we have considered
As far as can be seen at present, the Corn Segment
significant changes in the expected average rates in
will grow its net sales in the coming fiscal year. Our
our interim reports. We expect slight devaluations in
anticipated positive business performance will more
local currencies in South America, Eastern Europe
than compensate for the decline in net sales due to
and Turkey. As far as can be seen at present, cultiva-
the previously mentioned transfer of rapeseed busi-
tion area is subject to the usual regional fluctuations.
ness to the Cereals Segment (the segment generated
We do not anticipate significant changes at present;
net sales from rapeseed of just over €20 million in
however, a more concrete picture of the actual trends
the year under review). We assume that net sales will
will largely emerge toward the end of the forecast
increase in Europe on the back of higher volumes,
60 Combined Management Report | Forecast Report
Annual Report 2016/2017 | KWS Group
Research today – reap success tomorrow. We like looking into the future,
so as to live up to the standards our customers and we ourselves demand.
despite the fact that there will still be perceptible
(previous year: 33.2%) despite lower license pay-
pressure on prices. We expect to increase our net
ments for American sugarbeet technology.
sales from corn and soybean seed in North and
South America, but will not be able to do so in South
The Cereals Segment will benefit in the coming fis-
America to the same extent as in the very successful
cal year from taking over the Corn Segment’s rape-
previous year. The other regions will also likely con-
seed activities. That should increase its net sales by
tribute to the segment’s growth in net sales – thanks
around €20 million. As far as can be seen at present,
to a slight increase in revenue from corn seed in
revenue from rye and wheat will increase and barley
China, for instance. The segment’s EBIT margin
business will remain stable. Just about all important
should likewise improve slightly over the previous
cereal regions are expected to contribute to this
year (7.1%).
growth. Net sales for the Cereals Segment will there-
fore probably rise by at least 20% year on year. The
In view of the constant strength of our variety port-
segment’s income will also be strengthened by the
folio and the fact that the cultivation area will remain
planned growth in net sales and earnings from rape-
largely stable, we expect the Sugarbeet Segment
seed business. We currently expect an EBIT margin
to again post very good net sales and earnings in
at around the level of the previous year (9.4%).
the coming fiscal year. However, we will not be able
to replicate our success of the previous year as far
Revenue from our farms in Germany is grouped
as can be seen at present. Our large market share in
in the Corporate Segment. It should be around
North America will probably decline slightly. Demand
€4 million. Since all cross-segment costs for the
in Turkey will likely be lower since our customers
KWS Group’s central functions and basic research
have large stocks of seed. We will be able to offer
expenditure are charged to the Corporate Segment,
our new CONVISO® SMART sugarbeet varieties in a
its income is regularly negative. In our corporate
number of Eastern European countries for the first
planning for fiscal 2017/2018, its costs will tend to
time, albeit it in small quantities to begin with. All in
rise due to the planned expansion of our business
all, the segment’s net sales will therefore probably be
activity and so its income is expected to be between
lower than in the year under review (€454.6 million).
€–65 and €–75 million.
Its EBIT margin will also probably decline slightly
Forecast for the 2017/2018 fiscal year
Statement of comprehensive income
of the KWS Group
Slight increase
Double-digit EBIT
margin below
previous year
Net sales growth
EBIT margin
R&D intensity
Slight increase
Forecast Report | Combined Management Report
61
KWS Group | Annual Report 2016/2017 Only people who like
their job do it well.
Your job. Your passion. Our respect. Being passionate about your
job. That is independence. We not only respect that, it unites us.
Corporate Governance
Corporate Governance Report and Declaration
the following declaration of compliance was issued
on Corporate Governance1
to the effect that the company complies almost fully
Responsible corporate governance has always been
with the code’s recommendations.
of great importance at KWS SAAT SE. Since it was
founded more than 160 years ago, our company’s
You can find detailed information on corporate gov-
successful development has been based on thinking
ernance, also with the contents in accordance with
in the long term and acting in terms of sustainability.
Clause 3.10 of the German Corporate Governance
The Executive Board and the Supervisory Board
Code, in our Corporate Governance Report (which
run and accompany KWS with the goal of ensur-
is also the declaration on corporate governance in
ing it creates sustainable value added. They once
accordance with Section 289a of the German Com-
again examined in the year under review whether
mercial Code (HGB)), which is available in full on our
the company complies with the stipulations of the
website at www.kws.com/corporate-governance. You
German Corporate Governance Code. As a result,
can find the compensation 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 2 of
KWS SAAT SE declare, in compliance with Section
the German Corporate Governance Code, the Super-
161 AktG (German Stock Corporation Act), that the
visory Board is to set a limit on the length of time
company has complied with the recommendations
members can serve on the Supervisory Board.
of the German Corporate Governance Code in the
This recommendation is not complied with, since
version dated May 5, 2015, since the last compliance
in a business with a tradition of family ownership
declaration in October 2016, and with the recom-
like KWS SAAT SE, it would significantly restrict
mendations of the German Corporate Governance
the rights of the family shareholders, who hold a
Code in the version dated February 7, 2017, since its
majority stake in the company.
publication in the official section of the Federal Offi-
cial Gazette, and does now comply and will comply
Clause 7.1.2 Sentence 3 of the German Corporate
with them in the future, with the following exceptions:
Governance Code states that the consolidated finan-
cial statements shall be publicly accessible within
In accordance with Clause 4.2.2 (2) Sentence 3 of the
90 days of the end of the fiscal year and interim
German Corporate Governance Code, the Supervisory
reports within 45 days of the end of the reporting
Board shall consider the relationship between the
period. KWS SAAT SE publishes its consolidated
compensation of the Executive Board and that of
financial statements and interim reports within the
senior management and the workforce overall, particu-
period of time defined in the regulations for the Prime
larly in terms of its development over time, whereby the
Standard of the German Stock Exchange. The com-
Supervisory Board shall determine how senior man-
pany’s seasonal course of business means that it
agers and the relevant staff are to be differentiated.
cannot ensure compliance with the recommended
This recommendation is not complied with, since the
periods in the German Corporate Governance Code.
compensation of the Executive Board, senior manage-
ment and staff is based on variable criteria that defy
Einbeck, October 2017
rigid definition. These criteria include not only generally
applicable yardsticks such as degree of responsibility,
The Supervisory Board
The Executive Board
tasks, personal performance, expertise and the like for
the Executive Board, but also the company’s econom-
ic situation, success and future prospects.
1 Not part of the audited Combined Management Report
64 Combined Management Report | Corporate Governance
Annual Report 2016/2017 | KWS Group
Compensation Report
The total compensation of the Executive Board comprises
The compensation report contains explanations on
the following components:
the salient features, structure and level of the com-
pensation paid to members of the Executive Board
1. A basic fixed annual salary
and the Supervisory Board of KWS SAAT SE. It is
(if applicable with a CEO bonus)
based on the relevant statutory provisions and ori-
2. Fringe benefits
ented toward the pertinent recommendations of the
3. A variable payment in the form of a performance-
German Corporate Governance Code.
related bonus
Compensation for members of the
incentive (LTI) based on the KWS stock price
4. A variable payment in the form of a long-term
Executive Board
5. Any special payments
The compensation system for members of the
6. Pension arrangements
Execu tive Board was set by the Supervisory Board
in 2010 and approved by the Annual Shareholders’
The performance-related bonus (including fringe benefits),
Meeting. Compensation for the members of the
the LTI payment and the total compensation of every
Execu tive Board is based on the size and activity of
member of the Executive Board is limited individually to a
the company, its economic and financial situation, and
maximum amount.
the level and structure of compensation for managing
board members at comparable companies.
The basic annual salary in the year under review for all
Executive Board members was €300 thousand. The Chief
Executive Officer receives an extra “CEO bonus” of 25%
on top of the basic annual salary. The basic compensation
is paid as a monthly salary.
It’s how you look at things ... Whatever your viewpoint: Our seed stands for quality.
Corporate Governance | Combined Management Report
65
KWS Group | Annual Report 2016/2017 Apart from these fixed salaries, there is also
bonus payment in shares of KWS SAAT SE. The
non-monetary compensation in the form of fringe
long-term incentive (LTI) is paid in the form of cash
benefits (such as a company car and a mobile
compensation after a holding period of five years.
phone), contributions to health and nursing care
It was paid for the first time at the beginning of
insurance, and accident insurance in favor of mem-
2017. This payment is calculated on the basis of the
bers of the Executive Board.
share’s performance over the holding period and
The variable payment for Executive Board mem-
ment reporting), measured as the ratio of operating
on the average return on sales (ROS, based on seg-
bers (performance-related bonus) is calculated
income to net sales.
on the basis of a fixed percentage and depends
on the average net income of the KWS Group for
The LTI payment is limited to a maximum of
the past three years (“sustained net income”). The
one-and-a-half times (two times for Dr. Hagen
object of that is for the compensation to reflect the
Duenbostel) of the capital used to acquire the
company’s performance, positive or negative. Addi-
shares.
tional payments for any duties performed in subsidi-
aries and associated companies are offset against
Additional special payments were not granted to
the variable payment (performance-related bonus).
the members of the Executive Board in the year
This – including the fringe benefits – is limited to an
under review.
amount of €500 thousand for each Executive Board
member per fiscal year. If sustainable net incomes
Pension obligations are granted in the form of a
of more than €100 million in each year are gener-
direct obligation to provide benefits, with the annual
ated in two successive years, the upper limit for
anticipated pensions ranging between €13 thousand
the bonus is increased to €600 thousand for each
and €130 thousand, and a defined contribution plan.
Executive Board member as of the following fiscal
In fiscal 2016/2017, €306 (306) thousand was paid to
year.
a provident fund backed by a guarantee for pension
commitments to members of the Executive Board.
Since fiscal year 2010/2011, there has also been
A further €–204 (423) thousand was allocated to
a stock-based bonus system (the first reference
the pension provisions in accordance with IAS 19
point for which was in January 2012). It is intended
(of which €18 thousand was interest expenses and
to act as a long-term incentive and thus support the
€–222 thousand from revaluation effects). Pension
company’s sustainable development. Every member
provisions totaling €1,180 (1,384) thousand were thus
of the Executive Board is obligated to invest a freely
formed for the members of the Executive Board of
selectable amount ranging between at least 20%
KWS SAAT SE.
and at most 50% of the gross performance-related
Pension commitments
in €
Dr. Hagen Duenbostel
Dr. Peter Hofmann
Total
06/30/2017
06/30/2016
Interest
expenses
Revaluation
effects
852,085.00 1,015,005.00
13,195.00
–176,115.00
327,562.00
368,618.00
4,792.00
–45,848.00
1,179,647.00 1,383,623.00
17,987.00
–221,963.00
66 Combined Management Report | Corporate Governance
Annual Report 2016/2017 | KWS Group The total compensation to be reported for the
basic annual salary, including fringe benefits, 47.9%
Executive Board in accordance with Section 314 (1)
(45.4%) by annual variable components and 15.4%
No. 6a of the German Commercial Code (HGB) in
(15.8%) by multi-year variable components. The
conjunction with German Accounting Standard
tables below provide an overview of the total com-
No. 17 (GAS 17) was €3,772 (3,531) thousand in fiscal
pensation granted in the fiscal year on an individual-
2016/2017. 36.7% (38.8%) was accounted for by the
ized basis (excluding pension costs).
Total compensation for the Executive Board 2016/2017
in €
Cash compensation
LTI FV 1
Total
LTI
Basic
compensation
Fringe
benefits
Performance-
related bonus
Total
Grant
Cost
Dr. Hagen Duenbostel
375,000.00
29,316.14
451,457.68
855,773.82 199,823.52 1,055,597.34 316,943.04
Dr. Léon Broers
300,000.00
23,801.47
451,457.68
775,259.15 199,823.52
975,082.67 245,241.93
Dr. Peter Hofmann
300,000.00
22,623.40
451,457.68
774,081.08
82,991.22
857,072.30
25,831.79
Eva Kienle
Total
300,000.00
32,828.59
451,457.68
784,286.27
99,911.76
884,198.03
47,097.33
1,275,000.00 108,569.60 1,805,830.72 3,189,400.32 582,550.02 3,771,950.34 635,114.09
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
1 Long-term incentive fair value
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
Compensation of former members of the Executive
The target compensation, including the agreed
Board and their surviving dependents amounted to
lower and upper limits, is shown under “Grant.” The
€1,774 (1,334) thousand, of which €96 (97) thousand
LTI grants are assessed at the present value at the
was payment under a consultancy agreement. Pen-
time of acquisition of the last tranche of shares. The
sion commitments in accordance with IAS 19 (2011)
details on the receipts show the same figures as
recognized for this group of persons amounted to
under “Grant” for the fixed compensation and fringe
€7,337 (8,027) thousand as of June 30, 2017. The pen-
benefits. The receipt for fiscal years 2016/2017 and
sion commitments for three former members of the
2015/2016 (amounts paid) is stated for the one-year
Executive Board are backed by a guarantee. No loans
variable payment (performance-related bonus), as is
were granted to members of the Executive Board and
the amount for the multi-year variable payments (LTI),
the Supervisory Board in the year under review.
whose planned term ends in the year under review. In
turn, the benefit expense is presented in accordance
In the tables below, we present the individual grants
with IAS 19 and does not constitute a receipt in the
and receipts separately for each member of the
narrower sense, but serves to illustrate the overall
Executive Board, as incurred in the year under review
compensation.
and in the previous year in accordance with the
recommendations in Clause 4.2.5 (3) of the German
Corporate Governance Code (DCGK) in the version
dated February 7, 2017.
Corporate Governance | Combined Management Report
67
KWS Group | Annual Report 2016/2017 Executive Board compensation in keeping with Clause 4.2.5 (3) of the German Corporate Governance Code (DCGK)
in €
Grant
Receipt
2016/2017
2015/2016
2016/2017
2015/2016
min.
max.
Dr. Hagen Duenbostel (Chief Executive Office)
Fixed payment
Fringe benefits
Subtotal
375,000.00
375,000.00
375,000.00
375,000.00
375,000.00
375,000.00
29,316.14
29,316.14
29,316.14
21,522.58
29,316.14
21,522.58
404,316.14
404,316.14
404,316.14
396,522.58
404,316.14
396,522.58
Performance-related bonus
449,253.30
0.00
470,683.86
419,876.27
451,457.68
421,671.27
Total cash compensation
853,569.44
404,316.14
875,000.00
816,398.85
855,773.82
818,193.85
Multi-year variable payment
LTI 2010/2011
LTI 2014/2015
LTI 2015/2016
Subtotal
Pension costs1
414,433.23
205,561.20
199,823.52
0.00
421,140.01
1,053,392.96
404,316.14 1,296,140.01 1,021,960.05 1,270,207.05
818,193.85
103,195.00
103,195.00
103,195.00
107,059.00
103,195.00
107,059.00
Total compensation
1,156,587.96
507,511.14 1,399,335.01 1,129,019.05 1,373,402.05
925,252.85
Maximum compensation2
1,765,000.00 1,765,000.00
Dr. Léon Broers
Fixed payment
Fringe benefits
Subtotal
300,000.00
300,000.00
300,000.00
300,000.00
300,000.00
300,000.00
23,801.47
23,801.47
23,801.47
23,126.34
23,801.47
23,126.34
323,801.47
323,801.47
323,801.47
323,126.34
323,801.47
323,126.34
Performance-related bonus
449,253.30
0.00
476,198.53
419,876.27
451,457.68
421,671.27
Total cash compensation
773,054.77
323,801.47
800,000.00
743,002.61
775,259.15
744,797.61
Multi-year variable payment
LTI 2010/2011
LTI 2014/2015
LTI 2015/2016
Subtotal
Pension costs1
221,364.43
205,561.20
199,823.52
0.00
315,855.01
972,878.29
323,801.47 1,115,855.01
948,563.81
996,623.58
744,797.61
72,000.00
72,000.00
72,000.00
72,000.00
72,000.00
72,000.00
Total compensation
1,044,878.29
395,801.47 1,187,855.01 1,020,563.81 1,068,623.58
816,797.61
Maximum compensation2
Dr. Peter Hofmann
Fixed payment
Fringe benefits
Subtotal
1,547,000.00 1,547,000.00
300,000.00
300,000.00
300,000.00
300,000.00
300,000.00
300,000.00
22,623.40
22,623.40
22,623.40
22,835.78
22,623.40
22,835.78
322,623.40
322,623.40
322,623.40
322,835.78
322,623.40
322,835.78
Performance-related bonus
449,253.30
0.00
477,376.60
335,901.02
451,457.68
337,337.02
Total cash compensation
771,876.70
322,623.40
800,000.00
658,736.80
774,081.08
660,172.80
Multi-year variable payment
LTI 2010/2011
LTI 2014/2015
LTI 2015/2016
Subtotal
Pension costs1
0.00
64,567.30
82,991.22
0.00
131,181.72
854,867.92
322,623.40
931,181.72
723,304.10
774,081.08
660,172.80
76,792.00
76,792.00
76,792.00
78,953.00
76,792.00
78,953.00
Total compensation
931,659.92
399,415.40 1,007,973.72
802,257.10
850,873.08
739,125.80
Maximum compensation2
1,247,000.00 1,047,000.00
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.
68 Combined Management Report | Corporate Governance
Annual Report 2016/2017 | 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
2016/2017
2015/2016
2016/2017
2015/2016
min.
max.
300,000.00
300,000.00
300,000.00
300,000.00
300,000.00
300,000.00
32,828.59
32,828.59
32,828.59
27,966.54
32,828.59
27,966.54
332,828.59
332,828.59
332,828.59
327,966.54
332,828.59
327,966.54
Performance-related bonus
449,253.30
0.00
467,171.41
419,876.27
451,457.68
421,671.27
Total cash compensation
782,081.89
332,828.59
800,000.00
747,842.81
784,286.27
749,637.81
Multi-year variable payment
LTI 2010/2011
LTI 2014/2015
LTI 2015/2016
Subtotal
Pension costs1
0.00
82,224.48
99,911.76
0.00
157,927.50
881,993.65
332,828.59
957,927.50
830,067.29
784,286.27
749,637.81
72,000.00
72,000.00
72,000.00
72,000.00
72,000.00
72,000.00
Total compensation
953,993.65
404,828.59 1,029,927.50
902,067.29
856,286.27
821,637.81
Maximum compensation2
1,247,000.00 1,247,000.00
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.
Compensation for members of the
members of the Supervisory Board receive €5 thou-
Supervisory Board
sand p.a. for their work on the Committee for Exec-
The Supervisory Board’s compensation was set by
utive Board Affairs and €10 thousand p.a. for their
the Annual Shareholders’ Meeting on December 17,
work on the Audit Committee. The members of the
2009, and has remained unchanged since then. It
Supervisory Board are reimbursed for all expenses
is based on the size of the company, the duties and
– including value-added tax – that they incur while
responsibilities of the members of the Supervisory
carrying out the duties of their position.
Board and the company’s economic situation. The
remuneration includes not only a fixed payment of
The compensation for the Supervisory Board in
€28 thousand p.a. and a fixed payment for work on
the year under review was slightly below that of the
committees, but also a performance-related com-
previous year due to the changes in composition
ponent. This component is geared toward the com-
confirmed by the Annual Shareholders’ Meeting in
pany’s long-term development. In keeping with that,
December 2016. Total compensation was €504 (516)
members of the Supervisory Board receive €400 for
thousand exclusive of value added tax. In all, 47%
each full €0.10 by which the average consolidated
(46%) or €238 (238) thousand of the total compen-
annual earnings per share before minority interests
sation is performance-related.
for the past three fiscal years, starting with the fiscal
year for which the compensation is granted, exceeds
At the end of fiscal 2016/2017, the Executive
the amount of €4.00. The performance-related pay-
Board and the Supervisory Board commenced
ment is limited to the amount of the fixed payment.
deliberations on converting the compensation of
KWS SAAT SE’s Supervisory Board to a purely fixed
The Chairman of the Supervisory Board receives
compensation effective the start of fiscal 2017/2018
three times and his or her deputy one-and-a-half
(July 1, 2017) in line with recent trends for the re-
times the fixed compensation of an ordinary mem-
muneration of Supervisory Board members at large
ber. There is no extra compensation for them for
listed companies in Germany. The company believes
work on committees. The Chairman of the Audit
that a fixed compensation structure that is there-
Committee receives €25 thousand p.a. Ordinary
fore no longer linked to the company’s business
KWS Group | Annual Report 2016/2017
Corporate Governance | Combined Management Report
69
Total compensation for the Supervisory Board
in €
Dr. Andreas J. Büchting1
Dr. Arend Oetker2
Dr. Marie Theres Schnell3
Fixed
84,000.00
21,000.00
14,000.00
Work on
committees
Performance-
related
Total
2016/2017
Total
2015/2016
0.00
0.00
0.00
84,000.00
168,000.00
168,000.00
21,000.00
42,000.00
84,000.00
14,000.00
28,000.00
0.00
Hubertus von Baumbach4
35,000.00
12,500.00
35,000.00
82,500.00
81,000.00
Jürgen Bolduan
28,000.00
10,000.00
28,000.00
66,000.00
66,000.00
Cathrina Claas-Mühlhäuser
Dr. Berthold Niehoff
28,000.00
28,000.00
5,000.00
28,000.00
61,000.00
61,000.00
0.00
28,000.00
56,000.00
56,000.00
238,000.00
27,500.00
238,000.00
503,500.00
516,000.00
1 Chairman
2 Deputy Chairman until 12/15/2016
3 Since 12/15/2016
4 Deputy Chairman since 12/15/2016, Chairman of the Audit Committee
performance means that the Supervisory Board
Act (WpHG). In addition, no voting rights accrue to
can better exercise its control function. The change
the company on the basis of the shares it holds (Sec-
is also intended to reflect the greater sphere of re-
tion 71b AktG). The Executive Board is not aware of
sponsibility of the Supervisory Board and its bodies,
any contractual restrictions relating to voting rights
especially that of the Audit Committee. Subject to
or transfer of shares. If there are no restrictions to
the consent of the Annual Shareholders’ Meeting on
voting rights, all shareholders who register for the
December 14, 2017, the compensation system would
Annual Shareholders’ Meeting in time and have sub-
thus be adjusted for the first time since 2009. It would
mitted proof of their authorization to participate in
still comply with the recommendations of the German
the Annual Shareholders’ Meeting and exercise their
Corporate Governance Code in its new form.
voting rights are authorized to exercise the voting
rights conferred by all the shares they hold and have
A resolution to this effect is currently being prepared.
registered. If members of the Executive Board or
executive employees have acquired shares as part
Explanatory Report of the Executive Board in
of the long-term incentive programs, these shares
accordance with Section 176 (1) Sentence 1
are subject to a lock-up period until the end of the
AktG (German Stock Corporation Act) on the
fifth year after the end of the quarter in which they
Disclosures in Accordance with Sections 289 (4)
were acquired. The lock-up period for shares that
and 315 (4) HGB (German Commercial Code)
em ployees have acquired as part of the Employee
Stock Purchase Plans runs until the end of the fourth
Composition of the subscribed capital
year as of when they are posted to the employee’s
The subscribed capital of KWS SAAT SE is €19.8 mil-
securities account.
lion. It is divided into 6.6 million bearer shares. Each
share grants the holder the right to cast one vote at
Direct and indirect participating interests in
the Annual Shareholders’ Meeting.
excess of 10% of the voting rights
Restrictions relating to voting rights or
the following direct or indirect participating interests
the transfer of shares
in the capital of KWS SAAT SE in excess of 10% of
There may be restrictions relating to voting rights or
the voting rights in accordance with Section 21 and
the transfer of shares as a result of statutory or con-
Section 22 of the German Securities Trading Act
The company has been informed by shareholders of
tractual provisions. For example, shareholders are
(WpHG) or elsewhere.
barred from voting under certain conditions pursuant
to Section 136 of the German Stock Corporation Act
The voting shares, including mutual allocations, of
(AktG) or Section 28 of the German Securities Trading
the members and companies of the families Büchting
70 Combined Management Report | Corporate Governance
Annual Report 2016/2017 | KWS Group and Arend Oetker listed below each exceed 10% and
Article 46 of the Council Regulation on the Statute for
total 54.5%:
a European Company (SE Regulation) and Sections 84
and 85 AktG (German Stock Corporation Act). Section
■■ Dr. Drs. h. c. Andreas J. Büchting, Germany
6 of KWS SAAT SE’s Articles of Association also con-
■■ Christiane Stratmann, Germany
■■ Dorothea Schuppert, Germany
tains provisions that relate to the appointment of mem-
bers of the Executive Board by the Supervisory Board
■■ Michael C.-E. Büchting, Germany
and that correspond to the statutory regulations.
■■ Annette Büchting, Germany
■■ Stephan O. Büchting, Germany
■■ Christa Nagel, Germany
■■ Bodo Sohnemann, Germany
Amendments to the Articles of Association
The company’s Articles of Association can be
amended by a resolution adopted by the Annual
■■ Matthias Sohnemann, Germany
Shareholders’ Meeting in accordance with Article 59
■■ Malte Sohnemann, Germany
■■ Arne Sohnemann, Germany
■■ AKB Stiftung, Hanover
of the Council Regulation on the Statute for a Euro-
pean Company (SE Regulation) and Section 179 (1)
AktG (German Stock Corporation Act). In accordance
■■ Büchting Beteiligungsgesellschaft mbH, Hanover
with Article 51 of the SE Implementation Act (SEAG),
■■ Zukunftsstiftung Jugend, Umwelt und Kultur,
Section 179 (2) AktG (German Stock Corporation
Einbeck
Act) and Section 18 of the Articles of Association of
■■ Kommanditgesellschaft Dr. Arend Oetker Vermö-
KWS SAAT SE, amendments to the Articles of Asso-
gensverwaltungsgesellschaft mbH & Co., Berlin
ciation require that at least half the capital stock be
■■ Dr. Arend Oetker, Germany
represented and that a resolution be adopted by the
■■ Dr. Marie Theres Schnell, Germany
Annual Shareholders’ Meeting by a simple majority of
■■ Johanna Sophie Oetker, Germany
the capital stock represented in adoption of the reso-
■■ Leopold Heinrich Oetker, Germany
lution, unless obligatory statutory regulations speci-
■■ Clara Christina Oetker, Germany
■■ Ludwig August Oetker, Germany
fy otherwise. If at least half the capital stock is not
represented in adoption of the resolution to amend
the Articles of Association, the resolution must be
The voting shares, including mutual allocations, of
passed with a majority of at least two-thirds of the
the shareholders stated below each exceed 10% and
votes cast. The power to make amendments to the
total 15.4%.
Articles of Association that only affect the wording
(Section 179 (1) Sentence 2 AktG) has been conferred
■■ Hans-Joachim Tessner, Germany
on the Supervisory Board in accordance with Section
■■ Tessner Beteiligungs GmbH, Goslar
22 of the Articles of Association of KWS SAAT SE.
■■ Tessner Holding KG, Goslar
Shares with special rights and voting control
relation to issuing or buying back shares
Shares with special rights that grant powers of control
The Executive Board is not currently authorized to
Powers of the Executive Board, in particular in
have not been issued by the company. There is no
issue or buy back shares.
special type of voting control for the participating in-
terests of employees. Employees who have an interest
Significant agreements in the event of a change
in the company’s capital exercise their control rights
of control, compensation agreements
in the same way as other shareholders.
Significant agreements subject to the condition of
a change in control pursuant to a takeover bid have
Appointment and removal of members
not been concluded. The compensation agreements
of the Executive Board
between the company and members of the Execu-
Members of the Executive Board of KWS SAAT SE
tive Board governing the case of a change in control
are appointed and removed in accordance with Article
stipulate that any such compensation will be limited
9 (1) and Article 39 (2) of the Council Regulation on
to the applicable maximum amounts specified by the
the Statute for a European Company (SE Regulation),
German Corporate Governance Code.
Corporate Governance | Combined Management Report
71
KWS Group | Annual Report 2016/2017 Others think in quarters.
We think in generations.
Your farm. Your heritage. Our reliability. Doing something you are fully convinced of since
generations. That is independence. That’s why you can rely on us – since 1856.
KWS SAAT SE (Explanations in Accordance with HGB)
References to KWS SAAT SE in the KWS Group’s
which also contains the compliance declaration in
Annual Report
accordance with Section 161 AktG (German Stock
The Management Reports of KWS SAAT SE and
Corporation Act), has been published in the Internet
the KWS Group are combined. The declaration on
at www.kws.com/ir. The following disclosures are
corporate governance in accordance with Section
identical to those of the KWS Group and are printed
289a of the German Commercial Code (HGB),
in this Annual Report:
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 & development
Page(s)
65 to 71
24 to 52
15
29 to 31
KWS SAAT SE is the parent company of the KWS
revenues under the German Accounting Directive
Group. It is responsible for strategic management
Implementation Act (BilRUG) that was applied for
and, among other things, multiplies and distributes
the first time in the fiscal year and relates to reclassi-
sugarbeet and corn seed. It finances basic research
fication of parts of other operating income to sales
and breeding of the main range of varieties at the
revenues. The increase in net sales would be 5.2%
KWS Group and provides its subsidiaries with
excluding the effect from reclassification of €26.5
new varieties every year for the purpose of multi-
million. Research & development expenditure,
plication and distribution. On October 26, 2016,
which is pooled at KWS SAAT SE, was increased
KWS SAAT SE concluded profit and loss transfer
to €165.0 (158.0) million. Selling expenses rose
agreements with Agromais GmbH, Betaseed GmbH,
slightly to €60.6 (59.2) million. Most of the adminis-
Delitzsch Pflanzenzucht Gesellschaft mit beschränk-
trative expenses at the KWS Group are incurred
ter Haftung, Kant-Hartwig & Vogel Gesellschaft mit
at KWS SAAT SE – general and administrative ex-
beschränkter Haftung and KWS Services Deutsch-
penses in the year under review totaled €50.1 (57.0)
land GmbH, each of which applies retroactively as
million. The balance of other operating income and
of July 1, 2016. The Shareholders’ Meetings of the
other operating expenses was €11.0 (100.8) million.
individual companies on October 27, 2016, and the
Significant changes to this item resulted from the
Annual Shareholders’ Meeting of KWS SAAT SE on
amendments in accordance with the German Ac-
December 15, 2016, approved conclusion of the prof-
counting Directive Implementation Act (BilRUG) and
it and loss transfer agreements; as a result, a profit
reclassification of the profit of €67.7 million from the
of €10.5 million was paid to KWS SAAT SE for the
merger of KWS MAIS GMBH as other operating in-
first time for fiscal year 2016/2017 on the basis of the
come last year. Overall, KWS SAAT SE’s operating
agreements.
Earnings
income was thus €23.4 (85.8) million. Net financial
income/expenses is made up of the net income from
equity investments from eleven (eight) companies
KWS SAAT SE’s net sales increased in fiscal
and the interest result. Net income from equity in-
2016/2017 by 11.0% to €508.4 (€458.0) million. This
vestments rose by €7.6 million to €29.9 (22.3) mil-
rise is mainly attributable to the increase in revenue
lion, in particular due to the profits paid over under
from sugarbeet seed and the new definition of sales
the profit and loss transfer agreements concluded
74 Combined Management Report | KWS SAAT SE (Explanations in Accordance with HGB)
Annual Report 2016/2017 | KWS Group in the year under review. The interest result was
Forecast report
€4.2 (4.3) million, on a par with the previous year.
KWS SAAT SE generates the main part of its net
Taking into account tax expenditures, net income
sales from sugarbeet and corn seed business and
for the year was €34.6 (100.8) million. The previous
royalties from basic corn seed. The further develop-
year’s income included a profit of €67.7 million from
ment of sugarbeet seed business depends, among
the merger of KWS MAIS GMBH with KWS SAAT SE.
other things, on the performance of our varieties,
cultivation areas in our key markets and develop-
Financial position and assets
ments in our growth markets in Eastern Europe. We
KWS SAAT SE’s total assets increased in fiscal
currently antici pate a slight increase in net sales from
2016/2017 by €24.5 million to €909.7 (885.2) million.
this business. As a result of a continued challeng-
Fixed assets at the balance sheet date were €498.7
ing environment in the EU and the reassignment of
(485.4) million or, as in the previous year, 54.8%
net sales of rapeseed to the Cereals Segment (see
of total assets. The increase is due in particular to
page 63), we anticipate that the net sales of corn at
property, plant and equipment and financial assets.
KWS SAAT SE will decline slightly. Overall, we expect
Among other things, a new warehouse was built at
net sales for KWS SAAT SE to rise slightly year on
Einbeck, the company cafeteria expanded and ERP
year. KWS SAAT SE’s operating income is mainly im-
licenses acquired in the year under review. Current
pacted by the costs of central functions of the KWS
assets rose to €71.9 (67.0) million due to the increase
Group and cross-segment research & development
in inventories, while receivables and other assets
activities. The planned increase in research & devel-
rose to €211.4 (206.4) million. KWS SAAT SE’s equity
opment spending and a slight decline in income from
increased by €17.0 million to €281.3 (266.4) million,
sugarbeet will probably reduce KWS SAAT SE’s EBIT
giving an equity ratio of 30.9% (30.1%). In addition,
significantly.
liabilities to affiliated companies rose to €266.8
(237.3) million, mainly due to financing activities.
KWS SAAT SE’s total liabilities at the balance sheet
date were €495.3 (493.0) million.
Employees
An average of 1,434 (1,424) people were employed at
KWS SAAT SE in the year under review, of whom 114
(116) were trainees and interns.
Risks and opportunities
The opportunities and risks at KWS SAAT SE are es-
sentially the same as at the KWS Group. It shares the
risks of its subsidiaries and associated companies in
accordance with its respective stake in them. You can
find a detailed description of the opportunities and
risks and an explanation of the internal control and risk
management system (Section 289 (5) of the German
Commercial Code (HGB)) on pages 53 to 59.
Employees from all over the world are our foundation. Dedicated and grounded –
we instill and encourage home-grown talent, our most important asset.
KWS SAAT SE (Explanations in Accordance with HGB) | Combined Management Report
75
KWS Group | Annual Report 2016/2017 Annual Financial Statements
for the KWS Group 2016/2017
78 Statement of Comprehensive Income
79 Balance Sheet
80 Statement of Changes in Equity
82 Cash Flow Statement
83 Notes for the KWS Group 2016/2017
85
91
94
98
119
125
126
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
130
Independent Auditor’s Report
135 Declaration by Legal Representatives
s
t
n
e
m
e
t
a
t
S
l
i
a
c
n
a
n
F
i
l
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 €)
78 Annual Financial Statements | Statement of Comprehensive Income
Note no.
2016/2017
2015/2016
(20)
1,075,244
1,036,774
(21)
(22)
(23)
(24)
(27)
(12)
493,922
581,322
200,676
190,327
79,833
69,706
48,601
480,864
555,910
196,818
182,360
76,402
70,372
57,938
131,591
112,764
3,101
11,410
24,935
–27
16,599
148,190
50,478
97,712
2,662
14,347
26,466
3
14,784
127,548
42,271
85,277
–262
354
–13,194
–3,817
–17,273
8,459
8,459
–8,814
88,898
97,549
163
97,712
88,735
163
88,898
–18,743
–469
–18,858
–17,049
–17,049
–35,907
49,370
85,261
16
85,277
50,681
–1,311
49,370
14.78
12.92
Annual Report 2016/2017 | KWS Group Balance 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.
06/30/2017
06/30/2016
(2)
(3)
(4)
(6)
(7)
(24)
(8)
(8)
(9)
(10)
(11)
(9)
(9)
(9)
87,432
389,345
151,769
3,069
2,011
32
46,535
680,193
194,919
13,562
302,571
9,455
181,913
59,975
40,573
12,064
95,098
378,639
147,511
2,192
3,382
96
41,039
667,957
185,783
12,496
293,881
30,679
133,224
55,451
45,070
12,090
815,032
768,674
1,495,225
1,436,631
Note no.
06/30/2017
06/30/2016
(13)
(12)
(24)
19,800
5,530
809,132
2,534
836,996
125,408
200,828
1,217
12,721
1,306
17,405
(14)
358,885
72,774
39,065
75,400
25,620
16,318
70,167
299,344
658,229
(15)
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
Total equity and liabilities
1,495,225
1,436,631
Balance Sheet | Annual Financial Statements
79
KWS Group | Annual Report 2016/2017 Statement of Changes in Equity
July 1 to June 30
in € thousand
Subscribed
capital
Capital
reserve
Accumulated
Group equity
from
earnings
Parent company
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
07/01/2015
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
Dividends paid
Net income for the year
Other comprehensive income
after tax
Total consolidated gains
(losses)
Change in shares of
minority interests
06/30/2017
19,800
5,530
724,943
–19,800
85,261
3,233
9,930
–91
1,456
731,050
10,424
–1,878
0
–17,395
85,261
–17,395
–469
–469
333
333
–17,049
–17,049
0
0
50,681
16
–1,348
19,800
5,530
3,596
794,000
–19,800
97,549
–14,162
9,461
242
–50,800
1,456
765,527
0
0
97,549
–13,194
–3,817
–13,194
–3,817
–262
–262
8,459
8,459
19,800
5,530
871,749
–27,356
5,644
–20
–42,341
1,456
834,462
0
0
Revaluation
of defined
benefit
plans
–33,751
Other
trans-
actions
Adjustments
Revaluation
from
of defined
currency
translation
benefit
plans
–329
16
–6,728
3,383
0
163
–19,800
85,261
–34,580
3,596
–19,800
97,549
–8,841
0
88,735
163
0
–61
3,485
–1,348
3,132
–94
0
0
0
–94
Other
trans-
actions
–878
21
21
0
–857
0
0
7,668
–329
16
–1,327
–1,311
–3,596
2,432
163
0
0
163
–857
–61
2,534
0
0
0
0
0
738,718
–20,129
85,277
–35,907
49,370
0
767,959
–19,800
97,712
–8,814
88,898
–61
836,996
80 Annual Financial Statements | Statement of Changes in Equity
Annual Report 2016/2017 | KWS Group Statement of Changes in Equity
July 1 to June 30
in € thousand
Subscribed
capital
Capital
reserve
Accumulated
Group equity
from
earnings
Parent company
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
19,800
5,530
–33,751
1,456
731,050
10,424
–1,878
0
–17,395
85,261
–17,395
–469
–469
333
333
–17,049
–17,049
0
0
–329
16
–19,800
85,261
–34,580
–1,348
50,681
16
–1,348
19,800
5,530
–14,162
9,461
242
–50,800
1,456
765,527
3,596
Adjustments
from currency
translation
of equity-
accounted
financial
assets
9,930
Reserve for
available-
for-sale
financial
assets
–91
Adjustments
from currency
translation
3,233
724,943
–19,800
85,261
3,596
794,000
–19,800
97,549
07/01/2015
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
Dividends paid
Net income for the year
Other comprehensive income
after tax
(losses)
Total consolidated gains
Change in shares of
minority interests
06/30/2017
0
0
97,549
–13,194
–3,817
–13,194
–3,817
–262
–262
8,459
8,459
19,800
5,530
871,749
–27,356
5,644
–20
–42,341
1,456
834,462
0
0
0
–61
3,485
–6,728
3,383
0
163
–19,800
97,549
–8,841
0
88,735
163
3,132
–94
0
0
0
–94
Other
trans-
actions
–878
21
21
0
–857
0
0
7,668
–329
16
–1,327
–1,311
–3,596
2,432
0
163
0
163
–857
–61
2,534
738,718
–20,129
85,277
–35,907
49,370
0
767,959
–19,800
97,712
–8,814
88,898
–61
836,996
0
0
0
0
0
Statement of Changes in Equity | Annual Financial Statements
81
KWS Group | Annual Report 2016/2017 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
Income tax expense (+)/-income (–)
Income tax payments (–)/-refunds (+)
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
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.
2016/2017
2015/2016
97,712
85,277
49,353
–10,906
–30,751
105,408
–4,594
–1,692
54,077
48,187
1,184
–27,351
107,297
5.562
849
40,803
–52,610
–46,916
–26,590
–26,973
31,494
16,861
122,354
2,840
–57,125
2,930
–12,752
626
–1,279
0
–64,760
–19,860
125,256
–151,345
16,345
–29,604
27,990
–525
163,903
191,368
(1)
(2)
(3)
(4)
19,560
25,682
125,864
1,101
–67,745
87
–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
82 Annual Financial Statements | Cash Flow Statement
Annual Report 2016/2017 | KWS Group Notes for the KWS Group 2016/2017
The consolidated financial statements of KWS SAAT SE and
In addition, the following standards had to be applied for the
its subsidiaries were prepared under the assumption that
first time in fiscal year 2016/2017: Amendments to IFRS 11 –
the operations of the companies will be continued and ap-
Joint Arrangements: Accounting for Acquisitions of Interests
plying Section 315a of the German Commercial Code (HGB).
in Joint Operations; Amendments to IFRS 10, IFRS 12 and
They comply with the International Financial Reporting Stan-
IAS 28 – Investment Entities: Applying the Consolidation
dards (IFRS) as applicable in the European Union (EU).
Exception; Annual Improvements to the International Finan-
cial Reporting Standards (2010–2014 cycle); Amendments
KWS SAAT SE, the ultimate parent company of the KWS
to IAS 16 and IAS 38 – Property, Plant and Equipment and
Group, is an international company based in Germany, has
Intangible Assets: Clarification of Acceptable Methods of
its headquarters at Grimsehlstrasse 31, 37574 Einbeck,
Depreciation and Amortization; Amendments to IAS 16 and
Germany, and is registered at Göttingen Local Court under
IAS 41 – Property, Plant and Equipment and Agriculture:
the number HRB 204567. Since it was founded in 1856,
Bearer Plants; Amendments to IAS 27 – Separate Financial
KWS has specialized in developing, producing and dis-
Statements: Equity Method in Separate Financial State-
tributing high-quality seed for agriculture. KWS covers the
ments; Amendments to IAS 1 – Presentation of Financial
complete value chain of a modern seed producer – from
Statements: Disclosure Initiative. The new standards and
breeding of new varieties, multiplication and processing, to
interpretations to be applied did not result in any significant
marketing of the seed and consulting for farmers. KWS’ core
impact.
competence is in breeding new, high-performance varieties
that are adapted to regional needs, such as climatic and soil
The following standards and interpretations, or revisions of
conditions.
standards or interpretations, were not applied in the year
under review, as they have not yet been adopted by the
Unless otherwise stated, all the figures in the Notes are in
EU or application of them for fiscal 2016/2017 was not yet
thousands of euros (€ thousand) and have been rounded in
mandatory:
accordance with standard commercial practice.
To be applied in the future
Financial reporting standards and interpretations
Mandatory first-time application
Amendments to IAS 12 – Recognition of Deferred Tax Assets for Unrealized Losses
Fiscal year 2017/2018
Amendments to IAS 7 – Statement of Cash Flows: Disclosure Initiative
Amendments to IFRS 2 – Classification and Measurement of Share-based
Payment Transactions
Amendments to IFRS 4 – Applying IFRS 9, Financial Instruments with IFRS 4,
Insurance Contracts
Annual Improvements to the International Financial Reporting Standards
(2014–2016 cycle)
Amendments to IAS 40 – Transfers of Investment Property
IFRIC 22 – Foreign Currency Transactions and Advance Consideration
IFRS 15 – Revenue from Contracts with Customers
IFRS 9 – Financial Instruments
IFRS 16 – Leases
Fiscal year 2017/2018
Fiscal year 2018/2019
Fiscal year 2018/2019
Fiscal year 2018/2019
Fiscal year 2018/2019
Fiscal year 2018/2019
Fiscal year 2018/2019
Fiscal year 2018/2019
Fiscal year 2019/2020
Notes for the KWS Group 2016/2017 | Annual Financial Statements
83
KWS Group | Annual Report 2016/2017
IFRSs that have been published and adopted by the EU,
KWS Group are currently being examined. The quanti-
but not yet applied
tative effects cannot be estimated reliably at present.
The IASB published IFRS 15 (Revenue from Contracts
There may be effects, in particular, pursuant to the new
with Customers) in May 2014. IFRS 15 is the new standard
regulations on impairments. The main balance sheet item
for recognizing revenue and must be applied in general
for which anticipated losses will have to be recognized as
to all contracts with customers. The core principle of
an impairment in future are trade receivables. However,
IFRS 15 is recognition of revenue to the amount to which
the vast majority of them are covered by credit insurance
a consideration from the customer for the assumed
or other hedging instruments and so, on the basis of an
performance obligation (delivery of goods or provision
initial assessment, no significant impact on earnings can
of services) is expected. This principle is delivered in a
be expected. The new regulations on hedging relation-
five-step model framework. In step 1, the contract with a
ships do not have any impact, since the KWS Group
customer is identified. In step 2, the distinct performance
does not currently report any transactions that qualify for
obligations in the contract are identified. In step 3, the
hedge accounting. In addition, IFRS 9 entails new obliga-
transaction price is determined and is then allocated to
tions to disclose qualitative and quantitative information.
the separate performance obligations in the contract in
The KWS Group will apply IFRS 9 for the first time for the
step 4. In step 5, revenue is recognized when (at a point
fiscal year starting on July 1, 2018.
in time) or as (over time) the identified distinct perfor-
mance obligation is satisfied. IFRS 15 replaces IAS 11
IFRSs that have been published, but not yet adopted by
(Construction Contracts), IAS 18 (Revenue), IFRIC 13
the EU or applied
(Customer Loyalty Programmes), IFRIC 15 (Agreements
In January 2016, the IASB published the standard IFRS 16
for the Construction of Real Estate), IFRIC 18 (Transfers
(Leases), which is intended to replace the current standard
of Assets from Customers) and SIC-31 (Revenue-Barter
IAS 17 (Leases) and the related interpretations IFRIC 4 (Deter-
Transactions Involving Advertising Services). The KWS
mining Whether an Arrangement Contains a Lease), SIC-15
Group will apply IFRS 15 for the first time for the fiscal
(Operating Leases – Incentives) and SIC-27 (Evaluating the
year starting on July 1, 2018. This fiscal year, the KWS
Substance of Transactions in the Legal Form of a Lease).
Group initiated a Group-wide project to assess the im-
IFRS 16 introduces a single lease accounting model, requiring
pacts and to implement the new regulations. The quan-
lessees to recognize assets and liabilities for all leases. The
titative effects cannot be estimated reliably before the
previously required distinction between finance and operating
project has been completed. Following an initial analysis,
leases no longer applies to the lessee. In the future, all rights
it is still necessary to examine in detail whether there are
and obligations from leases are to be recognized as right-of-
further distinct services in addition to seed delivery. As
use assets and lease liabilities in the balance sheet. The only
far as can be seen at present, no significant impact on the
exceptions are for short-term leases of one year or less and
KWS Group’s assets, financial position and earnings is
for “small ticket leases” (e.g., small items of office furniture
expected from application of IFRS 15. In addition, IFRS 15
and business equipment). This balance sheet extension
entails new obligations to disclose qualitative and quanti-
means that liabilities will increase and the equity ratio be re-
tative information.
duced accordingly. For leases currently classified as operat-
ing leases, the lessee will recognize depreciation and interest
IFRS 9 (Financial Instruments) replaces the current stan-
expenses instead of leasing costs in the future. Among other
dard for reporting financial instruments, IAS 39 (Financial
things, this amendment will result in an improvement in oper-
Instruments: Recognition and Measurement). Adoption
ating income. The approach to lessor accounting adopted in
of IFRS 9 means that measurement of financial assets
IFRS 16 is substantially unchanged from that in IAS 17. In ad-
at “amortized cost” or “fair value” will depend, in future,
dition, IFRS 16 entails new obligations to disclose qualitative
on the underlying business model and the contractual
and quantitative information. The KWS Group will apply IFRS
terms giving rise to cash flows. The new regulations in
16 for the first time for the fiscal year starting on July 1, 2019.
IFRS 9 relating to recognition of impairments are based
This fiscal year, the KWS Group initiated a Group-wide
on the premise of providing for expected losses. Up
project to assess the impacts and to implement the new
to now, impairments have only been recognized if they
regulations. The quantitative effects cannot be estimated
relate to losses that have already occurred. In addition,
reliably before the project has been completed.
the regulations on recognition of hedging relationships
have been amended. They are now more strongly geared
The other published standards that have not yet been adopted
to the entity’s risk management strategy. The effects of
by the EU are not expected to have a significant impact on
IFRS 9 on the consolidated financial statements of the
the KWS Group’s assets, financial position and earnings.
84 Annual Financial Statements | Notes for the KWS Group 2016/2017
Annual Report 2016/2017 | KWS Group 1. General Disclosures
Companies consolidated in the KWS Group
Joint ventures are consolidated using the equity method in
application of IFRS 11 and IAS 28. The basis for a joint ven-
ture is a contractual agreement with a third party to manage a
The consolidated financial statements of the KWS Group in-
joint venture together. In the case of joint ventures, the parties
clude the single-entity financial statements of KWS SAAT SE
who exercise joint management have rights to the net assets
and its subsidiaries in Germany and other countries, as
of the agreement.
well as joint ventures and associated companies, which are
carried using the equity method, and a joint operation. A
In the case of joint ventures carried in accordance with the
company is a subsidiary if KWS SAAT SE has existing rights
equity method, the carrying amount is increased or reduced
that give it the current ability to control its relevant activi-
annually by the equity capital changes corresponding to the
ties. Relevant activities are the activities that significantly
KWS Group’s share. In the case of first-time consolidation
affect the company’s returns. Control therefore only exists
of equity investments using the equity method, differences
if KWS SAAT SE has the ability to use its power to affect
from first-time consolidation are treated in accordance
the amount of the variable returns. Control can usually be
with the principles of full consolidation. The changes in the
derived from holding a majority of the voting rights direct-
proportionate equity that are recognized in profit or loss are
ly or indirectly. Subsidiaries and joint ventures that are
included, along with impairment of goodwill, under the item
considered immaterial for the presentation and evaluation
“Income from equity-accounted financial assets” in the net
of the financial position and performance of the Group are
financial income/expenses. Associated companies in which
not included. Details on the changes in the consolidated
a stake between 20% and 50% is held are likewise mea-
group are provided in the section “Disclosures on the annual
sured using the equity method.
financial statements – Consolidated group and changes in
the consolidated group.”
Consolidation methods
As part of the elimination of intra-Group balances, borrow-
ings, receivables, liabilities and provisions are netted between
the consolidated companies. Intercompany profits not re-
The single-entity financial statements of the individual sub-
alized at Group level are eliminated from intra-Group trans-
sidiaries included in the consolidated financial statements
actions. Sales, income and expenses are netted between
and the single-entity financial statements of the joint ventures
consolidated companies, and intra-Group distributions of
and associated companies included using the equity method
profit are eliminated.
and of the joint operation were uniformly prepared on the
basis of the accounting and measurement methods applied
Deferred taxes on consolidation transactions recognized
at KWS SAAT SE; they were audited by independent auditors.
in income are calculated at the tax rate applicable to the
For company acquisitions, capital consolidation follows the
company concerned. These deferred taxes are aggregated
purchase method by allocating the cost of acquisition to the
with the deferred taxes recognized in the separate financial
Group’s interest in the subsidiary’s remeasured equity at the
statements.
time of acquisition. Any excess of interest in equity over cost
is recognized as an asset, up to the amount by which fair value
Minority interests are recognized in the amount of the imputed
exceeds the carrying amount. Any goodwill remaining after
percentage of equity in the consolidated companies.
first-time consolidation is recognized under intangible assets.
According to IAS 36, goodwill is not amortized, but tested
for impairment at least once a year at the end of the year
(impairment-only approach). Investments in unconsolidated
companies are carried at cost.
1. General Disclosures | Notes for the KWS Group 2016/2017 | Annual Financial Statements
85
KWS Group | Annual Report 2016/2017
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 independent
sheet date
entities are translated into euros using the functional
currency method and rounded in accordance with standard
The following exchange rates were applied in the consoli-
commercial practice as follows:
dated financial statements for the main foreign currencies
relative to the euro:
Exchange rates for main currencies
1 EUR/
ARS
BRL
GBP
RUB
UAH
USD
Argentina
Brazil
UK
Russia
Ukraine
USA
Rate on balance sheet date
Average rate
06/30/2017
06/30/2016
2016/2017
2015/2016
18.80320
3.76780
0.87865
67.49930
29.78678
1.14030
16.67190
17.03851
3.61730
0.82615
3.52999
0.86129
71.21020
66.48928
27.56354
28.59361
1.11430
1.09302
13.58600
4.11588
0.75290
74.54532
26.60710
1.10631
The difference resulting from the application of annual
Recognition of income and expenses
average rates to the net profit for the period in the income
Net sales include sales of products and services, less
statement is taken directly to equity. According to IAS 21,
revenue reductions. Net sales from the sale of products are
exchange differences resulting from loans to foreign sub-
realized at the time at which the opportunities and risks pass
sidiaries are reported in the Other comprehensive income
to the buyer. Income from service transactions is recognized
and are not recognized in profit or loss.
if it is likely that the economic benefit will accrue to the Group
and the amount of income can be reliably determined. Other
Classification of the statement of comprehensive income
income, such as interest, royalties and dividends, is recog-
The KWS Group has prepared the income statement using
nized in the period it accrues as soon as there is a contractual
the cost-of-sales method. The costs for the functions
or legal entitlement to it.
include all directly attributable costs, including other taxes.
Research & development expenses are reported separately
Performance-based public grants are carried under the other
for reasons of transparency.
operating income as part of profit/loss.
Accounting policies
Operating expenses are recognized in the income statement
upon the service in question being used or as of the date on
Consistency of accounting policies
which they occur.
The accounting policies are unchanged from the previous
year, with the exception of the change for cash-generating
units as part of impairment testing.
All estimates and assessments as part of accounting and
measurement are continually reviewed; they are based
on historical patterns and expectations about the future
regarded as reasonable in the particular circumstances.
86 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 1. General Disclosures
Annual Report 2016/2017 | KWS Group Intangible assets
In addition to directly attributable costs, the cost of self-
Purchased intangible assets are carried at cost less
produced plant or equipment also includes a proportion of
straight-line amortization and impairment losses. It is neces-
the overheads and depreciation/amortization.
sary to examine whether the useful life of intangible assets
is finite or indefinite. Goodwill has an indefinite useful life.
Goodwill and intangible assets with an indefinite useful life
Useful life of property, plant and equipment
are not amortized, but tested for impairment at least once a
Buildings
year. The Executive Board has adapted internal budgeting
and reporting processes due to the fact that the Group’s
business activities have been centralized in Business Units
across all companies. That resulted in a change in the
cash-generating units at the Group, since monitoring and
controlling (including of goodwill) has been the responsi bility
of the main decision makers at the level of the Business
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
Units and no longer at the level of the legal entities since
Low-value assets are fully expensed in the year of purchase;
fiscal 2016/2017. In the fiscal year, the impairment test was
they are reported as additions and disposals in the year
conducted using the old system at the level of the legal
of purchase in the statement of changes in fixed assets.
entities and using the new system at the level of the Busi-
Impairment losses on property, plant and equipment are
ness Units, and did not result in any need to recognize an
recognized according to IAS 36 whenever the recoverable
impairment loss in either case.
amount of the asset is less than its carrying amount. The
recoverable amount is the higher of the fair value less costs
Intangible assets acquired as part of business combinations
to sell or the value in use. If the reason for an earlier im-
are carried separately from goodwill if they are separable
pairment loss on property, plant and equipment no longer
according to the definition in IAS 38 or result from a contrac-
applies, its value is increased to up to the amount that
tual or legal right.
would have resulted if the impairment loss had not occurred,
taking depreciation into account. In accordance with IAS 20,
The service life of intangible assets is as follows:
government grants for assets are deducted from the costs
Useful life of intangible assets
Breeding material, proprietary rights
to varieties and trademarks
Other rights
Software
Distribution rights
Trait licensing agreements
Useful life
10 years
5 – 10 years
3 – 8 years
5 – 20 years
15 years
of the asset. Any deferred income is not recognized.
The residual values, useful economic lives and methods of
depreciation for property, plant and equipment are reviewed
at the end of each fiscal year and adjusted prospectively, if
necessary.
Leases
A lease is an agreement whereby the lessor conveys the
right to use an asset for an agreed period of time to the
Property, plant and equipment
lessee in exchange for a payment or a series of payments.
Property, plant and equipment is measured at cost less
A distinction is made between finance leases and operat-
straight-line depreciation and impairment losses. Deprecia-
ing leases. A finance lease relates to leasing transactions
tion of an asset commences when the asset is at its location
in which all the risks and rewards incidental to ownership
and is in the condition necessary for it to be capable of oper-
of an asset are transferred to the lessee. Otherwise a lease
ating in the manner intended by management. Depreciation
is classified as an operating lease. An assessment as to
of an asset ends when the asset has been fully expensed or
whether the agreement is a lease or an agreement involves
is classified as held for sale in accordance with IFRS 5 or, at
a lease is made when the contract is concluded.
the latest, when it is derecognized.
If property, plant and equipment is sold or scrapped, the
of the asset’s fair value and the present value of the mini-
profit or loss from the difference between the proceeds and
mum lease payments at the start of the lease is capitalized
residual carrying amount is recognized under the other oper-
in the balance sheet and simultaneously recognized under
ating income or other operating expenses.
the financial liabilities. The minimum lease payments are
If the KWS Group is the lessee in a finance lease, the lower
1. General Disclosures | Notes for the KWS Group 2016/2017 | Annual Financial Statements
87
KWS Group | Annual Report 2016/2017 divided into a repayment component of the residual debt
The fair value of financial liabilities with a long-term fixed in-
and financing costs, which are determined in accordance
terest rate is determined as present values of the payments
with the effective interest method. The leased asset is
related to the liabilities, using a yield curve applicable on the
written down using the straight-line method of depreciation
balance sheet date.
over its estimated useful life or the term of the contract,
whichever is shorter. An operating lease is a lease that
Derivative instruments are measured at fair value; they
does not involve a finance lease. Lease payments under an
can be assets or liabilities. Common derivative financial
operating lease are recognized as operating expense in the
instruments are essentially used to hedge interest rate
income statement on a straight-line basis over the lease’s
and foreign currency risks. The fair value of the derivative
term.
Financial instruments
financial instruments is measured on the basis of the market
information available on the balance sheet date and using
recognized mathematical models, such as present value or
Apart from equity instruments, financial instruments are,
Black-Scholes, to calculate option values, taking their vola-
in particular, financial assets and financial liabilities. The
tility, remaining maturity and capital market interest rates
financial assets consist primarily of bank balances and cash
into account. The instruments must also be classified in a
on hand, trade receivables, other receivables, other financial
level of the fair value hierarchy.
assets and securities. The credit risk mainly comprises trade
receivables. The amount recognized in the balance sheet is
Financial instruments in level 1 are measured using quoted
net of allowances for receivables expected to be uncollect-
prices in active markets for identical assets or liabilities. In
ible, estimated on the basis of historical patterns and the
level 2, they are measured by directly observable market
current economic environment. The credit risk on cash and
inputs or derived indirectly on the basis of prices for similar
derivative financial instruments is limited because they are
instruments. Finally, input factors not based on observable
kept with banks that have been given a good credit rating by
market data are used to calculate the value of level 3 finan-
international rating agencies. There is no significant con-
cial instruments.
centration of credit risks, because the risks are spread over
a large number of contract partners and customers. The
Subsequent measurement of the financial instruments
entire credit risk is limited to the respective carrying amount.
depends on their classification in one of the following
A detailed presentation of the value and age of the finan-
categories defined in IAS 39:
cial assets can be found in section (9) Current receivables.
Comments on the risk management system can be found in
■■ Loans and receivables
the Management Report.
This category mainly comprises trade receivables, other
receivables, loans and cash, including fixed-income short-
Available-for-sale financial assets are carried at fair value if
term securities. Loans are measured at cost. Loans that
that can be reliably measured. Unrealized gains and losses,
carry no interest or only low interest are measured at their
including deferred taxes, are recognized directly in the
present value. Discernible risks are taken into account
reserve for available-for-sale financial assets under equity.
by recognition of an impairment loss. After their initial
Allowances are recognized immediately through the income
recognition, the other financial assets in this category are
statement. Financial assets belonging to this category of
measured at amortized cost using the effective interest
financial instruments are measured at cost. The financial
method, minus impairments. Receivables that carry no
assets include shares in unconsolidated subsidiaries and
interest or only low interest and with a term of more than
securities classified as noncurrent assets. They are subse-
twelve months are discounted. Necessary value impair-
quently measured at amortized cost. Borrowings are carried
ments are based on the objective criteria of IAS 39 and
at amortized cost.
are carried in separate impairment accounts. Receivables
are derecognized if they are settled or uncollectible. Other
The carrying amount of receivables, fixed-income securities
financial assets are derecognized at the time they are
and cash is assumed as the fair value due to their short term
disposed of or if they have no value.
and the fixed-interest structure of the investments.
■■ Financial assets at fair value
The financial liabilities comprise, in particular, trade pay-
being sold in the short term are assigned to this category.
ables, borrowings and other liabilities.
Derivate financial instruments with a positive market value
Held-for-trading securities acquired with the intention of
are also categorized as held for trading, unless they are
designated hedging instruments. They are measured at fair
88 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 1. General Disclosures
Annual Report 2016/2017 | KWS Group value. Changes in value are recognized in income. Secu-
Inventories and biological assets
rities are derecognized after being sold on the settlement
Inventories are measured at the lower of cost or net realiz-
date.
able value less an allowance for obsolescent or slow-moving
■■ Available-for-sale financial assets
items. In addition to directly attributable costs, the cost of
This category covers all financial assets that have not been
sales also includes indirect labor and materials including
assigned to one of the above categories. In principle, se-
depreciation under IAS 2. Under IAS 41, biological assets
curities are classed as available for sale, unless a different
are measured at fair value less the estimated costs to sell.
classification is required due to the fact that they have an
Immature biological assets are carried as inventories as of the
explicit purpose. Equity instruments, such as shares in
time they are harvested. The measurement procedure used is
(unconsolidated) affiliated companies, which are measured
based on standard industry value tables.
at amortized cost, and shares held in listed companies, are
also included in this category. In principle, financial instru-
Deferred taxes
ments in this category are measured at their fair value in
Deferred taxes are calculated in accordance with IAS 12
subsequent recognition. The changes to their fair value in
and Deferred taxes are calculated on differences be-
subsequent recognition are recognized as unrealized gains
tween the carrying amounts of assets and liabilities in the
and losses directly in equity in the reserve for available-for-
consoli dated balance sheet and their tax base, and on car-
sale financial assets. The realized gains or losses are not
ried-forward tax losses. Deferred tax assets are netted off
recognized as profit or loss until they are disposed of. If
against deferred tax liabilities, provided they relate to the
there is objective evidence of permanent impairment on the
same tax creditor and have the same due date. Deferred
balance sheet date, the instruments are written down to the
tax assets are recognized if it can be assumed that they
lower value. Any subsequent decreases in the impairment
will be used in future. Deferred tax liabilities must be set
loss are recognized directly in equity.
up for all taxable temporary differences. All deferred taxes
■■ Financial liabilities measured at amortized cost
must be assessed individually at each balance sheet date.
All financial liabilities, with the exception of derivative finan-
Under IAS 12, deferred taxes are calculated on the basis of
cial instruments, are measured at amortized cost using the
the applicable local income tax anticipated at the time of
effective interest method. The liabilities are derecognized at
reversal. No discounting is carried out.
the time they are settled or when the reason why they were
formed no longer exists.
Provisions for income taxes
■■ Financial liabilities at fair value
The provisions for income taxes comprise obligations from
This category covers derivative financial instruments that
current income taxes. They are measured on the basis of a
have a negative market value and are categorized in prin-
best-possible assessment of the future amount to be paid.
ciple as held for trading. They are measured at fair value.
Deferred taxes are carried in a separate balance sheet
Changes in value are recognized in income. Derivatives that
item.
are designated hedging instruments in accordance with
IAS 39 are excluded from this provision.
Provisions for pensions and other employee benefits
The provisions for pensions and other employee benefits
In the case of securities that are classified as available for
are calculated using actuarial principles in accordance
sale, changes in their fair values that require reporting are
with the projected unit credit method. Actuarial gains and
taken directly to equity. If securities are carried at their fair
losses must be recognized directly in equity in other com-
value and have to be recognized in income, changes to the
prehensive income. The service costs, including the past
fair values are directly included in the net income for the
service costs, are recognized in operating income in ac-
period.
Derivatives
cordance with the employees’ assignment to the functions.
If there are planned assets, they are netted off against the
associated obligations.
The derivatives do not meet the requirements of IAS 39 to be
designated as a hedging instrument. They are measured at
The provisions for semi-retirement include obligations from
their fair value. The changes in their market value are recog-
concluded semi-retirement agreements. Payment arrears
nized in the income statement. Derivatives are derecognized
and top-up amounts for semi-retirement pay and for the
on their day of settlement.
contributions to the statutory pension insurance program
are recognized in measuring them.
1. General Disclosures | Notes for the KWS Group 2016/2017 | Annual Financial Statements
89
KWS Group | Annual Report 2016/2017 Other provisions
Discretionary decisions and estimates
Provisions are set up if current obligations have accrued
The measurement approaches and amounts to be carried in
from past events and it is likely that they will be utilized. In
these IFRS financial statements are partly based on estimates
addition, it must be possible to estimate the amount of the
and specifically defined specifications. This relates in particu-
anticipated obligation reliably.
lar to the following discretionary decisions:
Provisions are measured at their expected amount or
■■ Determination of the useful life of the depreciable asset
most likely amount, depending on whether they comprise
■■ Definition of measurement assumptions and future results
a large number of items or constitute a single obliga-
in connection with impairment tests, above all for capital-
tion. Provisions are reviewed regularly and adjusted to
ized goodwill
reflect new findings or changes in circumstances. If it
■■ Determination of the net selling price for inventories
is no longer likely that a provision will be utilized or the
■■ Definition of the parameters required for measuring pen-
conditions for why it was set up no longer apply, expense-
sion provisions
related provisions are reversed against the original ex-
■■ Selection of parameters for the model-based measure-
pense item and revenue-related provisions are reversed
ment of derivatives
against revenue. If the reversal amount is material, and so
■■ Determination whether tax losses carried forward can be
the effect not related to the period must be classified as
used
material, the reversal is carried as income from the reversal
■■ Determination of the fair value of intangible assets, tan-
of provisions under other operating income not related to
gible assets and liabilities acquired as part of a business
the period.
combination and determination of the service lives of the
purchased intangible assets and tangible assets
Long-term provisions are discounted taking into account
■■ Measurement of other provisions
future cost increases and using a market interest rate that
adequately reflects the risk, insofar as the interest effect is
Despite careful estimates, the actual development may devi-
material.
ate from the assumptions.
Contingent liabilities
The Executive Board of KWS SAAT SE prepared the con-
The contingent liabilities result from debt obligations where
solidated financial statements on September 27, 2017, and
outflow of the resource is not probable or the level of the ob-
released them for distribution to the Supervisory Board.
ligation cannot be estimated with sufficient reliability, or from
The Supervisory Board has the task of examining the
obligations for loan amounts drawn down by third parties as
consolidated financial statements and declaring whether it
of the balance sheet date.
approves them.
Borrowing costs
In accordance with IAS 23, borrowing costs are capitalized if
they can be classified as qualifying assets.
90 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 1. General Disclosures
Annual Report 2016/2017 | KWS Group 2. Disclosures on the Annual Financial Statements
Number of companies including KWS SAAT SE
Fully consolidated
Equity method
Joint operation
Total
Germany
Abroad
Total
Germany
Abroad
Total
06/30/2017
06/30/2016
13
0
0
13
46
3
1
50
59
3
1
63
13
0
0
13
46
3
1
50
59
3
1
63
Consolidated group and changes in the consolidated
Following acquisition of the remaining shares in DYNAGRI
group
S.A.R.L. in November 2016, the company has operated
KWS SEEDS THAILAND CO., LTD. was included in
under the name KLEIN WANZLEBENER SAATZUCHT
the consolidated companies for the first time effective
MAROC S.A.R.L.A.U.
July 1, 2016.
In addition, KWS SERVICES NORTH B.V. was liquidated
the consolidated financial statements at June 30, 2017.
effective September 30, 2016.
Three (three) joint ventures and associated companies
A total of 59 (59) companies were fully consolidated in
were measured using the equity method. One (one) joint
The Brazilian company RIBER KWS SEMENTES S.A. was
operation has been included proportionately. This is
merged with KWS MELHORAMENTO E SEMENTES LTDA.
GENECTIVE S.A.
effective October 1, 2016, and operates under the name
RIBER KWS SEMENTES LTDA.
In addition, the company KWS R&D INVEST B.V., Emmeloord,
Netherlands, was founded on October 25, 2016, and included
in the consolidated companies.
KWS Group | Annual Report 2016/2017
2. Disclosures on the Annual Financial Statements | Notes for the KWS Group 2016/2017 | Annual Financial Statements
91
List of shareholdings in accordance with Section 313 HGB (German Commercial Code)
Fully consolidated subsidiaries1
Sugarbeet
100%
100%
100%
100%
100%
100%
100%
100%
100%
BETASEED INC.2
Bloomington, MN, U.S.
KWS FRANCE S.A.R.L.
Roye, France
DELITZSCH
PFLANZENZUCHT GMBH4,9
Einbeck, Germany
O.O.O. KWS RUS11
Lipetsk, Russia
O.O.O. KWS R&D RUS10
Lipetsk, Russia
KWS ITALIA S.P.A.
Forlì, 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
Basel, 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
Eski ¸sehir, Turkey
BETASEED GMBH4
Frankfurt, Germany
KWS POTATO B.V.16
Emmeloord, Netherlands
100% KLEIN WANZLEBENER
100%
100%
100%
100%
100%
100%
100%
100%
SAATZUCHT MAROC
S.A.R.L.A.U.15
Casablanca, Morocco
KWS Podillya T.O.V. 20
Kiev, Ukraine
100%
Corn
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
100%
100%
100%
100%
KWS BENELUX B.V.
Amsterdam, Netherlands
KWS SEMENA S.R.O.
Bratislava, Slovakia
KWS MAIS FRANCE S.A.R.L.
Champhol, 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 GMBH4
Everswinkel, Germany
KWS MAGYARORSZÁG KFT.
Gyo˝ r, Hungary
KWS SEMINTE S.R.L.12
Bucharest, Romania
KWS ARGENTINA S.A.
Balcarce, Argentina
RAZES HYBRIDES S.A.R.L.3
Alzonne, France
RIBER KWS SEMENTES
LTDA19
Curitiba, Brazil
KWS PERU S.A.C.7
Lima, Peru
KWS R&D CHINA LTD.14
Hefei, China
KWS SEEDS THAILAND CO.,
LTD.14
Chiang Mai, Thailand
Cereals
Corporate
100 % KWS LOCHOW GMBH4
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 4
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 GMBH4
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
100%
100 %
Champagne, IL, U.S.
KANT-HARTWIG & VOGEL
GMBH4
Einbeck, Germany
KWS R&D INVEST B.V.
Emmeloord, Netherlands
Equity-accounted joint ventures1
Equity-accounted
associated companies1
Joint operation
(proportionately consolidated)1
Corn
Corn
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
92 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 2. Disclosures on the Annual Financial Statements
Annual Report 2016/2017 | 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%
100%
50%
50%
50%
50%
50%
KWS R&D PRIVATE LIMITED11
Hyderabad, India
KWS PARAGUAY S.R.L.21
Asuncion, Paraguay
GENECTIVE CANADA INC.22
Montreal, Canada
GENECTIVE TAIWAN LTD.22
Taipei City, Taiwan
GENECTIVE USA CORP.22
Weldon, U.S.
GENECTIVE JAPAN K.K.22
Chiba, Japan
GENECTIVE KOREA22
Sangdaewon-dong, Korea
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 Profit and loss transfer agreement.
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 UKRAINE T.O.V.
21 Subsidiary of KWS SERVICOS E PARTICIPACOES SOUTH AMERICA LTDA. and RIBER-KWS SEMENTES LTDA.
22 Subsidiary of GENECTIVE S.A.
Status: June 30, 2017
2. Disclosures on the Annual Financial Statements | Notes for the KWS Group 2016/2017 | Annual Financial Statements
93
KWS Group | Annual Report 2016/2017 3. Segment Reporting for the KWS Group
In accordance with its internal reporting system, the
Corporate
KWS Group is primarily organized according to the
Apart from revenue from farms and services for third par-
following business segments:
ties, net sales from strategic projects are reported in this
■■ Corn
■■ Sugarbeet
■■ Cereals
■■ Corporate
segment. The segment also assumes the costs of all central
holding functions and expenses for long-term research proj-
ects that have not yet reached market maturity.
It also includes all management services of KWS SAAT SE,
such as the holding company and administrative functions,
Considered a core competency for the KWS Group’s entire
which are not directly charged to the product segments or
product range, plant breeding, including the related biotech-
indirectly allocated to them by means of an appropriate cost
nology research, is essentially concentrated at the parent
formula.
company KWS SAAT SE in Einbeck. The breeding material,
including the relevant information and expertise about how
Segment information
to use it, is owned by KWS SAAT SE with respect to sugar-
The Executive Board as the main decision-making body is
beet and corn and by KWS LOCHOW GMBH with respect
responsible for allocating resources and assessing the earn-
to cereals. Product-related R&D costs are carried directly in
ings strength of the business segments. The segments and
the product segments Corn, Sugarbeet and Cereals. Cen-
regions are defined in compliance with the internal controlling
trally controlled corporate functions are grouped in the Cor-
and reporting systems (management approach). The ac-
porate Segment. The distribution and production of oil and
counting policies used to determine the information for the
field seed are reported in the Cereals and Corn Segments,
segments are basically the same as used for the KWS Group.
in keeping with the legal entities currently involved.
The only exception relates to consolidation of the equity-
Description of segments
Corn
accounted joint ventures that are assigned to the Corn
Segment, namely AGRELIANT GENETICS, LLC., AGRELIANT
GENETICS, INC. and KENFENG – KWS SEEDS CO., LTD.
In accordance with internal controlling practices, they are
KWS SAAT SE is the lead company in the Corn Segment.
included proportionately as part of segment reporting.
The production and distribution activities of this segment
relate to corn for grain and silage corn, and to oil and field
The segment net sales, segment income, depreciation and
seed. Apart from KWS SAAT SE, the business activities are
amortization, other noncash items, operating assets, oper-
conducted by one (one) German company, 15 (15) foreign
ating liabilities and capital expenditure on noncurrent assets
subsidiaries, two (two) joint ventures, one (one) associated
by segment have been determined in accordance with the
company and one (one) joint operation of the KWS Group.
internal operational controlling structure, with the joint ven-
Sugarbeet
tures and associated company consolidated proportionately
(management approach). In order to permit better compara-
In addition to multiplication, processing and distribution
bility, they have been reconciled with the figures in the IFRS
activities for sugarbeet seed, the breeding activities re-
consolidated financial statements.
lating to development of a hybrid potato are also report-
ed in the Sugarbeet Segment. Under the leadership of
Segment sales contains both net sales from third parties
KWS SAAT SE, 17 (17) foreign subsidiaries and two (two)
(external sales) and net sales between the segments (in-
subsidiaries in Germany are active in this segment.
tersegment sales). The prices for intersegment sales are
Cereals
determined on an arm’s-length basis. Uniform royalty rates
per segment for breeding genetics are used as the basis.
The lead company of this segment, which essentially con-
Technology revenues from genetically modified properties
cerns the production and distribution of hybrid rye, wheat
(“tech fees”) are paid as a per-unit royalty on the basis of
and barley, as well as oil and field seed, is KWS LOCHOW
the number of units sold, due to their growing competitive
GMBH with its four (four) foreign subsidiaries in France, the
importance.
UK and Poland.
94 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 3. Segment Reporting for the KWS Group
Annual Report 2016/2017 | KWS Group 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
2016/2017
2015/2016
2016/2017
2015/2016
2016/2017
2015/2016
825,867
454,860
795,320
439,635
111,526
119,046
18,235
17,921
530
319
2,179
13,436
162
88
1,095
13,811
825,337
454,541
795,158
439,547
109,347
117,951
4,799
4,110
1,410,488
1,371,922
16,464
15,156
1,394,024
1,356,766
–318,780
–319,992
1,075,244
1,036,774
The Corporate Segment generates 73.7% (77.1%) of its
The Corn Segment is the largest contributor of external
sales from the other segments. As in the previous year,
sales, accounting for 59.2% (58.6%) of external sales,
the sales of this segment represent 0.3% of the Group’s
followed by Sugarbeet with 32.6% (32.4%) and Cereals with
external sales.
7.8% (8.7%).
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
Net financial income/expenses
Earnings before taxes
2016/2017
2015/2016
2016/2017
2015/2016
2016/2017
2015/2016
58,213
150,929
10,310
–60,585
63,570
118,571
9,028
–50,102
27,417
12,994
8,472
10,444
23,199
14,193
8,192
10,343
4,213
–2,482
–4,034
–981
16,080
11,002
5,862
1,555
158,867
141,067
59,327
55,927
–3,284
34,499
–27,276
–28,303
–9,974
–7,740
–3,688
–21,328
131,591
112,764
49,353
48,187
–6,972
13,171
16,599
14,784
148,190
127,548
0
0
0
0
0
0
0
0
The income statements of the consolidated companies
Depreciation and amortization charges of €59,327
are assigned to the segments by means of profit center
(55,927) 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 2016/2017 | Annual Financial Statements
95
KWS Group | Annual Report 2016/2017 Operating 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
KWS Group acc. to consolidated financial statements
Operating assets
Operating liabilities
06/30/2017
06/30/2016 06/30/2017
06/30/2016
742,506
266,734
116,106
113,276
717,419
262,555
118,283
108,600
1,238,622
1,206,857
–250,793
–240,961
987,829
507,396
965,897
470,735
1,495,225
1,436,631
162,508
163,694
83,096
22,481
87,447
355,532
–82,431
273,101
385,128
658,229
91,227
25,772
90,508
371,201
–78,981
292,220
376,452
668,672
The operating assets of the segments are composed of in-
Capital expenditure on assets fell to €67,940 thousand
tangible assets, property, plant and equipment, inventories,
(previous year: €160,048 thousand). Capital expenditure
biological assets and trade receivables that can be charged
in the Corn Segment (€25,079 thousand; previous year:
directly to the segments or indirectly allocated to them by
€119,072 thousand) relates mainly to the production plant
means of an appropriate formula.
in Ukraine. The Sugarbeet Segment’s capital expenditure
The operating liabilities attributable to the segments include
previous year and relates mainly to expansion of production
the borrowings reported on the balance sheet, less provi-
capacities at Einbeck.
totaled €16,811 thousand following €17,199 thousand in the
sions for taxes and the portion of other liabilities that cannot
be charged directly to the segments or indirectly allocated
to them by means of an appropriate formula.
Investments in 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
06/30/2017
06/30/2016
25,079
16,811
4,961
21,089
67,940
–4,659
63,281
119,072
17,199
9,174
14,603
160,048
60,472
99,576
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 net
in accordance with the accounting policies to be applied to
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.
96 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 3. Segment Reporting for the KWS Group
Annual Report 2016/2017 | KWS Group External sales by region
in € thousand
Germany
Europe (excluding Germany)
Thereof in France
North and South America
Thereof in Brazil
Thereof in the U.S.
Rest of world
KWS Group
A total of 64.2% (65.1%) of total sales are recorded in Eu-
rope (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
2016/2017
2015/2016
226,291
464,283
(113,649)
317,472
(109,914)
(173,056)
67,198
1,075,244
223,971
450,817
(107,067)
282,999
(78,557)
(180,288)
78,986
1,036,774
06/30/2017
06/30/2016
26,481
20,256
(4,856)
14,743
(2,240)
(8,774)
1,800
63,281
48,945
32,220
(10,681)
15,800
(2,710)
(9,745)
2,611
99,576
A total of 41.9% (49.1%) of the capital spending was made
Europe (excluding Germany) and 2.8% (2.6%) in the rest of
in Germany. Of the further capital spending, 23.3% (15.9%)
the world.
was made in North and South America, 32.0% (32.4%) 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
06/30/2017
06/30/2016
215,945
167,567
(68,576)
238,388
(33,435)
(190,954)
9,715
631,615
214,217
163,994
(71,889)
234,253
(37,603)
(184,839)
10,976
623,440
3. Segment Reporting for the KWS Group | Notes for the KWS Group 2016/2017 | Annual Financial Statements
97
KWS Group | Annual Report 2016/2017 4. Notes to the Balance Sheet
Statement of changes in fixed assets
in € thousand
Gross book values
Amortization/depreciation
Net book values
Change
in con
solidated
compa
nies
Cur rency
trans
lation
Additions
of equity
account
ed assets
Addi
tions
Dis posals
of equity
account
ed assets Transfers
Dis
posals
Change
in con
solidated
compa
nies
Cur rency
trans
lation
Planned
addi
tions
Value
impair
ments
Adjust
ment not
affecting
profit
and loss
Dis
posals
Trans
fers
07/01/2016
Patents, industrial
property rights
and software
Goodwill
116,986
28,700
–891
–699
Intangible assets
145,686
–1,590
0
0
0
7,306
–1
7,305
295,023
–2,355
21
16,213
230,095
–3,260
3
11,399
94,145
649
27
10,554
38,298
–1,182
0
15,952
657,561
–6,148
51
54,118
Land and
buildings
Technical
equipment and
machinery
Operating and
office equipment
Payments on
account
Property, plant
and equipment
Equityaccounted
financial assets
Financial assets
Assets
0
0
0
0
0
0
0
0
9,896
0
9,896
8,799
6,838
3,902
372
19,911
0
0
0
0
0
0
0
0
06/30/2017
07/01/2016
06/30/2017 06/30/2017 06/30/2016
1,378
114,883
0
28,000
1,378
142,883
50,588
–799
0
0
50,588
–799
9,092
309,195
89,122
–637
12,632
0
12,632
9,140
6,966
0
6,966
8,561
–4
0
–4
7
55,451
0
55,451
59,432
28,000
87,432
66,398
28,700
95,098
89,072
220,123
205,901
9,788
241,187
130,573
–2,150
17,686
6,893
2,553
141,769
99,418
99,522
545
102,018
59,225
902
–1
9,846
3,310
–2,556
64,106
37,912
34,920
–20,803
31,893
2
–1
1
31,892
38,296
–1,378
684,293
278,922
–1,886
36,672
18,764
294,948
389,345
378,639
155,904
–3,817
2,827
–41
961,979
–11,596
0
–76
–25
0
24,936
1,858
1
0
627
16,861
0
63,281
24,937
30,434
16,861
0
0
0
160,162
3,941
991,280
8,393
635
0
–6
338,539
–2,691
49,353
25,731
359,665
631,615
623,440
8,393
151,769
147,511
873
3,069
2,192
07/01/2015
Patents, industrial
property rights
and software
Goodwill
110,543
36,975
Intangible assets
147,518
–829
–7,712
–8,541
Land and
buildings
Technical
equipment and
machinery
Operating and
office equipment
Payments on
account
Property, plant
and equipment
Equityaccounted
financial assets
Financial assets
Assets
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
0
0
0
0
0
0
0
0
0
0
0
29,538
0
29,538
11,507
16,558
10,037
31,645
69,747
0
0
0
0
0
0
0
0
44
247
26,466
0
23,625
5,451
29,076
1,896
6,631
6,268
228
15,023
0
378
06/30/2016
07/01/2015
06/30/2016 06/30/2016 06/30/2015
1,359
4,888
6,247
116,986
28,700
145,686
56,405
5,452
61,857
–23
0
–23
11,434
2,181
11,434
2,181
19,538
5,452
24,990
129
0
129
50,588
0
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
5,921
742
130,573
99,522
91,049
–792
94,145
58,004
–623
5,552
–1,714
59,225
34,920
32,485
–17,295
38,298
2
0
2
38,296
24,481
685
657,561
258,574
–1,664
34,572
13,071
512
278,922
378,639
351,856
0
0
0
0
0
0
0
0
25,682
–5,865
155,904
0
156
2,827
8,393
370
0
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
98 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 4. Notes to the Balance Sheet
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
49
0
0
0
0
16,097
9,110
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
195
195
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
31
0
4
0
0
0
0
0
0
Annual Report 2016/2017 | KWS Group Change
in con
solidated
compa
nies
Cur rency
trans
lation
Additions
of equity
account
Addi
Dis posals
of equity
Dis
account
tions
ed assets
posals
ed assets Transfers
Change
in con
solidated
compa
nies
Cur rency
trans
lation
Planned
addi
tions
Value
impair
ments
Adjust
ment not
affecting
profit
and loss
Dis
posals
Trans
fers
Gross book values
Amortization/depreciation
Net book values
07/01/2016
06/30/2017
07/01/2016
06/30/2017 06/30/2017 06/30/2016
Intangible assets
145,686
–1,590
116,986
28,700
–891
–699
0
0
0
7,306
–1
7,305
1,378
114,883
0
28,000
1,378
142,883
50,588
–799
0
0
50,588
–799
295,023
–2,355
21
16,213
9,092
309,195
89,122
–637
230,095
–3,260
3
11,399
9,788
241,187
130,573
–2,150
0
0
0
1
0
12,632
0
12,632
9,140
17,686
94,145
649
27
10,554
545
102,018
59,225
902
–1
9,846
4. Notes to the Balance Sheet
Statement of changes in fixed assets
in € thousand
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
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
Intangible assets
147,518
110,543
36,975
–829
–7,712
–8,541
284,248
–5,331
211,210
–3,319
90,489
679
24,483
–307
610,430
–8,278
161,411
2,835
–470
–32
0
0
0
0
0
0
0
0
1
0
0
0
0
0
0
0
0
0
9,896
0
9,896
8,799
6,838
3,902
372
0
627
23,625
5,451
29,076
1,896
6,631
6,268
228
15,023
0
378
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
–76
–25
0
0
0
0
0
0
0
0
0
0
0
29,538
0
29,538
11,507
16,558
10,037
31,645
69,747
44
247
38,298
–1,182
0
15,952
–20,803
31,893
2
–1
657,561
–6,148
51
54,118
19,911
–1,378
684,293
278,922
–1,886
155,904
–3,817
0
24,936
16,861
Financial assets
2,827
–41
1,858
Assets
961,979
–11,596
63,281
24,937
30,434
16,861
0
0
0
160,162
3,941
991,280
8,393
635
0
–6
338,539
–2,691
07/01/2015
06/30/2016
07/01/2015
1,359
4,888
6,247
116,986
28,700
145,686
56,405
5,452
61,857
–23
0
–23
6,495
295,023
80,407
–535
12,277
230,095
120,161
–506
–792
94,145
58,004
–623
–17,295
38,298
2
0
685
657,561
258,574
–1,664
922,194
–17,321
99,576
26,466
44,477
25,682
1,223
961,979
329,194
–1,391
26,466
25,682
–5,865
155,904
156
2,827
8,393
370
0
296
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
36,672
0
49
49,353
11,434
2,181
0
0
11,434
2,181
9,365
16,097
9,110
0
34,572
0
0
0
0
0
0
0
0
0
46,006
2,181
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
195
195
0
0
0
0
0
0
0
0
0
0
0
6,966
0
6,966
8,561
–4
0
–4
7
55,451
0
55,451
59,432
28,000
87,432
66,398
28,700
95,098
89,072
220,123
205,901
6,893
2,553
141,769
99,418
99,522
3,310
–2,556
64,106
37,912
34,920
0
18,764
0
0
25,731
0
4
0
0
0
1
31,892
38,296
294,948
389,345
378,639
8,393
151,769
147,511
873
3,069
2,192
359,665
631,615
623,440
06/30/2016 06/30/2016 06/30/2015
19,538
5,452
24,990
129
0
129
50,588
0
50,588
66,398
28,700
95,098
54,138
31,523
85,661
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
0
0
2
38,296
24,481
13,071
512
278,922
378,639
351,856
0
31
0
0
8,393
147,511
153,018
635
2,192
2,465
38,092
641
338,539
623,440
593,000
4. Notes to the Balance Sheet | Notes for the KWS Group 2016/2017 | Annual Financial Statements
99
KWS Group | Annual Report 2016/2017 (1) Assets
The impairment test uses the expected future cash flows on
The statement of changes in fixed assets contains a break-
which the medium-term plans of the companies, which are
down of assets summarized in the balance sheet and shows
grouped in segments, are based; these plans, which cover
how they changed in 2016/2017.
a period of four years, have been approved by the Executive
Board. They are based on historical patterns and expecta-
(2) Intangible assets
tions about future market development.
This item includes purchased varieties, rights to varieties
and distribution rights, software licenses for electronic data
For the European and American markets, the key assump-
processing and goodwill. The current additions of €7,305
tions on which corporate planning is based include as-
(29,538) thousand related to software licenses and patents.
sumptions about price trends for seed, in addition to the
Amortization of intangible assets amounted to €12,632
development of market shares and the regulatory frame-
(13,615) thousand, of which €0 (2,181) thousand were value
work. Company-internal projections take the assumptions
impairments. Depending on the operational use of the
of industry-specific market analyses and company-related
intangible assets, these charges were carried last year
growth perspectives into account.
in the selling expenses to an amount of €1,737 thousand
and in the research & development costs to an amount of
The discount rate at the KWS Group has been derived as
€444 thousand.
the weighted average cost of capital (WACC) and for the
cash-generating units is 4.66% (4.48%) after tax. A growth
One major intangible asset is the trait licensing agree-
rate of 1.5% (1.5%) has been assumed here beyond the
ment. Its carrying amount at the balance sheet date was
detailed planning horizon in order to allow for extrapolation
€22,332 thousand. Its remaining useful life is 13 years.
in line with the expected inflation rate.
In order to meet the requirements of IFRS 3 in combination
The impairment tests conducted at the end of fiscal year
with IAS 36, and to determine any impairment of goodwill,
2016/2017 confirmed that the existing goodwill is not im-
cash-generating units have been defined in line with internal
paired. Even under the old structure (legal entity = cash-
reporting guidelines. At the KWS Group, these units were
generating unit), all the impairment tests conducted con-
the legal entities up to now. In the current fiscal year, the
firmed that the goodwill is not impaired. The Business Unit
Executive Board adapted internal budgeting and reporting
Corn America carries goodwill totaling €17,780 (18,395) thou-
processes due to the fact that the Group’s business ac-
sand. The Business Unit Corn Europe/Asia carries goodwill
tivities have been centralized in Business Units across all
totaling €6,304 (6,304) thousand. A total of €3,916 (4,000)
companies. That resulted in a change in the cash-generating
thousand of the goodwill is carried by the Business Unit
units at the Group, since monitoring and controlling (in-
Cereals. Sensitivity analyses were also carried out for all
cluding of goodwill) has been the responsibility of the main
cash-generating units to which goodwill is allocated. In our
decision makers at the level of the Business Units since
opinion, realistic changes in the basic assumptions would
fiscal 2016/2017. To test for impairment, the carrying amount
not result in the need to recognize an impairment loss at any
of each Business Unit is determined by allocating the assets
cash- generating unit whose goodwill is significant relative to
and liabilities, including attributable goodwill and intangible
the total carrying amount of goodwill.
assets. An impairment loss is recognized if the recoverable
amount of a Business Unit is less than its carrying amount.
The recoverable amount is the higher of the fair value less
costs to sell and the value in use of a cash-generating unit.
The impairment tests to be carried out for fiscal 2016/2017
determine the recoverable amount on the basis of the value
in use of the respective cash-generating unit.
100 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 4. Notes to the Balance Sheet
Annual Report 2016/2017 | KWS Group (3) Property, plant and equipment
Capital expenditure amounted to €54,118 (69,747) thou-
sand and depreciation amounted to €36,672 (34,572) thou-
Disclosures on equityaccounted joint ventures
(with the partner Vilmorin)
in € thousand
06/30/2017 06/30/2016
sand. The main focus of our capital spending in the year
Stake in the joint venture
under review was on erecting and expanding production
Current assets
and research & development capacities. Among other
things, expansion of sugarbeet seed production and of
the greenhouse complex was completed in Germany. A
new corn seed plant was erected in Ukraine. The gross
carrying amount of the property, plant and equipment that
has already been written down in full, but not yet used, is
€127,880 thousand. Property, plant and equipment – mainly
assets under construction – to an amount of €2,299 (€3,111)
thousand are held as security for liabilities.
(4) Equityaccounted financial assets
Equityaccounted joint ventures
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
The joint ventures AGRELIANT GENETICS, LLC. and
Net sales
AGRELIANT GENETICS, INC., which KWS operates together
with its joint venture partner Vilmorin, are recognized at
equity. In the year under review, AGRELIANT GENETICS, LLC.
was classified as a significant joint venture. From the Group
perspective, AGRELIANT GENETICS, INC. was classified as
an insignificant joint venture.
The two joint ventures are operating units. The main busi-
ness activity of the two joint ventures is the production and
Depreciation and amortization
Net income for the year
Other comprehensive income
Comprehensive income (100%)
Comprehensive income (50%)
Group share of
comprehensive income
Dividend payment
50%
50%
341,140
310,658
(27,700)
191,468
265,560
(23,428)
206,013
253,654
(88,998)
(74,624)
2,570
264,478
132,239
8,802
141,041
631,904
18,765
44,364
0
44,364
22,182
22,182
32,508
3,674
259,343
129,672
8,802
138,474
637,976
15,478
48,004
0
48,004
24,002
24,002
51,364
sale of corn and soybean seed in North America.
1 Thereof AGRELIANT GENETICS, LLC.: €12,721 (5,878) thousand
The following disclosures on the joint ventures in accor-
dance with IFRS 12.21 (a) and (b) in conjunction with IFRS
12.B12-B13 are only slightly influenced by the insignificant
joint venture. If individual items of the information presented
are materially influenced by the insignificant joint venture,
this information is presented separately.
4. Notes to the Balance Sheet | Notes for the KWS Group 2016/2017 | Annual Financial Statements 101
KWS Group | Annual Report 2016/2017 Equityaccounted associated companies
(7) Noncurrent tax assets
The disclosures on insignificant associated companies in
This mainly relates to the present value of the corporate
accordance with IFRS 12.21 (c) in conjunction with IFRS
income tax credit balance of the German group compa-
12.B16 are as follows:
Disclosures on insignificant associated companies
accounted for using the equity method
in € thousand
06/30/2017 06/30/2016
Carrying amount for the
stake in insignificant
associated companies
( aggregated)
Net income for the year
Other comprehensive income
Comprehensive income (100 %)
10,726
5,761
0
5,761
9,059
5,029
0
5,029
In the year under review, this relates to our Chinese joint
venture KENFENG – KWS SEED CO. LTD., which is carried
in the KWS Group’s consolidated financial statements as an
nies, which was last determined at December 31, 2006,
and has been paid in ten equal annual amounts since
September 30, 2008.
(8) Inventories and biological assets
Inventories and biological assets
in € thousand
Raw materials and
consumables
Work in progress
Immature biological assets
Finished goods
06/30/2017 06/30/2016
21,965
58,051
13,562
114,903
208,481
18,041
52,206
12,496
115,536
198,279
associated company in accordance with the equity method.
Inventories and biological assets increased by €10,202 thou-
sand, or 5.1%, a figure that includes cumulative impairment
(5) Proportionately consolidated joint operations
losses on the net realizable value totaling €54,344 (49,947)
Joint operations are based on joint arrangements that
thousand. Inventories to an amount of €2,654 (5,225) thou-
always exist when the KWS Group jointly conducts opera-
sand are held as security for liabilities. Immature biological
tions managed together with a third party pursuant to a con-
assets relate to living plants in the process of growing (be-
tractual agreement. The operation is jointly managed only
fore harvest). The field inventories of the previous year have
if decisions on significant activities require the unanimous
been harvested in full and the fields have been newly tilled
consent of the parties involved. The assets and liabilities
in the year under review. Public subsidies of €1,275 (1,368)
and revenue and expenses from the joint operations are in-
thousand, for which all the requirements were met at
cluded proportionately (at 50%) in the consolidated financial
the balance sheet date, were granted for the total area
statements. The main activity of the proportionately consol-
under cultivation of 4,308 (4,240) ha and were recognized
idated GENECTIVE S.A. is development of its own traits for
in income. Future public subsidies depend on the further
genetically improving crops.
development of European agricultural policy.
(6) Financial assets
(9) Current receivables
Investments in unconsolidated subsidiaries totaling
€330 (439) thousand and shares in cooperatives, GmbHs
Current receivables
and other securities classified as noncurrent assets that
are of minor significance are reported, in principle, at their
amortized cost totaling €689 (692) thousand since the fair
value cannot be reliably determined. Listed shares are
carried at their fair value of €0 (452) thousand. This account
also includes other interest-bearing loans totaling €144 (230)
thousand. MLS Capital Fund II has been carried for the first
time at a fair value of €1,603 thousand. The other financial
assets totaling €303 thousand are reported at their amor-
tized cost, since the fair value cannot be reliably determined.
in € thousand
Trade receivables
Current tax assets
Other current financial assets
Other current assets
06/30/2017 06/30/2016
302,571
293,881
59,975
40,573
12,064
55,451
45,070
12,090
415,183
406,492
102 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 4. Notes to the Balance Sheet
Annual Report 2016/2017 | KWS Group Trade receivables were €302,571 thousand following
€293,881 thousand in the previous year. This amount
includes €1,819 (1,386) thousand in receivables from joint
ventures and joint operations.
Development of trade receivables
in € thousand
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
06/30/2017
Trade receivables
302,571
264,486
26,984
1,284
1,051
398
Other current
financial assets
06/30/2016
40,573
343,144
33,688
1
0
0
0
298,174
26,985
1,284
1,051
398
Trade receivables
293,881
268,656
15,656
2,748
1,257
Other current
financial assets
45,070
338,951
34,559
0
0
0
303,215
15,656
2,748
1,257
0
0
0
4,249
0
4,249
4,521
0
4,521
The already overdue trade receivables that have been
partly written down amount to a net total of €4,119 (1,043)
thousand.
There are no indications on the balance sheet date that
customers who owe trade receivables that have not been
written down and are not overdue will not meet their pay-
ment obligations.
4. Notes to the Balance Sheet | Notes for the KWS Group 2016/2017 | Annual Financial Statements 103
KWS Group | Annual Report 2016/2017
The following allowances have mainly been made for
possible risks of nonpayment of trade receivables:
Change in allowances on receivables
in € thousand
2016/2017
2015/2016
07/01
Addition
Disposal
Reversal
26,736
22,627
4,469
9,466
2,213
1,317
2,449
4,040
06/30
26,543
26,736
The receivables include an amount of €639 (450) thousand
The other reserves and net retained profit essentially com-
due after more than one year.
(10) Securities
prise the net income generated in the past by the com-
panies included in the consolidated financial statements,
minus dividends paid to shareholders, and the net retained
Securities amounting to €9,455 (30,679) thousand relate
profit. The differences from currency translation, the reserve
primarily to debt securities and fund shares.
for available-for-sale financial assets and the reserve for re-
(11) Cash and cash equivalents
as well as the reserve for currency translation for equity-ac-
Cash and cash equivalents of €181,913 (133,224) thousand
counted financial assets, are also carried here.
valuation of net liabilities/assets from defined benefit plans,
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.
(12) Equity
Group in reporting (euro) are carried in the item Adjust-
ments from currency translation. The item Revaluation of net
liabilities/assets from defined benefit plans and associated
The fully paid-up subscribed capital of KWS SAAT SE is still
planned assets includes the actuarial gains and losses from
€19,800 thousand. The no-par bearer shares are certificated
pensions and other employee benefits. Differences from
by a global certificate for 6,600,000 shares. The company
translation of the functional currency of equity-accounted
does not hold any shares of its own.
foreign business units into the currency used by the Group
The capital reserves essentially comprise the premium
currency translation for equity-accounted financial assets.
in reporting (euro) are essentially carried in the reserve for
obtained as part of share issues.
104 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 4. Notes to the Balance Sheet
Annual Report 2016/2017 | KWS Group The tax effects on other comprehensive income are as
follows:
Other comprehensive income
in € thousand
Items that may have to be subsequently
reclassified as profit or loss
Revaluation of available-for-sale
financial assets
Currency translation difference for
economically independent foreign
units
Currency translation difference from
equity-accounted financial assets
Items not reclassified as profit or loss
Revaluation of net liabilities/assets
from defined benefit plans
Other comprehensive income
Before
taxes
–17,323
–312
–13,194
–3,817
12,158
12,158
–5,165
2016/2017
2015/2016
Tax effect After taxes
Before
taxes
Tax effect After taxes
50
50
0
0
–3,699
–3,699
–3,649
–17,273
–18,752
–106
–18,858
–262
460
–106
354
–13,194
–18,743
–3,817
8,459
8,459
–8,814
–469
–24,652
–24,652
–43,404
0
0
–18,743
–469
7,603
–17,049
7,603
7,497
–17,049
–35,907
The objective of KWS’ capital management activities is to
of further operating business expansion in the long term.
pursue the interests of shareholders and employees in ac-
Equity increased by €69,037 thousand to €836,996 (767,959)
cordance with the corporate strategy and earn a reasonable
thousand. This figure includes a reduction of €17,011 thou-
return on investment. One main goal is to retain the trust
sand (previous year: reduction of €19,212 thousand) in the
of investors, lenders and the market, so as to strengthen
reserve for currency translation for foreign subsidiaries and
the company’s future business development. KWS’ capital
equity-accounted joint ventures and associated companies.
management activities intend to optimize the average cost
Please refer to the statement of changes in equity for further
of capital. Another goal is a balanced mix of equity and
effects not recognized in the income statement.
debt capital. Consolidated income (after taxes and minority
interests) is €97,549 (85,261) thousand. However, there was
An important indicator in capital management is the equity
a total dividend payout of €19,800 (19,800) thousand in De-
ratio. It was 56.0% (53.5%) at June 30, 2017, and thus at a
cember 2016. This ensures the adequate internal financing
good and solid level. The capital structure is as follows:
Capital structure
in € thousand
Equity
Long-term financial borrowings
Other noncurrent liabilities
Short-term borrowings
Other noncurrent liabilities
Total capital
06/30/2017
836,996
200,828
158,057
39,065
260,279
1,495,225
Share of
total capital
56.0%
Share of
total capital
53.5%
06/30/2016
767,959
228,712
164,941
23,078
251,941
1,436,631
4. Notes to the Balance Sheet | Notes for the KWS Group 2016/2017 | Annual Financial Statements 105
KWS Group | Annual Report 2016/2017 The focus in selecting financial instruments is on
The other provisions mainly comprise provisions by
financing with matching maturities, which is achieved by
the German companies for semi-retirement and loyalty
controlling the maturities. Long-term financial borrowings
bonuses.
fell by €27,884 thousand (previous year: increase of
€46,929 thousand). This is mainly due to the decrease in
The pension provisions are based on defined benefit obli-
long-term financial loans from banks.
gations, determined by years of service and pensionable
(13) Minority interest
compensation. They are measured using the projected unit
credit method under IAS 19 (2011), on the basis of assump-
The KWS Group does not have any minority interests that
tions about future developments. The assumptions in detail
are assessed as being significant.
are that wages and salaries in Germany will increase by
(14) Noncurrent liabilities
3.00% (3.00%) annually, in the U.S. by 3.75% (3.75%) annu-
ally and in the rest of the world by 1.80% to 3.00% (2.00%)
Noncurrent liabilities decreased by €34,768 thousand
annually. An annual increase in pensions of 2.00% (2.00%)
(previous year: increase of €76,922 thousand). That is
is assumed in Germany. The discount rate in Germany was
mainly attributable to the reduction in long-term financial
1.90% compared with 1.30% the year before, 3.75% in the
borrowings from banks and the lower provision for pension
U.S. compared with 3.60% the year before, and between
commitments.
Noncurrent liabilities
in € thousand
06/30/2017 06/30/2016
Long-term provisions
Long-term borrowings
Trade payables
Deferred tax liabilities
Other noncurrent financial
liabilities
Other noncurrent liabilities
125,408
200,828
1,217
12,721
1,306
17,405
358,885
136,515
228,712
1,413
9,447
681
16,885
393,653
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 06/30/2016
Changes
in the con
solidated
group,
currency
Interest
expenses
from com
pounding
Pension
provisions
Tax provisions
Other
provisions
126,431
1,636
8,448
136,515
–165
–19
–1,071
–1,255
1,796
0
71
1,867
1.65% and 3.15% (1.05% and 3.00%) in the rest of the world.
The following mortality tables were used at June 30, 2017:
■■ In Germany: The 2005G mortality table of Klaus Heubeck
■■ Abroad: Mainly RP-2014 Mortality Table Projection Scale
MP-2016 and INSEE TD/TV 12-14
A retirement age of 65 years is imputed for Germany and
the U.S.
06/30/2017
Adjust
ment not
affecting
profit or
loss
–12,157
0
0
–12,157
Addition
339
1,000
4,969
6,308
Consump
tion
Reversal
4,346
919
604
5,869
1
0
0
1
111,897
1,698
11,813
125,408
106 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 4. Notes to the Balance Sheet
Annual Report 2016/2017 | KWS Group Nature and scope of the pension benefits
The pension plans are mainly subject to the following risks:
In Germany
Investment and return
The following benefits are provided under a company agree-
The present value of the defined benefit obligation from the
ment relating to the company retirement pension program:
pension plan is calculated using a discount rate defined on
the basis of the returns on high-quality fixed-income corpo-
■■ An old-age pension at the age of 65
rate bonds. If the income from the planned assets is below
■■ An early retirement pension before the age of 65,
this rate of interest, the result is a shortfall in the plan. The
coupled with benefits from the early retirement pension
corporate bonds and share funds are chosen to ensure risk
from the statutory pension insurance program
diversification and managed by an external fund manager.
■■ An invalidity pension for persons who suffer from
occupational disability or incapacity to work as defined
Change in interest rates
by the statutory pension insurance program
The fall in the returns on corporate bonds and thus the dis-
■■ A widow’s or widower’s pension
count rate will result in an increase in the obligations, which
is only partly compensated for by a change in the value of
For benefit obligations backed by a guarantee by an insurance
the planned assets.
company toward three former members of the Executive
Board, the planned assets of €9,428 (10,217) thousand cor-
Life expectancy
respond to the present value of the obligation. In accordance
The present value of the defined benefit obligation from the
with IAS 19 (2011), the pension commitments are netted off
plan is calculated on the basis of the best-possible estimate
against the corresponding assets (planned assets).
using mortality tables. An increase in the life expectancy
of the entitled employees results in an increase in the plan
Abroad
liabilities.
The defined benefit obligations abroad mainly relate to
pension commitments in the U.S. Share funds and bonds
Salary and pension trends
were mainly invested as planned assets to cover them. All
The present value of the defined benefit obligation from the
employees who have reached the age of 21 are entitled to
plan is calculated on the basis of future salaries/pensions.
benefits. In addition, each employee must have worked at
Consequently, increases in the salary and pension of the en-
least one year and at least 1,000 working hours to earn an
titled employees results in an increase in the plan liabilities.
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 –
backed by a guarantee. The existing obligations, which are
to be eligible, the employee must be at least 55 and
partly covered by planned assets, are funded from the oper-
the minimum 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 2016/2017 | Annual Financial Statements 107
KWS Group | Annual Report 2016/2017
The tables below show the changes in the accrued benefit
and planned assets:
Changes in accrued benefit entitlements
in € thousand
2016/2017
2015/2016
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
126,607
23,262
149,869
106,837
18,408
125,245
993
1,613
–10,925
1,186
736
–521
2,179
2,349
–11,446
787
2,608
21,388
917
761
1,704
3,369
3,792
25,180
–10,953
–1,020
–11,973
21,229
3,389
24,618
28
–4,943
499
–534
–449
0
527
–5,477
–449
0
159
–5,013
403
–541
49
–124
562
–5,554
49
–124
113,345
23,680
137,025
126,607
23,262
149,869
Germany
Abroad
Total
Germany
Abroad
Total
2016/2017
2015/2016
10,217
13,221
23,438
129
437
566
–312
–606
1,024
–525
–284
1,827
712
–1,131
–284
1,827
9,446
229
1,133
–591
13,598
23,044
601
830
–605
–485
48
64
528
–1,076
48
64
9,428
15,700
25,128
10,217
13,221
23,438
In order to allow reconciliation with the figures in the balance
sheet, the accrued benefit must be netted off with the
planned assets.
Reconciliation with the balance sheet values for pensions
in € thousand
2016/2017
2015/2016
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
113,345
23,680
137,025
126,607
23,262
149,869
9,428
103,917
15,700
7,980
25,128
111,897
10,217
116,390
13,221
23,438
10,041
126,431
108 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 4. Notes to the Balance Sheet
Annual Report 2016/2017 | KWS Group The 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)
2016/2017
Germany
Abroad
993
1,484
1,186
298
Total
2,179
1,782
Germany
Abroad
787
2,379
917
159
2015/2016
Total
1,704
2,538
2,477
1,484
3,962
3,166
1,076
4,242
312
–1,024
–712
–1,133
605
–528
–10,953
–1,020
–11,973
21,229
3,390
24,618
28
499
527
159
403
562
–10,613
–1,545
–12,158
20,255
4,397
24,652
–8,136
–60
–8,196
23,421
5,473
28,894
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
9,428
9,428
Germany
Abroad
2016/2017
Total
4,198
10,455
1,047
9,428
4,198
10,455
1,863
1,139
1,127
1,882
1,367
3,077
1,047
15,700
25,128
Germany
Abroad
3,510
8,842
1,935
956
656
1,514
986
2,795
869
10,217
10,217
13,221
2015/2016
Total
3,510
8,842
869
10,217
23,438
The planned assets abroad relate mainly to the U.S.
The following sensitivity analysis at June 30, 2017, shows
There is no active market for the reinsurance policies in
a change in the actuarial assumptions. No correlations
Germany. There is an active market for the other planned
between the individual assumptions were taken into account
assets: the fair value can be derived from their stock market
in this, i.e., if an assumption varies, the other assumptions
prices. A total of 84.1% (previous year: 82.3%) of the corpo-
were kept constant. The projected unit credit method used
rate bonds have an AAA rating.
to calculate the balance sheet values was also used in the
how the present value of the obligation would change given
sensitivity analysis.
4. Notes to the Balance Sheet | Notes for the KWS Group 2016/2017 | Annual Financial Statements 109
KWS Group | Annual Report 2016/2017 Sensitivity analysis
in € thousand
Discount rate
Anticipated annual pay increases
Anticipated annual pension increase
Life expectancy
Effect on obligation in 2016/2017
Effect on obligation in 2015/2016
Change in
assumption
+/– 100
basis points
+/– 50
basis points
+/– 25
basis points
+/– 1 year
Decrease
Increase
25,306
–19,851
–1,220
1,315
–4,126
–4,883
4,287
4,978
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
The following undiscounted payments for pensions (with
their due dates) are expected in the following years:
Anticipated payments for pensions
Anticipated payments for pensions
in € thousand
2016/2017
in € thousand
2015/2016
2017/2018
2018/2019
2019/2020
2020/2021
2021/2022
Germany
Abroad
5,123
5,045
5,136
5,011
4,972
698
788
795
981
960
Total
5,820
5,833
5,931
5,992
5,933
2016/2017
2017/2018
2018/2019
2019/2020
2020/2021
2022/2023 – 2026/2027
24,355
6,050
30,406
2021/2022 – 2025/2026
24,333
Germany
Abroad
5,042
4,979
4,921
5,027
4,941
600
686
789
834
1,083
5,465
Total
5,642
5,665
5,710
5,861
6,024
29,798
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 15.4 (16.6) years in Germany and 17.1 (17.3) 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 2016/2017 were as follows:
Pension costs
in € thousand
Germany
Abroad
Cost for defined contribution plans
3,080
1,600
Service cost for the defined benefit
obligations
Pension costs
993
4,073
1,186
2,786
2016/2017
2015/2016
Total
4,680
2,179
6,859
Germany
Abroad
2,266
1,302
787
3,053
917
2,219
Total
3,568
1,704
5,272
110 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 4. Notes to the Balance Sheet
Annual Report 2016/2017 | KWS Group In addition, contributions of €13,955 thousand (previous
interest of between 0.9% and 2.25%. In addition, the benefit
year: €13,724 thousand) were paid to statutory pension
obligation from salary conversion was backed by a guaran-
insurance institutions.
tee that exactly matches the present value of the obligation
of €3,928 (3,581) thousand (defined contribution plan).
The costs for defined contribution plans in Germany main-
ly related to the provident fund backed by a guarantee.
The long-term financial borrowings include loans from banks
The contributions to this pension plan were €3,080 (2,016)
amounting to €200,828 (228,712) thousand. They have re-
thousand. The return and income from the planned assets
maining maturities through 2025.
depend on the reinsurance policy, which yields guaranteed
(15) 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
06/30/2017
06/30/2016
72,774
38,782
65
218
80,914
22,684
65
329
39,065
23,078
1,266
65
74,069
75,400
25,620
16,318
70,167
0
45
74,969
75,014
21,062
13,990
60,961
299,344
275,019
in € thousand
06/30/2016
06/30/2017
Changes in
the consoli
dated group,
currency
Addition
Consump
tion
Reversal
Obligations from sales transactions
62,884
–2,243
61,835
54,515
3,552
64,409
Obligations from purchase
transactions
Other obligations
3,884
14,146
80,914
0
–59
1,534
4,623
–2,302
67,992
3,724
10,843
69,082
100
1,096
4,748
1,594
6,771
72,774
The obligations from sales transactions essentially relate
The tax liabilities of €25,620 (21,062) 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 provisions
that cannot be assigned to the group of sales transactions
or the group of purchase transactions.
4. Notes to the Balance Sheet | Notes for the KWS Group 2016/2017 | Annual Financial Statements 111
KWS Group | Annual Report 2016/2017 Notes for the KWS Group 2016/2017
(16) Derivative financial instruments
Hedging transactions
in € thousand
Currency hedges
Interest-rate hedges
Commodity hedges
06/30/2017
06/30/2016
Nominal
volume
Carrying
amounts
Fair value
Nominal
volume
Carrying
amounts
Fair value
162,977
34,000
182
–1,881
–311
5
–1,881
143,735
–311
5
34,000
162
197,159
–2,187
–2,187
177,897
2,027
–485
9
1,551
2,027
–485
9
1,551
Of the currency hedges, hedges with a nominal volume
fair value. If this market does not exist for the asset or liabil-
of €153,196 (140,625) thousand have a remaining maturity
ities in question, the market that maximizes the amount that
of less than one year, and hedges with a nominal volume
would be received to sell the asset or minimizes the amount
of €9,781 (3,110) thousand have a remaining maturity of
that would be paid to transfer the liability, after taking into
between one and five years. Of the interest-rate derivatives,
account transaction costs, is used. These are active and
hedges with a nominal volume of €34,000 (29,000) thousand
accessible markets for identical assets and liabilities, where
will mature within one to five years, and hedges with a nomi-
the fair value results from quoted prices that are observable
nal value of €0 (5,000) thousand will mature in more than five
(level 1 input factors). At the KWS Group, this relates to
years. The commodity hedges have remaining maturities of
securities in the category available-for-sale financial assets, as
less than one (one) year.
well as fund shares at banks and other financial assets whose
price is likewise quoted in active markets.
(17) Financial instruments
In general, the fair values of financial assets and liabilities
The level 2 input factors relate to derivative financial instru-
are calculated on the basis of the market data available on
ments that have been concluded between KWS companies
the balance sheet date and are assigned to one of the three
and banks. The prices can thus be derived indirectly from
hierarchy levels in accordance with IFRS 13. The principal
active market prices for similar assets and liabilities. The level 3
market, i.e., the market with the largest volume of trading
input factors cannot be derived from observable market
and the greatest business activity, is used to calculate the
information.
112 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 4. Notes to the Balance Sheet
Annual Report 2016/2017 | KWS Group The carrying amounts and fair values of the financial assets
(financial instruments), split into the measurement categories
in accordance with IAS 39, are as follows:
06/30/2017
in € thousand
Financial assets
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
06/30/2016
in € thousand
Financial assets
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
3,069
32
(32)
302,571
9,455
181,913
40,573
(1,653)
537,613
Fair Values
2,192
96
(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
Available-for-sale
financial assets
Total
carrying
amount
0
0
(0)
302,571
0
181,913
38,920
(0)
523,404
0
32
(32)
0
0
0
1,653
(1,653)
1,685
3,069
3,069
0
(0)
0
9,455
0
0
(0)
12,524
32
(32)
302,571
9,455
181,913
40,573
(1,653)
537,613
Financial instruments
Carrying amounts
Loans and
receivables
Financial assets
held for trading
Available-for-sale
financial assets
Total
carrying
amount
0
0
(0)
293,881
0
133,224
42,120
(0)
469,225
0
96
(96)
0
0
0
2,950
(2,950)
3,046
2,192
2,192
0
(0)
0
30,679
0
0
(0)
32,871
96
(96)
293,881
30,679
133,224
45,070
(2,950)
505,142
4. Notes to the Balance Sheet | Notes for the KWS Group 2016/2017 | Annual Financial Statements
113
KWS Group | Annual Report 2016/2017 The fair value of financial assets (equity instruments)
The fair values of securities classified as current assets are
measured at amortized costs cannot be reliably determined.
based on the price for them quoted on active markets (level 1).
These assets relate to shares in unconsolidated subsidiaries
and associated companies. It is assumed that the carrying
The fair value of derivative financial instruments is the present
amounts are the same as the fair values. In addition, the
values of the payments related to these balance sheet items.
financial assets include securities classified as noncurrent
These instruments are mainly forward exchange deals.
assets, whose fair value is measured by their prices on the
They are measured on the basis of quoted exchange rates
stock market (level 1).
and yield curves available from the market data and allowing
for counterparty risks (level 2).
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 liabilities
carrying amounts as a result of the short time in which these
(financial instruments), split into the measurement categories
instruments are due.
in accordance with IAS 39, are as follows:
06/30/2017
in € thousand
Fair values
Financial instruments
Carrying amounts
Financial
liabilities
measured at
amortized cost
Financial
liabilities held
for trading
Financial liabilities
Long-term borrowings
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
204,649
1,217
1,306
(851)
39,065
75,400
16,318
(3,022)
200,828
1,217
455
(0)
39,065
75,400
13,296
(0)
Total
337,955
330,261
0
0
851
(851)
0
0
3,022
(3,022)
3,873
Total
carrying
amount
200,828
1,217
1,306
(851)
39,065
75,400
16,318
(3,022)
334,134
114 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 4. Notes to the Balance Sheet
Annual Report 2016/2017 | KWS Group 06/30/2016
in € thousand
Fair values
Financial instruments
Carrying amounts
Financial
liabilities
measured at
amortized cost
Financial
liabilities held
for trading
Financial liabilities
Long-term borrowings
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
1,413
681
(533)
23,078
75,014
13,990
(964)
228,712
1,413
148
(0)
23,078
75,014
13,026
(0)
Total
347,734
341,391
0
0
533
(533)
0
0
964
(964)
1,497
Total
carrying
amount
228,712
1,413
681
(533)
23,078
75,014
13,990
(964)
342,888
The fair value of long-term borrowings was calculated on
None of the reported financial instruments will be held to
the basis of discounted cash flows. To enable that, interest
maturity.
rates for comparable transactions and yield curves were
used (level 2).
The table below shows the financial assets and liabilities
measured at fair value:
Due to the generally short times by which trade payables
and other financial liabilities (excluding derivatives) are due,
it is assumed that their carrying amounts are equal to the
fair value.
Assets and liabilities measured at fair value
in € thousand
06/30/2017
06/30/2016
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
0
1,685
12,182
0
12,182
1,685
0
0
3,873
3,873
0
0
0
0
0
1,685
0
3,046
12,182
32,421
0
13,867
32,421
3,046
3,873
3,873
0
0
1,497
1,497
0
0
0
0
0
3,046
32,421
35,467
1,497
1,497
4. Notes to the Balance Sheet | Notes for the KWS Group 2016/2017 | Annual Financial Statements
115
KWS Group | Annual Report 2016/2017
The table below presents the net gains/losses carried in
In order to control the credit risk resulting from receivables
the income statement for financial instruments in each
from customers, a regular creditworthiness analysis is
measurement category:
conducted by the responsible credit manager in accordance
Net gain/losses of financial instruments
in € thousand
06/30/2017 06/30/2016
with the credit volume. Security is available for some of
these receivables and is used depending on the local cir-
cumstances. This includes, in particular, credit insurance,
down payments and guarantees. In general, reservation of
ownership of goods is agreed with our customers. Credit
limits are defined for all customers. Credit risks from financial
transactions are controlled centrally by Corporate Finance/
Treasury. In order to minimize risks, financial transactions are
29
47
–1,059
–68
–262
–1,349
–11,251
–12,228
exclusively conducted within defined limits with banks and
partners who always have an investment grade. Compliance
–2,506
1,158
with the risk limits is constantly monitored. The limits are
adjusted depending on the credit volume only subject to the
approval of the regional or divisional management and the
Available-for-sale financial
assets
Financial assets held for
trading
Loans and receivables
Financial liabilities measured
at amortized cost
Financial liabilities held
for trading
The net income from available-for-sale financial assets in-
Executive Board.
cludes income from equity investments in cooperatives and
income from securities.
Liquidity is managed in the eurozone by the central Treasury
unit using a cash-pooling system. Liquidity requirements are
The net gains from financial assets held for trading and
generally determined by means of cash planning and are
financial liabilities held for trading solely comprise changes
covered by cash and promised credit lines.
in the market value of derivative financial instruments.
The net gain/loss from loans and receivables mainly includes
of €70 million for financing purposes in December 2015. The
effects from changes in the allowances for impairment.
tranches have a maturity of five and seven years; part of the
KWS SAAT SE raised a borrower’s note loan for an amount
loan has a variable interest rate, but most of it (€43 million)
The net losses from financial liabilities measured at amortized
has a fixed interest rate.
cost result mainly from interest expense.
Interest income from financial assets that are not measured
syndicated loan of €200 million runs until October 2021, since
at fair value and recognized in the income statement was
the option of extending it was utilized. This loan only contains
€2,900 (2,278) thousand. Interest expenses for financial
one financial covenant. In the case of financial covenants,
borrowings were €11,251 (12,228) thousand.
the dynamic gearing ratio is used as a financial indicator.
There are unutilized credit lines totaling €268 million. The
Compliance with the covenants is regularly reviewed by
KWS SAAT SE’s Treasury unit and reported to the banks
every quarter in connection with the quarterly and annual
financial statements.
116 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 4. Notes to the Balance Sheet
Annual Report 2016/2017 | KWS Group 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 flows:
Fiscal year 2016/2017
in € thousand
Book value
Liquidity analysis of financial liabilities
06/30/2017
06/30/2017
Total
Financial liabilities
Trade payables
Other financial liabilities
Nonderivative financial liabilities
Payment claim
Payment obligation
239,893
242,273
76,617
13,751
330,261
76,617
13,751
332,641
112,163
117,830
Derivative financial liabilities
3,873
5,667
Fiscal year 2015/2016
in € thousand
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
Cash flows
Due in
> 5 years
28,493
0
Due in
> 1 year and
< 5 years
142,012
1,217
2
143,231
28,493
6,147
7,200
1,053
Due in
< 1 year
71,768
75,400
13,749
160,917
106,016
110,630
4,614
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
21,052
23,225
2,173
20,237
21,961
1,724
815
1,264
449
The cash flows of the derivative financial liabilities mainly
In order to assess the risk of exchange rate changes, the
relate to forward exchange deals and include both interest
sensitivity of a currency to fluctuations was determined.
payments and redemption payments. These derivative
After the euro, the US dollar is the most important currency
financial instruments are settled in gross.
in the KWS Group. All other currencies are of minor impor-
tance. The average exchange rate in the fiscal year was
The following sensitivity analyses show the impact on income
1.09 (1.11) USD/EUR. If the US dollar depreciated by 10%, the
and equity. The calculated figures relate to the portfolio at
financial instruments would be worth €192 (199) thousand. If
the balance sheet date and show the hypothetical effect for
the US dollar appreciated by 10%, the financial instruments
one year.
would have a value of €234 (244) thousand. The net income
for the year and equity would change accordingly.
4. Notes to the Balance Sheet | Notes for the KWS Group 2016/2017 | Annual Financial Statements
117
KWS Group | Annual Report 2016/2017 Interest rate sensitivity is a measure for showing the in-
(19) Other financial obligations
terest rate risk. The variable-interest components of the
There was a €4,610 (13,211) thousand obligation from
KWS Group’s interest expenses and interest income were
uncompleted capital expenditure projects, mainly relating
determined to calculate it. An average rate of interest per
to property, plant and equipment. The largest items are the
Group company for the past fiscal year was then formed
obligations from investments of €0.5 million in expanding
for all relevant investments and loans. This average rate of
the Biotechnology Center, €1.1 million for conversion of a
interest was then used in a scenario analysis to calculate
machine hall, and €0.6 million for expansion of the block-
the effects on the interest result and equity if the interest
type thermal power station at Einbeck.
Obligations under rental agreements and leases
rate increased by one percentage point (100 base points) or
decreased by the same amount. That yielded the following
results in the past fiscal year. An increase in the rate of inter-
est of one percentage point would result in additional interest
in € thousand
Due within one year
expense of €0.5 million (previous year: income and expense
Due between 1 and 5 years
canceled each other out); equity would fall by €0.3 (+0.0)
Due after 5 years
million in the event of such a change in the rate of interest.
A reduction in the rate of interest of one percentage point
would add a further €0.5 (0.6) million in income. Equity would
06/30/2017 06/30/2016
17,216
34,219
4,399
55,834
16,520
21,353
6,002
43,875
increase by €0.3 (0.4) million in the event of such a change in
The leases relate primarily to full-service agreements for IT
the rate of interest.
(18) Contingent liabilities
equipment and fleet vehicles, which also include services
for which a total of €4,620 (5,556) thousand was paid in the
year under review. The main leasehold obligations relate to
As in the previous year, there are no contingent liabilities to
land under cultivation.
report at the balance sheet date.
118 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 4. Notes to the Balance Sheet
Annual Report 2016/2017 | KWS Group 5. Notes to the Income Statement
Income statement
in € millions
Net sales
Cost of sales
Gross profit on sales
Selling expenses
Research & development expenses
General and administrative expenses
Other operating income
Other operating expenses
Operating income
2016/2017
% of sales
2015/2016
% of sales
1,075.2
493.9
581.3
200.7
190.3
79.8
69.7
48.6
131.6
100.0
45.9
54.1
18.7
17.7
7.4
6.5
4.5
12.2
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
1.4
Net financial income/expenses
16.6
1.5
14.8
Result of ordinary activities
148.2
13.8
127.6
12.3
Taxes
Net income for the year
Share of minority interest
Net income after minority interest
(20) Net sales and function costs
By product category
in € thousand
Certified seed sales
Royalties income
Basic seed sales
Services fee income
Other sales
50.5
97.7
0.2
97.5
4.7
9.1
0.0
9.1
42.3
85.3
0.0
85.3
4.1
8.2
0.0
8.2
2016/2017
2015/2016
967,736
918,471
59,783
17,843
4,288
25,594
73,006
19,411
3,513
22,373
1,075,244
1,036,774
5. Notes to the Income Statement | Notes for the KWS Group 2016/2017 | Annual Financial Statements
119
KWS Group | Annual Report 2016/2017 By region
in € thousand
Germany
Europe (excluding
Germany)
North and South
America
Rest of world
2016/2017
2015/2016
226,291
223,972
464,283
450,817
317,472
67,198
282,999
78,986
Selling expenses increased by €3,858 thousand to
€200,676 (196,818) thousand, or 18.7% (19.0%) of sales.
Research & development is recognized as an expense
in the year it is incurred; in the year under review, this
amounted to €190,327 (182.360) thousand. Development
costs for new varieties are not recognized as an asset
because evidence of future economic benefit can only be
1,075,244
1,036,774
provided after the variety has been officially certified.
For further details of sales, see segment reporting.
€3,431 thousand to €79,833 thousand, representing 7.4%
General and administrative expenses increased by
of sales as in the previous year.
The cost of sales increased by 2.7% to €493,922 (480,864)
thousand, or 45.9% (46.4%) of sales. The total cost of goods
sold was €289,427 (290,480) thousand.
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:
July 1 to June 30
in € thousand
Impairment losses
Decreases in impairment loss
Total
10,746
2,612
(21) 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
The other operating income mainly comprises foreign
exchange gains and income from interest rate hedges,
as well as miscellaneous other operating income. The
performance-based government grants mainly relate to
breeding allowances and farm payments.
120 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 5. Notes to the Income Statement
2016/2017
2015/2016
2,693
3,841
26,847
3,777
6,166
7,157
269
18,956
69,706
445
6,748
28,050
4,636
5,924
8,925
132
15,512
70,372
Annual Report 2016/2017 | KWS Group
(22) 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
Other expenses
In the year under review, allowances for receivables
and counterparty defaults of €3,728 (4,132) thousand
were recognized as an expense in the Corn Segment,
€713 (7,244) thousand in the Sugarbeet Segment and
€379 (180) thousand in the Cereals Segment.
(23) Net financial income/expenses
July 1 to June 30
in € thousand
Interest income
Interest expenses
Income from securities
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
Income from write-ups of subsidiaries, joint ventures and participations
Expenses from depreciation of shares of subsidiaries
Net income from equity investments
Net financial income/expenses
2016/2017
2015/2016
943
4,526
294
29,149
1,001
1,798
10,890
48,601
944
8,263
3,293
28,986
1,294
1,741
13,417
57,938
2016/2017
2015/2016
3,043
9,510
32
26
32
1,794
71
3
–8,309
24,935
3
10
40
24,908
16,599
2,618
11,679
0
44
0
2,547
114
7
–11,685
26,466
3
0
0
26,469
14,784
Net income from equity investments fell year on year by
net financial income/expenses rose by €1,815 thousand to
€1,561 thousand. Income from equity-accounted financial
€16,599 (14,784) thousand. The interest effects from pension
assets fell from €26,466 thousand to €24,935 thousand. To-
provisions comprise interest expenses (compounding) and the
gether with an interest result of €–8,309 (–11,685) thousand,
planned income.
5. Notes to the Income Statement | Notes for the KWS Group 2016/2017 | Annual Financial Statements
121
KWS Group | Annual Report 2016/2017
(24) 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
2016/2017
2015/2016
54,077
17,760
36,317
6,741
–3,599
–2,035
–1,564
50,478
40,803
4,666
36,137
–267
1,468
2,831
–1,363
42,271
KWS pays tax in Germany at a rate of 29.0% (29.1%).
out in ten equal annual amounts from 2008 to 2017. The
Corporate income tax of 15.0% (15.0%) and solidarity tax
German Group companies carried these claims as assets
of 5.5% (5.5%) are applied uniformly to distributed and
at their present value totaling €1,235 (2,470) thousand at
retained profits. In addition, trade tax is payable on profits
June 30, 2017. A total of €1,235 (1,236) thousand was re-
generated in Germany. Trade income tax is applied at a
covered in the year under review and recognized directly in
weighted average rate of 13.2% (13.3%), resulting in a total
equity.
tax rate of 29.0% (29.1%).
The “Law on Tax Measures Accompanying Introduction
are taxed at the rates applicable in the country in which they
of the Societas Europaea and Amending Further Tax
are based. The tax rates in foreign countries vary between
Regulations” (SEStEG), which was passed at the end of
10.0% (10.0%) and 39.0% (39.0%).
The profits generated by Group companies outside Germany
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-
ing balance sheet items and tax loss carryforwards:
Deferred taxes
in € thousand
Intangible assets
Property, plant and equipment
Biological assets
Financial assets
Inventories
Current assets
Noncurrent liabilities
of which pension provisions
Current liabilities
Deferred taxes recognized (gross)
Tax loss carryforward
Setting off
Deferred taxes recognized (net)
Deferred tax assets
Deferred tax liabilities
2016/2017
2015/2016
2016/2017
2015/2016
2,706
86
0
279
11,702
5,341
26,892
(20,495)
11,941
58,947
3,752
–16,164
46,535
786
612
0
1,738
8,122
1,618
27,549
(22,734)
14,463
54,888
5,588
–19,437
41,039
4,297
18,005
7
1,472
1,047
2,686
1,246
(1,241)
125
28,885
0
–16,164
12,721
5,957
17,699
4
0
1,013
4,026
1,420
(11)
3
30,122
0
–20,675
9,447
Due to the use of tax loss carryforwards and temporary
There is a deferred tax expense of €2,442 (1,616) thousand
differences on which no deferred taxes were recognized in
from the allowance for deferred taxes on tax loss carryfor-
the past, the actual tax expense fell by €100 (0) thousand.
wards and temporary differences in the year under review.
122 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 5. Notes to the Income Statement
Annual Report 2016/2017 | KWS Group The write-up of deferred taxes results in deferred tax
In the year under review, there were surpluses of deferred
income of €2,754 (95) thousand.
tax assets from temporary differences and loss carryfor-
wards totaling €15,376 (30,677) thousand at Group com-
No deferred taxes were formed for tax loss carryforwards
panies that made losses in the past period or the previous
totaling €15,772 (24,987) thousand that have not yet been
period. These were considered recoverable, since it is
utilized. Of these, €4,591 (4,627) thousand must be utilized
assumed that the companies in question will post taxable
within a period of five years and €2,251 (5,715) thousand
profits in the future. The fact is taken into account here that
within a period of nine years. Loss carryforwards totaling
the KWS Group may realize income with a delay due to the
€8,930 (14,645) thousand can be utilized without any time
long-term nature of research & development spending.
limit.
No deferred taxes were formed for deductible temporary
the reported income tax expense is derived on the basis of
differences totaling €0 (543) thousand.
the consolidated income before taxes and the nominal tax
The reconciliation of the expected income tax expense to
rate for the Group of 29.0% (29.1%), taking into account the
There are deferred taxes of €37,331 thousand relating to
following effects.
temporary differences in connection with shares in sub-
sidiaries; they are not recognized pursuant to IAS 12.39.
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: 29.0%
2016/2017
2015/2016
148,190
43,030
3,850
–27
8,073
–13,629
1,868
–688
–464
8,318
147
50,478
34.1%
127,548
37,148
11,709
–393
4,255
–13,155
–330
3,567
–245
–2,385
2,100
42,271
33.1%
Other taxes, primarily real estate tax, are allocated to the
Personnel costs went up by €14,808 thousand to
relevant functions.
€246,991 thousand, an increase of 6.4%. The number of
employees increased by 94 to 4,937, or by 1.9%. Of the
(25) Personnel costs/employees
4,937 (4,843) employees, 3,607 (3,560) are permanent
July 1 to June 30
in € thousand
Wages and salaries
Social security contributions,
expenses for pension plans
and benefits
2016/2017
2015/2016
198,675
188,170
48,316
246,991
44,013
232,183
employees, 1,193 (1,136) are temporary employees and
137 (147) are trainees.
Compensation increased by 5.6% from €188,170 thousand
in the previous year to €198,675 thousand. Social security
contributions, expenses for pension plans and benefits
were €4,303 thousand higher than in the previous year.
5. Notes to the Income Statement | Notes for the KWS Group 2016/2017 | Annual Financial Statements
123
KWS Group | Annual Report 2016/2017 Employees1
Germany
Europe (excluding Germany)
North and South America
Rest of world
Total
1 Annual average
2016/2017
2015/2016
1,911
1,454
1,287
285
4,937
1,908
1,449
1,280
206
4,843
With our joint ventures, associated company and joint oper-
ation consolidated proportionately, the number of employees
was 5,621 (5,472). The reported number of employees is
greatly influenced by seasonal labor.
(26) Share-based payment
Long-Term-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
performance-related bonus. Along with that, all members
of the first management level below the Executive Board
likewise take part in an LTI program. As part of this program,
they are obligated to invest in shares in KWS SAAT SE
every year in a freely selectable amount ranging between
10% and 40% of the gross performance-related bonus.
Employee Share Purchase Plan
The members of the Executive Board and the first manage-
KWS has established an Employee Share Purchase Plan. All
ment level below the Executive Board may sell these shares
employees who have been with the company for at least one
at the earliest after a regular holding period of five years
year without interruption and have a permanent employment
beginning at the time they are acquired (end of the quarter
relationship that has not been terminated at a KWS Group
in which the shares were acquired). The entitled persons are
company that participates in the program are eligible to take
paid a long-term incentive (LTI) in the form of cash compen-
part. That also includes employees who are on maternity
sation after the holding period for the tranche in question.
leave or parental leave or who are in semi-retirement.
This was the case for members of the Executive Board for
the first time in January 2017. Its level is calculated on the
Each employee can acquire up to 500 shares. A bonus of
basis of KWS SAAT SE’s share performance and on the
20% is deducted from the purchase price, which depends
KWS Group’s return on sales (ROS), measured as the ratio
on the price applicable on the key date. The shares are sub-
of operating income to net sales, over the holding period.
ject to a lock-up period of four years beginning when they
For persons with contracts as of July 1, 2014, the cash com-
are posted to the employee’s securities account. The right
pensation for members of the Executive Board is a maxi-
to a dividend, if KWS SAAT SE pays one out, exists during
mum of one-and-half times (for the Chief Executive Officer
the lock-up period. Holders can also exercise their right to
two times), and for members of the first management level
participate in the Annual Shareholders’ Meeting during the
below the Executive Board a maximum of two times their
lock-up period. They can dispose freely of the shares after
own investment (LTI cap). The costs of this compensation
the lock-up period.
are recognized in the income statement over the period and,
taking the cash compensation in January 2017 into account,
A total of 11,594 (7,541) shares were repurchased for the
were €1,213 (510) thousand in the period under review. The
Employee Share Purchase Plan at a total price of €3,354
provision for it at June 30, 2017, was €2,570 (2,680) thousand.
(1,952) thousand in the year under review. The total cost for
The LTI fair values are calculated by an external expert.
issuing shares at a reduced price was €750 thousand in the
past fiscal year (previous year: €311 thousand).
(27) Net income for the year
The KWS Group’s net income for the year was
€97,712 (85,277) thousand on operating income of
€131,591 (112,764) thousand and net financial income/
expenses of €16,599 (14,784) thousand. The return on
sales thus increased to 9.1% (8.2%). Net income for the
year after minority interest was €97,549 (85,261) thousand.
Earnings per share in the year under review were
€14.78 (12.92).
124 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 5. Notes to the Income Statement
Annual Report 2016/2017 | KWS Group 6. Notes to the Cash Flow Statement
The cash flow statement shows the changes in cash and
cash equivalents of the KWS Group in the three categories of
operating activities investing activities and financing activities.
The effects of exchange rate changes and changes in the
consolidated group have been eliminated from the respective
balance sheet items, except those affecting cash and cash
equivalents.
(1) Net cash from operating activities
The cash proceeds from operating activities are substan-
tially determined by cash earnings. In the year under review
they were €105,408 (107,297) thousand. The proportion of
cash earnings included in sales was 9.8% (10.3%). Since
current liabilities rose more sharply than inventories and
receivables, there were net cash proceeds of €21,765 thou-
sand. The cash proceeds from operating activities also
include interest income of €3,035 (2,609) thousand and
interest expense of €7,768 (7,871) thousand. Income tax
payments amounted to €52,610 (46,916) thousand. The divi-
dends received from the joint ventures are also carried here
and total €16,861 (25,682) thousand.
(2) Net cash from investing activities
A net total of €64,760 (92,174) thousand was required to
finance investing activities.
(3) Net cash from financing activities
The net cash used in financing activities was €29,604 thou-
sand (previous year: cash proceeds of €21,385 thousand).
(4) Supplementary information on the cash flow
statement
Of the changes in cash and cash equivalents caused
by exchange rate, consolidated group, and measurement
changes, a total of €–582 (€–1,161) thousand results from
exchange rate-related adjustments.
As in previous years, cash and cash equivalents are
composed of cash (on hand and balances with banks)
and current available-for-sale securities.
6. Notes to the Cash Flow Statement | Notes for the KWS Group 2016/2017 | Annual Financial Statements
125
KWS Group | Annual Report 2016/2017 7. Other Notes
Proposal for the appropriation of net retained profits
Related party disclosures
A proposal will be made to the Annual Shareholders’
Transactions with related parties in accordance with IAS 24
Meeting that, of KWS SAAT SE’s net retained profit of
are all business dealings that are conducted with the re-
€21,151 thousand, an amount of €21,120 thousand should
porting entity by entities or natural persons or their close
be distributed as a dividend of €3.20 (3.00) for each of the
family members, if the party or person in question controls
6,600,000 shares.
the reporting entity or is a member of its key management
personnel, for example. There were no business transactions
The balance of €31 (41) thousand is to be carried forward to
or legal transactions that required reporting for this group of
the new account.
persons in fiscal 2016/2017. As part of its operations, KWS
procures goods and services worldwide from a large number
Total remuneration of the Supervisory Board and
of business partners, They also include companies in which
Executive Board and of former members of the
KWS has an interest and on which representatives of KWS’
Super visory Board and the Executive Board of
Supervisory Board exert a significant influence. Business
KWS SAAT SE
dealings with these companies are always conducted on an
The compensation of the members of the Supervisory
arm’s-length basis and are not material in terms of volume.
Board consists of a fixed and a variable component, with
As part of Group financing, short- and medium-term term
the variable component being limited to the level of the
loans are taken out from, and granted to, subsidiaries at
fixed compensation. As in the previous year, the total
market interest rates. The compensation of members of the
compen sation for members of the Supervisory Board
Executive Board comprises short-term employee benefits,
amounts to €504 (516) thousand, excluding value-added
share-based payment benefits and post-employment ben-
tax. Some €238 (238) thousand of the total compensation
efits. Individualized disclosures on the compensation of
is performance-related.
members of the Executive Board and the Supervisory Board
are presented in the Compensation Report, which is part of
In fiscal year 2016/2017, total Executive Board compensation
the audited Combined Management Report.
amounted to €3,772 (3,531) thousand. The variable compen-
sation, which is calculated on the basis of the net profit for
No other related parties have been identified for whom there
the period of the KWS Group, is made up of a bonus and a
is a special reporting requirement under IAS 24.
long-term incentive. The bonus totals €1,806 (1,602) thou-
sand; there are contributions from the long-term incentive
tranche for 2015/2016 totaling €583 thousand (tranche for
2014/2015: €558 thousand). Pension provisions totaling
€1,180 (1,384) thousand were formed for two members of
the Executive Board at KWS SAAT SE.
Compensation of former members of the Executive Board and
their surviving dependents amounted to €1,774 (1,334 thou-
sand. Pension provisions recognized for this group of
persons amounted to €7,337 (8,027) thousand as of
June 30, 2017, before being netted off with the relevant
planned assets.
126 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 7. Other Notes
Annual Report 2016/2017 | KWS Group Related parties
in € thousand
Unconsolidated
subsidiaries
Equity-accounted
joint ventures
Joint operation
Other related parties
Deliveries and
services provided
Received deliveries
and services
Receivables
Payables
2016/2017 2015/2016 2016/2017 2015/2016 2016/2017 2015/2016 2016/2017 2015/2016
0
0
0
0
0
330
2,935
0
0
4,891
1,862
0
16,058
16,319
12,305
17,323
8,053
133
6,925
132
169
0
439
0
0
0
0
0
0
0
0
0
Disclosure
Report on events after the balance sheet date
The following subsidiaries with the legal form of a corpora-
In order to strengthen the technology platforms of KWS and
tion within the meaning of Section 264 (3) of the German
Vilmorin & Cie, a licensing agreement relating to additional
Commercial Code (HGB) have utilized the exemption pro-
corn traits was concluded in October 2015. It authorizes
vided in Section 264 (3) of the German Commercial Code
KWS and Vilmorin & Cie, separately and independently
(HGB) as regards preparation of financial statements and
of each other, as well as their joint ventures GENECTIVE
their publication:
and AGRELIANT, to make worldwide commercial use of
corn traits developed and marketed by a leading provider,
■■ KWS LOCHOW GMBH, Bergen
including future new developments. As agreed in 2015, fur-
■■ KWS LANDWIRTSCHAFT GMBH, Einbeck
ther new approvals by the provider resulted in an additional
■■ BETASEED GMBH, Frankfurt
payment by AGRELIANT totaling 75 million US dollars in
■■ DELITZSCH PFLANZENTUCHT GMBH, Einbeck
September 2017.
■■ KANT-HARTWIG & VOGEL GMBH, Einbeck
■■ AGROMAIS GMBH, Everswinkel
Apart from that, there were no events after June 30, 2017,
■■ KWS SERVICES DEUTSCHLAND GMBH, Einbeck
that can be expected to have a significant impact on the
KWS Group’s assets, financial position and earnings.
KWS SAAT SE prepares the consolidated financial state-
ments for the largest and smallest group of companies.
Declaration of compliance with the German Corporate
Audit of the annual financial statements
KWS SAAT SE has issued the declaration of compliance
On December 15, 2016, the Annual Shareholders’ Meeting
with the German Corporate Governance Code required by
of KWS SAAT SE elected for the first time the account-
Section 161 Aktiengesetz (AktG – German Stock Corpora-
ing firm Ernst & Young GmbH, Hanover, to be the Group’s
tion Act) and made it accessible to its shareholders on the
auditors for fiscal year 2016/2017. The disclosures for the
company’s home page at www.kws.de.
Governance Code
previous year are based on the work by the independent
auditor at the time, Deloitte GmbH, Hanover.
Fee paid to the external auditors under
Section 314 (1) No. 9 HGB
in € thousand
2016/2017 2015/2016
a) Audit of the consolidated
financial statements
b) Other certification services
c) Tax consulting
d) Other services
Total fee paid
625
0
0
0
625
674
0
0
109
783
7. Other Notes | Notes for the KWS Group 2016/2017 | Annual Financial Statements
127
KWS Group | Annual Report 2016/2017 Boards 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
(until December 15, 2016)
Honorary member of the Supervisory Board of KWS SAAT SE
(since December 15, 2016)
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
Deputy Chairman of the Supervisory Board of KWS SAAT SE
(since December 15, 2016)
Jürgen Bolduan
Einbeck
Seed Breeding Employee
Chairman of the Central Works Council of KWS SAAT SE
Cathrina Claas-Mühlhäuser
Frankfurt am Main
Businesswoman
Chairwoman of the Supervisory Board of
CLAAS KGaA mbH, Harsewinkel
Dr. Berthold Niehoff
Einbeck
Agricultural Scientist
Employee Representative
Dr. Marie Theres Schnell
Munich
Graduate in Communications
Mandates (06/30/2017)
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)
Membership of comparable German and foreign oversight
boards:
■■ DR.SCHNELL Chemie GmbH, Munich
(Member of the Advisory Board)
128 Annual Financial Statements | Notes for the KWS Group 2016/2017 | 7. Other Notes
Annual Report 2016/2017 | KWS Group Supervisory Board Committees
Committee
Audit Committee
Chairman
Hubertus von Baumbach
Committee for Executive Affairs
Andreas J. Büchting
Nominating Committee
Andreas J. Büchting
Members
Andreas J. Büchting
Jürgen Bolduan
Hubertus von Baumbach (since 2016/12)
Arend Oetker (until 2016/12)
Cathrina Claas-Mühlhäuser
Marie Theres Schnell (since 2016/12)
Arend Oetker (until 2016/12)
Cathrina Claas-Mühlhäuser
Mandates (06/30/2017)
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
7. Other Notes | Notes for the KWS Group 2016/2017 | Annual Financial Statements
129
KWS Group | Annual Report 2016/2017 Independent Auditor’s Report
To KWS SAAT SE
Basis for opinions
Report on the audit of the consolidated financial
statements and the group management report in accor-
statements and the group management report
dance with Sec. 317 HGB and Regulation (EU) No 537/2014
We conducted our audit of the consolidated financial
Opinions
(EU Audit Regulation) as well as German generally accept-
ed standards on auditing promulgated by the Institut der
We have audited the consolidated financial statements of
Wirtschaftsprüfer [Institute of Public Auditors in Germany]
KWS SAAT SE, Einbeck, and its subsidiaries (the Group),
(IDW). Our responsibilities under those laws and standards
which comprise the consolidated statement of financial
are further described in the “Auditor’s responsibilities for the
position as of 30 June 2017, the consolidated statement
audit of the consolidated financial statements and the group
of comprehensive income, the consolidated statement of
management report” section of our report. We are indepen-
changes in equity and the consolidated statement of cash
dent of the group companies in accordance with European
flows for the fiscal year from 1 July 2016 to 30 June 2017
and German commercial law and professional provisions,
and the notes to the consolidated financial statements,
and we have fulfilled our other German ethical responsibili-
including a summary of significant accounting policies.
ties in accordance with these requirements. Furthermore, in
We have also audited the group management report of
accordance with Art. 10 (2) f of the EU Audit Regulation, we
KWS SAAT SE, which was combined with the management
declare that we have not provided any prohibited non-audit
report of the Company, for the fiscal year from 1 July 2016
services referred to in Art. 5 (1) of the EU Audit Regulation.
to 30 June 2017.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinions
In our opinion, based on the findings of our audit,
on the consolidated financial statements and on the group
■■ the accompanying consolidated financial statements
management report.
comply, in all material respects, with IFRSs as adopted
by the EU and the additional requirements of German law
Key audit matters in the audit of the consolidated
pursuant to Sec. 315a (1) HGB [“Handelsgesetzbuch”:
financial statements
German Commercial Code] and give a true and fair view
Key audit matters are those matters that, in our professional
of the net assets and financial position of the Group as
judgment, were of most significance in our audit of the con-
of 30 June 2017 and its results of operations for the fiscal
solidated financial statements for the fiscal year from 1 July
year from 1 July 2016 to 30 June 2017 in accordance with
2016 to 30 June 2017. These matters were addressed in the
these requirements and
context of our audit of the consolidated financial statements
■■ the accompanying group management report as a whole
as a whole, and in forming our auditor’s opinion thereon,
provides a suitable view of the Group’s position. In all
and we do not provide a separate opinion on these matters.
material respects, this group management report is
consistent with the consolidated financial statements,
Below, we describe what we consider to be the key audit
complies with the provisions of German law and suit-
matters:
ably presents the opportunities and risks of future
development.
(1) Goodwill impairment test
In accordance with Sec. 322 (3) Sentence 1 HGB, we hereby
Reasons why the matter was determined to be
state that our audit has not led to any reservations regarding
a key audit matter
the compliance of the consolidated financial statements and
In fiscal year 2016/2017, management of KWS SAAT SE
the group management report.
modified the internal budgeting and reporting processes as
part of its activities, in particular due to a cross- company
centralization of the Group’s operations into divisions.
Pursuant to IAS 36, the internal management and reporting
structure serves as the basis for designating cash-gener-
ating units to which the respective items of goodwill are
allocated. There was therefore a change in the cash-gener-
ating units in the KWS SAAT SE Group since monitoring and
management, including of goodwill, has been performed by
130 Annual Financial Statements | Notes for the KWS Group 2016/2017 | Independent Auditor’s Report
Annual Report 2016/2017 | KWS Group the chief operating decision makers at divisional instead of
Reference to related disclosures
legal entity level since fiscal year 2016/2017.
With regard to the accounting and valuation bases applied
for goodwill, refer to the disclosure on intangible assets in
Goodwill is tested for impairment as of 30 June each year.
the section “Accounting policies” in the notes to the consoli-
The result of these tests is highly dependent on manage-
dated financial statements. For the related disclosures
ment’s estimate of future cash flows and the respective
on judgments by management and sources of estimation
discount rates used.
uncertainty as well as the disclosures on goodwill, refer to
no. 2 “Intangible assets” in section 4 “Notes to the state-
In light of the new definition of the cash-generating units,
ment of financial position” in the notes to the consolidated
the complexity of the valuation and the judgment exercised
financial statements.
during valuation, the goodwill impairment test was one of
the most significant matters we examined during our audit.
(2) Revenue recognition from the sale of seeds
Audit approach
Reasons why the matter was determined to be
During our audit, among other things, we obtained an
a key audit matter
understanding of the methods used to carry out the impair-
In the consolidated financial statements of KWS SAAT SE,
ment tests including an examination of the suitability of the
revenue from the sale of seeds is recognized when risk
procedure for performing an impairment test in accordance
passes, taking contractually agreed return deliveries into
with IAS 36. In doing so, we analyzed the planning process
consideration. Management of KWS SAAT SE has issued
and the operating effectiveness of the controls implemented
detailed accounting instructions and implemented process-
therein. We discussed the significant planning assumptions
es for recognizing revenue from seed sales and taking return
with management and compared these with the results and
deliveries into consideration. In light of the large number of
cash inflows realized in the past. With respect to the rollfor-
different contractual agreements and judgment exercised in
ward of the medium to the long-term plan, we examined in
assessing expected return deliveries, we consider revenue
particular the assumptions on the growth rate. Our assess-
recognition to be complex and therefore to pose an elevated
ment of the results of the impairment tests as of 30 June
risk of incorrect recognition.
was based among other things on a comparison with gen-
eral and industry-specific market expectations underlying
Audit approach
the expected cash inflows. Based on our understanding
During our audit, we considered, based on the criteria
that even relatively small changes in the discount rates used
defined in IAS 18, the accounting and valuation require-
can at times have significant effects on the amount of the
ments applied in the consolidated financial statements of
business value calculated, we analyzed the inputs used to
KWS SAAT SE for the recognition of revenue. Our audit
determine the discount rates and reperformed the calcula-
approach included an examination of whether the significant
tion with regard to the relevant requirements of IAS 36. We
opportunities and risks passed to the buyers upon the sale
also performed sensitivity analyses in order to estimate any
of the seeds. We analyzed the process implemented by
potential impairment risk associated with a reasonably pos-
the management board of KWS SAAT SE and the account-
sible change in one of the significant assumptions used in
ing and valuation requirements for the recognition of seed
the valuation. In addition, we analyzed the test performed by
sales, in particular regarding an appropriate consideration
KWS SAAT SE’s management to ascertain whether retaining
of return deliveries. We tested the operating effectiveness of
the previous definition of the cash-generating units would
the controls relating to revenue recognition and the correct
also have resulted in no impairment.
cut-off of revenue. We examined whether the significant
revenue items for fiscal year 2016/2017 correlate with the
We obtained evidence that the divisions represent the
corresponding trade receivables and payments received
lowest level within the Group at which independent cash
and, based on analytical procedures defined group-wide,
inflows are generated and goodwill is monitored for internal
analyzed whether the revenue for fiscal year 2016/2017 was
manage ment purposes. Moreover, according to our findings,
recognized on an accrual basis. We analyzed the recogni-
the modification of the cash-generating units is consistent
tion of revenue based on the contractual arrangements on
with the realignment of the internal budgeting and reporting
a sample basis with regard to the requirements of IAS 18
structure.
for revenue recognition. We also obtained balance confir-
mations from customers. Based on analytical procedures
Our procedures regarding the valuation of goodwill did not
carried out on historical data, the analysis of the underlying
lead to any reservations.
contracts and the test of the operating effectiveness of the
Independent Auditor’s Report | Notes for the KWS Group 2016/2017 | Annual Financial Statements
131
KWS Group | Annual Report 2016/2017 implemented controls in this area, we examined the calcula-
Our procedures regarding the recognition of current and
tion of expected return deliveries of seeds and their deduc-
deferred income taxes did not lead to any reservations.
tion from revenue. Based on our test of operating effective-
ness, no significant exceptions were noted in terms of the
Reference to related disclosures
controls implemented at KWS SAAT SE. Overall, our audit
With regard to the accounting and valuation bases applied
procedures relating to revenue recognition from the sale of
for current and deferred income taxes and the related
seeds did not lead to any reservations.
disclosures on judgments by management and sources of
estimation uncertainty, refer to the disclosure on deferred
Reference to related disclosures
taxes and income tax provisions in the section “Accounting
With regard to the accounting and valuation bases applied
policies” in the notes to the consolidated financial state-
for the recognition of revenue from the sale of seeds, refer to
ments and, with regard to the information on income taxes,
the disclosure on the recording of income and expenses in
no. 24 “Taxes” in section 4 “Notes to the statement of
the section “Accounting policies” in the notes to the consoli-
financial position” in the notes to the consolidated financial
dated financial statements.
statements.
(3) Current and deferred income taxes
Responsibilities of management and the supervisory
board for the consolidated financial statements and the
Reasons why the matter was determined to be
group management report
a key audit matter
Management is responsible for the preparation of consol-
The KWS SAAT SE Group operates in different legal jurisdic-
idated financial statements that comply, in all material re-
tions with the resulting complexity of matters affecting the
spects, with IFRSs as adopted by the EU and the additional
recognition of current and deferred income taxes, namely
requirements of German law pursuant to Sec. 315a (1) HGB,
the transfer prices used, changes in tax legislation and intra-
for the preparation of consolidated financial statements that
group financing. To calculate the provision for tax obliga-
give a true and fair view of the net assets, financial position
tions and deferred tax items, management of KWS SAAT SE
and results of operations of the Group in accordance with
must exercise judgment in assessing tax matters, estimating
these requirements and for such internal control as manage-
tax risks and recognizing deferred taxes.
ment determines is necessary to enable the preparation of
consolidated financial statements that are free from material
Audit approach
misstatement, whether due to fraud or error.
Management of KWS SAAT SE regularly engages external
experts to validate its own risk assessment. We called on
In preparing the consolidated financial statements, manage-
our tax specialists to consider these tax assessments. Our
ment is responsible for assessing the Group’s ability to con-
specialists also analyzed the correspondence with the com-
tinue as a going concern, disclosing, as applicable, matters
petent tax authorities and the assumptions used to calculate
related to going concern and using the going concern basis
provisions for current taxes and deferred taxes, considering
of accounting unless management either intends to liquidate
in particular the applicable transfer prices, based on their
the Group or to cease operations, or has no realistic alterna-
knowledge and experience of how the authorities and courts
tive but to do so.
currently apply the relevant legal provisions. In addition, we
involved tax specialists from our international network with
In addition, management is responsible for the preparation
the relevant knowledge of the respective local jurisdictions
of the group management report that as a whole provides
and regulations who reported to us on the results of their
a suitable view of the Group’s position and, in all material
work. We reperformed, based on the requirements of IAS
respects, is consistent with the consolidated financial
12, the reconciliation of the profit before tax reported in the
statements, complies with the provisions of German law
IFRS financial statements to the taxable profit. We reper-
and suitably presents the opportunities and risks of future
formed the calculation of the deferred tax items with regard
development and for such arrangements and measures
to the provisions of IAS 12 and considered the assump-
(systems) as management deems necessary to enable the
tions on the recoverability of deferred tax assets. Our audit
preparation of a group management report in accordance
approach also included the disclosures in the notes to the
with the applicable provisions of German law and to furnish
consolidated financial statements of KWS SAAT SE on
sufficient appropriate evidence for the assertions in the
current and deferred income taxes.
group management report.
132 Annual Financial Statements | Notes for the KWS Group 2016/2017 | Independent Auditor’s Report
Annual Report 2016/2017 | KWS Group The supervisory board is responsible for overseeing the
■■ evaluate the appropriateness of accounting policies used
Group’s financial reporting process for the preparation of
and the reasonableness of accounting estimates and re-
the consolidated financial statements and the management
lated disclosures made by management;
report.
■■ conclude on the appropriateness of the going concern
basis of accounting used by management and, based on
Auditor’s responsibilities for the audit of the
the audit evidence obtained, whether a material uncer-
consolidated financial statements and the group
tainty exists related to events or conditions that may cast
management report
significant doubt on the Group’s ability to continue as a
Our objectives are to obtain reasonable assurance about
going concern. If we conclude that a material uncertainty
whether the consolidated financial statements as a whole
exists, we are required to draw attention in our auditor’s
are free from material misstatement, whether due to fraud
report to the related disclosures in the consolidated finan-
or error, and whether the group management report as a
cial statements and the group management report or, if
whole provides a suitable view of the Group’s position and,
such disclosures are inadequate, to modify our respective
in all material respects, is consistent with the consolidated
opinion. Our conclusions are based on the audit evidence
financial statements and our audit findings, complies with
obtained up to the date of our auditor’s report. However,
the provisions of German law and suitably presents the
future events or conditions may cause the Group to cease
opportunities and risks of future development, and to issue
to continue as a going concern;
an independent auditor’s report that includes our opinions
■■ evaluate the overall presentation, structure and content
on the consolidated financial statements and the group
of the consolidated financial statements, including the
management report.
disclosures, and whether the consolidated financial state-
ments represent the underlying transactions and events
Reasonable assurance is a high level of assurance, but is
in a manner that achieves a true and fair view of the net
not a guarantee that an audit conducted in accordance
assets, financial position and results of operations of the
with Sec. 317 HGB and the EU Audit Regulation as well as
Group in accordance with IFRSs as adopted by the EU
generally accepted standards on auditing promulgated by
and the additional requirements of German law pursuant
the IDW will always detect a material misstatement when it
to Sec. 315a (1) HGB;
exists. Misstatements can arise from fraud or error and are
■■ obtain sufficient appropriate audit evidence regarding the
considered material if, individually or in the aggregate, they
financial information of the entities or business activities
could reasonably be expected to influence the economic
within the Group to express opinions on the consolidated
decisions of users taken on the basis of these consolidated
financial statements and the group management report.
financial statements and the group management report.
We are responsible for the direction, supervision and per-
formance of the group audit. We remain solely responsible
We exercise professional judgment and maintain profes-
for our audit opinions;
sional skepticism throughout the audit. We also
■■ evaluate the group management report’s consistency with
■■ identify and assess the risks of material misstatement
the consolidated financial statements, its compliance with
of the consolidated financial statements and the group
the legal provisions and the view it gives of the Group’s
management report, whether due to fraud or error, design
position;
and perform audit procedures responsive to those risks,
■■ perform procedures on the forward-looking assertions
and obtain audit evidence that is sufficient and appro-
made by management in the group management report.
priate to provide a basis for our opinions. The risk of not
In particular, on the basis of sufficient appropriate audit
detecting a material misstatement resulting from fraud
evidence, we walk through the significant assumptions
is higher than for one resulting from error, as fraud may
underlying management’s forward-looking assertions
involve collusion, forgery, intentional omissions, misrepre-
and assess whether the forward-looking assertions were
sentations, or the override of internal control;
appropriately derived from these assumptions. We do not
■■ obtain an understanding of internal control relevant to
provide a separate opinion on the forward-looking asser-
the audit of the consolidated financial statements and the
tions and underlying assumptions. There is a significant
arrangements and measures relevant to the audit of the
unavoidable risk that future events will differ materially
group management report in order to design audit proce-
from the forward-looking assertions.
dures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effective-
ness of these systems;
Independent Auditor’s Report | Notes for the KWS Group 2016/2017 | Annual Financial Statements
133
KWS Group | Annual Report 2016/2017 We communicate with those charged with governance
Report on other legal and regulatory requirements
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, includ-
Other reporting items in accordance with Art. 10 of
ing any significant deficiencies in internal control that we
the EU Audit Regulation
identify during our audit.
We were elected as auditor of the consolidated financial
statements by the shareholder meeting on 15 December
We provide those charged with governance with a statement
2016. We were engaged by the supervisory board on
that we have complied with relevant ethical requirements
8 August 2017. We have been the auditor of KWS SAAT SE
regarding independence, and communicate with them all
for an uninterrupted period since the audit of the consoli-
relationships and other matters that may reasonably be
dated financial statements for fiscal year 2016/2017.
thought to bear on independence and related safeguards.
From the matters communicated with those charged with
report are consistent with the additional report to the audit
governance, we determine those matters that were of most
committee in accordance with Art. 11 of the EU Audit Regu-
We confirm that the audit opinions included in this auditor’s
significance in the audit of the consolidated financial state-
lation (audit report).
ments of the current period and are therefore the key audit
matters. We describe each key audit matter in our auditor’s
Responsible auditor
report unless law or regulation precludes public disclosure
The auditor responsible for the audit is
about the matter.
Dr. Christian Janze.
Hanover, 27 September 2017
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft
Ludwig
Dr. Janze
Wirtschaftsprüfer
Wirtschaftsprüfer
[German Public Auditor]
[German Public Auditor]
134 Annual Financial Statements | Notes for the KWS Group 2016/2017 | Independent Auditor’s Report
Annual Report 2016/2017 | KWS Group
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, 2017
KWS SAAT SE
THE EXECUTIVE BOARD
H. Duenbostel
L. Broers
E. Kienle
P. Hofmann
Declaration by Legal Representatives | Notes for the KWS Group 2016/2017 | Annual Financial Statements
135
KWS Group | Annual Report 2016/2017
Financial calendar
Date
November 23, 2017
December 14, 2017
February 27, 2018
May 17, 2018
October 24, 2018
November 27, 2018
December 12, 2018
KWS share
Key data of KWS SAAT SE
Securities identification number
ISIN
Stock exchange identifier
Transparency level
Index
Share class
Number of shares
Dividend
Dividend payment and dividend ratios of the past 10 years
Quarterly Report Q1 2017/2018
Annual Shareholders’ Meeting in Einbeck
Semiannual Report 2017/2018
Quarterly Report 9M 2017/2018
Publication of 2017/2018 financial statements,
annual press and analyst conference in Frankfurt
Quarterly Report Q1 2018/2019
Annual Shareholders’ Meeting in Einbeck
707400
DE0007074007
KWS
Prime Standard
SDAX
Individual share certificates
6,600,000
3.00
3.00
3.00
3.00
3.20
Dividend proposal 2017
Dividend payment in €
Dividend ratio (total
dividends/net income) in %
2.80
2.30
1.80
1.90
1.70
25%
20%
20.5
07/08
23.7
24.3
20.8
21.7
24.7
19.6
23.6
23.2
21.6
16/17
136 Annual Financial Statements | Notes for the KWS Group 2016/2017
Annual Report 2016/2017 | KWS Group About this report
The Annual Report can be downloaded on our Internet sites at www.kws.de and www.kws.com. The KWS Group´s fiscal year
begins on July 1 and ends on June 30. Unless otherwise specified, figures in parentheses relate to the same period or date in
the previous year. There may be rounding differences for percentages and numbers.
Contact
Investor Relations and
Press
Financial Press
Mandy Schnell
Sustainability
Andrea Lukas
Editor
KWS SAAT SE
Wolf-Gebhard von der Wense
mandy.schnell@kws.com
andrea.lukas@kws.com
Grimsehlstrasse 31
investor.relations@kws.com
Phone: +49 5561 311 334
Phone: +49 5561 311 1393
P.O. Box 1463
Phone: +49 5561 311 968
37555 Einbeck
Germany
Remarks according with Article 80 EGHGB
In accordance with Article 80 of the German Introductory Act to the German Commercial Code (EGHGB), Sections 264, 289,
289a, 314, 315, 315a and 317 of the German Commercial Code (HGB), among others, in the version valid up to April 18, 2017,
are to be applied for the last time to management reports and group management reports for the fiscal year commencing
before January 1, 2017. Consequently, any reference to a provision of the German Commercial Code specified in Article 80
Sentence 1 EGHGB relates to the version valid up to April 18, 2017.
Safe harbor statement
This Annual Report includes forward-looking statements based on the assumptions and estimates of KWS SAAT SE’s
management. These forward-looking statements may be identified by words such as “forecast,” “assume,” “believe,”
“ assess,” “expect,” “intend,” “can/may/might,” “plan,” “should” or similar expressions.
These statements are based on current assessments and forecasts of the Executive Board and the information currently
available to it and are subject to certain elements of uncertainty, risks and other factors that may result in significant devia-
tions between expectations and actual circumstances. These factors may be, for example, changes in the overall economic
situation, the general statutory and regulatory framework, and the industry.
KWS SAAT SE does not warrant that the future development and actual results achieved in the future match the assumptions
and estimates expressed in this Annual Report and shall not assume any liability if they do not. Forward-looking statements
must therefore not be regarded as a guarantee or pledge that the developments or events they describe will actually occur.
KWS SAAT SE does not intend, nor does it assume any obligation, to update forward-looking statements in order to adapt
them to events or developments after the date of this report.
Photos/illustrations
Uwe Aufderheide ■ Christian Bruch ■ Jan Eric Euler ■ Eberhard Franke ■ Frank Stefan Kimmel ■ Julia Lormis ■
Christian Mühlhausen ■ Dominik Obertreis ■ Spieker Fotografie ■ Alex Telfer ■ KWS Gruppenarchiv
Date of publication: October 26, 2017
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.
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KWS SAAT SE
Grimsehlstrasse 31
P.O. Box 1463
37555 Einbeck/Germany
www.kws.com