Annual Report
2017 | 2018
KWS in Figures
The KWS Group (in € millions)
2017/2018
2016/2017
2015/2016
2014/2015
2013/2014
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)
1,068.0
1,075.2
1,036.8
132.6
131.6
112.8
12.4
5.4
99.7
12.2
16.6
97.7
10.9
14.8
85.3
986.0
113.4
11.5
16.7
84.0
923.5
118.3
12.8
7.5
80.3
18.5
17.7
17.6
17.7
16.2
71.7
50.1
881.8
58.1
13.3
7.1
37.4
63.3
49.4
836.9
56.0
13.1
7.3
48.5
99.6
48.2
767.9
53.5
11.9
7.0
87.9
132.5
45.9
738.7
55.2
13.6
7.8
105.9
69.4
41.2
637.8
54.7
12.8
7.8
31.6
1,517.7
1,495.2
1,436.6
1,337.1
1,165.0
981.1
13.8
98.1
5,147
253.9
15.08
3.20
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
851.0
13.3
48.1
4,691
216.9
12.53
3.00
737.5
16.0
76.0
4,150
189.9
11.69
3.00
Corn
Sugarbeet
Cereals
Corporate
–11.0%
825
734
+0.1%
455
455
–18.6%
58
47
+6.4%
151
161
+38.2%
151
109
+78.6%
10
18
Net sales
EBIT
Net sales
EBIT
Net sales
EBIT
2016/2017
2017/2018
Reconciliation (in € millions)
Net sales
EBIT
–12.5%
5
4
Net sales
–27.6%
EBIT
–61
–77
Segmente
Über leitung
KWS Gruppe
1,344.6
149.0
–276.6
–16.4
1,068.0
132.6
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 2017/2018 is subject to the consent of the 2018 Annual Shareholders´ Meeting.
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Contents
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43
48
54
65
71
73
1. To Our Share holders
Foreword of the Executive Board
Report of the Supervisory Board
KWS on the Capital Market
Spotlight Topic
2. Combined Management Report
2.1 Fundamentals of the KWS Group
2.2 Research & Development Report
2.3 Economic Report
2.4 Environmental Report
2.5 Employee and Social Report
2.6 Corporate Governance
2.7 Opportunity and Risk Report
2.8 Forecast Report
2.9 Report on KWS SAAT SE and Non-Financial
Declaration (Declaration based on the German
Commercial Code (HGB))
79
3. Annual Financial Statements
Léon Broers Research & Breeding
Peter Hofmann Sugarbeet, Cereals, Marketing
Eva Kienle Finance, Controlling, Global Services, IT, Legal, Human Resources
Hagen Duenbostel (CEO) Corn, Corporate Development and Communications, Compliance
2
To Our Shareholders | Foreword of the Executive Board
Annual Report 2017/2018 | KWS Group
To Our
Share
holders
Foreword of the Executive Board
High-yielding, yet eco-friendly arable farming – is that
an unattainable vision or a realistic scenario? Most
people agree: Things have to change if we are to
achieve that goal. There is declining public accept-
ance of agriculture. Consequently, more than 80%
of German farmers see acceptance of their work in
society as their biggest challenge. Farmers and con-
sumers have become alienated from each other. Many
problems have already been identified, but there is no
social consensus on how to solve them.
Agriculture is nowadays high tech – in all areas.
Technology in agriculture stands for safety and inno-
vation and enables transparency and precision. Yet
the growing application of technology in agriculture
strengthens the sense of alienation among consumers.
Many feel that farming should be environmentally
friendly and animal-friendly, and, if at all possible,
done by hand. And a good feeling is important when
consumers reach for a product from the shop shelf.
However, an often ignored fact is that arable farming
worldwide has to satisfy demand of more than 2 billion
tons of cereals a year, while keeping price fluctua-
tions to a minimum.
Foreword of the Executive Board | To Our Shareholders
3
KWS Group | Annual Report 2017/2018 A discussion on the future of agriculture is not a
our customers, we remain independent – as we have
one-way street. Our industry must accommodate
been for more than 160 years. From the outset, we
consumers’ wishes and take new paths – otherwise
have steadily expanded our plant genetic resources
progress in winning public acceptance will remain
– because genetic diversity is a key success factor in
wishful thinking. A particular focus here is on making
plant breeding.
agriculture greener. Reducing the use of pesticides is
an acknowledged objective of the Central Committee
We will also continue to grow independently and keep
of German Agriculture and also a key concern in
on enlarging our innovative portfolio for agriculture. In
“The Timetable for the 2050 Agricultural Revolution:
order to strengthen our independence and position
Ecologized Agriculture in Germany.”
ourselves ideally for growth moving ahead, we and
the Supervisory Board are proposing to the upcoming
Plant breeding offers extensive eco-friendly solutions.
Annual Shareholders’ Meeting that we change our
KWS’ variety portfolio is already one of the most
legal form into a partnership limited by shares (KGaA)
diversified and highest-performing in the industry.
– KWS SAAT SE & Co. KGaA. This move means we
Apart from delivering yield progress, we believe that
will be able to exploit opportunities to raise funds on
our key tasks lie in developing and selecting resistant
the capital market more flexibly, yet the shareholder
plant varieties, in ideal crop rotation and in bio diversity.
families, Büchting and Arend Oetker, will continue to
All in all, our new varieties need fewer resources such
shape and put their stamp on our company.
as fertilizer or pesticides. They are the result of inten-
sive research and the use of cutting-edge breeding
Seeding the future means shouldering responsibility.
technologies. The recent critical assessment of new
We look forward to shaping the future actively together
breeding measures by the European Court of Justice
with our shareholders, employees and customers. Our
was counter productive in this regard. The use of
focus will remain on our core corporate objectives of
mutagenesis in plant breeding has proven its worth
innovation, independence, sustainability and profitable
for generations and can now be used in a far more
growth, flanked by the values of a company steeped in
targeted way. A failure to leverage this potential
a tradition of family ownership.
in Europe is tantamount to accepting social and
economic harm.
My thanks for our success in the past fiscal year go
to our employees for their untiring efforts, as well as
Progress and innovation to promote more sustainable
to our partners and shareholders. I hope this Annual
agriculture is encouraged by a functioning system of
Report proves informative for you.
competition. The greater the number of companies
that conduct their own research & development, the
With best regards from Einbeck on behalf of the entire
greater diversity of products. Consolidation in our
Executive Board,
industry has further reduced the number of competi-
tors. Freedom to choose what means of production to
use and thus entrepreneurial business management
in agriculture are being increasingly restricted. Like
Dr. Hagen Duenbostel
Chief Executive Officer
4
To Our Shareholders | Foreword of the Executive Board
Annual Report 2017/2018 | KWS Group Report of the Supervisory Board
In the year under review, the agricultural sector was
important individual projects, risk management at
again impacted by low producer prices, low incomes
the KWS Group were the subject of detailed dis-
and new regulatory conditions. Business with sugar-
cussions. The Chairman of the Supervisory Board
beet and cereals seed developed successfully in this
continued the bilateral discussions with the Chief
environment, while our Corn Segment was strained by
Executive Officer and individual members of the
declining net sales in Brazil and North America. The
Executive Board in regular talks outside the meetings
major process of consolidation in the industry ended
of the Supervisory Board. In addition, there were
with completion of the multiyear international antitrust
monthly meetings between the Chairman of the Su-
reviews. KWS also discussed potential acquisitions.
pervisory Board and the Executive Board as a whole,
Preserving our company’s independence remains a
where the company’s current business development
key concern of the family shareholders. In this spirit,
and, in particular, its strategy, occurrences of special
the Executive Board and the Supervisory Board once
importance and individual aspects were dealt with.
again cooperated successfully in the past fiscal year.
The Chairman of the Supervisory Board informed the
Super visory Board of the results of these meetings.
The Supervisory Board discharged the duties incum-
The Supervisory Board did not make use of its right
bent on it in accordance with the law, the company’s
to conduct an examination granted by Section 111
Articles of Association and the bylaws, regularly
(2) AktG (German Stock Corporation Act) since the
advised and monitored the Executive Board in its
reporting by the Executive Board meant there was no
activities and satisfied itself that the company was
reason to do so.
run properly and in compliance with the law and that
it was organized efficiently and cost-effectively. The
Focal areas of deliberations
Supervisory Board decided on all significant busi-
The full Supervisory Board held five regular meetings
ness transactions requiring its consent and carefully
in fiscal 2017/2018, each of which was attended by
accompanied the Executive Board in all fundamen-
all its members. After the fiscal year had ended, the
tal decisions of importance to the company. The
Supervisory Board held a telephone conference on
Supervisory Board discussed the information and
September 3, 2018, and its meeting to discuss the
assessments that influenced its decisions together
financial statements on October 23, 2018.
with the Executive Board. Both boards continued
their constructive and trusted cooperation as in the
At the meeting to discuss the financial statements
past. Among other things, this was demonstrated by
on October 25, 2017, the Supervisory Board exam-
the fact that, as is customary, the Supervisory Board
ined and approved the financial statements of
was involved in all decisions of vital importance to
KWS SAAT SE and approved the consolidated finan-
the company at an early stage. The Supervisory
cial statements of the KWS Group as of June 30,
Board was provided with the necessary informa-
2017. At the meeting it also adopted, at the proposal
tion in written and oral form regularly, promptly and
of the Nominating Committee, its new profile of skills
comprehensively. This included all key information
and expertise, which was published on the company’s
on relevant questions of strategy, planning, the busi-
homepage on October 26, 2017. On the basis of the
ness performance and the situation of the company
Nominating Committee’s proposals, the Supervisory
and the KWS Group, including the risk situation,
Board then discussed the persons to be nomi -
risk management and compliance. Business trans-
nated as shareholder representatives for the new
actions requiring consent were submitted to, and
Supervisory Board elections at the Annual Share-
discussed and approved by, the Supervisory Board
holders’ Meeting on December 14, 2017. The new
in compliance with the bylaws for the Executive
profile of skills and expertise was taken into account
Board. The company’s business policy, corporate
in the nominations. The Supervisory Board also dis-
and financial planning, profitability and situation, the
cussed redrafting the Articles of Association relating
course business, market trends and the competitive
to its compensation. The Annual Shareholders’ Meet-
environment, research & breeding and, along with
ing on December 14, 2017, endorsed the nominations
Report of the Supervisory Board | To Our Shareholders
5
KWS Group | Annual Report 2017/2018 and adopted the proposed amendment of the Articles
in accordance with the provisions of the German
of Association relating to the new compensation
Commercial Code (HGB) for fiscal 2017/2018 and
system for the Supervisory Board (please refer to the
the financial statements of the KWS Group (IFRS
Compensation Report on page 63), in each case by
consolidated financial statements), as well as the
more than 97% of the votes represented.
Combined Management Report of KWS SAAT SE
and the KWS Group Management Report, including
On December 13 and 14, 2017, the Supervisory Board
the accounting reports, and awarded them its
also heard reports on the current status of research
unqualified audit certificate. In addition, the auditor
activities and related global challenges relating to
concluded that the audit of the financial statements
patents. Measures to expand corn activities in Brazil
did not reveal any facts that might indicate a mis-
and China were adopted and options for entering the
statement in the declaration of compliance issued
vegetable breeding market by means of an acquisition
by the Executive Board and the Supervisory Board
were explored. At its meeting on March 14, 2018,
in accordance with section 161 AktG (German Stock
the Supervisory Board discussed the performance
Corporation Act) with respect to the recommenda-
status of KWS’ respective breeding programs. As
tions of the “German Commission for the Corporate
usual, the Supervisory Board adopted the annual
Governance Code.”
planning for fiscal 2018/2019 and the medium-term
planning in June 2018. It also addressed the issue
The Supervisory Board received and discussed
of the company’s legal form. The objective was
the financial statements of KWS SAAT SE and the
to choose a legal form that enables equity to be
consolidated financial statements and Combined
raised more flexibly as and when required so as to
Management Report of KWS SAAT SE and the
lastingly strengthen the company’s growth strategy.
KWS Group, along with the report by the independent
In a telephone conference on September 3, 2018,
auditor of KWS SAAT SE and the KWS Group and
the Supervisory Board discussed converting
the proposal on appropriation of the net retained
KWS SAAT SE into a partnership limited by shares
profit for the year made by KWS SAAT SE, in due
(KGaA) and decided to take all the measures
time. Comprehensive documents and drafts were
necessary for that. As part of that, a stock split at
submitted to the members of the Supervisory
a ratio of 1:5 with a simultaneous increase in the
Board as preparation. For example, all of them
capital stock to €99,000,000 is to be prepared and
were provided with the annual financial statements,
there is to be an inter national merger of KWS Ser-
Combined Management Report, audit reports by
vices West S. L. U. with KWS SAAT SE & Co. KGaA.
the independent auditors, corporate governance
The Executive Board informed the capital market
report, compensation report and the proposal by the
of the conversion and the stock split in its ad-hoc
Executive Board on the appropriation of the profits.
release dated September 3, 2018. At its meeting
In addition, the Supervisory Board examined the
on Octo ber 23, 2018, the Supervisory Board then
separate non-financial report (Section 289b HGB
decided to propose conversion of KWS SAAT SE to
(German Commercial Code)) and the separate
KWS SAAT SE & Co. KGaA and a stock split of at a
non-financial group report (Section 315b HGB)
ratio of 1:5, with a simultaneous increase in the capital
with the audit report by the independent auditor
stock to €99,000,000 to the Annual Shareholders’
(Section 111 (2) Sentence 4 AktG (German Stock
Meeting on December 14, 2018.
Corporation Act)). The Supervisory Board also held
detailed discussions of questions on the agenda
Annual and consolidated financial statements
at its meeting to discuss the financial statements
and auditing
on October 23, 2018. The auditor took part in the
Ernst & Young GmbH Wirtschaftsprüfungs gesell schaft,
meeting. It reported on the main results of the
Hanover, the independent auditor chosen at the
audit and was also available to answer additional
Shareholders’ Meeting on December 14, 2017, and
questions and provide further information for the
commissioned by the Audit Committee, has audited
Supervisory Board. According to the report of the
the financial statements of KWS SAAT SE that were
independent auditor, there were no material weak-
presented by the Executive Board and prepared
nesses in the internal control and risk management
6
To Our Shareholders | Report of the Supervisory Board
Annual Report 2017/2018 | KWS Group system in relation to the accounting process. There
The Supervisory Board regularly addressed the
were also no circumstances that might indicate a
question of any conflicts of interest on the part of
lack of impartiality on the part of the independent
its members and those of the Executive Board. In
auditor. As can be seen from the Notes, the
the year under review, there were no such conflicts
independent auditor did not provide any additional
of interests that had to be disclosed immediately to
services.
the Supervisory Board and reported to the Annual
Shareholders’ Meeting.
In accordance with the final results of its own exam-
ination, the Supervisory Board endorsed the results
Supervisory Board committees
of the audit, among other things as a result of the
The Audit Committee convened for two joint meet-
preliminary examination by the Audit Committee,
ings in fiscal 2017/2018. It also held three telephone
and did not raise any objections. The Supervisory
conferences – on all occasions with all its members
Board gave its consent to the annual financial state-
in attendance. At its meeting on September 27, 2017,
ments of KWS SAAT SE, which were prepared by the
the Audit Committee discussed the annual financial
Executive Board, and to the consolidated financial
statements and accounting of KWS SAAT SE and
statements of the KWS Group, along with the Com-
the consolidated financial statements of the KWS
bined Management Report of KWS SAAT SE and the
Group for the fiscal year 2016/2017, along with the
KWS Group. The financial statements are thereby
Combined Management Report and the proposal by
approved. The Supervisory Board also endorses
the Executive Board on the appropriation of the prof-
the proposal by the Executive Board to the Annual
its. Risk management and the results of the auditing
Shareholders’ Meeting on the appropriation of the
projects were also on the agenda. The meeting of
net retained profit of KWS SAAT SE after having
the Audit Committee on March 14, 2018, discussed
examined it.
and defined the focus of the audit for fiscal year
2017/2018 in the presence of the appointed inde-
Corporate Governance
pendent auditor. The Annual Compliance Report and
The Supervisory Board conducts the efficiency
the requirements of the German CSR Directive Imple-
review recommended in Clause 5.6 of the German
mentation Act and the German Pay Transparency
Corporate Governance Code every two years. The
Act were discussed and risk management and the
review in fiscal year 2017/2018 was accompanied
results of the auditing projects in the new fiscal year
by the accounting firm Deloitte GmbH Wirtschafts-
were presented. The audit plan for fiscal 2018/2019
prüfungsgesellschaft, which held extensive interviews
was also defined and adopted. The quarterly reports
with members of the Executive and Supervisory
and the semiannual report for fiscal 2017/2018 were
Boards. Deloitte came to the conclusion that the
discussed in detail in three telephone conferences
Supervisory Board works in accordance with best
and their publication was approved.
practices.
The Audit Committee convened on Septem-
The Supervisory Board also discussed compliance
ber 25, 2018, to discuss the current annual
with the recommendations of the “German Commis-
financial statements of KWS SAAT SE and KWS’
sion for the Corporate Governance Code” and – after
consolidated financial statements and accounting,
the last compliance declaration in October 2017
along with the Combined Management Report. The
– issued a new declaration of compliance with the
independent auditor for fiscal 2017/2018 explained
German Corporate Governance Code in accordance
the results of its audit of the 2017/2018 financial
with Section 161 AktG (German Stock Corporation
statements and pointed out that there were no
Act) together with the Executive Board in October
grounds for assuming a lack of impartiality on the
2018. It is reproduced on page 56 of the Annual
part of the independent auditor in its audit. The
Report for fiscal 2017/2018 and can also be ob-
Audit Committee also dealt with the proposal by
tained on the company’s website at www.kws.com/
the Executive Board on the appropriation of the net
corporate-governance.
retained profit of KWS SAAT SE and recommended
that the Supervisory Board approve it.
Report of the Supervisory Board | To Our Shareholders
7
KWS Group | Annual Report 2017/2018 In addition, the Audit Committee obtained the state-
The term of office of all members of the Supervisory
ment of independence from the auditor in accordance
Board expired at the end of the Annual Shareholders’
with Clause 7.2.1 of the German Corporate Govern-
Meeting that ratified the acts of the Supervisory
ance Code, ascertained and monitored the auditor’s
Board of KWS SAAT SE for the fiscal year 2016/2017,
independence and examined its qualifications. The
i.e., the Annual Shareholders’ Meeting on Decem-
Audit Committee also satisfied itself that the regula-
ber 14, 2017. The Nominating Committee prepared
tions on internal rotation were observed by the inde-
the decision by the Supervisory Board on the per-
pendent auditor and dealt with the issue of any addi-
sons to be nominated as shareholder representatives
tional services rendered by the independent auditor.
to the Annual Shareholders’ Meeting and, in accor-
dance with Section 6 (2) of the Supervisory Board’s
The Nominating Committee dealt in detail with the
bylaws, submitted suitable candidates to the Super-
subject of diversity and submitted to the Supervisory
visory Board for the latter to nominate to the Annual
Board one proposed resolution to the effect that the
Shareholders’ Meeting. The Nominating Committee
ratio of female and male members on the Supervisory
took into account the proposed profile of skills and
Board and Executive Board is to be at least 25% on
expertise and the target for the ratio of men and
each. Under a new requirement in Clause 5.4.1 of the
women in choosing the persons to be nominated for
German Corporate Governance Code in the version
election.
dated February 7, 2017, the Supervisory Board is to
draw up a profile of skills and expertise for the board
In the year under review, the Committee for Execu-
as a whole. The Nominating Committee discussed
tive Board Affairs dealt with the impending renewal
the skills and expertise required under the bylaws for
of the contracts with Dr. Léon Broers and Eva Kienle.
the Supervisory Board and summarized them in a
At the committee’s proposal, the Supervisory Board
newly drafted profile of skills and expertise, which was
renewed the contract with Léon Broers, at his own
submitted as a proposed resolution to the Supervisory
request, only for a period of three years, namely from
Board. The profile was created in particular on
January 1, 2019, to December 31, 2021, by when
the basis of the principles for the necessary skills
Léon Broers will have reached the age of 62. In the
and expertise specified in the Supervisory Board’s
new fiscal year 2018/2019, it extended the contract
bylaws (version dated October 24, 2016). The
with Eva Kienle by five years, namely from July 1, 2019,
Nominating Committee was also guided by the
to June 30, 2024.
joint position paper from AdAR (Working Group of
German Supervisory Boards), ArMiD (Association
The second period of office of Hubertus von
for Supervisory Boards at SMEs in Germany) and
Baumbach on the Supervisory Board of KWS SAAT SE
FEA (Financial Experts Association).
ended at the Annual Shareholders’ Meeting on
Supervisory Board Committees
Committee
Audit Committee
Chairman
Hubertus von Baumbach
(until 12/2017)
Victor W. Balli (since 12/2017)
Members
Andreas J. Büchting
Jürgen Bolduan
Committee for Executive Affairs
Andreas J. Büchting
Nominating Committee
Andreas J. Büchting
Marie Th. Schnell (since 12/2017)
Hubertus von Baumbach
(until 12/2017)
Marie Th. Schnell (since 12/2017)
Cathrina Claas-Mühlhäuser
Marie Theres Schnell (until 12/2017)
Andreas J. Büchting (since 12/2017)
Cathrina Claas-Mühlhäuser
8
To Our Shareholders | Report of the Supervisory Board
Annual Report 2017/2018 | KWS Group Andreas J. Büchting, Chairman of the Supervisory Board
December 14, 2017. Hubertus von Baumbach, who
his successor Victor W. Balli a tidy and well-tend-
had chaired the Audit Committee as a financial
ed field. On behalf of all of KWS’ shareholders, the
expert on the Supervisory Board since he took up his
Supervisory Board expresses its deepest thanks to
office in December 2007, did not stand for reelection.
Hubertus von Baumbach for his good advice and the
KWS’ Supervisory Board formed an Audit Committee
expertise and experience with which he oversaw our
for the first time in December 2007. As its Chairman,
processes. His services for KWS have been particu-
Hubertus von Baumbach not only established the
larly valuable.
committee, but was also influential in shaping its
work. Circumspect, pragmatic and always aiming to
The Supervisory Board also expresses its thanks
find solutions, he helped drive key processes, such
to the Executive Board and all employees of
as our compliance and risk management, and our
KWS SAAT SE and the subsidiaries in the KWS
auditing projects. Hubertus von Baumbach was a
Group for their commitment and contribution to the
critical, yet constructive sparring partner, especially
successful further development of KWS in fiscal
for our Executive Board. When Dr. Arend Oetker de-
2017/2018.
parted to make way for a younger generation of his
family in December 2016, he also took over as Dep-
Einbeck, October 23, 2018
uty Chairman of the Supervisory Board for the last
year of his office. At the end of his ten years of work
for our company, Hubertus von Baumbach also con-
ducted the complex and time- consuming process
Dr. Drs. h. c. Andreas J. Büchting
of changing our independent auditor and so leaves
Chairman of the Supervisory Board
Report of the Supervisory Board | To Our Shareholders
9
KWS Group | Annual Report 2017/2018 Our roots are in Einbeck
– and in a hundred
thousand fields around
the world.
Despite our global growth, we never lose sight of our beginnings. It takes an eye for detail to make
great things possible. That is independence – and it allows us to work with you as equals.
KWS on the Capital Market
Performance
Listing
Stock markets performed variously in fiscal
The KWS share ranked 28th (14th) in the SDAX,
2017/2018 (July 1 to June 30), among other things
Germany’s index for small caps, in terms of
due to increasing geopolitical tensions. Key interest
market capitalization on the balance sheet date
rates stayed relatively low and so the stock mar-
of June 30, 2018. KWS ranked 49th (42nd) in terms
ket remained an attractive place to invest up to the
of trading volume over the past twelve months. On
spring of 2018. The DAX reached an all-time high of
May 18, 2018, Deutsche Börse announced changes
13,560 points in January 2018, but then fell sharply
to its rules for the MDAX, SDAX and TecDAX, which
by the middle of the year, among other things due to
took effect September 24, 2018. After the SDAX was
the new U.S. trade policy, and finished at the same
expanded from 50 to 70 companies, the KWS share
level as the previous year at the end of our fiscal
remained listed on the SDAX. In order to increase the
year. In contrast, the SDAX gained around 10%
volume of trading in the share, the Executive Board
over the same period. KWS’ share also reached
and the Supervisory Board plan to propose a stock
an all-time high at €380.30 in October 2017, but
split at a ratio of 1:5 to the Annual Shareholders’
then suffered losses. It closed on June 30, 2018, at
Meeting on December 14, 2018.
€304.00 (344.45)1 or down around 12% down year
on year. The stock price of our larger competitors
Employee Stock Purchase Plan
likewise declined in that period of time, in some
For more than 30 years KWS has offered its
cases more seriously than KWS’ share. The sector’s
employees the chance to become a shareholder
performance thus reflects the fact that the environ-
in the company and thus share in its success
ment for agriculture remains strained. Looking at the
and identify more strongly with it. The content
past ten years, however, the price of KWS’ share has
of our Employee Stock Purchase Plan remained
increased by 106.1% and so has again more than
unchanged in the year under review. Our employ-
doubled.
The KWS share’s performance
over 10 years
300%
250%
200%
150%
100%
50%
0%
ees were able to buy up to 500 KWS shares at a
price of €273.60 (225.60), including a 20% discount,
which the individual employees must pay tax on. A
total of 407 (435) employees in eight (six) European
+187%
+106%
+95%
July 1, 2008
KWS
SDAX
DAX
June 30, 2018
1 If not otherwise specified, the figures in parentheses give the previous year´s figure.
12
To Our Shareholders | KWS on the Capital Market
Annual Report 2017/2018 | KWS Group
Shareholder structure at June 30, 2018
Free float 30.1%
Tessner Beteiligungs GmbH 15.4%
54.5% Families Büchting, Arend Oetker
countries took up this offer and purchased a total of
9,832 (11,594) shares, corresponding to an average
stake per employee of 24 (27) shares. The acquired
shares are subject to a lock-up period of four
ISIN
Share class
years. They cannot be sold, transferred or pledged
Number of shares
Key figures for the KWS share (Xetra®)
during this period. As in previous years, the shares
used for the Employee Stock Purchase Plan were
acquired in accordance with Section 71 (1) No. 2 of
the German Stock Corporation Act (AktG). A total
of €3.4 (3.4) million was used to buy back the
company’s own shares, giving an average purchase
price per share (including fees) of €344.63 (290.31).
More details have been published in information
released for the capital market and can be viewed
on our website at www.kws.com/ir.
Planned appropriation of profits
Closing price
June 30, 2018
June 30, 2017
High and low
High (October 5, 2017)
Low (April 24, 2018)
Trading volume
in shares/day
2017/2018
2016/2017
2,086
2,484
DE0007074007
Individual share
certificates
6,600,000
in €
304.00
344.45
in €
380.30
285.00
Continuing to grow profitably is one of KWS’ core
Market capitalization
in € million
corporate goals. We were able to maintain our
good after-tax profitability of the previous year
in the year under review, despite a slight decline
June 30, 2018
June 30, 2017
in net sales. The KWS Group’s net income was
Earnings per share
June 30, 2018
June 30, 2017
Volatility (avg.)
2017/2018
2016/2017
€99.7 million, following €97.7 million the year before.
Operating income likewise remained virtually
constant at €132.6 (131.6) million. The Execu-
tive and Supervisory Boards will therefore again
propose a dividend of €3.20 (3.20) for fiscal year
2017/2018 to the Annual Shareholders’ Meeting
on December 14, 2018. €21.1 (21.1) million would
thus be distributed to KWS SAAT SE’s shareholders.
That would correspond to a dividend payout
ratio of 21.2% (21.6%), once again in line with the
KWS Group’s earnings-oriented policy of paying a
dividend of 20% to 25% of its net income.
2,006
2,273
in €
15.08
14.78
In €/day
7.00
5.18
KWS on the Capital Market | To Our Shareholders
13
KWS Group | Annual Report 2017/2018 Spotlight
Topic
The Power of Nature
Plant breeding’s contribution to global sustain-
thresholds for them. The planetary boundaries are
ability
climate change, biodiversity loss, freshwater con-
As far as product development is concerned, Mother
sumption, land use, ocean acidification, stratospheric
Nature does innovative, record-breaking work. There
ozone depletion, nitrogen and phosphorus flows
are currently around 350,000 different species of
to the biosphere, atmospheric aerosol loading and
plants on Earth, all of which have come about in de-
chemical pollution. If one of the defined thresholds is
velopment cycles that are almost beyond the bounds
exceeded, there is the risk of sudden and irreversible
of our imagination. Top-class products made by
changes to the environment.
nature. There are survival artists such as cacti in the
des ert or pine trees that live to the age of 5,000 years
Consequently, these planetary boundaries are in-
or more. Rainforests thrive in frugal, leached soil, and
tended as the basis for a change toward greener,
bamboo grows up to 1.2 meters a day. Moss and
more social and more economically sustainable
lichen survive at altitudes of 3,000 meters between
development. All social groups are to play their part
the ice and snow in high mountain regions. So plants
in that. Business and enterprises have a key role
can achieve truly great things – and we humans have
here by driving innovation and change. At the same
exploited that in the more than 10,000 years we have
time, consumers and their habits also bear a key
cultivated them. That has been the foundation for
responsibility.
progress and prosperity. However, humankind has
had an increasing impact on the global ecosystem,
The agriculture and food sectors are held responsible
especially since the age of industrialization.
for exceeding four of the nine boundaries worldwide.
Planetary limits
Excessive nutrient discharge to terrestrial and aquatic
ecosystems means that the nitrogen and phosphorus
In 2009, a team of scientists led by Johan Rockström
cycles are the main factors here, followed by exces-
from the Stockholm Resilience Centre defined nine
sive land system change and biodiversity loss caused
areas, termed planetary boundaries, and global
by farming and the food industry.
14
To Our Shareholders | Spotlight Topic
Annual Report 2017/2018 | KWS Group The Power of Nature
350,000
SPECIES OF
PLANTS
are now known world-
wide.
10,000
YEARS OF ARABLE
FARMING
have ensured prosperity,
but have also impact on the
ecosystem.
9
AGRICULTURE
& FOOD
are a burden on four of
the defined boundaries.
PLANETARY
BOUNDARIES
show potential future scenarios for
global environmental changes.
BUSINESS,
ENTERPRISES
& CONSUMERS
can change some-
thing together.
160
YEARS OF
EXPERIENCE
in plant breeding.
KWS’
VISION
To supply generations of farmers
with high-yielding seed.
KWS’
CONTRI-
BUTION
Creation of new high-yielding,
resource-conserving plant traits.
17
general global
Sustainable Develop-
ment Goals have been
defined by the UN.
6
goals are already
supported by KWS.
And it is coming up with
further solutions.
How plant breeding helps achieve steady
Yet our commitment to sustainability does not stop
improvement
where our business operations end. Above and be-
As a plant breeding company, KWS has now worked
yond our focal commercial activities, we are also
on solutions for sustainable agriculture for more
committed to increasing capacities in developing
than 160 years. Our vision is to supply generations
countries such as Peru and Ethiopia, for example.
of farmers with seed for a high-yielding harvest,
That is because these countries often do not have
coupled with increasing optimization of the use of
efficient, high-yielding seed. That is why we are on
resources. To enable that, we work on plant traits,
the ground there, contributing our knowledge to help
such as resistances to pests and diseases, drought
breed varieties adapted to local requirements and
tolerance and nutrient efficiency, and also advise
sharing optimized cultivation methods.
farmers on resource-conserving cultivation methods.
That is not only a great benefit for farmers, but also
Outlook
for the protection of the environment and nature con-
It is becoming more and more important for KWS
servation as a whole. Reduced use of resources such
to differentiate itself authentically in a consolidating
as pesticides and fertilizer, as well as efficient use and
seed and chemical industry. All in all, we believe we
conservation of the soil, also mean less discharge
have the duty to make an active contribution to sus-
to the environment, with potentially harmful effects
tainable development in agriculture. As a leading pro-
on the climate, water sources, soil and biodiversity.
vider of high-yielding and resource-preserving seed,
High-yielding and resource-conserving varieties from
we are gearing our company toward achieving meas-
KWS can therefore have a positive impact on the
urable ecological and social objectives that take up
above-mentioned planetary boundaries. We invest
the global UN Sustainable Development Goals. Of
a large part of our research expenditure of currently
the seventeen goals defined there, we already sup-
around €200 million in developing such new plant
port six with our products. A process of dialogue
varieties.
with our stakeholders helps us along the path to
developing KWS-specific sustainability. However,
In 2017 we rolled out a global reporting system at the
sustainable global development is a task for society
KWS Group for the main resource inputs and outputs
as a whole and one we all have to help shape. Every
in the seed development and production process
generation is responsible for helping create a future
for the first time. We will successively optimize the
that is liveable for future generations
quality and scope of the data we collect. The goal is
to obtain insightful data that can be used to deduce
potential for improvement.
The Earth Overshoot Day calculated by the U.S. non-profit
organization Global Footprint Network denotes the date on
which humanity’s resource consumption for the year ex-
ceeds Earth’s capacity to regenerate those resources and
capacity to absorb CO2 for that year. The trend of the past
years shows that this date is earlier every year. This year it
was August 1 – but it was September 23 a decade ago. In
other words: We use nature 1.7 times faster than ecosys-
tems can regenerate.
Follow the movement under the Twitter hashtag:
How will you #MoveTheDate?
16
To Our Shareholders | Spotlight Topic
Annual Report 2017/2018 | KWS Group 18
18
20
20
21
22
23
2.1 Fundamentals of the KWS Group
2.1.1 Business Model
2.1.2 Branches
2.1.3 Objectives and Strategies
2.1.4 Control System
2.1.5 Responsible Business Activity
2.1.6 Fundamentals of Research & Development
26
2.2 Research & Development Report
29
29
31
35
43
43
44
44
48
48
48
50
51
54
54
54
55
56
62
65
65
66
71
71
71
71
2.3 Economic Report
2.3.1 Business Performance
2.3.2 Earnings, Financial Position and Assets
2.3.3 Segment Reports
2.4 Environmental Report
2.4.1 Product Innovations
2.4.2 Plant and Process Safety
2.4.3 Resource-efficient Processes and Climate Protection
2.5 Employee and Social Report
2.5.1 Employment Trends
2.5.2 Recruitment & Qualification
2.5.3 Good Working Conditions
2.5.4 Social Commitment
2.6 Corporate Governance
2.6.1 Corporate Governance Report and Declaration on Corporate Governance
2.6.2 Compliance Declaration in Accordance with Section 161 AktG (German Stock
Corporation Act)
2.6.3 Business Ethics & Compliance
2.6.4 Compensation Report
2.6.5 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 Section 289a (1) and Section 315a (1) HGB (German Commercial Code)
2.7 Opportunity and Risk Report
2.7.1 Opportunities
2.7.2 Risks
2.8 Forecast Report
2.8.1 Changes in the KWS Group’s Composition that Are Significant for the Forecast
2.8.2 Forecast for the KWS Group’s Statement of Comprehensive Income
2.8.3 Forecast for the Segments
73
2.9 Report on KWS SAAT SE and Non-Financial Declaration
73
73
(Declaration based on the German Commercial Code (HGB))
2.9.1 KWS SAAT SE
2.9.2 Combined Non-Financial Declaration for the KWS Group
t
r
o
p
e
R
t
n
e
m
e
g
a
n
a
M
d
e
n
b
m
o
C
i
2. Combined Management Report
2. Combined Management Report
In the year under review, we merged our sustainability reporting with the Annual Report and published its contents in the
Combined Management Report and on our homepage at www.kws.com/ir. As a consequence, the structure of the Combined
Management Report has changed slightly. We refer to the report aspects required under Sections 289b et seq. and Sections
315b et seq. of the German Commercial Code (HGB) in our “Non- Financial Declaration” on page 73. The contents of the
Non-Financial Declaration were not audited as part of the audit of the annual and consolidated financial statements, but un-
derwent a voluntary external audit. They are indicated by an acronym
. The Combined Management Report also includes
voluntary com ponents that are not audited separately. These are indicated by footnotes.
2.1 Fundamentals of the KWS Group
2.1.1 Business Model
hemisphere. That means most of the segment’s net
Since it was founded in 1856, KWS has specialized
sales are generated in the second half of the fiscal
in breeding, producing and distributing high-quality
year (January to June). The segment generates a
varieties and seed for agriculture. From our begin-
lower share of its revenue in the first two quarters,
nings in Sugarbeet breeding, we have evolved into an
mainly from corn and soybean varieties in South
innovative, international supplier with a broad port-
America. KWS is the market leader for silage corn
folio of crops. We cover the complete value chain
in Europe.
of a modern seed producer – from developing new
varieties, multiplication and processing, to marketing
The Sugarbeet Segment comprises Sugarbeet seed
of the seed and consulting for farmers. KWS’ core
production and distribution, as well as the develop-
competence is in breeding new, high-performance
ment of diploid hybrid potatoes. Our high-quality
varieties that are adapted to regional needs, such as
Sugarbeet varieties are some of the highest yielding
climatic and soil conditions. Every new variety delivers
in the industry, which is why we are the clear
added value for the farmer. Our business model is
leader in the field of Sugarbeet seed, with a global
based on this added value – which is ultimately
market share of 58%. Our main sales markets are
attributable to breeding progress, optimization of
North America, a region where genetically modified,
seed quality and pinpointed consulting.
herbicide- tolerant Sugarbeet varieties are used
exclusively, and the EU, Russia and Turkey, where
Organization and segments of the KWS Group
KWS likewise has a very good market position with
The KWS Group’s operational business currently
conventionally bred, multiple- resistant varieties.
consists of four Business Units, which are grouped
Sugarbeet is sown in the spring, which means that
in the three product segments Corn, Sugarbeet and
net sales in this segment are largely generated in the
Cereals. The Business Units Sugarbeet and Cereals
second half of our fiscal year (January to June).
are identical to the segments of the same name.
There are the Business Units Corn Europe / Asia
The Cereals Segment includes production and
and the Business Unit Corn Americas in the
distribution of seed for rye, wheat, barley and rape-
Corn Segment:
seed. Rye accounts for the largest share of revenue
from cereals (around 35%), followed by rapeseed,
The Corn Segment is the KWS Group’s largest
wheat and barley (a combined total of around 60%).
segment in terms of net sales. It covers production
We generate the remainder from other crops such
and distribution of seed for corn, soybean, sunflower
as peas and triticale. In our core markets for
and sorghum. Its operating performance depends
cereals seed (Germany, Poland, the UK, France and
largely on the spring sowing season in the northern
Scandinavia), farmers predominantly sow the crops
18 Combined Management Report | 2.1 Fundamentals of the KWS Group
Annual Report 2017/2018 | KWS Group in the fall. Consequently, we generate most of our
specific location. These crops include corn, Sugar-
revenue in this segment in the first half of our fiscal
beet, the cereals rye, wheat and barley, oil plants
year (July to December).
such as sunflower, soybean and rapeseed, and catch
crops. The varieties are mainly adapted to markets
Apart from the operating segments, there is also
in the moderate climatic zones. Since we entered the
Corporate, a segment which by and large does not
Brazilian market in 2012, corn and soybean varieties
conduct any operational activities. Its relatively low
for tropi cal regions have also been part of our port-
net sales come from the revenue from our own farms
folio. In addition to selling seed, our field staff is also
in Germany. Since the costs for the KWS Group’s
on hand to offer farmers consulting on choosing and
administrative functions and basic research expen-
cultivating varieties. We also offer digital consulting
diture are charged to the Corporate Segment, its
with our KWS CULTIVENT Farm Service in mobile
income is usually negative.
form or on our website www.kws.com.
More details on the net sales and income contributed
Our breeding and seed multiplication activities are
by the segments, including our joint ventures, can be
subject to weather influences that cannot always
found in our segment reports starting on page 35.
be quickly compensated for with counter measures.
Economic policy decisions in the agricultural
Main business processes
industry, which is strongly regulated worldwide, may
KWS’ breeding processes are geared toward exploit-
also impact our business. You can find more details
ing plants’ potential as much as possible and lever-
on the external factors in our Opportunity and Risk
aging it to tackle the major challenges of modern
Report on pages 65 to 70.
sustainable agriculture. Whether it is plants for pro-
ducing food, fodder or energy, conventional, organic
Changes to the composition and organization
or genetically modified, we offer farmers the ideal
of the KWS Group
variety for their purposes. It takes at least ten years
Since the beginning of the fiscal year, our rapeseed
to breed a new variety. Thanks to our large network
activities, which were previously managed in the
of breeding and trial stations in all the world’s key
Corn Segment and in the Cereals Segment, have
markets, we can test the individual candidates un der
been pooled in one unit and transferred completely
a wide range of climatic and local conditions to
to the Cereals Segment. This step will enable us
deter mine whether the varieties are suitable for culti-
to benefit from integrated management and con-
vation. In most markets, variety development ends in
trolling of rapeseed activities moving ahead (see the
an official approval process in which candidates have
Research & Development Report on page 26). Conse-
to meet high quality standards, usually in three-year
quently, all net sales and earnings contributed by our
field trials. Seed multiplication in our selected cultiva-
rapeseed business are now allocated to the Cereals
tion regions also takes up to two years in a process
Segment. This effect meant an additional shift in net
that is sometimes begun alongside the approval pro-
sales of around €30 million and in EBIT of around
cess. Only then can the varieties be marketed to our
€4 million from the Corn Segment in fiscal 2017/2018.
customers via the various distribution channels.
The other changes are presented in the section on
the companies consolidated in the KWS Group in the
Products, markets and external factors
Notes to the consolidated financial statements start-
We offer our customers – farmers – a broad range
ing on page 95, but do not constitute any significant
of varieties of agricultural crops that have been
change in the KWS Group’s composition.
adapted by breeding to the conditions of their
2.1 Fundamentals of the KWS Group | Combined Management Report
19
KWS Group | Annual Report 2017/2018 Breeding and distribution activities of the KWS Group in over 70 countries
Breeding stations
Test locations for trial cultivation
We are gearing our global administrative organization
2.1.2 Branches
more strongly toward functional responsibility, as
KWS SAAT SE is the parent company of the KWS
well as harmonizing and standardizing processes, to
Group. Strategic management of all of KWS’ global
underpin our profitable and sustainable growth with
activities is pooled under its roof. It is head quartered
efficient administration. The new model will replace
in Einbeck, Germany, and controls breeding of the
our previously region-based organization. The core
KWS Group’s range of varieties. It conducts basic
objective is to bundle administrative services and
research, produces and distributes Sugarbeet and
control business processes for 70 countries more
corn seed, and is home to a number of central func-
efficiently. The project, which was launched in 2016,
tions. There are also currently 70 subsidiaries and
is going according to plan. Implementation was
associated companies in 33 countries and our sales,
begun in the year under review, following the suc-
research and breeding activities are spread over
cessful creation of the concept for a cross-function
around 70 countries, largely in the moderate climatic
target structure and the conclusion of the negotia-
zone. You can find a detailed breakdown of net sales
tions on an accommodation of interests in Germany.
by region on page 32. An overview of our subsidiar-
The goals include setting up and expanding our
ies and associated companies can be found in the
location for shared services in Berlin, establishing
Notes on pages 96 to 97.
Expert Hub structures and providing a global busi-
ness partner organization in the coming years. Our
2.1.3 Objectives and Strategies
objective is not to make any job cuts as part of the
Our strategic planning is the foundation for the KWS
reorganization.
Group’s further development. It defines strategic
objectives, initiatives and core measures for existing
activities and for potential new fields of business. The
planning is based on a long-term horizon (ten years)
and includes an analysis and assessment of market
20 Combined Management Report | 2.1 Fundamentals of the KWS Group
Annual Report 2017/2018 | KWS Group trends, competitors and the KWS Group’s position.
Independence has always been a key corporate
Strategic planning is carried out regularly on a rolling
objective for KWS, but it is gaining greater strategic
basis. We believe that strategic success factors are,
relevance in view of the process of consolidation in
in particular, our intensive research, breeding of new,
our industry. We have therefore added independence
high-yielding varieties and continuous expansion of
as a separate subject area in our presentation.
our global footprint so that we can further enhance
our know-how in regional markets with their special
Our business developed largely in line with our
climatic conditions.
strategic objectives in the year under review. Only
our net sales failed to reach the envisaged growth
Corporate objectives of the KWS Group
target of at least 5%. We deal with that and other
In the Annual Report for the year under review, we
details on achievement of our objectives in the
have changed the previous presentation of our cor-
respective sections, which are referred to in the table
porate objectives, consolidating it into the three core
on the corporate objectives.
topics of profitable growth, innovation and sustaina-
bility and adding the issue of independence. We have
2.1.4 Control System
reformulated our objectives in a few places and made
Detailed annual and medium-term operational plans
the following adjustments:
are used to control the Group and our Business
Units in the three product segments Corn, Sugarbeet
Profitable growth is vital for our future develop-
and Cereals, as well as in the Corporate Segment.
ment. We aim to increase net sales in particular in
The medium-term plan covers the time frame of the
our growth regions, which are also located in moder-
annual plan and planning for the three subsequent
ate climatic zones. Expansion of our variety portfolio
fiscal years. It is derived from the strategic planning,
is therefore of relevance to all our new markets, not
which covers a timescale of ten years.
just tropical or subtropical ones.
The KWS Group’s medium- and long-term objectives
Content of
the objective
unchanged?
Objective
achieved?
Explanation
of the course
of the year
Objectives
Profitable
growth
■■ Increase in consolidated net sales by
an average of at least 5% to 10% p. a.
■■ EBIT margin ≥10%
Yes
Yes
■■ Expansion of the portfolio of varieties
Reformulated
for new markets
Innovation
Independence
■■ A dividend payout ratio of 20% to
Yes
25% of the KWS Group’s net income
for the year
■■ 1% to 2% progress in yields p. a. for
our customers and development of
tolerances and resistances
■■ R&D intensity of around 17% of
consolidated net sales
■■ Retention of a control structure
shaped by the family owners
Yes
Yes
Yes
Sustainability
■■ Integration of international subsidiaries
Yes
in KWS’ sustainability reporting
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Page 31
Page 31
Page 26
Page 130
Page 23 to 28
Page 27
Page 63
Page 75 (NFD)
2.1 Fundamentals of the KWS Group | Combined Management Report
21
KWS Group | Annual Report 2017/2018
The targets set in the annual and medium-term
and R&D intensity. KWS’ product segments,
planning are arrived at on the basis of the strategic
which are divided into Business Units, are in turn
planning, regional economic and legal situation,
geared toward the main indicators of net sales and
anticipated market trends and assessments of the
EBIT margin. Since 2016/2017, our Business Units
company’s position in the market and the potential
have been the cash-generating units in accordance
product performance. In a subsequent bottom-up
with the actual management reporting structure.
process, which also includes the development of
our joint ventures, we use these premises to define
Management and control
figures for sales volumes and net sales, breeding
KWS SAAT SE has a system of dual management
activities, production capacities and quantities, the
and supervision, consisting of the Executive Board
allocation of resources (including capital spend-
and the Supervisory Board. The two bodies have
ing and personnel), the level of material costs and
strictly separated responsibilities and different mem-
internal charge allocation and the resultant balance
bers. The Executive Board is tasked with ensuring
sheet data, along with the financial budget. In
KWS’ responsible, sustainable development. It jointly
principle, part of the planning documentation is also
manages KWS’ business. The Supervisory Board
an opportunity/risk assessment that every manager
supervises and advises the Executive Board. The
must conduct for his or her unit.
declaration on corporate governance in accordance
with Section 289f of the German Commercial Code
The planning is compared every quarter with the
(HGB) contains detailed information on the extensive
company’s actual business performance and the
and close cooperation between the Executive Board
underlying general conditions. If necessary, we
and the Supervisory Board and has been published at
initiate suitable countermeasures and make adjust-
www.kws.com/corporate-governance.
ments. We update the forecast for the current fiscal
year at the end of every quarter. At the end of each
2.1.5 Responsible Business Activity
fiscal year, all the units conduct a detailed variance
analysis of the planned and actual results. That
Aspiration and principles
serves to optimize our internal processes.
As a family business, we think across generations.
Apart from our corporate objectives, responsible
Controlling is responsible for coordinating and
business activity with regard to people and the
documenting all planning processes and our current
environ ment (corporate social responsibility) is
expectations. It reports on compliance with adopted
therefore a firmly entrenched principle of how we
budgets and analyzes the efficiency and cost-
run our company. As a profitable, independent
effectiveness of business processes and measures.
family business, we have the necessary entrepre-
Controlling also advises decision-makers on eco-
neurial stability and freedom to operate within that
nomic optimization measures. In particular the heads
framework, largely independently of short-term
of the product segments, the regional directors and
shareholder interests.
the heads of research & breeding activities and the
central functions are responsible for the content of
Guidelines for the company’s day-to-day work
the planning and current forecasts.
Our guiding principles define the framework for
our everyday work, so that we are able to create
The Executive Board uses various indicators for
sustainable and profitable growth for our customers,
planning, controlling and monitoring the business
employees and investors. Our strategic decisions
performance of the KWS Group and its operat-
and day-to-day actions in operational business are
ing units. The main indicators for the KWS Group
guided by the following company principles:
are net sales, operating profitability (EBIT margin)
22 Combined Management Report | 2.1 Fundamentals of the KWS Group
Annual Report 2017/2018 | KWS Group Essence:
Make yourself grow.
Vision:
KWS seeds the future.
on specific subjects. A first International Stakeholder
Dialogue was held in 2017. It dealt with the new
breeding method of genome editing in the context of
sustainable agriculture. All information and insights
from our dialogue with stakeholders are gathered and
Our high-yielding seed and agricultural knowledge
evaluated in a structured process.
are why farmers have trusted us for generations. That
is our contribution to solving the issue of feeding the
2.1.6 Fundamentals of Research & Development
world.
Mission:
The objective of our research & development work
is to create high-performance varieties that meet
various environmental and application require ments
■■ We increase genetic potential through outstanding
and deliver continuous value added to farmers.
research and top-class breeding programs.
They include absolute yield, as well as issues such
■■ We supply our farmers with seed of the very
as yield stability, resistance to diseases, cultivation
best quality.
characteristics or constituent properties. We accord-
■■ We aim to be a strong partner who earns the trust
ingly continue to invest in expanding our research &
of our customers.
breeding capacities.
■■ We create entrepreneurial freedom and help
people unfold their talents.
Plant breeding is a very research-intensive and
long-term business. The average time to develop a
We also have a central policy framework – Rules,
new, high-performance variety for our inter national
Guidelines and Procedures (RGPs) – with which we
markets is up to ten years. As part of that, our plant
create a common understanding of the freedoms and
varieties are adapted to the specific environ mental
decision-making processes within the KWS Group.
The RGPs are continuously improved by means of
constant monitoring and feedback. They comple-
conditions of their target markets. Breeders are
assis ted in that by a global network of various breed-
ing and trial stations. That means candidate varieties
ment our existing guiding principles, with the objec-
can be tested under the location- specific conditions
tive of preserving KWS’ unmistakable profile, also
in their target markets over several years.
against the backdrop of the Group’s increasing
internationalization.
Stakeholder management
By applying leading-edge breeding methods, which
are continually optimized by the use of molecular bi-
ology, IT or technical approaches, we have created
The key stakeholder groups include not only our direct
sustainable annual progress in yields of 1% to 2%
customers, farmers, our shareholders and employees,
for decades. We also create genetic diversity by new
but also other players along the food value chain
crossings, which is vital to improving crop varieties.
(sugar companies, food processors, retailers and
That is why KWS has supported various gene banks
end consumers), as well as policymakers, public
in different projects for years. By continuously
authorities, non-governmental organizations, science,
improving yield and delivering new plant traits, we can
academia and the media.
make a contribution to resource- conserving, sustain-
able agriculture. Only by doing so can we tackle the
We learn of our stakeholders’ requirements through
challenges of climate change and increased demand
various channels – from daily business, in our work for
as a result of global population growth.
associations or through dialogue with stakeholders
2.1 Fundamentals of the KWS Group | Combined Management Report
23
KWS Group | Annual Report 2017/2018 We partner with you
to meet challenges.
Depend on it.
We take on challenges that others won’t touch. That is independence. It’s the foundation of
our lasting success – and yours.
2.2 Research & Development Report
In fiscal 2017/2018 alone, our R&D expenditure totaled
Licensed and applied – new breeding technology
€197.7 (190.3) million. The result was that new KWS
at KWS
varieties were awarded around 402 (357) marketing
The past years have seen the development of a
approvals.
number of molecular biology methods that open up
new prospects for plant breeding. Genome editing
Further strengthening of our innovativeness
is particularly worthy of mention in this regard. This
As part of our own research activities, scientists at
still-young breeding technique allows precise cuts in
KWS continuously work on innovative approaches
the genetic material of a plant. Breeders can use this
that enable us to develop improved product traits
method to develop plant varieties with desired traits
and further optimize our breeding methods. We strive
very precisely and in a far shorter time.
to keep on expanding our internal know-how and
expertise in plant breeding through partnerships with
As a globally operating breeding company, KWS
public research institutes and private enterprises.
always endeavors to drive innovative technologies
That allows us to integrate the latest scientific fin d ings
so as to keep on optimizing breeding methods.
and methods faster in our breeding work.
We have identified genome editing as a key future
technology and were able to secure access to it in
In a competitive environment characterized by
the last fiscal year under a license agreement with
increasing concentration, it is vital to protect our
a research institute and a prestigious university in
research results with patents and, at the same time,
the U.S. Crucial steps in applying the method have
preserve our freedom of action as a company that
been taken for corn, Sugarbeet and wheat. We
conducts research. In the year under review, we
intend to continue driving this field of research with
filed twice as many patent applications relating to
high priority in the coming years, even though a rul-
the use of important breeding technologies than the
ing by the European Court of Justice (ECJ) means
year before. In addition, important varietal traits and
that, only in Europe, the products developed using
lines in various crops were protected successfully
this breeding method will be covered by genetic
by means of variety protection. Apart from protec-
engineering law. Regardless of that, the opportuni-
tion measures of our own, our own patents give us
ties offered by this technology are to be leveraged
options for cross-licensing with other companies
in countries outside the EU.
in the industry and thus secure access to the latest
technologies.
Drones for modern agriculture
KWS works constantly on new innovative approach-
At the same time, we have driven expansion of our
es in order to meet the high standards demanded in
network in science and research and in the agri-
modern plant breeding. The quality of the product,
cultural sector. For example, further cooperation
i.e., the plant in the field, is naturally of particular
ventures with leading research institutes in Europe,
importance to our customers. Crucial factors here
North America and Asia give us access to know-how
are yield, resistance to diseases and pests, and ability
and are an ideal complement to our own research
to adapt to environmental influences such as drought
activities. In addition to partnerships and cooperation,
stress. The sum total of all visible and measurable
KWS also takes financial stakes in young companies
traits of a plant is termed the phenotype and is vital
so as to secure strategic access to new, ground-
in plant breeding.
breaking technologies.
26 Combined Management Report | 2.2 Research & Development Report
Annual Report 2017/2018 | KWS Group Working for progress. With precision and a balanced combination of technology and craftsmanship, sophisticated breeding is
producing the varieties of tomorrow.
At present, our breeders assess plants in the
That gives our breeders more extensive and new
field mainly with their naked eye. Backed by their
information to help them make decisions on selec-
many years of experience, they are able to collect
tion. Good interdisciplinary collaboration and the use
high-quality data. A focus in the future will be on
of external networks and existing technology thus
tools for recording and evaluating digital images and
mean that our breeders have an additional tool to
hyperspectral measurement data so as to improve
assist them.
efficiency as part of phenotyping. Among other
things, KWS’ experts use drones that are equipped
High-performance corn varieties for the
with cutting-edge software and special cameras for
Brazilian market
that. The color, size, shape or temperature of the
A long-term license agreement with a leading pro-
plants and leaves are identified when the drones fly
vider gave KWS’ corn breeders global access to its
over the field. Large plant populations are recorded
technology portfolio of genetically modified traits
automatically by digital means and their phenotype is
from 2015 on. Traits that make corn plants resistant
thus defined in a precise and standardized manner.
to harmful insects are vital for the North and South
American markets.
Key figures for research & development
in € millions
R&D employees1
Ratio of R&D employees
R&D expenditure
R&D intensity2
Marketing approvals for new varieties
1 Average number of employees
2 In % of net sales
avg.
in %
in %
2017/2018
2016/2017
1,920
37,3
197,7
18,5
402
1,889
38,3
190,3
17,7
357
+/–
1.6%
–2.6%
3.9%
4.5%
12.6%
2.2 Research & Development Report | Combined Management Report
27
KWS Group | Annual Report 2017/2018
The license agreement now enables KWS to access
Robust Sugarbeet varieties pay off
alternative trait technology. As a result, we can offer
The main task in breeding for resistance is to equip
farmers new, competitive varieties that boast an
KWS’ varieties with the resistance genes required
ideal combination of powerful traits with traits from
for the particular cultivation region. Where possible,
our own breeding material. The result is healthier
the varieties should protect themselves against
plants in the field and less use of chemicals to com-
pathogens or pests. As a result, less pesticide can be
bat pests. We were able to generate revenue in Brazil
used and diseases that cannot be protected against
from new varieties with this technology for the first
by chemical or biological means can be combated
time in the past fiscal year.
more efficiently.
Let’s roll up our sleeves – and get to work! Being a farmer isn’t just an
occupation, it’s a way of life. Our customers are people of action, and
we’re proud of them.
More and more combinations of resistances, coupled
with a stable and high sugar yield, are required for
growing Sugarbeet. We at KWS have developed a
wide-ranging portfolio of high-yielding varieties that
is a very good fit for the individual markets. Varieties
with a good performance, better robustness and good
leaf health contribute to sustainable and high-yielding
Sugarbeet cultivation. That is reflected in the excellent
results of official tests on our varieties and our very
successful fiscal year.
Successful restructuring of rapeseed operations
At the start of the fiscal year, KWS pooled its rape-
seed activities in a joint Sub Business Unit “SBU
Oilseed Rape” under the roof of the Cereals Seg-
ment. This restructuring enables a more focused
approach to breeding and product development.
Existing breeding structures in Germany and France
have already been merged under joint management
and now cover maritime and continental rapeseed
cultivation areas in Europe. That permits achieve-
ment of the traditional breeding objectives of grain
and oil yield, as well as even more focused work
on specific traits relating to plants’ health, growth
behavior and ripening times.
In addition to the breeding activities being merged,
the areas of Portfolio Management and Production
were also restructured. That resulted in the very first
year in an improvement in the portfolio’s performance
in the stated cultivation regions and an expansion of
KWS’ position in the European rapeseed business.
Annual Report 2017/2018 | KWS Group 2.3 Economic Report
2.3.1 Business Performance
sanctions in international trade in the year under
review. That also had a negative impact on our busi-
General developments and business
ness in some regions.
performance of the KWS Group
All in all, there were again good harvests in most of
Guidance versus actual business performance
the world’s cultivation regions in the past fiscal year.
of the KWS Group
However, the rise in consumption ultimately resulted
Our uncertainty as to what guidance to issue for the
in slight declines in global inventories, for example
year as a whole diminished in the course of the year
in worldwide stocks of cereals. However, the slight
after the end of our winter cereals, rapeseed and
price increases were not sufficient to cause a turn-
South American corn seed business. We were able to
around in the basic general conditions for growing
put a more precise figure on our earnings expectations
agricultural crops. In some cases, arable farming
(an EBIT margin between 11.0% and 12.0%) in the
remained a loss-making business as a result of high
KWS Group’s Semiannual Report in February 2018.
inventories and relatively low prices for agricultural
For the same reasons, we were also able to give
raw materials. Farmers in some regions were able to
a more specific figure for our R&D intensity then.
increase their liquidity, but only in the meat and dairy
Nevertheless, these adjustments still meant that our
industry or through other non-farm income. While
guidance was within what we had forecast up to that
corn cultivation mostly remained under pressure, the
time. After a large part of the spring sowing season
cultivation area for Sugarbeet was largely constant,
had ended, our net sales expectations for several
despite the fall in sugar prices in the EU. Exchange
regions were reduced due to a decline in corn busi-
rate trends for many local currencies in the coun-
ness, as well as the continuing weak performance
tries where the KWS Group operates – in particular
of a number of local currencies. As a consequence,
the US dollar – had a negative impact on its net
we lowered our guidance for the KWS Group’s net
sales, which are consolidated in euros. Among other
sales slightly in May 2018. Our expectations for
things, we see political effects on our business from
research & development expenditure and earn-
the growing number of regulatory decisions relat-
ings remained constant by and large at the time.
ing to pesticides. These restrictions will probably
Ultimately, the EBIT margin at the end of the fiscal
make growing a number of agricultural crops less
year was slightly above the last guidance we pub-
profitable. Increasingly there were new barriers and
lished, in particular because our cost of sales and
selling expenses were lower.
Guidance versus actual business performance of the KWS Group
Results for
2016/2017
Guidance for
2017/2018
Adjustments to the guidance
during the year
Results for
2017/2018
Annual Report
(10/26/2017)
Quarterly
Report Q1
(11/23/2017)
Semiannual
Report
(02/27/2018)
Quarterly
Report 9M
(5/17/2018)
Net sales
R&D
intensity
EBIT margin
12.2%
€1,075
million
Slight increase
in net sales
17.7%
Rising R&D
intensity
Double-digit
EBIT margin
below the
previous year’s
figure
–
–
–
–
Stable net
sales
€1,068 million
–0.7%
Above 18% About 18%
18.5 %
11.0–12.0%
–
12.4 %
2.3 Economic Report | Combined Management Report
29
KWS Group | Annual Report 2017/2018
Summary of the segments’ course of business
net sales in most regions, apart from North America
and comparison with the guidance 1
and Turkey. However, the decline in business in North
Most of the net sales in the Corn Segment are gen-
America was not as strong as expected, which also
erated in the second half of our fiscal year ( January
had a significant positive impact on the segment’s
to June), i.e., in the spring sowing season in the
margin. As a result, its performance surpassed our
northern hemisphere. A lesser share of revenue is
expectations and was the main reason we raised our
earned in South America in the first two quarters.
guidance for net sales and income during the year.
All in all, corn cultivation remained under pressure in
many regions due to relatively low producer prices.
Every year, the fall sowing season determines the
Our net sales in South America fell sharply due to
main business trends of the Cereals Segment. The
negative exchange rate effects and a temporary
key crop in that is rye, which accounts for a very
inadequate supply of seed resulting from the plan-
significant share of the segment’s net sales and
ned switchover to our own varieties in our portfolio.
earnings. In particular, net sales from rye and rape-
Our net sales in North America also declined due
seed seed rose more sharply than expected in the
to lower volumes and exchange rate influences.
year under review. These trends led us to adjust our
Whereas most expenditures in the segment declined
net sales and earnings expectations for the Cereals
in line with the reduction in net sales, the fall in value
Segment during the year.
of the US dollar, Argentinean peso and Brazilian
real resulted in a sharp increase in foreign exchange
There were adjustments to the EBIT guidance for
losses on the reporting date and thus a reduction in
the Corporate Segment during the year. As part
the EBIT margin forecast for the segment.
of our extensive reorganization of administration,
a more precise figure was able to be put on the
The main sales season for the Sugarbeet Segment
as so ciated costs as the planning for the project was
is in the third and fourth quarters (January to June).
fleshed out in more detail. These costs were above
The strong performance of our Sugarbeet varieties
our expectations and so ultimately resulted overall
was again a mainstay in the segment’s success in
in a slight increase in expenses in the Corporate
the year under review. Contrary to our expectations,
Segment than we had previously forecast.
the cultivation area in the EU remained at the high
level of the previous year. We were able to grow our
1 Including equity-accounted companies. Details on the segments’ business
performance and their economic environment can be found in the segment reports.
30 Combined Management Report | 2.3 Economic Report
Annual Report 2017/2018 | KWS Group 2.3.2 Earnings, Financial Position and Assets
Earnings
EBIT increased again
The KWS Group’s cost of sales fell sharply in the
Net sales down slightly year on year due to
year under review to €446.1 (493.9) million, giving
exchange rate effects
a cost of sales ratio of 41.8% (45.9%). That was
The KWS Group’s net sales in the year under review
mainly attributable to lower license costs in the U.S.
were €1,068.0 (1,075.2) million, a decline of 0.7%.
and higher contributions of net sales from regions
They were impacted in the year under review by
with a relatively lower cost of sales. Despite stable
significant exchange rate effects and a market
net sales, research & development expenditure
environment that remained challenging and was
was increased to €197.7 (190.3) million, resulting in
characterized by low producer prices in the face of
an R&D intensity of 18.5% (17.7%). Administrative
high inventories of agricultural raw materials world-
expen ses rose to €95.8 (79.8) million, in particular
wide. Apart from the depreciation in the US dollar
due to costs relating to optimization of our organiza-
and the Brazilian real, the Argentinean peso and
tional structure (see page 19). The balance of other
the Turkish lira also had a negative impact on net
operating income and other operating expenses fell
sales. Assuming constant exchange rates at the
by 73.0% to €5.7 (21.1) million. Key factors in that
level of the previous year, net sales would have been
were higher expenses as part of receivables man-
€1,113.4 million, an increase of 3.5%. We grew our
agement and positive special effects in the previous
net sales in Europe (corn, Sugarbeet, winter rape-
year, which were not repeated. The related individual
seed and cereals seed) and Asia (corn seed). Net
items are explained in detail in the Notes on pages
sales from corn in South America fell due to ex-
124 to 125. All in all, the KWS Group posted an EBIT
change rate effects and a temporary inadequate
of €132.6 (131.6) million, i.e., 0.8% above the level
supply of seed resulting from the planned switch -
of the previous year, and an EBIT margin of 12.4%
over to our own varieties in our portfolio in Brazil.
(12.2%) in fiscal 2017/2018.
Net sales from Sugarbeet seed also fell in North
America, mainly due to exchange rate effects.
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
2017/2018
2016/2017
1,068.0
1,075.2
132.6
5.4
138.0
38.3
99.7
131.6
16.6
148.2
50.5
97.7
+/–
–0.7%
0.8%
–67.5%
–6.9%
–24.2%
2.0%
in €
in %
15.08
14.78
2.0%
12.4
12.2
2.3 Economic Report | Combined Management Report
31
KWS Group | Annual Report 2017/2018 Net sales by region1
Total net sales €1,068.0 million
Rest of world 5.5%
North and South America 25.2%
22.0% Germany
47.3% Europe (excluding Germany)
Net sales by segment1
Total net sales €1,068.0 million
Corporate 0.4%
Cereals 14.0%
42.9% Corn
42.7% Sugarbeet
1 Ohne Umsätze unserer at equity bilanzierten Gesellschaften.
Fall in net financial income/expenses – tax rate
Net financial income/expenses was thus €5.4 (16.6)
improves – net income for the year rises by 2.0%
million. Earnings before taxes (EBT) fell by 6.9% to
Our net financial income/expenses is made up of the
€138.0 (148.2) mil lion. A sharp drop in income taxes to
net income from equity investments and the interest
€38.3 (50.5) mil lion gave a tax rate of 27.8% (34.1%).
result. One component of income from equity
Tax expenses fell in particular in Germany and North
investments is the income from equity- accounted
America. Overall, the KWS Group generated net in-
financial assets, which fell to €13.4 (24.9) million
come of €99.7 (97.7) mil lion in the year under review.
due to the drop in earnings (see page 36) from
Given that the number of shares was unchanged,
our joint ventures in North America. The interest
earnings per share were €15.08 (14.78).
result remained stable and was €–8.0 (–8.3) million.
Financial Situation
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
2017/2018
2016/2017
192.6
98.1
–68.1
–25.3
191.4
122.4
–64.8
–29.6
+/–
0.6%
–19.9%
5.1%
–14.5%
The task of financial management is to ensure the
Higher net income year on year, before allowing for
KWS Group’s earnings strength and secure its
non-cash expenses and income, coupled with a rise
financial assets long-term. Among other things,
in long-term provisions and higher allowances for
extensive liquidity planning, monitoring of cash
receivables (other non-cash expenses), resulted in an
flows, and hedging the risk of interest rate changes
increase in cash earnings 2 to €147.2 (105.4) million.
and currency risks contribute to that.
32 Combined Management Report | 2.3 Economic Report
2 Net income for the year, allowing for depreciation (+) and write-ups (–) for fixed
assets, the increase (–) and decrease (+) in long-term provisions, and other
non-cash expenses (+) and income (–) = cash earnings
Annual Report 2017/2018 | KWS Group Good storage is half the battle. Everything has to be just right so that the seed’s top quality is not impaired.
However, the decrease in short-term provisions, low
Einbeck, a multiyear project with a total invest-
income taxes and the increase in trade receivables
ment volume of around €40 million. We also began
were a major reason for the weaker net cash from
expanding our laboratory capacities there. We
operating activities, which totaled €98.1 (122.4) million.
expanded our corn seed drying and production
capacities in Brazil and Argentina. Total capital
The net cash from investing activities totaled
spending in fiscal 2017/2018 was €71.7 (63.3) million.
€–68.1 (–64.8) million in fiscal 2017/2018. Our capital
Some of the investments planned for the year under
spending in the year under review was consistent
review were shifted to fiscal 2018/2019, which
with our long-term growth plans and focused on
is why our investment planning for the coming
erecting and expanding production, research &
year envisages an increase in capital spending.
development capacities. Among other things, we
Depreciation and amortization remained virtually
continued to expand Sugarbeet seed production in
constant at €50.1 million.
Capital expenditure by segments
Total capital expenditure €71.7 million1
Corporate 41.5%
Cereals 9.8%
25.3% Corn
23.4% Sugarbeet
Capital expenditure by region
Total capital expenditure €71.7 million1
Rest of world 1.3%
North and South America 18.5%
55.1% Germany
25.1% Europe (excluding Germany)
1 Without capital expenditures of our at equity consolidated companies
2.3 Economic Report | Combined Management Report
33
KWS Group | Annual Report 2017/2018 Since short-term commercial papers were issued
A syndicated loan with a total volume of €200 million
again in the fiscal year in order to finance business
and running until 2021 still exists with KWS SAAT SE’s
operations during the year and more capital debt
principal bankers to finance operating resources
was repaid than raised compared with the previ-
during the year. It was not utilized in the year under re-
ous year, the net cash from financing activities was
view; the covenants were fulfilled by KWS at all times.
€–25.3 (–29.6) million. Commercial papers have
lower-interest terms than our available credit lines,
which enhances the attractiveness of this financ-
ing instrument. The KWS Group’s cash and cash
equivalents at the end of fiscal 2017/2018 rose to
€192.6 (191.4) million.
Assets
Abridged balance sheet
in € millions
Assets
Noncurrent assets
Current assets
Equity and liabilities
Equity
Noncurrent liabilities
Current liabilities
Total assets
06/30/2018
06/30/2017
+/–
691.3
826.4
881.8
334.3
301.6
680.1
815.1
836.9
358.8
299.5
1,517.7
1,495.2
1.6%
1.4%
5.4%
–6.8%
0.7%
1.5%
The KWS Group’s balance sheet is impacted by the
to the inadequate supply of seed in Brazil (see the
seasonal nature of our business. In the course of the
report on the Corn Segment) as well as currency
year, there are usually balance sheet items that differ
translation effects. Current assets at the balance
significantly from the corresponding figures at the
sheet date totaled €826.4 (815.1) million. Net debt
balance sheet date, in particular in relation to work-
was reduced further to €37.4 (48.5) million as a result
ing capital.
of repayments.
Total assets at June 30, 2018, were €1,517.7
The allocation to the other reserves meant that equity
(1,495.2) million. Noncurrent assets rose to €691.3
rose to €881.8 (836.9) million. As a result, noncurrent
(680.1) million, mainly due to planned investments
assets were again fully covered by equity. Repayment
in new production plants and research & develop-
of the borrower’s note loan and repayment of other
ment capacities. Trade receivables rose slightly to
long-term loans reduced noncurrent liabilities to
€310.1 (302.6) million. However, inventories fell by
€334.3 (358.8) million. As a result, the equity ratio
7.1% to €181.0 (194.9) million, meaning their ratio
also increased to 58.1% (56.0%), meaning we again
relative to total assets decreased slightly. The drop
continued our stable and solid financial policy this
in inventories was attributable, among other things,
year.
34 Combined Management Report | 2.3 Economic Report
Annual Report 2017/2018 | KWS Group 2.3.3 Segment Reports
Reconciliation with the KWS Group
The difference from the KWS Group’s statement of
The KWS Group’s consolidated financial statements
comprehensive income is summarized for a number
are prepared in accordance with the International
of key indicators in the reconciliation table:
Financial Reporting Standards (IFRS). The seg-
ments are presented in the Management Report in
The reconciliation between the KWS Group’s state-
line with our internal corporate controlling structure
ment of comprehensive income and the reporting
in accordance with GAS 20. The main difference is
by segments in fiscal 2017/2018 is impacted by our
that we no longer carry the revenues and costs of
equity-accounted companies in the North American
our equity- accounted companies in the statement of
and Chinese corn markets. That applies to all key
comprehensive income (in accordance with IFRS 11).
figures in the table below, with the main influences
The KWS Group’s net sales and EBIT will therefore be
coming from North America. Net sales from corn and
lower than the total for the segments. The earnings
EBIT were lower there in the year under review, which
contributed by the equity-accounted companies are
therefore had an impact on the reconciliation. The
instead included under net financial income/ expenses.
Chinese company KENFENG – KWS SEEDS CO., LTD.
In addition, their assets are included separately in the
increased its contribution to net sales and income in
KWS Group’s balance sheet. Our equity- accounted
the year under review, although that still had a minor
companies are included proportionately in the
effect on the reconciliation.
segment reports in line with our internal corporate
controlling structure.
Reconciliation table
in € millions
Net sales
EBIT
Number of employees
Capital expenditure
Total assets
avg.
Segments Reconciliation
KWS Group
1,344.6
–276.6
1,068.0
149.0
5,872
117.7
–16.4
–725
–46.0
132.6
5,147
71.7
1,627.3
–109.6
1,517.7
2.3 Economic Report | Combined Management Report
35
KWS Group | Annual Report 2017/2018
Corn Segment
Key figures
in € millions
Net sales
EBIT
EBIT margin
Capital expenditure
Capital employed (avg.)
ROCE (avg.)
2017/2018
2016/2017
734.2
47.4
6.5
64.1
695.5
6.8
825.3
58.2
7.1
25.0
728.0
8.0
+/–
–11.0%
–18.6%
156.4%
–4.5%
in %
in %
Economic environment: High inventories
been €783.4 million, a decline of 5.1%. Rapeseed
impact commodity prices
business was also transferred to the Cereals Seg-
The economic environment for corn continued to
ment in the year under review. After adjustment for
prove extremely difficult in most regions in fiscal
that effect, the net sales in the previous year would
2017/2018. First of all, there were very good harvests
have been €800.9 million. Net sales from corn seed
in the most important corn cultivation regions in 2017.
in South America – in particular Brazil – were below
Corn production in the U.S. was again at one of
the strong level of the previous year. There was also
its highest-ever levels – despite a decline in the
a decline in net sales in North America. However,
cultivation area. The global price trends for corn hardly
we grew net sales from our corn business slightly in
changed due to the fact that inventories remained
Europe and China.
high. In the 2018 cultivation year, price trends for
agricultural raw materials again went against corn,
The segment’s earnings decreased due to a fall in
especially in North and South America and Europe.
sales volumes in Brazil and North America and neg-
With the exception of Argentina, there was a reduction
ative exchange rate effects. Our earnings increased
in the corn cultivation area here, since growing alter-
in Europe and China. The segment’s function costs
native crops proved more attractive for farmers. The
developed in line with net sales and were below the
adverse conditions at the time of the cereals sowing
levels of the previous year. As a result, their ratio rela-
season in the fall resulted in sporadic increases in the
tive to net sales remained largely the same. The seg-
corn cultivation area in Europe. Increasing regulatory
ment’s earnings were thus €47.4 (58.2) million. After
restrictions on the use of insecticidal seed dressings
adjustment for the contribution made by rapeseed
hampered sales here. Cultivation area in Russia fell
business, there would have been an imputed EBIT
by around 10%, whereas it increased in Ukraine by
of €52.9 million last year.
approximately 2%. There were also slight increases
in cultivation area in China due to fact that corn was
The regions: Net sales fall in North and South
more profitable than soybeans. There were very sharp
America – Higher revenue in China and Europe
exchange rate effects on the segment in the year
Net sales in North America fell by almost 14% to a
under review, primarily from the depreciation of the US
total of €264.9 million, among other things on the
dollar, the Brazilian real and the Argentinean peso.
back of lower sales volumes. The depreciation of
the US dollar had a significant impact on net sales
The segment’s performance: Decline in net sales
and there was also a slight decrease in the cultivation
and income
area. Our 50:50 joint venture AgReliant is currently
Operational business at the Corn Segment was not
formulating a new strategy for establishing strong
able to match that of the previous year and net sales
national brands. This new strategy is the basis for
fell by 11.0% to €734.2 (825.3) million. If exchange
our planned growth in the coming years.
rates had remained constant, net sales would have
36 Combined Management Report | 2.3 Economic Report
Annual Report 2017/2018 | KWS Group
Corn
In Brazil, we began switching to new, high-
performance varieties equipped with market-leading
technology in the year under review. There were
problems resulting from that as part of our seed
production, which led to a temporary inadequate
supply of seed. That, as well as exchange rate
effects, meant our net sales decreased for the first
time since we entered the market. We currently
expect to complete this switchover in our port-
folio in the current season, so our net sales will
probably increase again sharply. We grew sales
volumes of corn seed in Argentina once more, but
the Argentinean peso continued to slump in value
this year.
We increased our net sales from corn seed in Europe
and Asia following the difficult previous years. Impro-
ved product performance resulted in the lar g est
growth in net sales from corn seed in the regions of
southern, southeastern and Central Europe and
China. Net sales in Ukraine also rose sharply.
Expansion of production and storage capacities
The segment’s capital spending rose to €64.1
(25.0) million in the year under review. One of the
reasons for that was that the second tranche for
corn trait technology licenses from the previous
year was due in the year under review. Apart from
that, we mainly invested in expanding production
and processing plants in Brazil and Argentina so
as to provide sufficient capacities for our strategic
objectives. Along with that, we expanded our
storage capa cities in southern Europe.
KWS Group | Annual Report 2017/2018 Sugarbeet Segment
Key figures
in € millions
Net sales
EBIT
EBIT margin
Capital expenditure
Capital employed (avg.)
ROCE (avg.)
2017/2018
2016/2017
455.1
160.5
35.3
16.8
282.0
56.9
454.6
150.9
33.2
16.8
260.4
58.0
+/–
0.1%
6.4%
0.0%
8.3%
in %
in %
Economic environment: Constant cultivation
our research & development activities significantly.
area and low world market prices for white sugar
Administrative expenses fell, among other things due
In the first sowing season after the end of the Sugar
to lower costs as a result of the fall in value of the
Market Regime, the cultivation area for sugarbeet in
US dollar. The reimposition of political sanctions led
the EU – a key factor for our business – remained
to an allowance for our outstanding receivables in the
virtually constant despite the low price for white sugar,
Middle East, which resulted in a reduction in earnings.
while the cultivation area in Eastern urope declined
Expenses from remeasurement and destruction of
by around 5%. The area in the important cultivation
inventories were above the level of the previous year
region of North America likewise remained constant.
and are attributable to higher stocks. The segment
The foreign currencies of relevance to the segment in
ultimately posted an increase in its EBIT to €160.5
Eastern Europe, the U.S. and Turkey fell significantly
(150.9) million as a result of lower royalty payments
in value year over year. The segment was also subject
due to the fact that a patent expired.
to political influences to a greater extent in the year
under review, while the still strained geopolitical
The regions: Competitiveness remains at a high
situation weighed on earnings in the Middle East.
level thanks to strong variety performance
In the segment’s key region of the EU 28, we grew
The segment’s performance: Stable net sales
our net sales from sugarbeet seed by 12.1% to
In the year under review, we were able to maintain
€204.6 (182.4) million, even though the cultivation area
our operational business in the Sugarbeet Segment
remained constant. We captured a market share of
at the level of the previous year thanks to constantly
55% (49%) here thanks to the consistently high per-
good variety performance. Net sales totaled €455.1
formance of our portfolio of sugarbeet varieties and
(454.6) million. We grew our net sales mainly in
improved our market position in France, in particular.
Germany, France and northern and Eastern Europe.
In view of the further restrictions on pesticides in the
On the other hand, there were declines in net sales
EU, we believe that the development of natural resis-
in the U.S. and Turkey due to exchange rate effects
tances will grow in importance in the medium to long
and falls in volumes. If exchange rates had remained
term. Consequently, we will intensify our breeding
constant, the segment’s net sales would have risen
activities in this direction. Despite a slight decline in
by 4.5% to €474.8 million.
net sales in North America, we were able to retain
our very strong market position there. In Eastern
Additional marketing activities, for example as
Europe, we reaped rewards from our fine variety per-
part of the launch of CONVISO® SMART varieties,
formance and tailored sales and marketing strategy.
resulted in higher selling expenses. We expanded
38 Combined Management Report | 2.3 Economic Report
Annual Report 2017/2018 | KWS Group
Sugarbeet
Here, too, net sales were grown significantly. How-
ever, we were not able to maintain net sales in Turkey
and the Middle East at the high level of the previous
year. In summary, KWS remains the world’s market
leader by far. All in all, we achieved a global market
share of 58% (55%) in the year under review.
Successful market launch of CONVISO® SMART
– Investments in seed production
The new CONVISO® SMART system not only makes
growing sugarbeet easier for farmers and gives them
more flexibility in terms of time, but is also more
environ mentally friendly. The technology was sold
to farmers in six European countries for the first
time in the year under review. Other rollouts in our
key markets are scheduled for the coming years. In
addition, a long-term license for the technology was
awarded to a competitor in mid-2017.
We continued our multiyear capital spending pro j-
ects as planned in the year under review. Our most
important construction project at the moment is
aimed at renewing and expanding our seed pro-
duction plant at Einbeck and has a total investment
volume of more than €40 million. As part of it, we
will expand our production capacity by up to 60%.
We will also deploy a completely new process tech-
nology so as to ensure high seed purity, achieve
greater flexibility in production and make the pro-
cess more efficient. After completion of the logistics
center, the project was continued in the year under
review with the construction of a further production
building. The new dressing and packaging plant is
expected to be put into operation in April 2019.
KWS Group | Annual Report 2017/2018 Cereals Segment
Key figures
in € millions
Net sales
EBIT
EBIT margin
Capital expenditure
Capital employed (avg.)
ROCE (avg.)
2017/2018
2016/2017
151.1
18.4
12.2
7.0
127.8
14.4
109.3
10.3
9.4
5.0
114.9
9.0
+/–
38.2%
78.6%
40.0%
11.2%
in %
in %
Economic environment: Cereal commodity
Apart from a further devaluation of the pound sterling,
prices still low
the loss in value of the Ukrainian hryvnia also had a
The economic situation remained strained for
negative impact.
cereals farmers in Europe in the year under review.
Apart from poor weather conditions, the main exter-
A higher proportion of revenue from licenses and
nal factors influencing our customers’ purchasing
rapeseed seed resulted in an improvement in the
decisions were low cereal commodity prices, in
segment’s gross margin. Expenditure on distribu-
particular in our growth markets for rye in Eastern
tion, research & development and administration
Europe. The prices of rye of bread-making quality in
was higher, primarily due to the transfer of rapeseed
Germany and Poland trended positively compared
operations. Apart from the effects from the orga-
to those for bread wheat, resulting in an increase in
nizational restructuring, the segment’s EBIT rose
rye cultivation area in those countries. Despite a fall
in particular due to an expansion in rye and winter
in demand for biodiesel, lower availability of efficient
rapeseed seed business by 78.6% to a total of
dressing applications and the above-mentioned poor
€18.4 (10.3) million.
weather conditions at the time of the sowing season,
the cultivation area for rapeseed remained constant
The regions: European business grows – Net
in the EU.
sales increase in all main cultivation areas
We increased our domestic net sales again in the
The segment’s performance: Increase in net
past fiscal year. We generated around 29% of net
sales and income
cereal sales in Germany, mainly from rye, barley,
Net sales in the Cereals Segment rose by around
wheat and rapeseed seed, and so Germany remains
38% to €151.1 (109.3) million. We expanded net sales
the most important single market for our Cereals
from rapeseed sharply, due to two factors: the
Segment. The main driver here was rye seed busi-
transfer of all rapeseed activities from the Corn Seg-
ness. We were able to increase our market share to
ment and higher demand overall for KWS’ rapeseed
approximately 60% and so strengthen our position
varieties. We increased our net sales from rye seed
as a market leader thanks to improved variety perfor-
by 16% thanks to new variety approvals and net
mance after two years in which our share declined.
sales from wheat seed by 12%, while revenue from
barley rose slightly. Rye seed was still the main sales
We again turned in a positive business performance
driver in the Cereals Segment, contributing around
in our other key markets – the UK, France, Poland
36%, followed by rapeseed, wheat and barley. If
and Scandinavia – which accounted for almost 40%
exchange rates had remained constant, net sales
of the segment’s net sales. We gained market share
would have been slightly higher at €152.3 million.
in rapeseed business in France and southeastern
40 Combined Management Report | 2.3 Economic Report
Annual Report 2017/2018 | KWS Group
Cereals
Europe. Our wheat licensing business in the UK grew
by double digits and increased its market share to
46%. We likewise won market share in wheat and
barley seed in France. We also expanded business in
our strategic growth markets of Russia and Ukraine.
Net sales in our young future markets in North America
remained constant.
Investments in the future continued
Along with conventional breeding, long-term
breeding and development projects are vital to the
segment’s future. Our focus is on breeding high-
performance varieties and preserving and enhancing
their resource efficiency. So that we can tap further
market potential in the medium term, our breeding
and development projects are also aimed at tailored
rye varieties for Eastern Europe and North America.
The initiative for expanded use of rye as feed aims to
provide additional incentive to grow rye in Germany.
Another long-term goal is to establish hybrid breed-
ing activities for wheat and barley.
The segment’s capital expenditure in the year under
review totaled €7.0 (5.0) million. We invested primarily
in expanding and modernizing breeding stations and
production plants. Our focus is still on the quality of
our varieties and seed. Investments to renew and
replace plant and equipment help ensure that we
meet high quality requirements in our breeding and
production processes. At the same time, they are
geared to providing sufficient capacities for our stra-
tegic objectives. These are, in particular, expansion
of wheat seed business in France and Germany and
our rye seed business in Eastern Europe and North
America, as well as development of hybrid wheat and
hybrid barley varieties.
KWS Group | Annual Report 2017/2018 Corporate
Corporate Segment
Key figures
in € millions
Net sales
EBIT
Capital expenditure
2017/2018
2016/2017
4.2
–77.3
29.8
4.8
–60.6
21.1
+/–
–12.5%
27.6%
41.2%
The Corporate Segment’s net sales are generated
the EBIT reported by the segment is impacted every
mainly from our farms in Germany. In the past fiscal
fiscal year by regularly increasing costs, depending
year they were €4.2 (4.8) million. All cross-segment
on our business activity. In the year under review, it
costs are also allocated to the segment. They include
was influenced, in particular, by costs for optimizing
expenses for all central functions of the KWS Group
our organizational structure, tax consulting services
and for long-term research projects. The segment’s
and strengthening our IT infrastructure and totaled
net sales cannot cover these expenses. As a result,
€–77.3 (–60.6) million.
42 Combined Management Report | 2.3 Economic Report
Annual Report 2017/2018 | KWS Group
2.4 Environmental Report
2.4.1 Product Innovations
equip our varieties with resistance to pests and plant
The most important environmental aspect in pro-
diseases and are working, for example, to improve
ducing seed is to optimize the use of resources
drought tolerance and nutrient efficiency, allowing
such as soil, water, pesticides and fertilizer. We have
for the conditions at the location and the regional
drawn up environmental protection guidelines in
climate. The crop-specific development objectives
which we commit ourselves to ensuring resource
are agreed between Research, the respective
efficiency in our work processes.
development departments, Production and Sales and
submitted annually as a proposal for the Executive
Research & breeding – Development of high-
Board to decide on. In an extensive internal reporting
yielding and resource-efficient plant varieties
process, the core component of which is an annual
Resource efficiency in our breeding processes means
performance status report to the Executive Board
developing varieties that produce a higher yield with
and the Supervisory Board, the progress made
the same or fewer resources. Our goal is to deliver an
in the individual breeding programs is regularly
average yield progress of 1% to 2% a year for farm-
reviewed and changes or adjustments are defined
ers with new and innovative varieties. That is why we
if necessary.
Breeding objectives
High-performance seed
Yield
Sugar, grain, energy
Agronomic properties
Hardiness,
monogerm varieties,
bolting resistance
Constituents
Food, processing,
fodder
Nutrient efficiency
Nitrogen,
phosphorus
Resistance
Diseases, pests,
stress
Alternatives to seed dressing
Organic seed and special minor crops
We are working on biologicals, which are obtained
We pooled our research & development work in
from microorganisms or plants, to be used as an
the field of organic seed, founding a separate Sub
alter native or to complement the standard means of
Business Unit, “Special Crops & Organic Seed,”
dressing seed with chemical pesticides commonly
effective July 1, 2018. This special Sub Business
used at present. Biologicals are becoming increasingly
Unit will deal not only with organic seed, but also
attractive, since they can help improve crops’ nutrient
crops of lesser economic importance, such as
efficiency and stress tolerance, for example, without
peas, triticale, oats, sorghum and catch crops.
the need to use chemical substances. This means
General conditions in society, such as the difficult
chemical residues in the soil are avoided. We launched
situation regarding the approval of pesticides, mean
sugarbeet varieties equipped with biologicals that
established crop rotations and traditional farming
protect the plants against stress in Eastern Europe in
systems need to be rethought and farmers are in-
fiscal 2016/2017. We plan to expand our development
creasingly turning their attention to minor crops.
work on the use of biologicals to all relevant KWS
crops in the coming years.
2.4 Environmental Report | Combined Management Report
43
KWS Group | Annual Report 2017/2018
Sales and consulting
“Excellence Through Stewardship” (ETS) since
KWS also informs and advises farmers on cultiva-
2015. Regular internal and external audits are held
tion methods. On our trial fields, we develop meth-
as part of that. KWS gained the certification for
ods that help prevent soil erosion. We also market
successful completion of the second audit cycle in
the KWS AckerFit catch crop mixtures, a product
August 2018.
line that enables farmers to break up the crop rota-
tion cycle and additionally protect the soil.
All the audits, records and measures are
administered in a central database. The results are
2.4.2 Plant and Process Safety
reported to the Executive Board once a year.
In the operational processes at our plants of rel-
e vance to the environment, we have to prevent
2.4.3 Resource-efficient Processes and
environmentally harmful substances being released
Climate Protection*
into the air, soil and water in the form of dusts,
In 2017 we introduced a standard accounting
hazardous wastewater and waste. KWS defined
system for the main resources used, such as
minimum standards in 2016 to specify binding
fertilizer, pesticides, energy and water, as well as for
minimum requirements for the local environmental
waste, wastewater and greenhouse gas emissions,
protection technology and process organization for
at the KWS Group. That means we now have for
all its plants. They are based on the environmental
the first time a Group-wide database, which we
standards that apply at KWS SAAT SE’s head-
will optimize further in terms of the scope of data
quarters in Einbeck. The Corn Segment has already
collected and the quality of data in the coming years.
begun introducing the environmental standards.
The objective is to be able to use the database to
They are to be expanded to the other segments in
analyze and derive potential for improvement.
2019. Compliance with the standards is tracked
and reviewed by internal audits. Two audits were
As a member of the “Climate Protection
conducted at Corn Segment locations in fiscal
Companies,” an excellence initiative of the German
2017/2018 and confirmed that the environmental
business community in the field of climate protec-
standards were being met. KWS SAAT SE and KWS
tion and energy efficiency, we are committed in
Services Deutschland GmbH at Grimsehlstrasse in
particular to saving energy by optimizing technical
Einbeck were successfully recertified in accordance
processes and reducing greenhouse emissions
with the environmental management standard
resulting from energy consumption by moving to
ISO 14001 in the spring of 2017.
renewable sources of energies. Our headquarters at
Einbeck, which requires most of the energy used in
A further key aspect in plant and process safety is
the KWS Group, operates its own block-type ther-
responsible use of modern breeding methods such
mal power station with biogas, for example. KWS’
as genetic engineering. Unintentional release of
Wiebrechtshausen monastery estate, where organic
genetically modified organisms in the production
farming trials are conducted, supplies itself fully
process and mixing of seed produced using con-
with renewable energy from wood chips and green
ventional means and genetic engineering must be
electricity. Residues from the corn harvest are used
prevented. In order to prove that we use genetically
as sources of energy at our locations in Romania
modified organisms responsibly throughout the life
and Hungary.
cycle of our products, our entire Group has been
certified in accordance with the industry standard
44 Combined Management Report | 2.4 Environmental Report
* Not an audited part of the Combined Management Report.
Annual Report 2017/2018 | KWS Group From food for people and animals to CO2-neutral biodiesel and soil protection against erosion and weed pressure,
rapeseed is an absolute all-rounder.
2.4 Environmental Report | Combined Management Report
45
KWS Group | Annual Report 2017/2018 Life doesn’t always
go smoothly.
We pitch in when others have long since given up. That is independence. And it’s not
only the greatest asset on your farm, but here in Einbeck as well. As it has been for
more than 160 years.
2.5 Employee and Social Report
Over six generations, our employees have made
2.5.2 Recruitment and Qualification
KWS what it is today: an innovative, world- leading
We pursue various measures to cover the KWS
plant breeding company. That is due in great
Group’s quantitative and qualitative personnel
measure to their skills, mindsets, ideas and their job
requirements to match its strategic objectives.
satisfaction. As a company with a tradition of family
ownership, we attach importance to a work culture
Employer branding: KWS as an employer
of respect, a high degree of personal initiative, and
As a global player, our constant goal is to clearly
personal and professional development. Openness,
position KWS in international labor markets by mod-
trust and team spirit define our culture.
ern means of online communications and a pres-
2.5.1 Employment Trends
ence in social media. A key aspect in our employer
branding is to actively address interests and needs
We employed an average of 5,147 people worldwide
that are important to our current and future em-
in the year under review, an increase of 4.3%. A total
ployees. Among other things, we are committed
of 1,952 (1,911), or around 38% (39%) of the work-
to fostering employees’ personal and professional
force, were employed in Germany. While the head-
development in a targeted manner as well as an
count in Europe (excluding Germany) remained vir-
appropriate work-life balance. In the rankings by
tually unchanged, it rose sharply in North and South
the consulting firm Universum, which ascertains
America. However, the headcount fell slightly in the
the most popular employers among students every
rest of the world. Once again, the area that accounted
year, KWS came in 49th in the area of sciences and
for the most employees was research & develop-
so captured a place among the top 50 in Germany
ment: The number of employees here increased and
for the first time.
made up 37.4% of the total workforce.
As a research company, KWS attaches great importance to ensuring that employees of KWS have the freedom to
“seed the future” successfully and to advance their own ideas.
Employees by function1
Number of employees 5,147
Administration 13.3%
Distribution 22.1%
37.4% Research & Development
27.2% Production
Employees by region1
Number of employees 5,147
Rest of world 4.3%
North and South America 29.6%
37.9% Germany
28.2% Europe (excluding Germany)
1 Average number of employees
Establishment of global networks and contacts
on the company’s values, is the basis for that. We
Establishing networks and nurturing contacts with
continue to expand and optimize our employee
professional groups of importance to us are key
development activities, emphasizing both internal
elements of our HR strategy. That is why we attend
and external further training measures. Qualification
trade fairs and events and also maintain close ties
needs are discussed and agreed on by the super-
with universities. School pupils and students have
visor and employee in the annual performance and
the chance to gain initial insights into working life at
career develop ment reviews.
KWS by means of internships or excursions, or by
writing their degree theses at our company. We also
Our internal development programs aim to enhance
award various scholarships to young talents and
a wide range of skills. The “Orientation Center”
offer induction programs.
enables us to verify individual potential and draw up
customized development plans on that basis. For its
Vocational training and induction programs
part, the “International Development Program” offers
The vocational training we offer helps our employees
experts and executives an additional opportunity to
develop practical skills. There are diverse options to
enhance their personal and professional strengths in
chose from in Germany – from vocational training to a
the international environment.
dual course of study. In fiscal 2017/2018, for example,
our instructors and trainee supervisors supported
KWS is also working in the field of IT to optimize tools
a total of 93 trainees on their path to gaining their
and provide innovative solutions so as to provide
vocational qualifications.
better central support for employee development.
Continuous qualification
The objective is to systematize all activities globally to
a greater extent – from recruiting, onboarding, further
We offer all our employees a continually enhanced
development of employees, feedback processes to
range of professional and personal development
succession planning. The focus is initially on rolling
measures, since our global growth and regional
out a digital recruiting module. Other modules are to
markets increasingly demand a high level of adap-
be introduced successively over the coming years.
tivity. KWS’ competence model, which is founded
2.5 Employee and Social Report | Combined Management Report
49
KWS Group | Annual Report 2017/2018 2.5.3 Good Working Conditions*
Employee Stock Purchase Plans where staff can
One foundation for our attractiveness as an employer
buy shares in the company. Equal pay for the same
is good working conditions. We are therefore
activi ties is a principle of our compensation policy.
committed to decent labor standards worldwide.
Work-life balance
Contracts and compensation
Different working time models enable employees to
Every employee of the KWS Group has a written con-
strike a good work-life balance. Employees can also
tract of employment that complies with labor and so-
work from home, if that can be reconciled with their
cial insurance legislation. The overall compensation
activity. We also offer part-time models. Employees
package for KWS employees takes into account their
in Germany also have the opportunity to take leave
individual expertise and local market circumstances
or reduce their working hours, with an adjustment
and consists of a basic salary, social bene fits, per-
to their salary, if they would like to look after depen-
formance-related payments (if applicable) and, locally,
dents who need caring for.
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 %
2017/2018
2016/2017
1,952
1,911
443
52.7
47.3
93
4.8
39.1
13.8
415
51.3
48.7
95
5.0
40.8
13.5
+/–
2.1%
6.7%
2.7%
–2.9%
–2.1%
–4.0%
–4.2%
2.2%
Equal opportunity and diversity
Work safety and health
KWS is committed to equal opportunities and rights
The individual KWS companies are responsible for
for its employees, regardless of gender, age, origin,
work safety and health management in compliance
culture, religion or sexual orientation. We have en-
with local statutory regulations. In fiscal 2016/2017,
shrined that in our binding Code of Business Ethics
the Corn Segment established technical and
and related anti-discrimination guidelines. We
organizational minimum work safety standards for
believe that diversity of our employees, as dis play ed
all its production sites, and these will be reviewed
in their individual attitudes, knowledge, skills and
regularly by internal audits. A global accounting
ideas, is a key value and a competitive advantage.
system for workplace incidents (as defined by the
It encourages creativity and innovativeness and
U.S. Occupational Safety and Health Adminis-
strengthens our understanding of markets and dif-
tration (OSHA)) was also introduced in 2017. This
ferent cultures by fostering intercultural skills.
new transparency enables us for the first time to
We aim to increase the ratio of women in the top two
targeted measures. KWS has set itself the goal of
management levels at KWS. The targets for that can
establishing a Group-wide work safety concept for
be found in our declaration on corporate governance,
all sites where safety is of relevance in the coming
which is published on our website at www.kws.com/ir .
calendar year 2019.
analyze and assess work safety globally and initiate
50 Combined Management Report | 2.5 Employee and Social Report
Annual Report 2017/2018 | KWS Group Employee representative bodies
Employees’ interests are represented collectively
toward management by the elected Works Councils
and the persons entrusted with representing young
people and trainees. We also have a European Em-
ployees’ Committee (EEC), a body that represents
the interests of European employees and is respon-
sible for cross-border matters within the EU. The
working relationship between the employee rep-
resentative bodies and management is close and
based on trust. In regions where there is no collec-
tive employee representative body, we attach im-
portance to mutual respect and dialogue between
regional management and employees.
As part of its ongoing reorganization activities to
optimize administration, KWS has opened a global
Shared Service Center in Berlin, in particular so
that standard processes that are still performed at
the local level can be pooled centrally to a greater
extent. In this regard, the employee representatives
and Executive Board of KWS SAAT SE negotiated
a framework accommodation of interests and two
company agreements in fiscal 2017/2018, to ensure
that the measures, in particular the relocation of
jobs, are implemented with the greatest possible
social compatibility.
It’s the people at KWS who are the foundation of the future success of their
company. Their personal development, their dedication and their satisfaction
are vital factors in this success.
2.5.4 Social Commitment*
varieties adapted to the demanding cultivation
As an international company, we not only pursue
conditions. The projects specifically aim to con-
our primary corporate purpose, but are also en-
serve domestic plant genetic resources and breed
gaged in the fields of science and education and
high-performance crop varieties that are adapted
promote cultural and social projects. We believe
to local conditions so as to give farmers there
that our society benefits from top-level science.
access to quality seed. The focus is on corn and
We therefore focus our support in this field in
quinoa in Peru and on barley and wheat in Ethiopia.
particular – also to the benefit of up-and-coming
The projects aim to help the local population to
scientists.
help themselves. In cooperation with other part-
ners, KWS is training young scientists and plant
KWS’ international support initiatives include capac -
breeders in Peru and Ethiopia so that farmers
ity development programs in Peru and Ethiopia.
there can work efficiently and independently using
Many local farmers there cannot afford fertilizer,
varieties adapted to local requirements.
pesticides and the machinery they need. A sustain-
able harvest in both countries therefore depends, in
In fiscal 2017/2018, we determined the scope of our
particular, on robust plant varieties that offer high
social commitment worldwide. We spent a total of
resistance and good quality, as well as the know-
€1.1 million – or around 1% of our operating income
how required to cultivate them efficiently. Despite
(EBIT) – on social projects.
intensive research, there are still not sufficient
* Not an audited part of the Combined Management Report.
2.5 Employee and Social Report | Combined Management Report
51
KWS Group | Annual Report 2017/2018 If you get up every
morning before dawn,
you won’t sleep away
the future.
Wanting to go to work – not having to. That is independence. Your energy and drive motivate
us. Day in and day out.
If you get up every
morning before dawn,
you won’t sleep away
the future.
2.6 Corporate Governance
2.6.1 Corporate Governance Report and
to the effect that the company complies almost fully
Declaration on Corporate Governance*
with the code’s recommendations.
Responsible corporate governance has always been
of great importance at KWS SAAT SE. Since it was
You can find detailed information on corporate gover-
founded more than 160 years ago, our company’s
nance, also with the contents in accordance with
successful development has been based on thinking
Clause 3.10 of the German Corporate Governance
in the long term and acting in terms of sustainability.
Code, in our Corporate Governance Report (which
The Executive Board and the Supervisory Board
is also the declaration on corporate governance in
run and accompany KWS with the goal of ensuring
accordance with Section 289a of the German Com-
it creates sustainable value added. They once
mercial Code (HGB)), which is available in full on our
again examined in the year under review whether
website at www.kws.com/corporate-governance.
the company complies with the stipulations of the
You can find the Compensation Report starting on
German Corporate Governance Code. As a result,
page 56 of this Annual Report.
the following declaration of compliance was issued
2.6.2 Compliance Declaration in Accordance with Section 161 AktG (German Stock Corporation Act)*
The Executive Board and the Supervisory Board of
In accordance with Clause 5.4.1 (2) Sentence 2
KWS SAAT SE declare in compliance with Section
of the German Corporate Governance Code, the
161 AktG (German Stock Corporation Act) that the
Supervisory Board is to set a limit on the length of
company has complied with the recommendations
time members can serve on the Supervisory Board.
of the German Corporate Governance Code in the
This recommendation is not complied with, since
version dated February 7, 2017, since the last com-
in a business with a tradition of family ownership
pliance declaration in October 2017, and will comply
like KWS SAAT SE, it would significantly restrict the
with them in the future, with the following exceptions:
rights of the family shareholders, who hold a majority
stake in the company.
In accordance with Clause 4.2.2 (2) Sentence 3 of
the German Corporate Governance Code, the Super-
Clause 7.1.2 Sentence 3 of the German Corporate
visory Board shall consider the relationship between
Governance Code states that the consolidated finan-
the compensation of the Executive Board and that
cial statements shall be publicly accessible within
of senior management and the workforce overall,
90 days of the end of the fiscal year and interim
particularly in terms of its development over time,
reports within 45 days of the end of the reporting
whereby the Supervisory Board shall determine how
period. KWS SAAT SE publishes its consolidated
senior managers and the relevant staff are to be
financial statements and interim reports within the
diffe rentiated. This recommendation is not complied
period of time defined in the regulations for the Prime
with, since the compensation of the Executive Board,
Standard of the German Stock Exchange. The com-
senior management and staff is based on variable
pany’s seasonal course of business means that it
criteria that defy rigid definition. These criteria
cannot ensure compliance with the recommended
include not only generally applicable yardsticks
periods in the German Corporate Governance Code.
such as degree of responsibility, tasks, personal
performance, expertise and the like for the Executive
Einbeck, October 2018
Board, but also the company’s economic situation,
success and future prospects.
The Supervisory Board
The Executive Board
* Not an audited part of the Combined Management Report
54 Combined Management Report | 2.6 Corporate Governance
Annual Report 2017/2018 | KWS Group
Got your eye on everything? Drone technology supports us in evaluating and documenting trials and practical areas.
The high-resolution photos provide new perspectives for consultation and for farmers.
2.6.3 Business Ethics & Compliance
and rules of conduct can be accessed by all employ-
Compliance with basic principles of business ethics
ees worldwide on a Compliance site on KWS’ intranet.
is vital to our license to operate. Binding principles
In addition, all supervisors are obliged to inform their
of business conduct therefore apply to all employees
employees about compliance issues.
of the KWS Group.
Reporting and investigation of potential
Group-wide ethical business principles
compliance cases
Our Code of Business Ethics gives employees
Compliance cases are analyzed in accordance with
cru cial guidance in their day-to-day work and
KWS’ regulations entitled “Procedures of Internal
contains stipulations on compliance with the law,
Compliance Notification.” The open door principle applies
fair competition, safety at work, protection of the
to reporting suspected violations: Employees can sup-
environ ment and the need to treat each other, cus-
ply information on them to their supervisor, directly
tomers, business partners, other third parties and
to the Chief Compliance Officer or to the external
public authorities with respect. All employees must
compliance hotline, where cases can also be reported
undertake to comply with the code.
anonymously. The reported cases are investigated,
as are anonymous tips. Whistle-blowers do not suffer
Preventive training and leadership
any disadvantages, unless they have obviously abused
The central point of contact for all matters relating
their right to report violations. After the investigation
to business ethics is the Compliance department,
has been completed, the whistle-blowers are informed
which advises all divisions of the KWS Group in
of the results, as long as there are no legal reasons or
complying with laws, regulations and internal rules of
legitimate interests against doing so or other disadvan-
conduct and controlling their observance. The focus
tages are to be feared.
is on the subjects of antitrust law, anti-corruption,
data protection and capital market law.
Sanctions and consequences in the event
of violations
The Chief Compliance Officer provides information
If the suspected cases prove to be actual violations,
about the compliance system and its principles, as
the system of sanctions is applied. In general, it can
well as about the latest issues and developments, in
be applied to all types of compliance violations and is
training courses, information events and workshops,
also accessible to employees. The system of sanctions
and with a Compliance Newsletter. Apart from this
defines various criteria governing the measures to be
information, a broad range of aids is also available
taken, such as the gravity of the violations, the degree of
to employees. Checklists, instructional leaflets and
the person’s breach of duty, the functional level, behavior
other guides provide practical tips on observing
after the violation – help in investigating it or attempts to
compliance rules in everyday work. All information
cover it up – as well as the consequences of the violation,
2.6 Corporate Governance | Combined Management Report
55
KWS Group | Annual Report 2017/2018 such as the threat of damage or actually incurred
maintain human rights, equal treatment and anti-
damage, among other things. The sanctions con-
discrimination, safety at work, protection of the
sequently range from cautions, warnings and reduc-
environ ment and avoidance of corruption.
tions in bonuses to immediate dismissal and laying
of a complaint.
We are currently reorganizing our purchasing organi-
zation. As part of that, fundamental corporate social
Prevention of corruption and bribery
responsibility aspects will be incorporated in the
Anti-corruption management is an integral part of our
guidelines and requirements, in selecting suppliers
compliance management work. On the basis of the
and as part of management’s work.
regulations in the Code of Business Ethics, there is a
policy of zero tolerance toward any form of corruption
2.6.4 Compensation Report
at the KWS Group and that principle is stipulated as
The compensation report contains explanations on
a Group-wide standard in the Anti-Corruption Policy.
the salient features, structure and level of the compen-
This standard applies regardless of whether bribery
sation paid to members of the Executive Board and
is prohibited by law, tolerated or permitted in the
the Supervisory Board of KWS SAAT SE. It is based
country in question. The Group-wide Anti-Corruption
on the relevant statutory provisions and oriented
Policy defines the responsibilities, processes and
toward the pertinent recommendations of the German
regulations in relation to preventing corruption and
Corporate Governance Code.
bribery at the KWS Group. The central Compliance
department is responsible for informing employees
Compensation for members of the
and provides relevant material.
Executive Board
Monitoring
The compensation system for the Executive Board
was set by the Supervisory Board in 2010 and
Implementation of individual compliance aspects is
approved by the Annual Shareholders’ Meeting. The
reviewed as part of audits. The Compliance depart-
Executive Board’s compensation is based on the size
ment also conducts regular compliance risk analyses
and activity of the company, its economic and finan-
for all divisions and regions and derives measures for
cial situation, and the level and structure of compen-
improvement from them. In addition, the com panies
sation for managing board members at comparable
are asked to supply key performance indicators
companies.
once a year along with the data for the annual finan-
cial statements. According to them, no incidents of
The total compensation of the Executive Board
corruption that were subsequently confirmed were
comprises the following components:
reported to headquarters in fiscal 2017/2018. No
violations of antitrust, anti-corruption and data protec-
■■ A basic fixed annual salary (if applicable with
tion legislation, and so no related fines, were reported
a CEO bonus)
to headquarters, either.
■■ Fringe benefits
The Executive Board is informed once a year about
performance-related bonus
the current status and latest developments of the
■■ A variable payment in the form of a long-term
Compliance Management System.
incentive (LTI) based on the KWS stock price
■■ A variable payment in the form of a
Suppliers and service providers
KWS also expects its suppliers, service providers,
■■ Any special payments and
■■ Pension arrangements
their employees and subcontractors (jointly termed
The performance-related bonus (including fringe
“suppliers”) to act responsibility and in a spirit of
benefits), the LTI payment and the total compen-
sustainability. The requirements for our suppliers
sation of every member of the Executive Board is
are specified in the Code of Business Ethics for
limited individually to a maximum amount.
Suppliers and include respect for, and obligation to,
56 Combined Management Report | 2.6 Corporate Governance
Annual Report 2017/2018 | KWS Group The basic annual salary in the year under review
company’s sustainable development. Every member
for all Executive Board members was €300 thousand.
of the Executive Board is obligated to invest a freely
The Chief Executive Officer receives an extra
selectable amount ranging between at least 20%
“CEO bonus” of 25% on top of the basic annual
and at most 50% of the gross performance-related
salary. The basic compensation is paid as a
bonus payment in shares of KWS SAAT SE. The
monthly salary.
long-term incentive (LTI) is paid in the form of cash
compensation after a holding period of five years.
Apart from these fixed salaries, there is also
It was paid for the first time at the beginning of
non-monetary compensation in the form of fringe
2017. This payment is calculated on the basis of the
benefits (such as a company car and a mobile
share’s performance over the holding period and
phone), contributions to health and nursing care
on the average return on sales (ROS, based on seg-
insurance, and accident insurance in favor of
ment reporting), measured as the ratio of operating
members of the Executive Board.
income to net sales.
The variable payment for Executive Board
The LTI payment is limited to a maximum of
members (performance-related bonus) is calculated
one-and-a-half times (two times for Dr. Hagen
on the basis of a fixed percentage and depends
Duenbostel) of the capital used to acquire the
on the average net income of the KWS Group for
shares.
the past three years (“sustained net income”). The
object of that is for the compensation to reflect the
Additional special payments were not granted to the
company’s performance, positive or negative. Addi-
members of the Executive Board in the fiscal year.
tional payments for any duties performed in subsid-
iaries and associated companies are offset against
Pension obligations are granted in the form of a
the variable payment (performance-related bonus).
direct obligation to provide benefits, with the annual
This – including the fringe benefits – is limited to an
anticipated pensions ranging between €13 thousand
amount of €500 thousand for each Executive Board
and €130 thousand, and a defined contribution
member per fiscal year. If sustainable consolidated
plan. In fiscal 2017/2018, €306 (306) thousand was
net incomes of more than €100 million in each year
paid to a provident fund backed by a guarantee for
are generated in two successive years, the upper
pension commitments to members of the Executive
limit for the bonus is increased to €600 thousand
Board. A further €111 (–204) thousand was allocated
for each Executive Board member as of the follow-
to the pension provisions in accordance with IAS 19
ing fiscal year.
(of which €22 thousand was interest expenses
and €89 thousand from revaluation effects due to
Since fiscal year 2010/2011, there has also been
adjusted Heubeck mortality tables). There were thus
a stock-based bonus system (the first reference
pension provisions totaling €1,291 (1,180) thousand
point for which was in January 2012). It is intended
for the members of the Executive Board of
to act as a long-term incentive and thus support the
KWS SAAT SE.
Pension commitments
in €
Dr. Hagen Duenbostel
Dr. Peter Hofmann
Total
06/30/2018
06/30/2017
Interest
expenses
Revaluation
effects
938,928.00
852,085.00
16,190.00
70,653.00
352,134.00
327,562.00
6,224.00
18,348.00
1,291,062.00 1,179,647.00
22,414.00
89,001.00
2.6 Corporate Governance | Combined Management Report
57
KWS Group | Annual Report 2017/2018 The total compensation to be reported for the
(47.9%) by annual variable components and 18.5%
Executive Board in accordance with Section 314 (1)
(15.4%) by multiyear variable components. The tables
No. 6a of the German Commercial Code (HGB) in
below provide an overview of the total compensation
conjunction with German Accounting Standard
granted in the fiscal year on an individualized basis
No. 17 (GAS 17) was €4,016 (3,772) thousand in fiscal
(excluding pension costs):
2017/2018; 34.3% (36.7%) was accounted for by the
basic annual salary, including fringe benefits, 47.3%
Total compensation for the Executive Board 2017/2018
in €
Cash compensation
LTI FV 1
Total
LTI
Basic
compensation
Fringe
benefits
Performance-
related bonus
Total
Grant
Cost
Dr. Hagen Duenbostel
375,000.00
21,686.48
478,313.52
875,000.00 214,116.10 1,089,116.10 231,635.44
Dr. Léon Broers
300,000.00
23,724.44
476,275.56
800,000.00 214,116.10 1,014,116.10 217,245.89
Dr. Peter Hofmann
300,000.00
23,792.93
476,207.07
800,000.00 162,741.00
962,741.00
44,122.41
Eva Kienle
Total
300,000.00
31,282.37
468,717.63
800,000.00 149,977.00
949,977.00
60,986.87
1,275,000.00 100,486.22 1,899,513.78 3,275,000.00 740,950.20 4,015,950.20 553,990.61
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
1 Long-term incentive fair value.
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
Compensation of former members of the Executive
Corporate Governance Code (DCGK) in the version
Board and their surviving dependents amounted to
dated February 7, 2017.
€1,575 (1,774) thousand, of which €0 (96) thousand
was payment under a consultancy agreement.
The target compensation, including the agreed
Pension commitments in accordance with IAS 19
lower and upper limits, is shown under “Grant.” The
(2011) recognized for this group of persons amounted
LTI grants are assessed at the present value at the
to €7,315 (7,337) thousand as of June 30, 2018. The
time of acquisition of the last tranche of shares. The
pension commitments for three former members
details on the receipts show the same figures as
of the Executive Board are backed by a guarantee.
under “Grant” for the fixed compensation and fringe
No loans were granted to members of the Executive
benefits. The receipt for fiscal years 2017/2018 and
Board and the Supervisory Board in the year under
2016/2017 (amounts paid) is stated for the one-year
review.
variable payment (performance-related bonus), as is
the amount for the multiyear variable payments (LTI),
In the tables below, we present the individual grants
whose planned term ends in the year under review. In
and receipts separately for each member of the
turn, the benefit expense is presented in accordance
Executive Board, as incurred in the year under review and
with IAS 19 and does not constitute a receipt in the
in the previous year in accordance with the recom-
narrower sense, but serves to illustrate the overall
mendations in Clause 4.2.5 (3) of the German
compensation.
58 Combined Management Report | 2.6 Corporate Governance
Annual Report 2017/2018 | KWS Group Executive Board compensation in keeping with Clause 4.2.5 (3) of the German Corporate Governance Code (DCGK)
in €
Grant
Receipt
2017/2018
2016/2017
2017/2018
2016/2017
Min.
Max.
Dr. Hagen Duenbostel (Chief Executive Officer)
Fixed payment
Fringe benefits
Subtotal
375,000.00
375,000.00
375,000.00
375,000.00
375,000.00
375,000.00
21,686.48
21,686.48
21,686.48
29,316.14
21,686.48
29,316.14
396,686.48
396,686.48
396,686.48
404,316.14
396,686.48
404,316.14
Performance-related bonus
470,827.83
0.00
478,313.52
449,253.30
477,876.64
451,457.68
Total cash compensation
867,514.31
396,686.48
875,000.00
853,569.44
874,563.12
855,773.82
Multiyear variable payment
LTI 2010/2011
LTI 2011/2012
LTI 2015/2016
LTI 2016/2017
Subtotal
Pension costs1
414,433.23
297,479.52
199,823.52
214,116.10
0.00
451,235.69
1,081,630.41
396,686.48 1,326,235.69 1,053,392.96 1,172,042.64 1,270,207.05
106,190.00
106,190.00
106,190.00
103,195.00
106,190.00
103,195.00
Total compensation
1,187,820.41
502,876.48 1,432,425.69 1,156,587.96 1,278,232.64 1,373,402.05
Maximum compensation2
1,765,000.00
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.
Executive Board compensation in keeping with Clause 4.2.5 (3) of the German Corporate Governance Code (DCGK)
2 The total compensation is limited individually to a maximum overall amount per fiscal year.
in €
Dr. Léon Broers
Fixed payment
Fringe benefits
Subtotal
Grant
Receipt
2017/2018
2016/2017
2017/2018
2016/2017
Min.
Max.
300,000.00
300,000.00
300,000.00
300,000.00
300,000.00
300,000.00
23,724.44
23,724.44
23,724.44
23,801.47
23,724.44
23,801.47
323,724.44
323,724.44
323,724.44
323,801.47
323,724.44
323,801.47
Performance-related bonus
470,827.83
0.00
476,275.56
449,253.30
476,275.56
451,457.68
Total cash compensation
794,552.27
323,724.44
800,000.00
773,054.77
800,000.00
775,259.15
Multiyear variable payment
LTI 2010/2011
LTI 2011/2012
LTI 2015/2016
LTI 2016/2017
Subtotal
Pension costs1
221,364.43
229,805.09
199,823.52
214,116.10
0.00
338,426.77
1,008,668.37
323,724.44 1,138,426.77
972,878.29 1,029,805.09
996,623.58
72,000.00
72,000.00
72,000.00
72,000.00
72,000.00
72,000.00
Total compensation
1,080,668.37
395,724.44 1,210,426.77 1,044,878.29 1,101,805.09 1,068,623.58
Maximum compensation2
1,547,000.00
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.
2.6 Corporate Governance | Combined Management Report
59
KWS Group | Annual Report 2017/2018
Executive Board compensation in keeping with Clause 4.2.5 (3) of the German Corporate Governance Code (DCGK)
in €
Dr. Peter Hofmann
Fixed payment
Fringe benefits
Subtotal
Grant
Receipt
2017/2018
2016/2017
2017/2018
2016/2017
Min.
Max.
300,000.00
300,000.00
300,000.00
300,000.00
300,000.00
300,000.00
23,792.93
23,792.93
23,792.93
22,623.40
23,792.93
22,623.40
323,792.93
323,792.93
323,792.93
322,623.40
323,792.93
322,623.40
Performance-related bonus
470,827.83
0.00
476,207.07
449,253.30
476,207.07
451,457.68
Total cash compensation
794,620.76
323,792.93
800,000.00
771,876.70
800,000.00
774,081.08
Multiyear variable payment
LTI 2010/2011
LTI 2011/2012
LTI 2015/2016
LTI 2016/2017
Subtotal
Pension costs1
0.00
0.00
162,741.00
0.00
257,224.52
82,991.22
957,361.76
323,792.93 1,057,224.52
854,867.92
800,000.00
774,081.08
78,224.00
78,224.00
78,224.00
76,792.00
78,224.00
76,792.00
Total compensation
1,035,585.76
402,016.93 1,135,448.52
931,659.92
878,224.00
850,873.08
Maximum compensation2
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.
Executive Board compensation in keeping with Clause 4.2.5 (3) of the German Corporate Governance Code (DCGK)
2 The total compensation is limited individually to a maximum overall amount per fiscal year.
in €
Eva Kienle
Fixed payment
Fringe benefits
Subtotal
Grant
Receipt
2017/2018
2016/2017
2017/2018
2016/2017
Min.
Max.
300,000.00
300,000.00
300,000.00
300,000.00
300,000.00
300,000.00
31,282.37
31,282.37
31,282.37
32,828.59
31,282.37
32,828.59
331,282.37
331,282.37
331,282.37
332,828.59
331,282.37
332,828.59
Performance-related bonus
468,717.63
0.00
468,717.63
449,253.30
468,717.63
451,457.68
Total cash compensation
800,000.00
331,282.37
800,000.00
782,081.89
800,000.00
784,286.27
Multiyear variable payment
LTI 2010/2011
LTI 2011/2012
LTI 2015/2016
LTI 2016/2017
Subtotal
Pension costs1
0.00
0.00
149,977.00
0.00
237,050.05
99,911.76
949,977.00
331,282.37 1,037,050.05
881,993.65
800,000.00
784,286.27
72,000.00
72,000.00
72,000.00
72,000.00
72,000.00
72,000.00
Total compensation
1,021,977.00
403,282.37 1,109,050.05
953,993.65
872,000.00
856,286.27
Maximum compensation2
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.
60 Combined Management Report | 2.6 2.6 Corporate Governance Report
Annual Report 2017/2018 | KWS Group
Total compensation for the Supervisory Board
in €
Dr. Andreas J. Büchting1
Dr. Arend Oetker2
Dr. Marie Theres Schnell3
Hubertus von Baumbach4
Victor W. Balli5
Jürgen Bolduan
Cathrina ClaasMühlhäuser
Christine Coenen6
Dr. Berthold Niehoff7
Fixed
180,000.00
75,000.00
45,000.00
30,000.00
60,000.00
60,000.00
30,000.00
30,000.00
Work on
committees
Total
2017/2018
0.00
180,000.00
10,000.00
30,000.00
30,000.00
20,000.00
10,000.00
0.00
0.00
85,000.00
75,000.00
60,000.00
80,000.00
70,000.00
30,000.00
30,000.00
510,000.00
100,000.00
610,000.00
Total
2016/2017
168,000.00
42,000.00
28,000.00
82,500.00
66,000.00
61,000.00
56,000.00
503,500.00
1 Chairman.
2 Deputy Chairman until 12/15/2016.
3 Deputy Chairman since 12/14/2017.
4 Deputy Chairman since 12/15/2016, Chairman of the Audit Committee until 12/14/2017.
5 Chairman of the Audit Committee since 12/14/2017.
6 Since 12/14/2017.
7 Until 12/14/2017.
Compensation for members of the
Supervisory Board does not receive additional com
Supervisory Board
pensation for his or her work on committees. Mem
Pursuant to the resolution adopted by the Annual
bers of the Supervisory Board who are members of a
Shareholders’ Meeting on December 14, 2017, the
committee receive an additional payment of €10,000
compensation of KWS SAAT SE’s Supervisory Board
therefor. The Chairperson of a committee receives two
was converted to a purely fixed compensation effec
times the said amount. The additional compensation
tive the start of fiscal 2017/2018, in line with recent
for members of the Audit Committee is €20,000. The
trends for the remuneration of supervisory board
Chairperson of the Audit Committee receives three
members at large listed companies in Germany. The
times the said amount. Additional compensation is
compensation system was thus adjusted for the first
owed only for participation in one committee, namely
time since 2009. The compensation is based on the
at the amount that is the highest to which the member
size of the company and the duties and respon si
in question is entitled for his or her work on a commit
bilities of the members of the Supervisory Board. The
tee. If a person is a member of the Supervisory Board
company believes that the fixed compensation struc
or a committee, or holds the office of Chairperson
ture, which is therefore no longer linked to the com
or Deputy Chairperson of the Supervisory Board or
pany’s business performance, means that the Super
Chairperson of a committee for only part of the fiscal
visory Board can better exercise its control function.
year, or if a fiscal year is shorter than the calendar year,
The change also reflected the greater sphere of
the payment is granted only on a pro rata temporis
responsibility of the Supervisory Board and its
basis. Members of the Supervisory Board also receive
bodies, especially that of the Audit Committee. The
reimbursement of their expenses incurred in connec
compensation system for the Supervisory Board still
tion with exercise of their office and the value added
complies with the recommendations of the German
tax due on their payment and on their expenses.
Corporate Governance Code.
The compensation for the Supervisory Board in the
The members of the Supervisory Board receive a fixed
year under review was higher than in the previous
annual payment of €60,000 for their work. The Chair
year due to the conversion to a purely fixed compen
person receives three times and the Deputy Chairper
sation as explained above. Total compensation was
son oneandahalf times the said amount. Members
€610 (504) thousand exclusive of value added tax. In
of the Supervisory Board receive separate payment
the previous year, 47% or €238 thousand of the total
for their work on committees; the Chairperson of the
compensation was performancerelated.
2.6 Corporate Governance | Combined Management Report
61
KWS Group | Annual Report 2017/2018
2.6.5 Explanatory Report of the Executive Board
Trading Act (WpHG). In addition, no voting rights
in Accordance with Section 176 (1) Sentence 1
accrue to the company on the basis of the shares
AktG (German Stock Corporation Act) on the
it holds (Section 71b AktG). The Executive Board is
Disclosures in Accordance with Section 289a (1)
not aware of any contractual restrictions relating to
and Section 315a (1) HGB (German Commercial
voting rights or the transfer of shares. If there are
Code)
no restrictions to voting rights, all shareholders who
register for the Annual Shareholders’ Meeting in time,
Composition of the subscribed capital
and have submitted proof of their authorization to
The subscribed capital of KWS SAAT SE is
participate in the Annual Shareholders’ Meeting and
€19.8 million. It is divided into 6.6 million bearer
exercise their voting rights, are authorized to exercise
shares. Each share grants the holder the right to cast
the voting rights conferred by all the shares they
one vote at the Annual Shareholders’ Meeting.
hold and have registered. If members of the Execu-
tive Board or executive employees have acquired
Restrictions relating to voting rights or the
shares as part of the long-term incentive programs,
transfer of shares
these shares are subject to a lock-up period until
There may be restrictions relating to voting rights or
the end of the fifth year after the end of the quarter
the transfer of shares as a result of statutory or con-
in which they were acquired. The lock-up period for
tractual provisions. For example, shareholders are
shares that employees have acquired as part of the
barred from voting under certain conditions pursuant
Employee Stock Purchase Plans runs until the end
to Section 136 of the German Stock Corporation
of the fourth year as of when they are posted to the
Act (AktG) or Section 44 of the German Securities
employee’s securities account.
Ready – set – go! In determining the right time for planting, assistance comes from KWS’ digital tools
and computers as well as our personal advisers.
Direct and indirect participating interests in
The voting shares, including mutual allocations, of the
excess of 10% of the voting rights
members, companies and foundations of the Büchting
The company has been informed by shareholders of
and Arend Oetker families listed above exceed 10%
the following direct or indirect participating interests
and total 54.6% for:
in the capital of KWS SAAT SE in excess of 10% of
the voting rights in accordance with Section 33 and
■■ Dr. Arend Oetker, Germany
Section 34 of the German Securities Trading Act
(WpHG) or elsewhere.
The voting shares, including mutual allocations, of the
shareholders stated below each exceed 10% and total
The voting shares, including mutual allocations, of
15.4%:
the members and companies of the families Büchting
and Arend Oetker listed below each exceed 10% and
■■ Hans-Joachim Tessner, Germany
total 54.5%:
■■ Tessner Beteiligungs GmbH, Goslar
■■ Tessner Holding KG, Goslar
■■ Dr. Drs. h. c. Andreas J. Büchting, Germany
■■ Christiane Stratmann, Germany
■■ Dorothea Schuppert, Germany
Shares with special rights and voting control
Shares with special rights that grant powers of con-
■■ Michael C.-E. Büchting, Germany
trol have not been issued by the company. There is
■■ Annette Büchting, Germany
■■ Stephan O. Büchting, Germany
■■ Christa Nagel, Germany
■■ Bodo Sohnemann, Germany
■■ Matthias Sohnemann, Germany
■■ Malte Sohnemann, Germany
■■ Arne Sohnemann, Germany
■■ AKB Stiftung, Hanover
no special type of voting control for the participating
interests of employees. Employees who have an
interest in the company’s capital exercise their control
rights in the same way as other shareholders.
Appointment and removal of members of the
Executive Board
Members of the Executive Board of KWS SAAT SE are
■■ Büchting Beteiligungsgesellschaft mbH, Hanover
appointed and removed in accordance with Article 9 (1)
■■ Zukunftsstiftung Jugend, Umwelt und Kultur, Einbeck
and Article 39 (2) of the Council Regulation on the Stat-
■■ RETOKE Holding Vermögensverwaltungs-
ute for a European Company (SE Regulation), Article
gesellschaft mbH & Co. KG, Bad Schwartau3
46 of the Council Regulation on the Statute for a Euro-
■■ Dr. Marie Th. Schnell, Germany
pean Company (SE Regulation) and Sections 84 and
■■ Johanna Sophie Oetker, Germany
85 AktG (German Stock Corporation Act). Section 6 of
■■ Leopold Heinrich Oetker, Germany
KWS SAAT SE’s Articles of Association also contains
■■ Clara Christina Oetker, Germany
■■ Ludwig August Oetker, Germany
provisions that relate to the appointment of members
of the Executive Board by the Supervisory Board and
that correspond to the statutory regulations.
3 Formerly Kommanditgesellschaft Dr. Arend Oetker
Vermögensgesellschaft mbH & Co., Berlin.
2.6 Corporate Governance | Combined Management Report
63
KWS Group | Annual Report 2017/2018 Personal dialogue with vision: KWS lives from farmers’ trust. We have acquired that trust over generations by being close
at hand to help them, always taking their concerns and commercial ambitions seriously and proving time and again to be
a reliable partner.
Amendments to the Articles of Association
Articles of Association that only affect the wording
The company’s Articles of Association can be
(Section 179 (1) Sentence 2 AktG) has been conferred
amended by a resolution adopted by the Annual
on the Supervisory Board in accordance with Section
Shareholders’ Meeting in accordance with Article 59
22 of the Articles of Association of KWS SAAT SE.
of the Council Regulation on the Statute for a Euro-
pean Company (SE Regulation) and Section 179 (1)
Powers of the Executive Board, in particular in
AktG (German Stock Corporation Act). In accordance
relation to issuing or buying back shares
with Article 51 of the SE Implementation Act (SEAG),
The Executive Board is not currently authorized to
Section 179 (2) AktG (German Stock Corporation
issue or buy back shares.
Act) and Section 18 of the Articles of Association of
KWS SAAT SE, amendments to the Articles of Asso-
Significant agreements in the event of a change of
ciation require that at least half the capital stock be
control, compensation agreements
represented and that a resolution be adopted by the
Significant agreements subject to the condition of
Annual Shareholders’ Meeting by a simple majority of
a change in control pursuant to a takeover bid have
the capital stock represented in adoption of the res-
not been concluded. The compensation agreements
olution, unless obligatory statutory regulations spec-
between the company and members of the Executive
ify otherwise. If at least half the capital stock is not
Board and governing the case of a change in control
represented in adoption of the resolution to amend
stipulate that any such compensation will be limited
the Articles of Association, the resolution must be
to the applicable maximum amounts specified by the
passed with a majority of at least two-thirds of the
German Corporate Governance Code.
votes cast. The power to make amendments to the
64 Combined Management Report | 2.6 Corporate Governance
Annual Report 2017/2018 | KWS Group 2.7 Opportunity and Risk Report
As an international seed company, the KWS Group
To succeed in achieving sustainable, profitable
operates in a dynamically changing environment.
growth in the future as well, our prime goal must be
That results in risks as well as opportunities, which
to retain and increase our innovativeness. The latter is
we have to weigh as the foundation for our entrepre-
expressed in seed business by continuous increases
neurial decisions.
in the yields of new varieties. The plants’ yield potential
can be increased or their resistance to detrimental
2.7.1 Opportunities
influences, of whatever type, can be improved.
We understand an opportunity as a development that
might have a positive impact on our earnings, financial
Our goal is to offer our customers an increase in yield
position and assets. At the KWS Group, opportunity
of 1% to 2% per annum with our new varieties. That
management is an integral component of the estab-
is why we constantly expand our research & develop-
lished controlling system between the subsidiaries /
ment activities. In the approval processes, our varieties
associated companies and company management.
are compared directly with rival products in official
Strategic opportunities of major importance, such as
performance tests.
joint ventures and acquisitions, are jointly discussed
by the KWS Group’s Executive Board. Even though
There are also market opportunities as a result of our
the strategic orientation is mainly based on organic
intensified activities in tropical regions. Our corn activ-
growth, selective acquisitions may also round out
ities in Brazil and China will enable us to tap additional
KWS’ portfolio.
sales potential for the KWS Group in the medium
to long term, including in other tropical markets, by
Operational opportunities are identified and exploited
developing varieties tailored precisely to their climatic
in the Business Units of the segments, since they have
conditions.
the most extensive knowledge of their markets and
products. Targeted measures are formulated together
Investing in expansion of our production capacities
with the Executive Board so that strengths can be
and modernization of our seed processing offers
leve raged and strategic growth potentials tapped.
additional opportunities to grow further. Further
Extensive strategic planning covering a ten-year time
develop ment of our variety portfolio and expansion
frame is the basis for opportunity management. In
of capacities are accompanied by expansion of our
keeping with our earnings-oriented growth strategy,
international distribution structures to enable even
we exploit the industry-specific and strategic oppor-
more tailored and intensive information and advice for
tunities that arise by means of pinpointed investments
our customers on the possible uses of our seed, and
in production capacities, research & development
so allow us to leverage further sales potential. In addi-
activities, and expansion of distribution.
tion, continuous optimization of processes offers the
KWS Group the opportunity to increase productivity
We see diverse opportunities for the KWS Group to
and improve cost structures.
develop the company further in line with our strategy.
2.7 Opportunity and Risk Report | Combined Management Report
65
KWS Group | Annual Report 2017/2018
2.7.2 Risks
Development & Communications and Corporate
We define a risk as a potential future event with a
Controlling each assume specific operational tasks
negative impact on our earnings, financial position and
(see the figure). The Corporate Management Circle,
assets. In the past fiscal year, we added the potential
consisting of the first and second management tiers,
negative impacts on the environment and society
forms the Risk Committee of KWS.
resulting from our business activities, products and
supply chain to the definition of risks, so that they
KWS’ risk management system is based on the inter-
can be addressed adequately in our management
nationally recognized COSO II model (Committee of
processes.
Sponsoring Organizations of the Treadway Commis-
sion). The principles of risk management are enshrined
Organizational structure of the risk
in our Group-wide “Rules, Guidelines & Procedures.”
management system
Core contents of it define the scope of application,
The Executive Board is responsible for risk
responsibilities and reporting lines. Opportunity man-
management. The Group functions Corporate
agement is not part of the risk management system.
Finance, Corporate Compliance Office, Corporate
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 auditing
■■ Planning/budget
■■ Current expectations
■■ Integrated Management System
■■ Rules, Guidelines & Procedures (RGPs)
■■ Auditing and case management
■■ Excellence Through Stewardship (ETS)
■■ Sustainability management
■■ Non-financial accounting
■■ Compliance Management System
■■ Compliance Risk Assessment
■■ Compliance training
■■ External audits
■■ Examinations
As part of its audit of the annual financial statements
Brief description of the risk management system
for fiscal year 2017/2018, Ernst & Young GmbH
The objective of the risk management system is to
Wirtschaftsprüfungsgesellschaft confirmed the work-
record and assess all the main risks and counter
ing order of our system for early detection of risks in
them with suitable measures. With proactive mea-
accordance with Section 91 (2) of the German Stock
sures, we reduce or avoid negative impacts on our
Corporation Act (AktG).
corporate objectives so that we can survive and
thrive on the world market.
66 Combined Management Report | 2.7 Opportunity and Risk Report
Annual Report 2017/2018 | KWS Group
Artistic change of perspective: Our trial fields near Seligenstadt – chosen for their orderliness and well-arranged layout.
The persons responsible for the Group companies
companies and specific functions record individual
and specific functions within the Group are inte-
risks in their sphere of responsibility on an electronic
grated in KWS’ risk management system. Risk
platform. In doing so, they quantify the likelihood of
Management coordinates the process and supports
the risk occurring and its potential financial impact
the departments. Risks are assessed by Risk
measured by its effect on EBIT.
Manage ment and the Risk Committee.
The individual risks are classified as below as part of
Risk management process
assessment. Following a suggestion by KWS’ Audit
The risk management process at KWS consists of
Committee, the respective EBIT thresholds were
the phases of identification, assessment, control and
raised in the year under review to reflect the change
monitoring of risks and risk reporting. As part of risk
in the KWS Group’s earnings, so as to obtain more
identification, the persons responsible for the Group
reasonable materiality thresholds.
Scheme for assessing individual risks
Likelihood of occurrence
Low
< 20%
Moderate
20% – 60%
High
≥ 60%
Moderate
Moderate
Moderate
Moderate
Moderate
Substantial
Substantial
Substantial
Critical
Critical
Critical
Critical
Very low
< €3 million
1
k
s
i
r
T
B
E
I
Low
€3 million–€7 million
Moderate
€7 million–€13 million
High
≥ €13 million
1 Before measures.
2.7 Opportunity and Risk Report | Combined Management Report
67
KWS Group | Annual Report 2017/2018
Appropriate countermeasures are formulated and
Overview of the risks
analyzed for all recorded risks where possible. They
The table below presents the risks, aggregated into
may be measures to reduce risks, constant monitoring
risk categories.
of them or taking out insurance. The measures
are weighed on the basis of economic aspects
Aggregated risk categories
and initiated. The individual risks are analyzed in
aggregated form using the risk categories presented
Risk category
Likelihood of
occurrence
Extent of
damage
in the following and assessed, taking the initiated
Market risks
measures into account.
Risks are controlled systematically by continuous
checks, which review whether they are still appli cable
and whether the measures and control activities
are effective. 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
Product risks
Procurement
risks
Product risks
Environmental
and social risks
Liquidity risks
High
High
Low
Low
Low
Low
Legal risks
Moderate
Personnel risks Moderate
High
Moderate
Low
High
High
Low
High
Low
Committee of the Supervisory Board every year.
IT risks
Low
Moderate
Corporate Finance reports regularly to the Risk
Committee on the current risk situation at the KWS
In addition, the following deals with the risk cate-
Group and business segments. On that basis, the
gories that we see as having a greater influence on
Risk Committee discusses how to deal with the
our future business performance.
risks and provides stimuli on how to control them.
Market risks
Risk management and the internal control
KWS faces political risks in many countries in the
system in the accounting process
strongly regulated international agricultural indus-
The risk management and internal control system
try. 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
accounting consistently, promptly and correctly. The
sales totaling €79.5 (68.3) million in these two coun-
following are examined regularly: the completeness
tries in fiscal 2017/2018. Other important growth
of financial reporting, the Group’s uniform account-
countries for KWS face economic and political
ing, measurement and account allocation stipula-
difficulties, too. The impact of the United Kingdom’s
tions, and the authorization and access regulations
decision to leave the EU (Brexit) does not appear to
for IT systems used in accounting. Intra- Group
be significant for our business as far as can be seen
transactions are consolidated appropriately and
at present.
in full.
Our business success depends, among other
The Group functions Corporate Finance, Group
things, on the type of market access, our own
Accounting and Corporate Controlling are respon-
variety performance and the competitive environ-
sible for consolidated accounting at KWS. A con-
ment. However, the global economy has an indirect
sistent system tool that is subject to the Group’s
influence on our net sales and income. We address
regulations on accounting makes it easier to ensure
these challenges with systematic analyses of the
that the consolidated financial statements comply
market and the competition and by developing
with the rules.
high-yielding varieties optimized for different
climatic zones.
68 Combined Management Report | 2.7 Opportunity and Risk Report
Annual Report 2017/2018 | KWS Group
Currency risks arise in particular from receivables
also reduce claims for damages under product
and liabilities denominated in foreign currency.
liability law. We also have product liability insurance
There are interest rate risks as a result of potential
to defend against unjustified claims and to settle
changes to market interest rates. The interest pay-
justified claims.
able on financial obligations with a variable rate of
interest may increase. We address currency risks
Product risks
and the risk of interest rate changes to a reasonable
Our quality controls of conventional seed include
extent through the usual hedging instruments, to
an examination to determine that it is free of GMOs.
reduce the influence on the KWS Group’s earnings
Very strict requirements must be met regarding
and assets situation. In fiscal 2017/2018, we hedged
management of genetically modified products, in
our research & development expenditure and intra-
particular, to prevent GMOs becoming mixed with
group loans almost completely in order to avoid
conventional seed. In the absence of a standard-
exchange rate risks.
ized legal threshold value, a number of European
countries practice a policy of zero tolerance. KWS
There have been no significant changes for KWS as
is a member of the “Excellence Through Steward-
part of the now completed process of consolidation
ship” (ETS) initiative, an internationally standardized
in the agricultural industry. We still do not expect
quality management program. It defines how genet-
any negative impact on our business in the short
ically modified plant material is used throughout the
term. There are opportunities and risks from market
product lifecycle. By being a member, we signal our
consolidation in the medium to long term.
clear commitment to the responsible use of trans-
genic plant material.
Production risks
Seed production is dependent on the weather. We
The acquisition or licensing of technologies is cus-
reduce the risk of crop failures by multiplying seed
tomary and necessary in the industry. We reduce
– depending on the crop – in separate locations
the related risks by developing our own innovations,
and regions in Europe, North and South America
which may also be attractive to competitors.
and Asia. We can carry out contra-seasonal multi-
plication in the winter half-year in the southern
Legal risks
hemisphere if there are bottlenecks in the volume of
KWS faces risks from official proceedings and
seed produced.
legal disputes. Legal disputes are possible with
suppliers, licensors, customers, employees,
We counter the outage of seed processing plants by
lenders and investors and may result in payments
means of preventive maintenance, risk inspections
or other obligations. There were no significant legal
and organizational and technical damage prevention
proceedings in fiscal 2017/2018.
programs. To cover economic loss, we have Group-
wide property and business interruption insurance.
Under our compliance policy and the Code of
Business Ethics, we obligate our employees to
We have established detailed checks and tests to
undertake to act in accordance with laws, contracts,
determine the performance and quality of our seed.
internal guidelines and our corporate values, and raise
Quality controls, such as germination and sprout-
their awareness in this regard. In addition, we regularly
ing strength tests, are conducted at all stages of
hold international compliance training courses.
production. The high quality of our seed should
2.7 Opportunity and Risk Report | Combined Management Report
69
KWS Group | Annual Report 2017/2018 Trust is good – and control is vital. To develop the best varieties, in Research & Development we continuously
check the current status of our plants.
Personnel risks
hacking and malware. There is also an extensive
Our HR strategy aims to recruit and keep qualified
authorization concept. IT service providers con-
employees at KWS. KWS also faces the challenging
stantly examine our IT security and system authori-
task of competing for staff with companies from
zations so that we can obtain recommendations
outside the industry, too. That may result in the risk
for optimization measures through an external risk
of losing employees or not being able to fill vacan-
assessment.
cies promptly. We counter this risk by continuously
further developing our HR strategy. Among other
Overall statement on the risk situation by the
things, we are committed to fostering talents, grow-
Executive Board
ing our brand as an attractive employer and ex-
Our risk situation essentially remained essentially
panding the KWS Group to new locations in urban
the same in fiscal 2017/2018. The most important
centers.
IT risks
risks are still related to the market and products.
Our business in emerging countries and in foreign
currency continues to grow and harbors additional,
The KWS Group’s business and production pro-
yet calculable currency and political risks. The iden-
cesses, as well as its internal and external commu-
tified risks do not jeopardize the existence of the
nications, are run on globally networked IT systems.
KWS Group, neither individually nor in their entirety.
Any outages or attacks can sometimes result in
significant interruptions to business operations. In
We feel sure that, thanks to our global footprint,
addition, theft of sensitive data can entail a loss of
innovative strength and the quality of our products,
reputation for us.
we can seize opportunities and successfully counter
risks as they arise. However, we cannot rule out
On the basis of our IT security policies, our IT secu-
the possibility that other factors that are currently
rity organization monitors access to company data.
unknown or which are not assessed as significant
Firewall, antivirus and other programs are kept up
may jeopardize the continued existence of the KWS
to date to avoid losses and damage as a result of
Group in the future.
70 Combined Management Report | 2.7 Opportunity and Risk Report
Annual Report 2017/2018 | KWS Group 2.8 Forecast Report
The expectations of management outlined here are
in the previous year – the strongest exchange rate
based on our corporate planning and the information
effects to come from the regions North and South
it takes into account, including market expectations,
America, Eastern Europe and Turkey, but also in
strategic decisions, regulatory measures or exchange
China.
rate trends. They are subject to the same premises
as the consolidated financial statements and forecast
We expect a slight increase in the KWS Group’s
our business performance up to the end of fiscal
net sales on the back of an improvement in corn
2018/2019 on June 30, 2019. In our forecast for the
seed business, among other things in Brazil. As far
KWS Group’s statement of comprehensive income in
as can be seen at present, the EBIT margin will be
accordance with IFRS, we deal with the KWS Group’s
between 10.0% and 12.0%, despite a significant
anticipated net sales, EBIT and R&D intensity. Our
increase in our research & development and dis-
forecast for the segments contains comments on our
tribution activities and a decline in sugarbeet seed
net sales and EBIT expectations, including the con-
business. Expansion of our research & development
tributions made by our equity-accounted companies,
activities will result in an increase in the R&D inten-
which are included proportionately in the segment
sity to around 19%. Our capital spending in fiscal
reports in line with our internal corporate controlling
2018/2019 will focus on expanding our processing,
structure.
production and research capacities and, as far as
can be seen at present, will exceed €100 million.
2.8.1 Changes in the KWS Group’s Composition
Due to the strongly seasonal nature of our business
that are Significant for the Forecast
as a result of the great importance of the spring
There have not been any significant changes in the
sowing season and external factors that are difficult
KWS Group’s composition that are of significance
to anticipate, such as the weather and fluctuations
for the forecast for its business performance in fiscal
in cultivation areas, more detailed statements on
2018/2019.
our net sales and earnings performance cannot yet
be made with sufficient reliability.
2.8.2 Forecast for the KWS Group’s Statement of
Comprehensive Income
2.8.3 Forecast for the Segments
There have been no fundamental changes to the
We anticipate that net sales in the Corn Segment
economic environment and agricultural policy that
will increase again sharply in fiscal 2018/2019
impact the assumptions on which we base our fore-
following the decline in the year under review. In
cast. We anticipate a slight reduction in the sugar-
most regions, but particularly in South America
beet cultivation area in the EU and North America
and also Europe, we will likely post higher sales
and an increase in Eastern Europe. We expect
volumes for seed, despite the fact that, by and large,
a largely stable cultivation area for our corn and
there will still be no change in the heavy pressure
cereals seed business. Due to the continued high
on prices. In North America, we expect a decline
level of supply for cereals, corn and sugar worldwide,
in cultivation areas and an environment where
there will also likely be fierce competition and heavy
competition remains fierce, but also anticipate that
pressure on prices for seed in most markets. In view
net sales will rise slightly – as in the other regions. In
of the current geopolitical situation, we expect – as
the latter, we expect to perform positively in China in
2.8 Forecast Report | Combined Management Report
71
KWS Group | Annual Report 2017/2018
particular. The concrete sales of corn seed there will
The success of our cereals seed business depends
depend, among other things, on the development of
greatly on the fall sowing season in the northern
soybean imports from the U.S. Corn, like soybean,
hemisphere, which commences in September of
is an important source of fodder in China. As far as
each year. Its concrete performance will depend on
can be seen at present, the EBIT margin will be well
conditions in the sowing season, which were not
above the previous year’s figure (6.5%), even though
ideal in terms of the weather at the time this report
there will be a planned increase of around €14 mil-
was created. We currently anticipate a slight increase
lion in our research & development and distribution
in net sales in the Cereals Segment as a result of
expenditures.
growth in rye sales in Germany. We assume that
net sales for rapeseed, wheat and barley seed will
In the Sugarbeet Segment, our consistently high-
remain stable or fall slightly. The segment’s earnings
yielding portfolio of varieties will probably mean
will benefit from an increase in sales of rye seed.
another successful year for us. As far as can be seen
However, we are planning to spend around €7 million
at present, however, the surplus supply of sugar on
more on our research & development and distribution
the world market will result in declines in cultivation
activities. Consequently, the segment’s EBIT margin
area in the EU and North America, and so lower
will probably fall slightly compared to the figure for
sales volumes for seed overall. These significant
the year under review (12.2%).
factors mean that we will probably not be able to
match our good net sales and earnings figures from
Revenue from our farms in Germany is grouped in
the previous year. We therefore expect the segment’s
the Corporate Segment. It should again be around
net sales to be slightly down from the previous year
€4 million. Since all cross-segment costs for the
(€455.1 million). As far as can be seen at present, the
KWS Group’s central functions and basic research
EBIT margin will also be lower than in the year under
expenditure are charged to the Corporate Segment,
review (35.3%), among other things due to higher re-
its income is usually negative. In our corporate plan-
search & development and distribution expenditures.
ning for fiscal 2018/2019, its costs will rise due to
the planned expansion of our business activity and
the current reorganization of our administration (see
page 19 and 20). Income will likely be between €–80
and €–90 million.
Forecast for the 2018/2019 fiscal year
Statement of comprehensive income
of the KWS Group
Slight increase in
net sales
10–12%
Around 19%
Net sales growth
EBIT margin
R&D intensity
72 Combined Management Report | 2.8 Forecast Report
Annual Report 2017/2018 | KWS Group
2.9 Report on KWS SAAT SE and Non-Financial Declaration
(Declaration based on the German Commercial Code (HGB))
2.9.1 KWS SAAT SE
corporate governance in accordance with Section 289f
of the German Commercial Code (HGB), which also
References to KWS SAAT SE in the KWS Group’s
contains the compliance declaration in accordance
Annual Report
with Section 161 AktG (German Stock Corporation Act),
The Management Reports of KWS SAAT SE and
has been published on the Internet at www.kws.com/ir.
the KWS Group are combined. The declaration on
The following disclosures are identical to those of the
KWS Group and are printed in this Annual Report:
References to KWS SAAT SE in the KWS Group’s Annual Report
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)
56 to 64
18 to 42
130 (Notes)
23 to 28
KWS SAAT SE is the parent company of the KWS
allowances for receivables. Overall, KWS SAAT SE’s
Group. It is responsible for strategic management
operating income was thus €–12.1 (23.4) million and
and, among other things, multiplies and distributes
so, as we had forecast, fell sharply. Net financial in-
sugarbeet and corn seed. It finances basic research &
come/expenses is made up of the net income from
breeding of the main range of varieties at the KWS
equity investments from eleven (eleven) companies
Group and provides its subsidiaries with new vari-
and the interest result. Net income from equity invest-
eties every year for the purpose of multiplication and
ments rose by €9.3 million to €39.2 (29.9) million. The
distribution.
Earnings
profits paid over under Profit and Loss Transfer Agree-
ments were €14.0 (17.8) million in the fiscal year. The
interest result was €4.2 (4.2) million, on a par with the
KWS SAAT SE’s net sales increased in fiscal
previous year. Taking into account tax expenditures,
2017/2018 by 4.6% to €532.0 (508.4) million. That was
net income for the year was €22.1 (34.6) million.
in line with the expectations of a slight rise in net sales
we forecast. This rise is mainly attributable to the in-
Financial position and assets
crease in revenue from sugarbeet seed. Research &
KWS SAAT SE’s total assets increased in fiscal
development expenditure, which is pooled at
2017/2018 by €25.8 million to €935.5 (909.7) million.
KWS SAAT SE, was increased to €173.8 (165.0) mil-
Fixed assets at the balance sheet date were
lion. Selling expenses rose slightly to €65.0 (60.6) mil-
€525.8 (498.7) million or 56.2% of total assets.
lion. Most of the administrative expenses at the KWS
The increase is due in particular to property, plant,
Group are incurred at KWS SAAT SE – general and
and equipment and financial assets. Among other
administrative expenses in the year under review to-
things, a new warehouse was built at Einbeck and
taled €69.6 (50.1) million. One reason for the increase
construction of a machine hall for a production
is higher consulting and personnel costs as part of
plant was c ommenced in the year under review.
the process of optimizing the organizational structure.
Current assets fell to €68.5 (71.9) million due to the
The balance of other operating income and other
reduction in inventories. Receivables and other assets
operating expenses was €–2.3 (11.0) million, primarily
were €213.4 million and so were at the level of the
due to lower currency translation gains and higher
previous year (€211.4 million). KWS SAAT SE’s equity
2.9 Report on KWS SAAT SE and NFD | Combined Management Report
73
KWS Group | Annual Report 2017/2018 increased by €1.0 million to €282.3 (281.3) million,
Forecast report
giving an equity ratio of 30.1% (30.9%). Liabilities to
KWS SAAT SE generates the main part of its net sales
affiliated companies rose to €319.7 (266.8) million,
from sugarbeet and corn seed business and royalties
mainly due to financing activities. KWS SAAT SE’s
from basic corn seed. The further development of
total liabilities at the balance sheet date were €508.6
sugarbeet seed business depends, among other
(495.3) million.
Employees
things, on the performance of our varieties, cultivation
areas in our key markets and developments in
our growth markets in Eastern Europe. We currently
An average of 1,484 (1,434) people were employed at
expect a slight decline in net sales as a result of
KWS SAAT SE in the year under review, of whom 109
the anticipated reductions in cultivation areas, in
(114) were trainees and interns.
particular in the EU. KWS SAAT SE’s net sales from
corn in Europe are expected to be at the level of
Risks and opportunities
fiscal 2017/2018 due to the still challenging environ-
The opportunities and risks at KWS SAAT SE are es-
ment. All in all, we expect that KWS SAAT SE
sentially the same as at the KWS Group. It shares the
will post a slight year- on-year drop in net sales.
risks of its subsidiaries and associated companies
KWS SAAT SE’s operating income is mainly impact-
in accordance with its respective stake in them. You
ed by the costs of central functions of the KWS
can find a detailed description of the opportunities
Group and cross- segment research & development
and risks and an explanation of the internal control
activities. The planned increase in spending on
and risk management system (Section 289 (4) of the
research & development and on distribution activi-
German Commercial Code (HGB)) on pages 65 to 70.
ties, as well as a slight decline in income from
sugarbeet, will probably reduce KWS SAAT SE’s
EBIT significantly once more.
We make use of contra-seasonal possibilities in the tropical climates of the southern hemisphere to
expand production options for corn.
2.9.2 Combined Non-Financial Declaration for
of the statutory regulations. They include product
the KWS Group
innovations, yield optimization, product quality, prod-
In accordance with Sections 289b et seq. and
uct safety, genetic engineering, education and fur-
Sections 315b et seq. of the German Commercial
ther training, plant and process safety, compliance
Code (HGB), KWS is obliged to prepare a Non-
and anti-corruption. They were then consolidated
Financial Declaration for the parent company
into four issues: product innovations, plant and pro-
KWS SAAT SE and the Group disclosing details of
cess safety, recruitment and qualification, and busi-
the business model and related material corporate
ness ethics and compliance.
social responsibility (CSR) aspects ( environmental
issues, social issues, employee issues, human
The table below gives an overview of the CSR report
rights, and prevention of corruption and bribery),
aspects stipulated by law in accordance with Sec-
where these are necessary for an understanding
tion 289c of the German Commercial Code (HGB)
of the course of business, business results, the
and other associated issues that require reporting,
situation of KWS SAAT SE and the KWS Group, and
as well as references to the sections in which the
the effects on said aspects. The disclosures in the
required disclosures on concepts, results, risks and
Combined Non-Financial Declaration relate to both
key performance indicators are made. We did not
KWS SAAT SE and the KWS Group, unless other-
identify any issue that required reporting for the as-
wise specified.
pect of social issues. We also did not identify any
risks that exceeded the statutory materiality thresh-
In order to identify issues that need to be reported
old defined in Section 289c (3) of the German Com-
in the Non-Financial Declaration, the relevant issues
mercial Code (HGB). In addition, the KWS Group has
from an existing GRI materiality analysis were sys-
not defined any non-financial performance indicators
tematically reassessed to determine their impact on
relating to controlling at present.
the environment and society and on the position of
the KWS Group. On the basis of this analysis, ten
We were guided by the GRI standards in preparing
issues were identified as material within the meaning
the Non-Financial Declaration.
Index for the Non-Financial Declaration
Required HGB disclosures
Material issues for KWS
Reference to sections
Business model
–
2.1 Fundamentals of the KWS Group
Environmental issues
Product innovations
2.4.1 Product Innovations
Plant and process safety
2.4.2 Plant and Process Safety
Employee issues
Recruitment and qualification
2.5.2 Recruitment and Qualification
Corruption and bribery
Business ethics and compliance
2.6.3 Business Ethics and Compliance
Human rights
Social issues
Business ethics and compliance
2.6.3 Business Ethics and Compliance
After an internal analysis for fiscal 2017/2018, this issue was regarded as not
being material, so no disclosures have to be made on it.
2.9 Report on KWS SAAT SE and NFD | Combined Management Report
75
KWS Group | Annual Report 2017/2018 You don’t become a
seed specialist over-
night, but through hard
work in the field.
We think about tomorrow today. And pass on knowledge and values – as we have done and
will do for generations. We think independently and practice sustainability.
3. Annual Financial Statements
for the KWS Group 2017/2018
80 Statement of Comprehensive Income
81 Balance Sheet
82 Statement of Changes in Equity
84 Cash Flow Statement
85 Notes for the KWS Group 2017/2018
88
95
98
102
123
129
130
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
134
Independent Auditor’s Report
140
Independent Auditor’s Limited Assurance Report
142 Declaration by Legal Representatives
143 Additional Information
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
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 €)
Note no.
2017/2018
2016/2017
5.1
1,068,012
1,075,244
5.2
5.3
5.4
5.5
5.8
4.12
446,063
621,949
201,537
197,696
95,793
65,668
60,035
493,922
581,322
200,676
190,327
79,833
69,706
48,601
132,556
131,591
4,046
12,026
13,414
0
5,434
137,990
38,333
99,657
3,101
11,410
24,935
–27
16,599
148,190
50,478
97,712
261
–262
–28,913
–2,650
–31,302
–2,442
–33,744
65,913
99,521
136
99,657
65,776
137
65,913
–13,194
–3,817
–17,273
8,459
–8,814
88,898
97,549
163
97,712
88,735
163
88,898
15.08
14.78
80 Annual Financial Statements | Statement of Comprehensive Income
Annual Report 2017/2018 | 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.
06/30/2018
06/30/2017
4.2
4.3
4.4
4.6
4.7
5.5
4.8
4.8
4.9
4.10
4.11
4.9
4.9
4.9
85,465
401,687
150,424
3,605
822
1
49,247
691,251
180,980
14,339
310,141
18,282
174,300
56,772
52,922
18,694
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
826,430
815,032
1,517,681
1,495,225
Note no.
06/30/2018
06/30/2017
19,800
5,530
853,640
2,813
881,783
127,833
168,698
968
19,342
288
17,194
334,323
42,311
61,287
75,721
39,171
11,288
71,797
301,575
635,898
19,800
5,530
809,132
2,534
836,996
125,408
200,828
1,217
12,721
1,306
17,405
358,885
72,774
39,065
75,400
25,620
16,318
70,167
299,344
658,229
4.13
4.12
5.5
4.14
4.15
Total equity and liabilities
1,517,681
1,495,225
Balance Sheet | Annual Financial Statements
81
KWS Group | Annual Report 2017/2018 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
19,800
5,530
794,000
–19,800
97,549
–14,162
9,461
242
1,456
765,527
3,383
–94
0
–857
2,432
0
0
97,549
–13,194
–3,817
–13,194
–3,817
–262
–262
0
0
19,800
5,530
871,749
–27,356
5,644
–20
–42,341
1,456
834,462
–94
–857
Revaluation
of defined
benefit
plans
–50,800
Other
trans-
actions
Adjustments
Revaluation
from
of defined
currency
translation
benefit
plans
Other
trans-
actions
88,735
163
0
–61
3,485
–19,800
97,549
–8,814
–21,120
99,521
–33,745
65,776
0
–148
0
0
0
0
0
0
163
0
136
136
142
0
8,459
8,459
–2,442
–2,442
0
–61
2,534
163
0
0
163
136
0
1
137
142
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
0
–44,783
1,456
878,970
3,763
–93
–857
2,813
767,959
–19,800
97,712
–8,814
88,898
–61
836,996
–21,120
99,657
–33,744
65,913
142
–148
881,783
–21,120
99,521
–28,914
–2,650
99,521
–28,914
–2,650
0
0
0
0
19,800
5,530
950,002
–56,270
0
–148
0
0
261
261
0
241
0
2,994
07/01/2016
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
Dividends paid
Net income for the year
Other comprehensive income
after tax
Total consolidated gains
(losses)
Change in shares of
minority interests
Other changes
06/30/2018
82 Annual Financial Statements | Statement of Changes in Equity
Annual Report 2017/2018 | 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
19,800
5,530
–50,800
1,456
765,527
3,383
–94
0
–857
2,432
Revaluation
of defined
benefit
plans
Other
trans-
actions
Adjustments
from
currency
translation
Revaluation
of defined
benefit
plans
Other
trans-
actions
Adjustments
from currency
translation
of equity-
accounted
financial
assets
9,461
Reserve for
available-
for-sale
financial
assets
242
Adjustments
from currency
translation
–14,162
0
0
97,549
–13,194
–3,817
–13,194
–3,817
0
163
–19,800
97,549
–8,814
88,735
163
8,459
8,459
0
0
19,800
5,530
871,749
–27,356
5,644
–20
–42,341
1,456
834,462
0
0
0
–21,120
99,521
–33,745
65,776
0
–148
0
0
0
–2,442
–2,442
0
–61
3,485
0
136
136
142
0
0
0
0
–94
1
1
0
0
19,800
5,530
950,002
–56,270
–44,783
1,456
878,970
3,763
–93
0
163
0
163
0
0
–857
–61
2,534
0
136
1
137
142
0
0
0
0
–857
2,813
0
0
0
0
0
07/01/2016
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
Dividends paid
Net income for the year
Other comprehensive income
after tax
(losses)
Total consolidated gains
Change in shares of
minority interests
Other changes
06/30/2018
794,000
–19,800
97,549
–21,120
99,521
0
0
0
0
–28,914
–2,650
99,521
–28,914
–2,650
0
–148
0
0
0
2,994
–262
–262
261
261
0
241
767,959
–19,800
97,712
–8,814
88,898
–61
836,996
–21,120
99,657
–33,744
65,913
142
–148
881,783
Statement of Changes in Equity | Annual Financial Statements
83
KWS Group | Annual Report 2017/2018 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.
2017/2018
2016/2017
99,657
97,712
49,864
2,421
–4,740
147,202
–44,290
34
34,250
–16,451
49,353
–10,906
–30,751
105,408
–4,594
–1,692
54,077
–52,610
–55,500
–26,590
20,708
12,110
98,062
1,592
–55,133
1
–12,535
227
–744
–1,479
–68,071
–21,120
4,431
–30,816
22,221
–25,284
4,707
–3,494
191,368
192,582
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
6.1
6.2
6.3
6.4
84 Annual Financial Statements | Cash Flow Statement
Annual Report 2017/2018 | KWS Group Notes for the KWS Group 2017/2018
The consolidated financial statements of KWS SAAT SE
Unless otherwise stated, all the figures in the Notes are in
and its subsidiaries were prepared under the assumption
thousands of euros (€ thousand) and have been rounded in
that the operations of the companies will be continued
accordance with standard commercial practice.
and applying Section 315e of the German Commercial
Code (HGB). They comply with the International Financial
In addition, the following standards had to be applied for
Reporting Standards (IFRS) as applicable in the European
the first time in fiscal year 2017/2018: Amendments to IAS
Union (EU).
12 – Recognition of Deferred Tax Assets for Unrealized
Losses; amendments to IAS 7 – Statement of Cash Flows:
KWS SAAT SE, the ultimate parent company of the KWS
Disclosure Initiative. The new revisions to the standards to
Group, is an international company based in Germany,
be applied did not result in any significant impact.
has its headquarters at Grimsehlstrasse 31, 37574 Einbeck,
Germany, and is registered at Göttingen Local Court
The following standards and interpretations, or revisions of
under the number HRB 204567. Since it was founded in
standards or interpretations, were not applied in the year
1856, KWS has specialized in developing, producing and
under review, as they have not yet been adopted by the
distributing high-quality seed for agriculture. KWS covers
EU or application of them for fiscal 2017/2018 was not yet
the complete value chain of a modern seed producer –
mandatory:
from the breeding of new varieties, multiplication and
processing, to the marketing of the seed and consulting
for farmers. KWS’ core competence is in breeding new,
high-performance varieties that are adapted to regional
needs, such as climatic and soil conditions.
To be applied in the future
Financial reporting standards and interpretations
Mandatory first-time application
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
IFRIC 23 – Uncertainty over Income Tax Treatments
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
Fiscal year 2019/2020
Amendments to IFRS 9 – Prepayment Features with Negative Compensation
Fiscal year 2019/2020
Amendments to IAS 19 – Plan Amendment, Curtailment or Settlement
Fiscal year 2019/2020
Amendments to IAS 28 – Long-term Interests in Associates and Joint Ventures
Fiscal year 2019/2020
Annual Improvements to the International Financial Reporting Standards
(2015–2017 cycle)
Fiscal year 2019/2020
Conceptual Framework for Financial Reporting and Amendments to References
to the Conceptual Framework in IFRS Standards
Fiscal year 2020/2021
IFRS 17 – Insurance Contracts
Fiscal year 2021/2022
Notes for the KWS Group 2017/2018 | Annual Financial Statements
85
KWS Group | Annual Report 2017/2018 IFRSs that have been published and adopted by the EU,
IFRS 9 (Financial Instruments) replaces the current standard
but not yet applied
for reporting financial instruments, IAS 39 (Financial Instru-
The IASB published IFRS 15 (Revenue from Contracts with
ments: Recognition and Measurement). It was adopted into
Customers) in May 2014. The standard and the clarifications
European law in November 2016. The standard includes new
published in April 2016 have been adopted into European law
requirements for classification, measurement, impairment
by the EU. The objective of IFRS 15 is to introduce consis-
and hedge accounting. IFRS 9 must be applied by KWS for
tent, industry-independent regulations on revenue recogni-
the first time for fiscal year 2018/2019. Implementation of the
tion that can generally be applied to all types of contracts
new standard is being controlled as part of a Group-wide
with customers. IFRS 15 replaces IAS 11 (Construction
project.
Contracts), IAS 18 (Revenue), IFRIC 13 (Customer Loyalty
Programs), IFRIC 15 (Agreements for the Construction of
The gross effect of applying it for the first time effective
Real Estate), IFRIC 18 (Transfers of Assets from Cus-
July 1, 2018, is €11,420 thousand. After recognition of
tomers) and SIC-31 (Revenue-Barter Transactions Involving
deferred tax assets totaling €3,248 thousand, the net effect
Advertising Services). There are also expanded disclosure
is €8,152 thousand. Since the country rating in accordance
requirements.
with IAS 39.A89 applies for the last time on June 30, 2018,
the net effect from changing to the new standard is
The new standard provides a five-step model for recogniz-
€4,754 thousand, which is recognized directly in equity
ing revenues from customers. Under it, revenues are to be
under the revenue reserves. The effect from the change
recognized to the amount to which a consideration from the
is due to measurement of receivables on the basis of the
customer for the assumed performance obligation (delivery
expected loss impairment model, measurement of cash
of goods or provision of services) is expected, as soon as
and cash equivalents at banks, and the fact that the country
the company has transferred control over goods or services
rating no longer applies. The figures for the previous year
to a customer either over time or at a point in time.
have not been adjusted.
The KWS Group will introduce IFRS 15 on the basis of the
Apart from new obligations to disclose qualitative and
modified retrospective method, meaning any effects from
quantitative information, IFRS 9 entails changes in the
the change will be recognized cumulatively in the revenue
following three sub-areas:
reserves at July 1, 2018. All common types of contract were
analyzed for all Business Units as part of the Group-wide
Classification and measurement
implementation project. The previous assessment that no
Adoption of IFRS 9 means that measurement of financial
significant impact on the time of revenue recognition for
assets at “amortized cost” or “fair value” will depend in the
these types of contract were anticipated was confirmed.
future on the underlying business model and the contrac-
KWS will exercise the option of not adjusting the amount
tual terms giving rise to cash flows. Under KWS’ business
of the promised consideration by the effects of a financing
model, financial assets are generally held to maturity. Since
component if the period for payment is less than twelve
the cash flows received usually constitute interest and
months. The analysis also revealed that there are no other
repayment of the underlying receivable, the assets are still
separable performance obligations apart from seed deliv-
measured at amortized cost in the vast majority of cases,
eries. KWS will exercise the exemption permitted in IFRS
especially for trade receivables and other financial assets.
15.94 whereby, subject to the specified conditions, it may
recognize the incremental costs of obtaining a contract as
The method for classifying and measuring financial liabilities
a current expense in the period.
remains unchanged.
The KWS Group will apply IFRS 15 for the first time for the
fiscal year starting on July 1, 2018. Overall, the analysis
revealed that first-time application of IFRS 15 does not have
any significant impact on the KWS Group’s assets, financial
position and earnings.
86 Annual Financial Statements | Notes for the KWS Group 2017/2018
Annual Report 2017/2018 | KWS Group Impairments
between finance and operating leases. Companies in the
The new regulations in IFRS 9 on recognizing credit losses
KWS Group mainly act as lessees. This balance sheet
and defaults relating to financial assets, including trade
extension means that liabilities will increase and the equity
receivables, in the balance sheet are based on the premise
ratio be reduced accordingly. For leases currently classified
of providing for expected losses (expected loss model).
as operating leases, the lessee will recognize depreciation
Impairments were previously recognized only if losses had
and interest expenses instead of leasing costs in the future.
already been incurred (incurred loss model). The Group’s
Among other things, this amendment will result in an
trade receivables are mainly due in a maximum of twelve
improvement in operating income. The approach to lessor
months and so do not usually include a financing compo-
accounting adopted in IFRS 16 is substantially unchanged
nent. Customer and country ratings, as well as a recovery
from that in IAS 17. Application of IFRS 16 means there
rate, have been used by market data service providers to
will tend to be an improvement in net cash from operating
calculate the probability of default for receivables. The provi-
activities in the cash flow statement as a result of lower
sion for expected credit risks from trade receivables at the
payments as part of operations, whereas the repayment
time of application of the new regulations is €11,235 thou-
component of the lease payments and the interest expense
sand. The effects from measurement of other financial
are included as part of the net cash from financing activi-
assets, mainly cash and cash equivalents at banks, are
ties. In addition, IFRS 16 entails new obligations to disclose
immaterial. That is due to the short times in which they are
qualitative and quantitative information.
due (usually balances payable on demand) and the good
ratings of investment grade banks.
Implementation of the new lease standard is being con-
Hedge accounting
trolled as part of a Group-wide project. An analysis has
so far revealed that a slight increase in total assets can be
The modified regulations on hedge accounting are more
expected. We refer in this connection to the other financial
strongly geared toward the Group’s risk management strategy.
obligations [note 4.19] from rent and leases presented in the
The new regulations do not have any impact, since the KWS
Notes.
Group does not currently report any transactions that qualify
for hedge accounting.
The KWS Group will apply IFRS 16 for the first time for the
fiscal year starting on July 1, 2019. KWS currently plans to
In January 2016, the IASB published the standard IFRS 16
apply IFRS 16 using the modified retrospective method and,
(Leases), which is intended to replace the current standard
in compliance with the transitional provisions, not to adjust
IAS 17 (Leases) and the related interpretations IFRIC 4
the previous year’s figures and to recognize the cumulative
(Determining Whether an Arrangement Contains a Lease),
effects from the change directly in equity under the revenue
SIC-15 (Operating Leases – Incentives) and SIC-27 (Evalu-
reserves.
ating the Substance of Transactions in the Legal Form of a
Lease). It was adopted into European law in October 2017.
IFRSs that have been published, but not yet adopted
by the EU or applied
IFRS 16 introduces a single lease accounting model,
IFRS 17 – Insurance Contracts will not have any significant
requiring lessees to recognize assets and liabilities for all
impact on the KWS Group’s assets, financial position and
leases. The previously required distinction between finance
earnings.
and operating leases no longer applies to the lessee. In
the future, all rights and obligations from leases are to be
recognized as right-of-use assets (right-of-use approach)
and lease liabilities in the balance sheet. The only excep-
tions are for short-term leases of one year or less and for
“small ticket leases.” KWS intends to exercise the exemp-
tions permitted in IFRS 16. The approach to lessor account-
ing adopted in IFRS 16 is substantially unchanged from
that in IAS 17, meaning the lessor still has to distinguish
Notes for the KWS Group 2017/2018 | Annual Financial Statements
87
KWS Group | Annual Report 2017/2018 1. General Disclosures
Joint ventures are consolidated using the equity method in
application of IFRS 11 and IAS 28. The basis for a joint venture
1.1 Companies consolidated in the KWS Group
is a contractual agreement with a third party to manage a joint
The consolidated financial statements of the KWS Group in-
venture together. In the case of joint ventures, the parties who
clude the single-entity financial statements of KWS SAAT SE
exercise joint management have rights to the net assets of the
and its subsidiaries in Germany and other countries, as well
agreement.
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 directly
propor tionate equity that are recognized in profit or loss
or indirectly. Details on the changes in the consolidated
are included, along with impairment of goodwill, under the
group are provided in the section “Disclosures on the annual
item “Income from equity-accounted financial assets” in
financial statements – Consolidated group and changes in
the net financial income/expenses. Associated companies
the consolidated group.”
in which a stake between 20% and 50% is held are likewise
measured using the equity method.
1.2 Consolidation methods
The single-entity financial statements of the individual sub-
As part of the elimination of intra-Group balances, borrowings,
sidiaries included in the consolidated financial statements and
receivables, liabilities and provisions are netted between the
the single-entity financial statements of the joint ventures and
consolidated companies. Intercompany profits not realized
associated companies included using the equity method
at Group level are eliminated from intra-Group transactions.
and of the joint operation were uniformly prepared on the
Sales, income and expenses are netted between consoli-
basis of the accounting and measurement methods applied
dated companies, and intra-Group distributions of profit are
at KWS SAAT SE; they were audited by independent auditors.
eliminated.
For company acquisitions, capital consolidation follows the
purchase method by allocating the cost of acquisition to the
Deferred taxes on consolidation transactions recognized in
Group’s interest in the subsidiary’s remeasured equity at the
income are calculated at the tax rate applicable to the
time of acquisition. Any excess of interest in equity over cost
company concerned. These deferred taxes are aggregated
is recognized as an asset, up to the amount by which fair
with the deferred taxes recognized in the separate financial
value exceeds the carrying amount. Any goodwill remaining
statements.
after first-time consolidation is recognized under intangible
assets.
Minority interests are recognized in the amount of the imputed
percentage of equity in the consolidated companies.
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.
88 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 1. General Disclosures
Annual Report 2017/2018 | KWS Group 1.3 Currency translation
Under IAS 21, the financial statements of the consolidated
foreign group companies that conduct their business as
financially, economically and organizationally indepen-
dent entities are translated into euros using the functional
currency method and rounded in accordance with standard
commercial practice as follows:
■■ Income statement items at the average exchange rate for
the year
■■ Balance sheet items at the exchange rate on the balance
sheet date
The following exchange rates were applied in the consoli-
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
06/30/2018
06/30/2017
2017/2018
2016/2017
32.66250
18.80320
23.91751
17.03851
4.49640
0.88590
72.99210
30.56800
1.16410
3.76780
0.87865
3.98728
0.88563
3.52999
0.86129
67.49930
70.25821
66.48928
29.78678
31.85345
28.59361
1.14030
1.19399
1.09302
The difference resulting from the application of annual
average rates to the net profit for the period in the income
All estimates and assessments as part of accounting and
statement is taken directly to equity. According to IAS 21,
measurement are continually reviewed; they are based on
exchange differences resulting from loans to foreign sub-
historical patterns and expectations about the future regarded
sidiaries are reported in the Other comprehensive income
as reasonable in the particular circumstances.
and are not recognized in profit or loss.
1.5.2 Recognition of income and expenses
1.4 Classification of the statement of comprehensive
Net sales include sales of products and services, less
income
revenue reductions. Net sales from the sale of products are
The KWS Group has prepared the income statement using
realized at the time at which the opportunities and risks pass
the cost-of-sales method. The costs for the functions
to the buyer. Income from service transactions is recognized
include all directly attributable costs, including other taxes.
if it is likely that the economic benefit will accrue to the Group
Research & development expenses are reported separately
and the amount of income can be reliably determined. Other
for reasons of transparency.
income, such as interest, royalties and dividends, is recog-
nized in the period in which it accrues as soon as there is a
1.5 Accounting policies
contractual or legal entitlement to it.
1.5.1 Consistency of accounting policies
Performance-based public grants are carried under the other
The accounting policies are unchanged from the previous
operating income as part of profit/loss.
year, with the exception of the change for cash-generating
units as part of impairment testing.
1. General Disclosures | Notes for the KWS Group 2017/2018 | Annual Financial Statements
89
KWS Group | Annual Report 2017/2018
Operating expenses are recognized in the income statement
1.5.4 Property, plant, and equipment
upon the service in question being used or as of the date on
Property, plant, and equipment is measured at cost less
which they occur.
1.5.3 Intangible assets
straight-line depreciation and impairment losses. Deprecia-
tion of an asset commences when the asset is at its location
and is in the condition necessary for it to be capable of oper-
Purchased intangible assets are carried at cost less
ating in the manner intended by management. Depreciation
straight-line amortization and impairment losses. It is neces-
of an asset ends when the asset has been fully expensed or
sary to examine whether the useful life of intangible assets
is classified as held for sale in accordance with IFRS 5 or, at
is finite or indefinite. Goodwill has an indefinite useful life.
the latest, when it is derecognized.
Goodwill and intangible assets with an indefinite useful life
are not amortized, but tested for impairment at least once a
If property, plant and equipment is sold or scrapped, the
year.
profit or loss from the difference between the proceeds and
residual carrying amount is recognized under the other oper-
Intangible assets acquired as part of business combinations
ating income or other operating expenses.
are carried separately from goodwill if they are separable
according to the definition in IAS 38 or result from a contrac-
In addition to directly attributable costs, the cost of self-
tual or legal right.
The service life of intangible assets is as follows:
Useful life of intangible assets
produced plant or equipment also includes a proportion
of the overheads and depreciation/amortization.
Useful life of property, plant and equipment
Useful life
Buildings
Breeding material, proprietary rights
to varieties and trademarks
10 years
Operating equipment and other
facilities
Other rights
Software
Distribution rights
Trait licensing agreements
5 – 10 years
Technical equipment and machinery
3 – 8 years
Laboratory and research facilities
5 – 20 years
15 years
Other equipment, operating and office
equipment
Useful life
10 – 50 years
5 – 25 years
5 –15 years
5 –13 years
3 –15 years
Low-value assets are fully expensed in the year of purchase;
they are reported as additions and disposals in the year
of purchase in the statement of changes in fixed assets.
Impairment losses on property, plant, and equipment are
recognized according to IAS 36 whenever the recoverable
amount of the asset is less than its carrying amount. The
recoverable amount is the higher of the fair value less costs
to sell or the value in use. If the reason for an earlier impair-
ment loss on property, plant, and equipment no longer
applies, its value is increased to up to the amount that
would have resulted if the impairment loss had not occurred,
taking depreciation into account. In accordance with IAS 20,
government grants for assets are deducted from the costs
of the asset. Any deferred income is not recognized.
90 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 1. General Disclosures
Annual Report 2017/2018 | KWS Group The residual values, useful economic lives and methods of
and the current economic environment. The credit risk on
depreciation for property, plant and equipment are reviewed
cash and derivative financial instruments is limited because
at the end of each fiscal year and adjusted prospectively, if
they are kept with banks that have been given a good
necessary.
1.5.5 Leases
credit rating by international rating agencies. There is no
significant concentration of credit risks, because the risks
are spread over a large number of contract partners and
A lease is an agreement whereby the lessor conveys the
customers. The entire credit risk is limited to the respective
right to use an asset for an agreed period of time to the
carrying amount. A detailed presentation of the value and
lessee in exchange for a payment or a series of payments.
age of the financial assets can be found in section (4.9)
A distinction is made between finance leases and operating
Current receivables. Comments on the risk management
leases. A finance lease relates to leasing transactions in
system can be found in the Management Report.
which all the risks and rewards incidental to ownership of
an asset are transferred to the lessee. Otherwise a lease
Available-for-sale financial assets are carried at fair value
is classified as an operating lease. An assessment as to
if that can be reliably measured. Unrealized gains and
whether the agreement is a lease or an agreement involves
losses, including deferred taxes, are recognized directly
a lease is made when the contract is concluded.
in the reserve for available-for-sale financial assets under
equity. Allowances are recognized immediately through
If the KWS Group is the lessee in a finance lease, the lower
the income statement. Financial assets belonging to this
of the asset’s fair value and the present value of the mini-
category of financial instruments are measured at cost.
mum lease payments at the start of the lease is capitalized
The financial assets include shares in unconsolidated
in the balance sheet and simultaneously recognized under
subsidiaries and securities classified as noncurrent assets.
the financial liabilities. The minimum lease payments are
They are subsequently measured at amortized cost.
divided into a repayment component of the residual debt
Borrowings are carried at amortized cost.
and financing costs, which are determined in accordance
with the effective interest method. The leased asset is
The carrying amount of receivables, fixed-income securi-
written down using the straight-line method of depreciation
ties and cash is assumed as the fair value due to their short
over its estimated useful life or the term of the contract,
term and the fixed-interest structure of the investments.
whichever is shorter.
An operating lease is a lease that does not involve a finance
payables, borrowings and other liabilities.
The financial liabilities comprise, in particular, trade
lease. Lease payments under an operating lease are recog-
nized as operating expense in the income statement on a
straight-line basis over the lease’s term.
1.5.6 Financial instruments
Apart from equity instruments, financial instruments are, in
particular, financial assets and financial liabilities. The finan-
cial assets consist primarily of bank balances and cash on
hand, trade receivables, other receivables, other financial
assets and securities. The credit risk mainly comprises
trade receivables. The amount recognized in the balance
sheet is net of allowances for receivables expected to be
uncollectible, estimated on the basis of historical patterns
1. General Disclosures | Notes for the KWS Group 2017/2018 | Annual Financial Statements
91
KWS Group | Annual Report 2017/2018 The fair value of financial liabilities with a long-term fixed
■■ Financial assets at fair value
interest rate is determined as the present values of the pay-
Held-for-trading securities acquired with the intention
ments related to the liabilities, using a yield curve applica-
of being sold in the short term are assigned to this
ble on the balance sheet date.
category. Derivate financial instruments with a positive
market value are also categorized as held for trading,
Derivative instruments are measured at fair value; they
unless they are designated hedging instruments.
can be assets or liabilities. Common derivative financial
They are measured at fair value. Changes in value are
instruments are essentially used to hedge interest rate
recognized in income. Securities are derecognized after
and foreign currency risks. The fair value of the derivative
being sold on the settlement date.
financial instruments is measured on the basis of the market
■■ Available-for-sale financial assets
information available on the balance sheet date and using
This category covers all financial assets that have not
recognized mathematical models, such as present value or
been assigned to one of the above categories. In prin-
Black-Scholes, to calculate option values, taking their vola-
ciple, securities are classed as available for sale, unless
tility, remaining maturity and capital market interest rates
a different classification is required due to the fact that
into account. The instruments must also be classified in a
they have an explicit purpose. Equity instruments, such
level of the fair value hierarchy.
as shares in (unconsolidated) affiliated companies, which
are measured at amortized cost, and shares held in listed
Financial instruments in level 1 are measured using quoted
companies, are also included in this category. In principle,
prices in active markets for identical assets or liabilities. In
financial instruments in this category are measured at their
level 2, they are measured by directly observable market
fair value in subsequent recognition. The changes to their
inputs or derived indirectly on the basis of prices for similar
fair value in subsequent recognition are recognized as un-
instruments. Finally, input factors not based on observable
realized gains and losses directly in equity in the reserve
market data are used to calculate the value of level 3 financial
for available-for-sale financial assets. The realized gains
instruments.
or losses are not recognized as profit or loss until they are
disposed of. If there is objective evidence of permanent
Subsequent measurement of the financial instruments
impairment on the balance sheet date, the instruments are
depends on their classification in one of the following
written down to the lower value. Any subsequent decreases
categories defined in IAS 39:
in the impairment loss are recognized directly in equity.
■■ Loans and receivables
■■ Financial liabilities measured at amortized cost
All financial liabilities, with the exception of derivative
This category mainly comprises trade receivables, other
financial instruments, are measured at amortized cost
receivables, loans and cash, including fixed-income short-
using the effective interest method. The liabilities are
term securities. Loans are measured at cost. Loans that
derecognized at the time they are settled or when the
carry no interest or only low interest are measured at their
reason why they were formed no longer exists.
present value. Discernible risks are taken into account by
■■ Financial liabilities at fair value
recognition of an impairment loss. After their initial recog-
This category covers derivative financial instruments that
nition, the other financial assets in this category are mea-
have a negative market value and are categorized in prin-
sured at amortized cost using the effective interest method,
ciple as held for trading. They are measured at fair value.
minus impairments. Receivables that carry no interest
Changes in value are recognized in income. Derivatives
or only low interest and with a term of more than twelve
that are designated hedging instruments in accordance
months are discounted. Necessary value impairments are
with IAS 39 are excluded from this provision.
based on the objective criteria of IAS 39 and are carried in
separate impairment accounts. Receivables are derecog-
nized if they are settled or uncollectible. Other financial
assets are derecognized at the time they are disposed of
or if they have no value.
92 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 1. General Disclosures
Annual Report 2017/2018 | KWS Group
In the case of securities that are classified as available for
are recognized if it can be assumed that they will be used
sale, changes in their fair values that require reporting are
in the future. Deferred tax liabilities must be set up for all
taken directly to equity. If securities are carried at their fair
taxable temporary differences. All deferred taxes must be
value and have to be recognized in income, changes to the
assessed individually at each balance sheet date. Under
fair values are directly included in the net income for the
IAS 12, deferred taxes are calculated on the basis of
period.
1.5.7 Derivatives
the applicable local income tax anticipated at the time of
reversal. No discounting is carried out.
The derivatives do not meet the requirements of IAS 39 to be
1.5.10 Provisions for income taxes
designated as a hedging instrument. They are measured at
The provisions for income taxes comprise obligations from
their fair value. The changes in their market value are recog-
current income taxes. They are measured on the basis of a
nized in the income statement. Derivatives are derecognized
best-possible assessment of the future amount to be paid.
on their day of settlement.
Deferred taxes are carried in a separate balance sheet item.
1.5.8 Inventories and biological assets
1.5.11 Provisions for pensions and other employee
Inventories are measured at the lower of cost or net realiz-
benefits
able value less an allowance for obsolescent or slow-moving
The provisions for pensions and other employee benefits
items. In addition to directly attributable costs, the cost of
are calculated using actuarial principles in accordance
sales also includes indirect labor and materials including
with the projected unit credit method. Actuarial gains and
depreciation under IAS 2. Under IAS 41, biological assets
losses must be recognized directly in equity in Other com-
are measured at fair value less the estimated costs to sell.
prehensive income. The service costs, including the past
Immature biological assets are carried as inventories as of
service costs, are recognized in operating income in ac-
the time they are harvested. The measurement procedure
cordance with the employees’ assignment to the functions.
used is based on standard industry value tables.
If there are planned assets, they are netted off against the
associated obligations.
1.5.9 Deferred taxes
Deferred taxes are calculated in accordance with IAS 12
The provisions for semi-retirement include obligations from
and are calculated on differences between the carrying
concluded semi-retirement agreements. Payment arrears
amounts of assets and liabilities in the consolidated
and top-up amounts for semi-retirement pay and for the
balance sheet and their tax base, and on carried-forward
contributions to the statutory pension insurance program
tax losses. Deferred tax assets are netted off against
are recognized in measuring them.
deferred tax liabilities, provided they relate to the same tax
creditor and have the same due date. Deferred tax assets
1. General Disclosures | Notes for the KWS Group 2017/2018 | Annual Financial Statements
93
KWS Group | Annual Report 2017/2018 1.5.12 Other provisions
1.5.15 Discretionary decisions and estimates
Provisions are set up if current obligations have accrued from
past events and it is likely that they will be utilized. In addition,
The measurement approaches and amounts to be carried
it must be possible to estimate the amount of the anticipated
in these IFRS financial statements are partly based on esti-
obligation reliably.
mates and specifically defined specifications. This relates in
particular to the following discretionary decisions:
Provisions are measured at their expected amount or most
likely amount, depending on whether they comprise a large
■■ Determination of the useful life of the depreciable asset
number of items or constitute a single obligation. Provisions
■■ Definition of measurement assumptions and future results
are reviewed regularly and adjusted to reflect new findings
in connection with impairment tests, above all for capital-
or changes in circumstances. If it is no longer likely that a
ized goodwill
provision will be utilized or the conditions for why it was set
■■ Determination of the net selling price for inventories
up no longer apply, expense-related provisions are reversed
■■ Definition of the parameters required for measuring
against the original expense item and revenue-related provi-
pension provisions
sions are reversed against revenue. If the reversal amount is
■■ Selection of parameters for the model-based measurement
material, and so the effect not related to the period must be
of derivatives
classified as material, the reversal is carried as income from
■■ Determination whether tax losses carried forward can be
the reversal of provisions under other operating income not
used
related to the period.
■■ Determination of the fair value of intangible assets, tan-
gible assets and liabilities acquired as part of a business
Long-term provisions are discounted taking into account
combination and determination of the service lives of the
future cost increases and using a market interest rate that
purchased intangible assets and tangible assets
adequately reflects the risk, insofar as the interest effect is
■■ Measurement of other provisions
material.
Despite careful estimates, the actual development may
1.5.13 Contingent liabilities
deviate from the assumptions.
The contingent liabilities result from debt obligations where
outflow of the resource is not probable or the level of the
The Executive Board of KWS SAAT SE prepared the con-
obligation cannot be estimated with sufficient reliability, or
solidated financial statements on September 25, 2018, and
from obligations for loan amounts drawn down by third
released them for distribution to the Supervisory Board.
parties as of the balance sheet date.
The Supervisory Board has the task of examining the
consolidated financial statements and declaring whether it
1.5.14 Borrowing costs
approves them.
In accordance with IAS 23, borrowing costs are capitalized if
they can be classified as qualifying assets.
94 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 1. General Disclosures
Annual Report 2017/2018 | 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
06/30/2018
06/30/2017
14
0
0
14
48
3
6
57
62
3
6
71
13
0
0
13
46
3
1
50
59
3
1
63
2.1 Consolidated group and changes in the
GENECTIVE CANADA INC., Montreal, Canada, GENECTIVE
consolidated group
JAPAN K.K., Chiba, Japan, and GENECTIVE KOREA,
IKWS BERLIN GMBH, Berlin, was founded and included
Sangdaewon- dong, Korea, were included as joint
in the consolidated companies on September 4, 2017. In
operations in the companies consolidated in the KWS
addition, IMPETUS AGRICULTURE INC., Lewes, U.S., was
Group effective the end of the fiscal year.
founded on June 29, 2018.
KWS PARAGUAY S.R.L., Asunción, Paraguay, was includ-
consolidated financial statements at June 30, 2018. Three
ed for the first time as a fully consolidated subsidiary in
(three) joint ventures and associated companies were mea-
the consolidated companies of the KWS Group at the
sured using the equity method. Six (one) joint operations
end of the fiscal year. GENECTIVE TAIWAN LTD., Taipei
have been included proportionately.
A total of 62 (59) companies were fully consolidated in the
City, Taiwan, GENECTIVE USA CORP., Weldon, U.S.,
2. Disclosures on the Annual Financial Statements | Notes for the KWS Group 2017/2018 | Annual Financial Statements
95
KWS Group | Annual Report 2017/2018 2.2 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%
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
KWS PARAGUAY S.R.L.21
Asunción/Paraguay
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
RECHERCHE 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 %
100 %
70%
Champagne, IL, U.S.
KANT-HARTWIG & VOGEL
GMBH4
Einbeck, Germany
KWS R&D INVEST B.V.
Emmeloord, Netherlands
KWS BERLIN GMBH
Berlin, Germany
IMPETATUS AGRICULTURE
INC.
Lewes, DE, U.S.
Equity-accounted
joint ventures1
Corn
Equity-accounted
associated companies1
Joint operation
(proportionately consolidated)1
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
50 % GENECTIVE CANADA INC.22
Montreal, Canada
50 % GENECTIVE TAIWAN LTD.22
Taipei City, Taiwan
50 % GENECTIVE USA CORP.22
Weldon, U.S.
50 % GENECTIVE JAPAN K.K.22
Chiba, Japan
50 % GENECTIVE KOREA22
Sangdaewon-dong, Korea
96 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 2. Disclosures on the Annual Financial Statements
Annual Report 2017/2018 | KWS Group
Unconsolidated subsidiaries1
Sugarbeet
67%
VAN RIJN BALCAN S.R.L.15 *
Vulcan, Romania
Corn
100%
KWS R&D PRIVATE LIMITED11 *
Hyderabad, India
Cereals
Corporate
* In Liquidation
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, 2018
2. Disclosures on the Annual Financial Statements | Notes for the KWS Group 2017/2018 | Annual Financial Statements
97
KWS Group | Annual Report 2017/2018
3. Segment Reporting for the KWS Group
In accordance with its internal reporting system, the
3.1.2 Sugarbeet
KWS Group is primarily organized according to the following
In addition to multiplication, processing and distribu-
business segments:
■■ Corn
■■ Sugarbeet
■■ Cereals
■■ Corporate
tion activities for sugarbeet seed, the breeding activities
relating to development of a hybrid potato are also reported
in the Sugarbeet Segment. Under the leadership of
KWS SAAT SE, 17 (17) foreign subsidiaries and two (two)
subsidiaries in Germany are active in this segment.
3.1.3 Cereals
Considered a core competency for the KWS Group’s
The lead company of this segment, which essentially con-
entire product range, plant breeding, including the related
cerns the production and distribution of hybrid rye, wheat and
biotechnology research, is essentially concentrated at the
barley, as well as oil and field seed, is KWS LOCHOW GMBH
parent company KWS SAAT SE in Einbeck. The breeding
with its four (four) foreign subsidiaries in France, the UK and
material, including the relevant information and expertise
Poland.
about how to use it, is owned by KWS SAAT SE with
respect to sugarbeet and corn and by KWS LOCHOW GMBH
3.1.4 Corporate
with respect to cereals. Product-related R&D costs are
Apart from revenue from farms and services for third parties,
carried directly in the product segments Corn, Sugarbeet
net sales from strategic projects are reported in this segment.
and Cereals. Centrally controlled corporate functions are
The segment also assumes the costs of all central holding
grouped in the Corporate Segment. The distribution and
functions and expenses for long-term research projects that
production of oil and field seed are reported in the Cereals
have not yet reached market maturity.
and Corn Segments, in keeping with the legal entities
currently involved.
3.1 Description of segments
It also includes all management services of KWS SAAT SE,
such as the holding company and administrative functions,
which are not directly charged to the product segments or
Since the beginning of the year under review, our rapeseed
indirectly allocated to them by means of an appropriate cost
activities, which were previously managed in the Corn
formula.
Segment and in the Cereals Segment, have been pooled
in one unit and transferred completely to the Cereals Seg-
3.2 Segment information
ment. This step will enable us to benefit from the integrated
The Executive Board as the main decision-making body
management and controlling of rapeseed activities moving
is responsible for allocating resources and assessing the
ahead. Consequently, all net sales and earnings contributed
earnings strength of the business segments. The segments
by our rapeseed business are allocated to the Cereals
and regions are defined in compliance with the internal
Segment. This effect meant an additional shift in net sales
controlling and reporting systems (management approach).
of around €30 million and in EBIT of around €4 million in
The accounting policies used to determine the information
fiscal 2017/2018.
3.1.1 Corn
for the segments are basically the same as those used for
the KWS Group. The only exception relates to consolidation
of the equity-accounted joint ventures that are assigned to
KWS SAAT SE is the lead company in the Corn Segment.
the Corn Segment, namely AGRELIANT GENETICS LLC.,
The production and distribution activities of this segment
AGRELIANT GENETICS INC. and KENFENG – KWS SEEDS
relate to corn for grain and silage corn, and to oil and field
CO., LTD. In accordance with internal controlling pract-
seed. Apart from KWS SAAT SE, the business activities are
ices, they are included proportionately as part of segment
conducted by one (one) German company, 16 (15) foreign
reporting.
subsidiaries, two (two) joint ventures, one (one) associated
company and six (one) joint operations of the KWS Group.
98 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 3. Segment Reporting for the KWS Group
Annual Report 2017/2018 | KWS Group The segment net sales, segment income, depreciation and
Segment sales contains both net sales from third parties
amortization, other noncash items, operating assets, oper-
(external sales) and net sales between the segments (inter-
ating liabilities and capital expenditure on noncurrent assets
segment sales). The prices for intersegment sales are
by segment have been determined in accordance with the
determined on an arm’s-length basis. Uniform royalty rates
internal operational controlling structure, with the joint ven-
per segment for breeding genetics are used as the basis.
tures and associated company consolidated proportionately
Technology revenues from genetically modified properties
(management approach). In order to permit better compara-
(“tech fees”) are paid as a per-unit royalty on the basis of
bility, they have been reconciled with the figures in the IFRS
the number of units sold, due to their growing competitive
consolidated financial statements.
importance.
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
2017/2018
2016/2017
2017/2018
2016/2017
2017/2018
2016/2017
734,204
455,444
825,867
454,860
151,410
111,526
26
351
300
16,672
18,235
12,456
530
319
2,179
13,436
734,178
455,094
825,337
454,541
151,109
109,347
4,216
4,799
1,357,730
1,410,488
13,133
16,464
1,344,597
1,394,024
–276,585
–318,780
1,068,012
1,075,244
The Corporate Segment generates 74.7% (73.7%) of its
The Corn Segment is the largest contributor of external
sales from the other segments. As in the previous year,
sales, accounting for 54.7% (59.2%) of external sales,
the sales of this segment represent 0.3% of the Group’s
followed by Sugarbeet with 33.8% (32.6%) and Cereals with
external sales.
11.2% (7.8%).
Earnings, depreciation and amortization and other noncash items per segment
in € thousand
Segment earnings
Depreciation and
amortization
Other noncash items
Corn
Sugarbeet
Cereals
Corporate
Segments acc. to management
approach
Elimination of equity-accounted
financial assets
Segments acc. to consolidated
financial statements
Net financial income/expenses
Earnings before taxes
2017/2018
2016/2017
2017/2018
2016/2017
2017/2018
2016/2017
47,374
160,473
18,395
–77,277
58,213
150,929
10,310
–60,585
29,239
12,480
8,855
11,629
27,417
12,994
8,472
10,444
–10,936
–21,072
4,639
1,058
4,213
–2,482
–4,034
–981
148,965
158,867
62,203
59,327
–26,311
–3,284
–16,409
–27,276
–12,062
–9,974
19,339
–3,688
132,556
131,591
50,141
49,353
–6,972
–6,972
5,434
16,599
137,990
148,190
0
0
0
0
0
0
0
0
The income statements of the consolidated companies
income of each segment is reported as the segment result.
are assigned to the segments by means of profit center
The segment results are presented on a consolidated basis
allocation. Operating income, the most important internal
and include all directly attributable income and expenses.
parameter and an indicator of the earnings strength in the
Items that are not directly attributable are allocated to the
KWS Group, is used as the segment result. The operating
segments on the basis of an appropriate formula.
3. Segment Reporting for the KWS Group | Notes for the KWS Group 2017/2018 | Annual Financial Statements
99
KWS Group | Annual Report 2017/2018
Depreciation and amortization charges of
The other noncash items recognized in the income
€62,203 (59,327) thousand allocated to the segments
statement relate to noncash changes in the allowances
relate exclusively to intangible assets and property, plant
on inventories and receivables, and in provisions.
and equipment.
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
Operating assets
Operating liabilities
06/30/2018
06/30/2017 06/30/2018
06/30/2017
729,126
277,936
120,731
114,705
742,506
266,734
116,106
113,276
1,242,498
1,238,622
–251,774
–250,793
990,724
526,957
987,829
507,396
137,572
162,508
32,549
28,383
96,428
294,932
–49,808
245,124
390,774
635,898
83,096
22,481
87,447
355,532
–82,431
273,101
385,128
658,229
KWS Group acc. to consolidated financial statements
1,517,681
1,495,225
The operating assets of the segments are composed of
Capital expenditure on assets rose to €117,696 thousand
intangible assets, property, plant and equipment, inven-
(previous year: €67,940 thousand). Capital expenditure in
tories, biological assets and trade receivables that can be
the Corn Segment was €64,147 thousand (previous year:
charged directly to the segments or indirectly allocated to
€25,079 thousand), which largely involved drying and
them by means of an appropriate formula.
production capacities in South America. The Sugarbeet
Segment’s capital expenditure totaled €16,741 thousand
The operating liabilities attributable to the segments in-
following €16,811 thousand in the previous year and relates
clude the borrowings reported on the balance sheet, less
mainly to continued expansion of sugarbeet seed produc-
provisions for taxes and the portion of other liabilities that
tion in Einbeck. In addition, expansion of our laboratory
cannot be charged directly to the segments or indirectly
capacities was launched there as well.
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
06/30/2018
06/30/2017
64,147
16,741
7,027
29,781
117,696
–45,994
71,702
25,079
16,811
4,961
21,089
67,940
–4,659
63,281
3.3 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 in
individual customer accounted for more than 10% of total
accordance with the accounting policies to be applied to the
net sales in the current and the previous fiscal years.
consolidated financial statements of the KWS Group, and thus,
without proportionate consolidation of the equity-accounted
financial investments.
100 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 3. Segment Reporting for the KWS Group
Annual Report 2017/2018 | 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 69.3% (64.2%) of total sales are recorded in
Europe (including Germany).
Investments in long-term assets by region
in € thousand
Germany
Europe (excluding Germany)
Thereof in France
North and South America
Thereof in Brazil
Thereof in the U.S.
Rest of world
KWS Group
2017/2018
2016/2017
235,303
504,985
(117,592)
269,553
(82,168)
(155,357)
58,171
226,291
464,283
(113,649)
317,472
(109,914)
(173,056)
67,198
1,068,012
1,075,244
06/30/2018
06/30/2017
39,478
18,026
(5,297)
13,269
(1,187)
(5,528)
929
71,702
26,481
20,256
(4,856)
14,743
(2,240)
(8,774)
1,800
63,281
A total of 55.1% (41.9%) of the capital spending was made in
made in North and South America, 25.1% (32.0%) in Europe
Germany. Of the further capital spending, 18.5% (23.3%) was
(excluding Germany) and 1.3% (2.8%) in the rest of the world.
Long-term assets by region
in € thousand
Germany
Europe (excluding Germany)
Thereof in France
North and South America
Thereof in Brazil
Thereof in the U.S.
Rest of world
KWS Group
06/30/2018
06/30/2017
235,994
166,600
(66,430)
230,125
(28,602)
215,945
167,567
(68,576)
238,388
(33,435)
(185,842)
(190,954)
8,460
641,179
9,715
631,615
3. Segment Reporting for the KWS Group | Notes for the KWS Group 2017/2018 | Annual Financial Statements 101
KWS Group | Annual Report 2017/2018 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
07/01/2017
06/30/2018
07/01/2017
06/30/2018 06/30/2018 06/30/2017
Patents, industrial
property rights
and software
Goodwill
Intangible assets
Land and
buildings
Technical
equipment and
machinery
Operating and
office equipment
Payments on
account
Property, plant
and equipment
Equityaccounted
financial assets
Financial assets
Assets
114,883
28,000
142,883
–2,970
–2,898
–5,868
309,195
–4,161
241,187
–4,340
0
0
0
0
0
12,164
13
12,177
9,842
11,226
102,018
–1,797
2,052
12,230
31,893
–968
0
25,483
684,293
–11,266
2,052
58,781
0
0
0
0
0
0
0
0
418
0
418
2,044
5,746
5,964
57
13,811
0
0
0
0
0
0
0
0
226
0
226
123,885
25,115
149,000
55,451
–2,519
0
0
55,451
–2,519
416
0
416
63,535
0
63,535
60,350
25,115
85,465
59,432
28,000
87,432
7,922
320,754
89,072
–741
27
1,667
96,170
224,584
220,123
8,944
251,271
141,769
–2,311
18,303
4,995
44
152,810
98,461
99,418
2,678
111,217
64,106
–994
323
11,286
5,521
–44
69,156
42,061
37,912
–19,770
36,581
1
0
0
36,581
31,892
–226
719,823
294,948
–4,046
323
39,122
27
12,184
318,136
401,687
389,345
160,162
–2,649
3,941
–55
0
–10
0
744
13,414
0
0
229
12,110
0
991,280
–19,838
2,042
71,702
13,414
14,458
12,110
0
158,817
–172
–172
4,218
1,031,859
8,393
873
0
–5
359,665
–6,570
323
50,141
12,600
390,680
641,179
631,615
8,393
150,424
151,769
615
3,603
3,069
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
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
07/01/2016
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
102 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 4. Notes to the Balance Sheet
11,019
0
11,019
9,533
0
0
0
0
0
49
0
0
0
0
0
0
0
0
0
0
0
1
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
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
253
280
195
195
0
0
0
0
0
0
0
0
0
0
4
0
0
0
–4
0
–4
7
1
0
0
0
0
0
Annual Report 2017/2018 | KWS Group 4. Notes to the Balance Sheet
Statement of changes in fixed assets
in € thousand
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
07/01/2017
06/30/2018
07/01/2017
06/30/2018 06/30/2018 06/30/2017
0
0
0
0
0
0
0
0
Patents, industrial
property rights
and software
Goodwill
Intangible assets
Land and
buildings
Technical
equipment and
machinery
Operating and
office equipment
Payments on
account
Property, plant
and equipment
Equityaccounted
financial assets
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
114,883
28,000
142,883
–2,970
–2,898
–5,868
309,195
–4,161
12,164
13
12,177
9,842
226
0
226
123,885
25,115
149,000
55,451
–2,519
0
0
55,451
–2,519
7,922
320,754
89,072
–741
241,187
–4,340
11,226
8,944
251,271
141,769
–2,311
0
0
0
0
0
11,019
0
11,019
9,533
18,303
102,018
–1,797
2,052
12,230
2,678
111,217
64,106
–994
323
11,286
31,893
–968
0
25,483
–19,770
36,581
1
0
0
0
684,293
–11,266
2,052
58,781
13,811
–226
719,823
294,948
–4,046
323
39,122
Financial assets
3,941
–55
0
–10
0
744
160,162
–2,649
13,414
12,110
0
158,817
Assets
991,280
–19,838
2,042
71,702
13,414
14,458
12,110
–172
–172
4,218
1,031,859
8,393
873
0
–5
0
0
0
0
359,665
–6,570
323
50,141
07/01/2016
06/30/2017
07/01/2016
116,986
28,700
–891
–699
Intangible assets
145,686
–1,590
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
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
–76
–25
0
0
0
160,162
3,941
991,280
8,393
635
0
–6
338,539
–2,691
0
0
0
0
0
0
36,672
0
49
49,353
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
418
0
418
2,044
5,746
5,964
57
0
229
9,896
0
9,896
8,799
6,838
3,902
372
0
627
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
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
416
0
416
27
1,667
0
0
0
0
63,535
0
63,535
60,350
25,115
85,465
59,432
28,000
87,432
96,170
224,584
220,123
4,995
44
152,810
98,461
99,418
5,521
–44
69,156
42,061
37,912
1
27
12,184
0
253
280
0
0
12,600
6,966
0
6,966
8,561
0
0
0
0
0
0
0
0
0
0
0
0
195
195
0
0
0
0
0
–4
0
–4
7
0
36,581
31,892
318,136
401,687
389,345
8,393
150,424
151,769
615
3,603
3,069
390,680
641,179
631,615
06/30/2017 06/30/2017 06/30/2016
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
4. Notes to the Balance Sheet | Notes for the KWS Group 2017/2018 | Annual Financial Statements 103
KWS Group | Annual Report 2017/2018 4.1 Assets
For the European and American markets, the key assump-
The statement of changes in fixed assets contains a break-
tions on which corporate planning is based include as-
down of assets summarized in the balance sheet and shows
sumptions about price trends for seed, in addition to the
how they changed in 2017/2018.
development of market shares and the regulatory frame-
4.2 Intangible assets
work. Company-internal projections take the assumptions
of industry-specific market analyses and company-related
This item includes purchased varieties, rights to varieties
growth perspectives into account.
and distribution rights, software licenses for electronic data
processing and goodwill. The current additions of €12,177
The discount rate at the KWS Group has been derived as
(7,305) thousand related to software licenses and patents.
the weighted average cost of capital (WACC) and for the
Amortization of intangible assets amounted to €11,019
cash-generating units is 4.85% (4.66%) after tax. A growth
(12,632) thousand.
rate of 1.5% (1.5%) has been assumed here beyond the
detailed planning horizon in order to allow for extrapolation
One major intangible asset is the trait licensing agree-
in line with the expected inflation rate.
ment. Its carrying amount at the balance sheet date was
€20,614 thousand. Its remaining useful life is 12 years.
The impairment tests conducted at the end of fiscal year
2017/2018 confirmed that the existing goodwill is not
In order to meet the requirements of IFRS 3 in combination
impaired. The Business Unit Corn America carries good-
with IAS 36, and to determine any impairment of goodwill,
will totaling €14,903 (17,780) thousand. The Business Unit
cash-generating units have been defined in line with inter-
Corn Europe/Asia carries goodwill totaling €6,306 (6,304)
nal budgeting and reporting processes. In the KWS Group,
thousand. Some €3,906 (3,916) thousand of the goodwill is
these are the Business Units. To test for impairment, the
carried by the Business Unit Cereals. Sensitivity analyses
carrying amount of each Business Unit is determined by
were also carried out for all cash-generating units to which
allocating the assets and liabilities, including attributable
goodwill is allocated. In our opinion, realistic changes in the
goodwill and intangible assets. An impairment loss is
basic assumptions would not result in the need to recog-
recognized if the recoverable amount of a Business Unit is
nize an impairment loss at any cash-generating unit whose
less than its carrying amount. The recoverable amount is the
goodwill is significant relative to the total carrying amount of
higher of the fair value less costs to sell and the value in use
goodwill.
of a cash-generating unit. The impairment tests to be carried
out for fiscal 2017/2018 determine the recoverable amount
on the basis of the value in use of the respective cash-
generating unit.
The impairment test uses the expected future cash flows on
which the medium-term plans of the companies, which are
grouped in segments, are based; these plans, which cover
a period of four years, have been approved by the Executive
Board. They are based on historical patterns and expecta-
tions about future market development.
104 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 4. Notes to the Balance Sheet
Annual Report 2017/2018 | KWS Group 4.3 Property, plant and equipment
Capital expenditure amounted to €58,781 (54,118) thousand
and depreciation amounted to €39,122 (36,672) thousand.
The main focus of our capital spending in the year under
Disclosures on equityaccounted joint ventures
(with the partner Vilmorin)
in € thousand
06/30/2018 06/30/2017
Stake in the joint venture
50%
50%
302,250
341,140
(26,144)
254,586
296,704
(27,700)
191,468
265,560
(156,730)
(88,998)
1,656
258,476
129,238
8,802
138,040
545,536
22,867
21,696
21,696
10,848
10,848
22,006
2,570
264,478
132,239
8,802
141,041
631,904
18,765
44,364
44,364
22,182
22,182
32,508
review was on erecting and expanding production and
Current assets
research & development capacities. Among other things,
expansion of sugarbeet seed production was continued in
Germany. In addition, expansion of our laboratory capacities
was also launched there. Drying and production capacities
for corn seed were increased in South America as well. The
gross carrying amount of the property, plant and equipment
that has already been written down in full, but not yet used,
is €154,691 thousand. Property, plant and equipment to an
amount of €1,926 (€2,299) thousand are held as security for
liabilities.
4.4 Equityaccounted financial assets
Equityaccounted joint ventures
The joint ventures AGRELIANT GENETICS LLC. and
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.
Thereof cash and cash
equivalents1
Noncurrent assets
Current liabilities
Thereof current financial
liabilities (excluding trade
payables and other
liabilities and provisions)
Noncurrent liabilities
Net assets (100%)
Group share of net assets (50%)
Goodwill
Carrying amount for the
stake in the joint ventures
Net sales
Depreciation and amortization
Net income for the year
Comprehensive income (100%)
Comprehensive income (50%)
Group share of
comprehensive income
Dividend payment
The two joint ventures are operating units. The main business
1 Thereof AGRELIANT GENETICS LLC.: €9,256 (€12,721).
activity of the two joint ventures is the production and sale of
corn and soybean seed in North America.
The following disclosures on the joint ventures 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 2017/2018 | Annual Financial Statements 105
KWS Group | Annual Report 2017/2018 Equityaccounted associated companies
4.7 Noncurrent tax assets
The disclosures on insignificant associated companies
For the previous year, this figure was €2,011 thousand and
in accordance with IFRS 12.21 (c) in conjunction with
mainly relates to the present value of the corporate income
IFRS 12. B16 are as follows:
Disclosures on insignificant associated companies
accounted for using the equity method
in € thousand
06/30/2018 06/30/2017
Carrying amount for the
stake in insignificant
associated companies
( aggregated)
Net income for the year
Other comprehensive income
Comprehensive income (100%)
12,344
5,236
0
5,236
10,726
5,761
0
5,761
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
tax credit balance of the German group companies, which
was last determined at December 31, 2006, and has been
paid in ten equal annual amounts since September 30, 2008.
4.8 Inventories and biological assets
Inventories and biological assets
in € thousand
Raw materials and
consumables
Work in progress
Immature biological assets
Finished goods
06/30/2018 06/30/2017
20,524
58,979
14,339
101,477
195,319
21,965
58,051
13,562
114,903
208,481
associated company in accordance with the equity method.
Inventories and biological assets decreased by €13,162 thou-
sand, or 6.3%, a figure that includes cumulative
4.5 Proportionately consolidated joint operations
impairment losses on the net realizable value totaling
Joint operations are based on joint arrangements that
€63,992 (54,344) thousand. Immature biological assets relate
always exist when the KWS Group jointly conducts
to living plants in the process of growing (before harvest). The
operations managed together with a third party pursuant to
field inventories of the previous year have been harvested
a contractual agreement. The operation is jointly managed
in full and the fields have been newly tilled in the year under
only if decisions on significant activities require the unanimous
review. Public subsidies of €1,289 (1,275) thousand, for which
consent of the parties involved. The assets and liabilities
all the requirements were met at the balance sheet date, were
and revenue and expenses from the joint operations are
granted for the total area under cultivation of 4,387 (4,308) ha
included proportionately (at 50%) in the consolidated
and were recognized in income. Future public subsidies
financial statements. The main activity of the proportionately
depend on the further development of European agricultural
consolidated GENECTIVE S.A. is development of its own
policy.
traits for genetically improving crops.
4.6 Financial assets
Investments in unconsolidated subsidiaries totaling
Current receivables
4.9 Current receivables
€155 (330) thousand and shares in cooperatives, GmbHs
and other securities classified as noncurrent assets that
are of minor significance are reported, in principle, at their
amortized cost totaling €471 (689) thousand since the fair
value cannot be reliably determined. This account also
includes other interest-bearing loans totaling €85 (144) thou-
sand. MLS Capital Fund II has been carried at a fair value of
€2,637 (1,603) thousand. The other financial assets totaling
€257 (303) thousand are reported at their amortized cost,
since the fair value cannot be reliably determined.
in € thousand
Trade receivables
Current tax assets
Other current financial assets
Other current assets
06/30/2018 06/30/2017
310,141
302,571
56,772
52,922
18,694
59,975
40,573
12,064
438,529
415,183
106 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 4. Notes to the Balance Sheet
Annual Report 2017/2018 | KWS Group Trade receivables were €310,141 thousand following
€302,571 thousand in the previous year. This amount
includes €5,757 (1,819) 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
06/30/2018
Trade receivables
310,141
272,111
22,720
1,146
1,947
Other current
financial assets
06/30/2017
52,922
363,063
37,786
0
0
0
309,897
22,720
1,146
1,947
1
0
1
Trade receivables
302,571
264,486
26,984
1,284
1,051
398
Other current
financial assets
40,573
343,144
33,688
1
0
0
0
298,174
26,985
1,284
1,051
398
3,454
0
3,454
4,249
0
4,249
The already overdue trade receivables that have been
partly written down amount to a net total of €8,762
(4,119) thousand.
In addition, specific bad-debt allowances for receivables
from customers in Middle East were recognized to an
amount of €8,671 thousand due to political uncertainties.
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 2017/2018 | Annual Financial Statements 107
KWS Group | Annual Report 2017/2018 The following allowances have mainly been made for possi-
ble risks of nonpayment of trade receivables:
Change in allowances on receivables
in € thousand
2017/2018
2016/2017
07/01
Addition
Disposal
Reversal
26,543
26,736
11,165
4,469
206
2,213
5,506
2,449
06/30
31,996
26,543
The receivables include an amount of €606 (639) thousand
The other reserves and net retained profit essentially
due after more than one year.
4.10 Securities
comprise the net income generated in the past by the
companies included in the consolidated financial state-
ments, minus dividends paid to shareholders, and the net
Securities amounting to €18,282 (9,455) thousand relate
retained profit. The differences from currency translation,
primarily to debt securities and fund shares.
the reserve for available-for-sale financial assets and
the reserve for revaluation of net liabilities/assets from
4.11 Cash and cash equivalents
defined benefit plans, as well as the reserve for currency
Cash and cash equivalents of €174,300 (181,913) thousand
trans lation for equity-accounted financial assets, are also
consists of balances with banks and cash on hand. The cash
carried here.
flow statement explains the change in this item compared
with the previous year, together with the change in securities.
Differences from translation of the functional currency of
4.12 Equity
foreign business operations into the currency used by the
group in reporting (euro) are carried in the item Adjust-
The fully paid-up subscribed capital of KWS SAAT SE
ments from currency translation. The item Revaluation
is still €19,800 thousand. The no-par bearer shares are
of net liabilities/assets from defined benefit plans and
certificated by a global certificate for 6,600,000 shares.
associated planned assets includes the actuarial gains
The company does not hold any shares of its own.
and losses from pensions and other employee benefits.
The capital reserves essentially comprise the premium
equity-accounted foreign business units into the currency
obtained as part of share issues.
used by the Group in reporting (euro) are essentially
Differences from translation of the functional currency of
carried in the reserve for currency translation for equity-
accounted financial assets.
108 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 4. Notes to the Balance Sheet
Annual Report 2017/2018 | 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
2017/2018
2016/2017
Before
taxes
Tax effect After taxes
Before
taxes
Tax effect After taxes
–31,238
–64
–31,302
–17,323
325
–64
261
–312
–28,913
–2,650
–3,712
–3,712
–34,950
0
0
1,270
1,270
1,206
–28,913
–13,194
–2,650
–2,442
–2,442
–33,744
–3,817
12,158
12,184
–5,165
50
50
0
0
–3,699
–3,706
–3,649
–17,273
–262
–13,194
–3,817
8,459
8,478
–8,814
The objective of KWS’ capital management activities is
term. Equity increased by €44,787 thousand to €881,783
to pursue the interests of shareholders and employees in
(836,996) thousand. This figure includes a reduction of
accordance with the corporate strategy and earn a reason-
€31,564 thousand (previous year: reduction of €17,011 thou-
able return on investment. One main goal is to retain the trust
sand) in the reserve for currency translation for foreign sub-
of investors, lenders and the market, so as to strengthen
sidiaries and equity-accounted joint ventures and associated
the company’s future business development. KWS’ capital
companies. Please refer to the statement of changes in equity
management activities intend to optimize the average cost
for further effects not recognized in the income statement.
of capital. Another goal is a balanced mix of equity and
debt capital. Consolidated income (after taxes and minority
An important indicator in capital management is the equity
interests) is €99,521 (97,549) thousand. However, there
ratio. It was 58.1% (56.0%) at June 30, 2018, and thus at a
was a total dividend payout of €21,120 (19,800) thousand in
good and solid level. The capital structure is as follows:
December 2017. This ensures the adequate internal financ-
ing of further operating business expansion in the long
Capital structure
in € thousand
Equity
Long-term financial borrowings
Other noncurrent liabilities
Short-term borrowings
Other noncurrent liabilities
Total capital
06/30/2018
881,783
168,698
165,625
61,287
240,288
1,517,681
Share of
total capital
58.1%
Share of
total capital
56.0%
06/30/2017
836,996
200,828
158,057
39,065
260,279
1,495,225
4. Notes to the Balance Sheet | Notes for the KWS Group 2017/2018 | Annual Financial Statements 109
KWS Group | Annual Report 2017/2018
The focus in selecting financial instruments is on financing
The other provisions mainly comprise provisions by the
with matching maturities, which is achieved by controlling
German companies for semi-retirement and loyalty bonuses.
the maturities. Long-term financial borrowings fell by
€32,130 thousand (previous year: decrease of €27,884 thou-
The pension provisions are based on defined benefit obliga-
sand). This is mainly due to the decrease in long-term
tions, determined by years of service and pensionable com-
financial loans from banks.
pensation. They are measured using the projected unit credit
4.13 Minority interest
method under IAS 19 (2011), on the basis of assumptions
about future developments. The assumptions in detail are
The KWS Group does not have any minority interests that
that wages and salaries in Germany will increase by 3.00%
are assessed as being significant.
(3.00%) annually, in the U.S. by 3.75% (3.75%) annually and
4.14 Noncurrent liabilities
in the rest of the world by 2.00% to 3.00% (1.80% to 3.00%)
annually. An annual increase in pensions of 2.00% (2.00%)
Noncurrent liabilities fell by €24,562 thousand (previous
is assumed in Germany. The discount rate in Germany was
year: decrease of €34,768 thousand). This is mainly due to
1.65% compared with 1.90% the year before, 4.15% in the
the decrease in long-term financial loans from banks.
U.S. compared with 3.75% the year before, and between
1.45% and 3.15% (1.65% and 3.15%) in the rest of the world.
Noncurrent liabilities
in € thousand
06/30/2018 06/30/2017
The following mortality tables were used at June 30, 2018:
Long-term provisions
Long-term borrowings
Trade payables
Deferred tax liabilities
Other noncurrent financial
liabilities
Other noncurrent liabilities
127,833
168,698
968
19,342
288
17,194
125,408
200,828
1,217
12,721
1,306
17,405
334,323
358,885
■■ In Germany: The 2018 G mortality table of Klaus Heubeck
■■ Abroad: Mainly RP-2014 Mortality Table Projection Scale
MP-2017 and INSEE TD/TV 13-15
Due to the change in actuarial assumptions in keeping
with the 2018 G mortality table of Klaus Heubeck, there is
an increase in the pension provisions of €1,636 thousand,
which was recognized directly in equity.
The trade payables and other long-term liabilities are due for
A retirement age of 63 years is imputed for Germany, a
payment in between one and five (one and five) years.
retirement age of 65 years is imputed for the U.S. and a
retirement age of 66 years is imputed for France.
Longterm provisions
in € thousand 06/30/2017
Changes in
the consoli
dated group,
currency
Interest
expenses
from com
pounding
Pension
provisions
Tax provisions
Other
provisions
111,897
1,698
11,813
125,408
–121
–14
0
–135
2,380
0
87
2,467
06/30/2018
Adjust
ment not
affecting
profit or
loss
3,712
0
0
3,712
Addition
649
914
1,260
2,823
Consump
tion
Reversal
4,396
1,053
979
6,428
0
0
13
13
114,121
1,545
12,168
127,834
110 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 4. Notes to the Balance Sheet
Annual Report 2017/2018 | 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, coupled
this rate of interest, the result is a shortfall in the plan. The
with benefits from the early retirement pension from the
corporate bonds and share funds are chosen to ensure risk
statutory pension insurance program
diversification and managed by an external fund manager.
■■ An invalidity pension for persons who suffer from occu-
pational disability or incapacity to work as defined by the
Change in interest rates
statutory pension insurance program
The fall in the returns on corporate bonds and thus the dis-
■■ A widow’s or widower’s pension
count rate will result in an increase in the obligations, which
is only partly compensated for by a change in the value of
For benefit obligations backed by a guarantee by an in-
the planned assets.
surance company toward three former members of the
Executive Board, the planned assets of €10,061 (9,428) thou-
Life expectancy
sand corres pond to the present value of the obligation. In
The present value of the defined benefit obligation from the
accordance with IAS 19 (2011), the pension commitments are
plan is calculated on the basis of the best-possible estimate
netted off 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
least one year and at least 1,000 working hours to earn an
the entitled employees results in an increase in the plan
entitlement.
liabilities.
The following benefits are granted from the pension plan:
In previous years, KWS countered the usual risks of direct
obligations by converting the pension obligations from
■■ An old-age pension at the age of 65
defined benefit to defined contribution plans. As a result,
■■ An early retirement pension before the age of 65 – to be
subsequent benefits will be provided by a provident fund
eligible, the employee must be at least 55 and the mini-
backed by a guarantee. The existing obligations, which are
mum vesting period is 5 years
partly covered by planned assets, are funded from the oper-
■■ A pro-rata pension if the employee reaches the minimum
ating cash flow and are subject to the familiar measurement
vesting period of 5 years, but is below 55
risks.
4. Notes to the Balance Sheet | Notes for the KWS Group 2017/2018 | Annual Financial Statements 111
KWS Group | Annual Report 2017/2018
The tables below show the changes in the accrued benefit
and planned assets:
Changes in accrued benefit entitlements
in € thousand
2017/2018
2016/2017
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
113,345
23,680
137,025
126,607
23,262
149,869
809
2,105
6,656
1,359
800
–1,180
2,168
2,905
5,476
993
1,613
–10,925
1,186
736
–521
2,179
2,349
–11,446
6,116
–1,201
4,915
–10,953
–1,020
–11,973
540
–4,987
21
–589
–428
0
561
–5,576
–428
0
28
–4,943
499
–534
–449
0
527
–5,477
–449
0
117,928
23,642
141,570
113,345
23,680
137,025
Germany
Abroad
Total
Germany
Abroad
Total
2017/2018
2016/2017
9,428
173
1,086
–626
15,700
25,128
10,217
13,221
23,438
552
725
129
437
566
678
–511
–305
1,274
1,764
–1,137
–305
1,274
–312
–606
1,024
–525
–284
1,827
712
–1,131
–284
1,827
10,061
17,388
27,449
9,428
15,700
25,128
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
2017/2018
2016/2017
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
117,928
23,642
141,570
113,345
23,680
137,025
10,061
107,867
17,388
6,254
27,449
114,121
9,428
103,917
15,700
25,128
7,980
111,897
112 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 4. Notes to the Balance Sheet
Annual Report 2017/2018 | 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)
2017/2018
Germany
Abroad
809
2,105
1,359
800
Total
2,168
2,905
Germany
Abroad
993
1,484
1,186
298
2016/2017
Total
2,179
1,782
2,914
2,159
5,073
2,477
1,484
3,962
–1,086
–678
–1,764
312
–1,024
–712
6,116
–1,201
4,915
–10,953
–1,020
–11,973
540
21
561
28
499
527
5,570
–1,858
3,712
–10,613
–1,545
–12,158
8,484
301
8,785
–8,136
–60
–8,196
The service cost is recognized in operating income in the
The fair value of the planned assets was split over the
respective functional areas by means of an appropriate
following investment categories:
formula. Net interest expenses and income are carried in the
interest result.
Breakdown of the planned assets by investment category
Germany
Abroad
Germany
Abroad
in € thousand
Corporate bonds
Equity funds
Consumer industry
Finance
Industry
Technology
Health care
Other
2017/2018
Total
4,755
11,456
4,755
11,456
1,964
1,475
1,393
2,346
1,297
2,981
1,177
17,388
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
Cash and cash equivalents
Reinsurance policies
Planned assets on June 30
10,061
10,061
1,177
10,061
27,449
9,428
9,428
The planned assets abroad relate mainly to the U.S.
The following sensitivity analysis at June 30, 2018, shows
There is no active market for the reinsurance policies in Ger-
change in the actuarial assumptions. No correlations between
many. There is an active market for the other planned assets:
the individual assumptions were taken into account in this,
the fair value can be derived from their stock market prices.
i. e., if an assumption varies, the other assumptions were kept
A total of 83.8% (previous year: 84.1%) of the corporate bonds
constant. The projected unit credit method used to calculate
have an AAA rating.
the balance sheet values was also used in the sensitivity
how the present value of the obligation would change given a
analysis.
4. Notes to the Balance Sheet | Notes for the KWS Group 2017/2018 | Annual Financial Statements 113
KWS Group | Annual Report 2017/2018
Sensitivity analysis
in € thousand
Discount rate
Anticipated annual pay increases
Anticipated annual pension increase
Life expectancy
Effect on obligation in 2017/2018
Effect on obligation in 2016/2017
Change in
assumption
+/– 100
basis points
+/– 50
basis points
+/– 25
basis points
+/– 1 year
Decrease
Increase
26,184
–20,535
–1,229
1,327
–4,264
–5,945
4,434
6,049
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
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
2018/2019
2019/2020
2020/2021
2021/2022
2022/2023
2023/2024–
2027/2028
2017/2018
in €
thousand
Germany
Abroad
5,233
5,273
5,138
5,057
5,031
798
774
1,008
947
1,086
Total
6,031
6,047
6,145
6,004
6,116
24,640
6,175
30,814
2017/2018
2018/2019
2019/2020
2020/2021
2021/2022
2022/2023–
2026/2027
Germany
Abroad
5,123
5,045
5,136
5,011
4,972
698
788
795
981
960
2016/2017
Total
5,820
5,833
5,931
5,992
5,933
24,355
6,050
30,406
The weighted average time at which the pension obligations
obligations above and beyond payment of the contributions
are due is 15.5 (15.4) years in Germany and 17.3 (17.1) years
(defined contribution plans). These comprise benefits that
abroad.
are funded solely by the employer and allowances for con-
version of earnings by employees.
Defined contribution plans
Apart from the above-described pension obligations, there
The total pension costs for fiscal 2017/2018 were as follows:
are other old-age pension systems. However, no provi-
sions have to be set up for them, since there are no further
Pension costs
in € thousand
Germany
Abroad
Cost for defined contribution plans
3,189
1,870
Service cost for the defined benefit
obligations
Pension costs
809
3,998
1,359
3,229
2017/2018
2016/2017
Total
5,059
2,168
7,227
Germany
Abroad
3,080
1,600
993
4,073
1,186
2,786
Total
4,680
2,179
6,859
114 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 4. Notes to the Balance Sheet
Annual Report 2017/2018 | KWS Group In addition, contributions of €14,417 thousand (previous year:
interest of between 0.9% and 2.25%. In addition, the benefit
€13,955 thousand) were paid to statutory pension insurance
obligation from salary conversion was backed by a guaran-
institutions.
tee that exactly matches the present value of the obligation
of €4,322 (3,928) thousand.
The costs for defined contribution plans in Germany mainly
related to the provident fund backed by a guarantee. The
The long-term financial borrowings include loans from banks
contributions to this pension plan were €2,201 (3,080) thou-
amounting to €168,698 (200,828) thousand. They have re-
sand. The return and income from the planned assets
maining maturities through 2028.
depend on the reinsurance policy, which yields guaranteed
4.15 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
06/30/2018
06/30/2017
42,311
60,536
65
686
72,774
38,782
65
218
61,287
39,065
2,903
56
72,762
75,721
39,171
11,288
71,797
1,266
65
74,069
75,400
25,620
16,318
70,167
301,575
299,344
in € thousand
06/30/2017
06/30/2018
Changes in
the consoli
dated group,
currency
Addition
Consump
tion
Reversal
Obligations from sales transactions
64,409
–1,995
27,052
53,904
1,736
33,826
Obligations from purchase
transactions
Other obligations
1,594
6,771
72,774
–2
135
943
5,394
1,508
4,320
–1,862
33,389
59,732
20
502
2,258
1,007
7,478
42,311
The obligations from sales transactions essentially relate
The tax liabilities of €39,171 (25,620) 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 2017/2018 | Annual Financial Statements 115
KWS Group | Annual Report 2017/2018 4.16 Derivative financial instruments
Hedging transactions
in € thousand
Currency hedges
Interest-rate hedges
Commodity hedges
06/30/2018
06/30/2017
Nominal
volume
Carrying
amounts
Fair value
Nominal
volume
Carrying
amounts
Fair value
199,505
34,000
0
233,505
3,129
–223
0
2,906
3,129
–223
0
162,977
34,000
182
–1,881
–311
5
–1,881
–311
5
2,906
197,159
–2,187
–2,187
Of the currency hedges, hedges with a nominal volume of
would be received to sell the asset or minimizes the amount
€199,505 (153,196) thousand have a remaining maturity of
that would be paid to transfer the liability, after taking into
less than one year, and hedges with a nominal volume of
account transaction costs, is used. These are active and
€0 (9,781) thousand have a remaining maturity of between
accessible markets for identical assets and liabilities, where
one and five years. Of the interest-rate derivatives, hedges
the fair value results from quoted prices that are observ-
with a nominal volume of €34,000 (34,000) thousand will
able (level 1 input factors). At the KWS Group, this relates
mature within one to five years. No commodity hedges were
to securities in the category “available-for-sale financial
concluded in the current fiscal year.
assets,” as well as fund shares at banks and other financial
assets whose price is likewise quoted in active markets.
4.17 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
market, i. e., the market with the largest volume of trading
level 3 input factors cannot be derived from observable
and the greatest business activity, is used to calculate the
market information.
fair value. If this market does not exist for the asset or liabil-
ities in question, the market that maximizes the amount that
116 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 4. Notes to the Balance Sheet
Annual Report 2017/2018 | 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:
06/30/2018
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
06/30/2017
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
Fair values
3,605
1
(1)
310,141
18,282
174,300
52,922
(5,303)
559,251
Fair values
3,069
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)
310,141
0
174,300
47,619
(0)
532,060
0
1
(1)
0
0
0
5,303
(5,303)
5,304
3,605
3,605
0
(0)
0
18,282
0
0
(0)
21,887
1
(1)
310,141
18,282
174,300
52,922
(5,303)
559,251
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
4. Notes to the Balance Sheet | Notes for the KWS Group 2017/2018 | Annual Financial Statements 117
KWS Group | Annual Report 2017/2018 It is assumed that the carrying amounts are the same as the
The fair value of derivative financial instruments is the pres-
fair values. In addition, the financial assets include securities
ent values of the payments related to these balance sheet
classified as noncurrent assets, whose fair value is measured
items. These instruments are mainly forward exchange deals.
by their prices on the stock market (level 1).
They are measured on the basis of quoted exchange rates
and yield curves available from the market data and allowing
The fair value of trade receivables, other current financial
for counterparty risks (level 2).
assets and cash and cash equivalents is the same as the
carrying amounts as a result of the short time in which these
The carrying amounts and fair values of the financial lia-
instruments are due.
bilities (financial instruments), split into the measurement
categories in accordance with IAS 39, are as follows:
The fair values of securities classified as current assets are
based on the price for them quoted on active markets (level 1).
06/30/2018
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
171,032
168,698
968
288
(223)
61,287
75,721
11,288
(2,174)
968
65
(0)
61,287
75,721
9,114
(0)
Total
320,584
315,853
0
0
223
(223)
0
0
2,174
(2,174)
2,397
Total
carrying
amount
168,698
968
288
(223)
61,287
75,721
11,288
(2,174)
318,250
118 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 4. Notes to the Balance Sheet
Annual Report 2017/2018 | KWS Group
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
The fair value of long-term borrowings was calculated on the
None of the reported financial instruments will be held to
basis of discounted cash flows. To enable that, interest rates
maturity.
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
06/30/2018
06/30/2017
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
5,304
21,863
0
21,863
5,304
0
0
2,397
2,397
0
0
0
0
0
5,304
0
1,685
21,863
12,182
0
27,167
12,182
1,685
2,397
2,397
0
0
3,873
3,873
0
0
0
0
0
1,685
12,182
13,867
3,873
3,873
4. Notes to the Balance Sheet | Notes for the KWS Group 2017/2018 | Annual Financial Statements 119
KWS Group | Annual Report 2017/2018
The table below presents the net gains/losses carried in the
In order to control the credit risk resulting from receivables
income statement for financial instruments in each measure-
from customers, a regular creditworthiness analysis is
ment category:
Net gain/losses of financial instruments
in € thousand
06/30/2018 06/30/2017
Available-for-sale financial
assets
Financial assets held for
trading
Loans and receivables
Financial liabilities measured
at amortized cost
Financial liabilities held
for trading
conducted by the responsible credit manager in accor-
dance with the credit volume. Security is available for some
of these receivables and is used depending on the local
circumstances. 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 trans-
103
29
3,532
–2,829
–1,059
–68
–11,763
–11,251
actions are exclusively conducted within defined limits with
banks and partners who always have an investment grade.
1,355
–2,506
Compliance with the risk limits is constantly monitored. The
limits are adjusted depending on the credit volume only sub-
ject to the approval of the regional or divisional management
The net income from available-for-sale financial assets
and the Executive Board.
includes 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
syndicated loan of €200 million runs until October 2021,
includes effects from changes in the allowances for
since the option of extending it was utilized. This loan
There are unutilized credit lines totaling €251 million. The
impairment.
contains only one financial covenant, for which the dynamic
gearing ratio is used as a financial indicator. Compliance
The net losses from financial liabilities measured at amor-
with the covenants is regularly reviewed by KWS SAAT SE’s
tized cost result mainly from interest expense.
Treasury unit and reported to the banks every quarter
in connection with the quarterly and annual financial
Interest income from financial assets that are not measured
statements.
at fair value and recognized in the income statement was
€3,852 (2,900) thousand. Interest expenses for financial
borrowings were €11,763 (11,251) thousand.
120 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 4. Notes to the Balance Sheet
Annual Report 2017/2018 | 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 2017/2018
in € thousand
Book value
Liquidity analysis of financial liabilities
06/30/2018
06/30/2018
Total
Financial liabilities
Trade payables
Other financial liabilities
262,115
226,921
76,938
14,227
76,689
14,227
Due in
< 1 year
57,279
75,721
14,227
Due in
> 1 year and
< 5 years
166,302
968
0
Cash flows
Due in
> 5 years
3,340
0
Nonderivative financial liabilities
353,280
317,837
147,227
167,270
3,340
Payment claim
Payment obligation
Derivative financial liabilities
2,397
Fiscal year 2016/2017
in € thousand
Book value
77,383
80,490
3,107
77,383
80,490
3,107
0
0
0
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
76,617
13,751
330,261
332,641
112,163
117,830
Derivative financial liabilities
3,873
5,667
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
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 inter-
sensitivity of a currency to fluctuations was determined.
est 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-
The following sensitivity analyses show the impact on
1.19 (1.09) USD/EUR. If the US dollar depreciated by 10%,
income and equity. The calculated figures relate to the port-
the financial instruments would be worth €199 (192) thou-
folio at the balance sheet date and show the hypothetical
sand. If the US dollar appreciated by 10%, the financial
tance. The average exchange rate in the fiscal year was
effect for one year.
instruments would have a value of €243 (234) thousand.
The net income for the year and equity would change
accordingly.
4. Notes to the Balance Sheet | Notes for the KWS Group 2017/2018 | Annual Financial Statements 121
KWS Group | Annual Report 2017/2018 Interest rate sensitivity is a measure for showing the interest
4.19 Other financial obligations
rate risk. The variable-interest components of the KWS
The obligations from uncompleted capital expenditure
Group’s interest expenses and interest income were deter-
projects, mainly relating to property, plant and equipment,
mined to calculate it. An average rate of interest per Group
and other commitments amount to €45,296 thousand
company for the past fiscal year was then formed for all
(€22,123 thousand).
relevant investments and loans. This average rate of interest
was then used in a scenario analysis to calculate the effects
Obligations under rental agreements and leases
on the interest result and equity if the interest 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 interest of 1 per-
centage point would result in additional interest expense of
€0.2 million (previous year: expense of €0.5 million); equity
would fall by €0.1 million (previous year: a fall of €0.3 million)
in € thousand
Due within one year
Due between 1 and 5 years
Due after 5 years
06/30/2018 06/30/2017
14,071
16,516
9,007
39,594
17,216
34,219
4,399
55,834
in the event of such a change in the rate of interest. A reduc-
The leases relate primarily to full-service agreements for
tion in the rate of interest of 1 percentage point would add a
fleet vehicles, which also include services for which a total
further €0.2 (0.5) million in income. Equity would increase by
of €2,298 thousand was paid in the year under review
€0.1 million (previous year: an increase of €0.3 million) in the
(previous year: €4,620 thousand for IT equipment and fleet
event of such a change in the rate of interest.
vehicles). The main leasehold obligations relate to land
4.18 Contingent liabilities
As in the previous year, there are no contingent liabilities to
Other guarantees with respect to third parties amount to
report at the balance sheet date.
€48,808 (€25,856) thousand. The likelihood that these guar-
under cultivation.
antees will be utilized is seen as slight, based on the experi-
ence of previous years. No claims have yet been made.
122 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 4. Notes to the Balance Sheet
Annual Report 2017/2018 | 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
2017/2018
% of sales
2016/2017
% of sales
1,068.0
100.0
1,075.2
446.1
621.9
201.5
197.7
95.8
65.7
60.0
132.6
41.8
58.2
18.9
18.5
9.0
6.2
5.6
12.4
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
Net financial income/expenses
5.4
0.5
16.6
1.5
Result of ordinary activities
138.0
12.9
148.2
13.8
Taxes
Net income for the year
Share of minority interest
Net income after minority interest
5.1 Net sales and function costs
By product category
in € thousand
Certified seed sales
Royalties income
Basic seed sales
Services fee income
Other sales
38.3
99.7
0.1
99.6
3.6
9.3
0.0
9.3
50.5
97.7
0.2
97.5
4.7
9.1
0.0
9.1
2017/2018
2016/2017
961,199
967,736
66,110
19,769
3,432
17,502
59,783
17,843
4,288
25,594
1,068,012
1,075,244
5. Notes to the Income Statement | Notes for the KWS Group 2017/2018 | Annual Financial Statements 123
KWS Group | Annual Report 2017/2018 By region
in € thousand
Germany
Europe (excluding
Germany)
North and South
America
Rest of world
2017/2018
2016/2017
235,303
226,291
Selling expenses increased by €861 thousand to
€201,537 (200,676) thousand, or 18.9% (18.7%) of sales.
Research & development is recognized as an expense
504,985
464,283
in the year it is incurred; in the year under review, this
269,553
58,171
317,472
67,198
amounted to €197,696 (190,327) thousand. Development
costs for new varieties are not recognized as an asset
because evidence of future economic benefit can only be
1,068,012
1,075,244
provided after the variety has been officially certified.
For further details of sales, see segment reporting.
€15,960 thousand to €95,793 thousand, representing
General and administrative expenses increased by
The cost of sales decreased by 9.7% to €446,063
particular, due to the process of optimizing our organiza-
(493,922) thousand, or 41.8% (45.9%) of sales. The key fac-
tional structure.
9.0% of sales, after 7.4% the year before. They rose, in
tors in this development were savings in license payments
in the U.S. and higher net sales shares in regions with a
relatively low cost of sales. The total cost of goods sold
was €275,388 (289,427) 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 impair-
ment loss
2017/2018
2016/2017
14,268
10,746
2,907
2,612
5.2 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 from government grants. The performance-based
government grants mainly relate to breeding allowances
and farm payments.
124 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 5. Notes to the Income Statement
2017/2018
2016/2017
52
1,915
31,418
6,007
7,121
2,602
1,329
15,223
65,667
2,693
3,841
26,847
3,777
6,166
7,157
269
18,956
69,706
Annual Report 2017/2018 | KWS Group
5.3 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 €2,529 (3,728) thousand were
recognized as an expense in the Corn Segment, €9,925
(713) thousand in the Sugarbeet Segment and €234 (379)
thousand in the Cereals Segment.
5.4 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
2017/2018
2016/2017
1,090
12,688
1,123
35,144
18
2,797
7,174
60,034
943
4,526
294
29,149
1,001
1,798
10,890
48,601
2017/2018
2016/2017
3,943
9,749
0
103
0
2,154
122
1
–7,980
13,414
0
0
0
13,414
5,434
3,043
9,510
32
26
32
1,794
71
3
–8,309
24,935
3
10
40
24,908
16,599
Net income from equity investments fell year on year by
(–8,309) thousand, net financial income/expenses fell by
€11,494 thousand. Income from equity-accounted financial
€11,165 thousand to €5,434 (16,599) thousand. The interest
assets decreased from €24,935 thousand to €13,414 thou-
effects from pension provisions comprise interest expenses
sand. Together with an interest result of €–7,980
(compounding) and the planned income.
5. Notes to the Income Statement | Notes for the KWS Group 2017/2018 | Annual Financial Statements 125
KWS Group | Annual Report 2017/2018
5.5 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
2017/2018
2016/2017
34,248
1,178
33,070
–4,275
4,085
5,677
–1,592
38,333
54,077
17,760
36,317
6,741
–3,599
–2,035
–1,564
50,478
KWS pays tax in Germany at a rate of 29.1%. Corporate in-
time in December 2017. There is thus a carrying amount of
come tax of 15.0% (15.0%) and solidarity tax of 5.5% (5.5%)
€0 thousand at June 30, 2018 (previous year: €1,235 thou-
are applied uniformly to distributed and retained profits. In
sand). A total of €1,235 (1,235) thousand was recovered in
addition, trade tax is payable on profits generated in Germany.
the year under review and recognized directly in equity.
Trade income tax is applied at a weighted average rate of
13.3% (13.2%), resulting in a total tax rate of 29.1% (29.0%).
The profits generated by Group companies outside Germany
are taxed at the rates applicable in the country in which they
The “Law on Tax Measures Accompanying Introduction of
are based. The tax rates in foreign countries vary between
the Societas Europaea and Amending Further Tax Regu-
9.0% (10.0%) and 35.0% (39.0%).
lations” (SEStEG), which was passed at the end of 2006,
means that the corporate income tax credit balance at
The deferred taxes that are recognized relate to the follow-
December 31, 2006, can be realized. It was paid out in ten
ing balance sheet items and tax loss carryforwards:
equal annual amounts from 2008 to 2017, and for the last
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
2017/2018
2016/2017
2017/2018
2016/2017
480
366
0
1,383
15,971
1,785
20,344
2,706
86
0
279
11,702
5,341
26,892
(19,035)
(20,495)
19,308
59,637
8,397
11,941
58,947
3,752
2,476
16,756
4
6,549
1,088
10,326
271
(92)
658
4,297
18,005
7
1,472
1,047
2,686
1,246
(1,241)
125
38,128
28,885
0
0
–18,787
–16,164
–18,787
–16,164
49,247
46,535
19,341
12,721
Due to the use of tax loss carryforwards and temporary
There is a deferred tax expense of €684 (2,442) 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 €13 (100) thousand.
wards and temporary differences in the year under review.
The write-up of deferred taxes results in deferred tax
income of €320 (2,754) thousand.
126 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 5. Notes to the Income Statement
Annual Report 2017/2018 | KWS Group
No deferred taxes were formed for tax loss carryforwards
made losses in the past period or the previous period. These
totaling €17,704 (15,772) thousand that have not yet been
were considered recoverable, since it is assumed that the
utilized. Of these, €4,053 (4,591) thousand must be utilized
companies in question will post taxable profits in the future.
within a period of five years and €0 (2,251) thousand
The fact is taken into account here that the KWS Group may
within a period of nine years. Loss carryforwards totaling
realize income with a delay due to the long-term nature of
€13,650 (8,930) thousand can be utilized without any time
research & development spending.
limit.
Deferred taxes were formed for all deductible temporary
approximately €4,500 thousand resulting from a change in
In addition, the company posted deferred tax income of
differences.
tax rates in the U.S., due to the tax reform there. The tax rate
used to determine deferred taxes in the U.S. thus fell from
No deferred taxes were recognized for temporary differences
37% to 26%.
amounting to €35,633 (37,331) thousand related to shares in
subsidiaries in keeping with IAS 12.39.
The reconciliation of the expected income tax expense to
In the year under review, there were surpluses of deferred tax
the consolidated income before taxes and the nominal tax
assets from temporary differences and loss carryforwards
rate for the Group of 29.1% (29.0%), taking into account the
totaling €20,913 (15,376) thousand at group companies that
following effects.
the reported income tax expense is derived on the basis of
Reconciliation of income taxes
in € thousand
Earnings before income taxes
Expected income tax expense1
Reconciliation with the reported income tax expense
Differences from the Group’s tax rate
Effects of changes in the tax rate
Tax effects from:
Expenses not deductible for tax purposes and other additions
tax-free income
other permanent deviations
Reassessment of the recognition and measurement of deferred tax assets
Tax credits
Taxes relating to previous years
Other effects
Reported income tax expense
Effective tax rate
1 Tax rate in Germany: 29.1%
Other taxes, primarily real estate tax, are allocated to the
relevant functions.
2017/2018
2016/2017
137,990
40,190
460
–4,183
6,100
–7,895
365
7,938
–374
–4,725
7
38,333
27.8%
148,190
43,030
3,850
–27
8,073
–13,629
1,868
–688
–464
8,318
147
50,478
34.1%
5. Notes to the Income Statement | Notes for the KWS Group 2017/2018 | Annual Financial Statements 127
KWS Group | Annual Report 2017/2018
5.6 Personnel costs/employees
5.7 Share-based payment
July 1 to June 30
in € thousand
Wages and salaries
Social security contributions,
expenses for pension plans
and benefits
2017/2018
2016/2017
202,912
198,675
51,017
48,316
253,929
246,991
Employee Stock Purchase Plan
KWS has established an Employee Stock Purchase Plan. All
employees who have been with the company for at least one
year without interruption and have a permanent employment
relationship that has not been terminated at a KWS Group
company that participates in the program are eligible to take
part. That also includes employees who are on maternity
leave or parental leave or who are in semi-retirement.
Personnel costs went up by €6,938 thousand to €253,929
thousand, an increase of 2.8%. The number of employees
Each employee can acquire up to 500 shares. A bonus of
increased by 210 to 5,147, or by 4.3%. Of the 5,147 (4,937)
20% is deducted from the purchase price, which depends
employees, 3,742 (3,607) are permanent employees, 1,282
on the price applicable on the key date. The shares are
(1,193) are temporary employees and 123 (137) are trainees.
subject to a lock-up period of 4 years beginning when they
Compensation increased by 2.1% from €198,675 thousand
to a dividend, if KWS SAAT SE pays one out, exists during
in the previous year to €202,912 thousand. Social security
the lock-up period. Holders can also exercise their right to
contributions, expenses for pension plans and benefits
participate in the Annual Shareholders’ Meeting during the
were €2,701 thousand higher than in the previous year.
lock-up period. They can dispose freely of the shares after
are posted to the employee’s securities account. The right
Employees by region1
Germany
Europe (excluding Germany)
North and South America
Rest of world
Total
1 Average number of employees
2017/2018
2016/2017
1,952
1,451
1,524
220
5,147
the lock-up period.
A total of 9,832 (11,594) shares were repurchased for the
Employee Stock Purchase Plan at a total price of €3,388
(3,354) thousand in the year under review. The total cost for
issuing shares at a reduced price was €699 thousand in the
1,911
1,454
1,287
285
past fiscal year (previous year: €750 thousand).
4,937
Long-term incentive (LTI)
The stock-based compensation plans awarded at the
KWS Group are recognized in accordance with IFRS 2
With our joint ventures, associated company and joint oper-
“Share-based Payment.” The incentive program, which
ation consolidated proportionately, the number of employees
was launched in fiscal 2009/2010, involves stock-based
was 5,834 (5,621). The reported number of employees is
payment transactions with cash compensation, which are
greatly influenced by seasonal labor.
measured at fair value at every balance sheet date. Mem-
bers of the Executive Board are obligated to acquire shares
in KWS SAAT SE every year in a freely selectable amount
ranging between 20% and 50% of the gross perfor-
mance-related bonus. Along with that, all members of the
first management level below the Executive Board likewise
128 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 5. Notes to the Income Statement
Annual Report 2017/2018 | KWS Group
take part in an LTI program. As part of this program, they
are obligated to invest in shares in KWS SAAT SE every
6. Notes to the Cash Flow Statement
year in a freely selectable amount ranging between 10%
The cash flow statement shows the changes in cash and
and 40% of the gross performance-related bonus. The
cash equivalents of the KWS Group in the three categories
members of the Executive Board and the first management
of operating activities investing activities and financing ac-
level below the Executive Board may sell these shares at the
tivities. The effects of exchange rate changes and changes
earliest after a regular holding period of five years beginning
in the consolidated group have been eliminated from the
at the time they are acquired (end of the quarter in which
respective balance sheet items, except those affecting cash
the shares were acquired). The entitled persons are paid a
and cash equivalents.
long-term incentive (LTI) in the form of cash compensation
after the holding period for the tranche in question. This
6.1 Net cash from operating activities
was the case for members of the Executive Board for the
The cash proceeds from operating activities are substan-
first time in January 2017. Its level is calculated on the basis
tially determined by cash earnings. In the year under review
of KWS SAAT SE’s share performance and on the KWS
they were €147,202 (105,408) thousand. The proportion of
Group’s return on sales (ROS), measured as the ratio of
cash earnings included in sales was 13.8% (9.8%). Since
operating income to net sales, over the holding period. For
current receivables rose and current liabilities had already
persons with contracts as of July 1, 2014, the cash compen-
been repaid, there were net cash outflows of €22,682 thou-
sation for members of the Executive Board is a maximum
sand. The cash proceeds from operating activities also
of one-and-half times (for the Chief Executive Officer two
include interest income of €3,943 (3,035) thousand and
times), and for members of the first management level below
interest expense of €8,418 (7,768) thousand. Income tax
the Executive Board a maximum of two times their own in-
payments amounted to €16,451 (52,610) thousand. The
vestment (LTI cap). The costs of this compensation are rec-
dividends received from the joint ventures are also carried
ognized in the income statement over the period and, taking
here and total €12,110 (16,861) thousand.
the cash compensation in January 2018 into account, were
€1,038 (1,213) thousand in the period under review. The pro-
6.2 Net cash from investing activities
vision for it at June 30, 2018, was €2,440 (2,570) thousand.
A net total of €68,071 (64,760) thousand was required to
The LTI fair values are calculated by an external expert.
finance investing activities.
5.8 Net income for the year
6.3 Net cash from financing activities
The KWS Group’s net income for the year was
Financing activities resulted in cash outflows of €25,284
€99,657 (97,712) thousand on operating income of
(29,604) thousand.
€132,556 (131,591) thousand and net financial income/
expenses of €5,434 (16,599) thousand. The return on sales
6.4 Supplementary information on the
thus increased to 9.3% (9.1%). Net income for the year after
cash flow statement
minority interest was €99,521 (97,549) thousand. Earnings
Of the changes in cash and cash equivalents caused by
per share in the year under review were €15.08 (14.78).
exchange rate, consolidated group and measurement
changes, a total of €–3,494 (–525) 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 2017/2018 | Annual Financial Statements
129
KWS Group | Annual Report 2017/2018 7. Other Notes
7.1 Proposal for the appropriation of net retained profits
■■ KWS LOCHOW GMBH, Bergen
A proposal will be made to the Annual Shareholders’
■■ KWS LANDWIRTSCHAFT GMBH, Einbeck
Meeting that, of KWS SAAT SE’s net retained profit of
■■ BETASEED GMBH, Frankfurt
€22,172 thousand, an amount of €21,120 thousand should
■■ DELITZSCH PFLANZENZUCHT GMBH, Einbeck
be distributed as a dividend of €3.20 (3.20) for each of the
■■ KANT-HARTWIG & VOGEL GMBH, Einbeck
6,600,000 shares.
■■ AGROMAIS GMBH, Everswinkel
The balance of €1,052 (31) thousand is to be carried forward
to the new account.
■■ KWS SERVICES DEUTSCHLAND GMBH, Einbeck
KWS SAAT SE prepares the consolidated financial state-
ments for the largest and smallest group of companies.
7.2 Total remuneration of the Supervisory Board and the
Executive Board and of former members of the Super-
7.4 Related party disclosures
visory Board and the Executive Board of KWS SAAT SE
Transactions with related parties in accordance with IAS 24
The compensation of the members of the Supervisory
are all business dealings that are conducted with the report-
Board was converted to a purely fixed compensation pursu-
ing entity by entities or natural persons or their close family
ant to the resolution adopted by the Annual Shareholders’
members, if the party or person in question controls the
Meeting in December 2017. Members of the Supervisory
reporting entity or is a member of its key management per-
Board who are members of a committee – with the excep-
sonnel, for example. There were no business transactions
tion of the Chairman of the Supervisory Board – receive an
or legal transactions that required reporting for this group of
additional fixed payment therefor. The total compensation
persons in fiscal 2017/2018. As part of its operations, KWS
for members of the Supervisory Board amounts to €610
procures goods and services worldwide from a large num-
(504) thousand, excluding value-added tax.
ber of business partners. They also include companies in
which KWS has an interest and on which representatives of
In fiscal year 2017/2018, total Executive Board compen-
KWS’ Supervisory Board exert a significant influence. Busi-
sation amounted to €4,016 (3,772) thousand. The variable
ness dealings with these companies are always conducted
compensation, which is calculated on the basis of the net
on an arm’s-length basis and are not material in terms of
profit for the period of the KWS Group, is made up of a
volume. As part of Group financing, short- and medium-term
bonus and a long-term incentive. The bonus totals €1,899
term loans are taken out from, and granted to, subsidiaries at
(1,806) thousand; there are contributions from the long-
market interest rates. The compensation of members of the
term incentive tranche for 2016/2017 totaling €741 thousand
Executive Board comprises short-term employee bene-
(tranche for 2015/2016: €583 thousand). Pension provisions
fits, share-based payment benefits and post-employment
totaling €1,291 (1,180) thousand were formed for two mem-
benefits.
bers of the Executive Board at KWS SAAT SE.
Compensation of former members of the Executive Board and
bers of the Executive Board and the Supervisory Board are
their surviving dependents amounted to €1,575 (1,774) thou-
presented in the Compensation Report, which is part of the
sand. Pension provisions recognized for this group of
audited Combined Management Report.
Individualized disclosures on the compensation of mem-
persons amounted to €7,315 (7,337) thousand as of
June 30, 2018, before being netted off with the relevant
No other related parties have been identified for whom there
is a special reporting requirement under IAS 24.
planned assets.
7.3 Disclosure
The following subsidiaries with the legal form of a corpo-
ration within the meaning of Section 264 (3) of the German
Commercial Code (HGB) have utilized the exemption
provided in Section 264 (3) of the German Commercial Code
(HGB) as regards preparation of financial statements and
their publication:
130 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 7. Other Notes
Annual Report 2017/2018 | 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
2017/2018 2016/2017 2017/2018 2016/2017 2017/2018 2016/2017 2017/2018 2016/2017
0
0
0
0
0
0
1,664
2,935
14,736
16,058
11,364
12,305
0
0
0
0
7,461
111
8,053
133
487
0
169
0
0
0
223
0
0
0
0
0
7.5 Declaration of compliance with the German
7.7 Report on events after the balance sheet date
Corporate Governance Code
The provisions of IAS 29 “Financial Reporting in Hyper-
KWS SAAT SE has issued the declaration of compliance
inflationary Economies” are relevant for KWS Argentina S.A.
with the German Corporate Governance Code required by
for the first time in fiscal 2018/2019. The cumulative inflation
Section 161 Aktiengesetz (AktG – German Stock Corpo-
rate over the past three years has been 148%. The exchange
ration Act) and made it accessible to its shareholders on the
rate for the Argentinean peso was 10.1629 ARS/EUR on
company’s home page at www.kws.com.
June 30, 2015, and 32.6625 ARS/EUR on June 30, 2018. The
7.6 Audit of the annual financial statements
breeding services and conducts contra-seasonal seed
On December 14, 2017, the Annual Shareholders’ Meeting
multiplication operations for KWS SAAT SE. A new item
of KWS SAAT SE elected the accounting firm Ernst & Young
“Adjustment for inflation in accordance with IAS 29” will be
GmbH, Hanover, to be the Group’s auditors for fiscal year
included in the statement of changes in fixed assets in the
2017/2018.
future.
company mainly sells corn seed in Argentina. It also provides
Fee paid to the external auditors under
Section 314 (1) No. 9 HGB
in € thousand
2017/2018 2016/2017
a) Audit of the consolidated
financial statements
b) Other certification services
c) Tax consulting
d) Other services
Total fee paid
The Supervisory Board and Executive Board of
KWS SAAT SE decided at the beginning of September 2018
to propose a change in the company’s legal form to a
partner ship limited by shares (KGaA) and a stock split
at a ratio of 1:5. As part of the change in legal form,
KWS SAAT SE would be converted into an SE & Co. KGaA.
The aim of the change in form is to sustainably further the
company’s continuing growth strategy. As a partnership
669
63
0
0
625
0
0
0
732
625
limited by shares (KGaA), KWS will be able to leverage
future growth opportunities with greater agility and flexibility
and raise the equity required for that, without losing the
The non-audit services in the fiscal year comprised the
company’s character as a listed family business. In order
voluntary audit of the Non-Financial Declaration, voluntary
to increase the share’s fungibility, a stock split at the ratio
audits of annual financial statements, and agreed examina-
of 1:5 is also being prepared. At the same time, there is to
tion activities.
be a capital increase from company funds, i.e., reserves
will be converted into capital stock. The decision by the
Executive Board and the Supervisory Board on the related
resolutions to be proposed to the upcoming Annual Share-
holders’ Meeting on December 14, 2018, had not been
made by the time the audit opinion was issued
7. Other Notes | Notes for the KWS Group 2017/2018 | Annual Financial Statements 131
KWS Group | Annual Report 2017/2018
Mandates
Membership of comparable German and foreign oversight
boards:
■■ DR.SCHNELL Chemie GmbH, Munich
(Member of the Advisory Board)
■■ DR.SCHNELL GmbH & Co. KGaA, Munich
(Deputy Chairwoman of the Supervisory Board)
Membership of other legally mandated supervisory boards:
■■ Givaudan SA (member of the Board of Directors,
the Audit Committee and the Compensation Committee)
■■ CEVA Logistics AG, Baar, Switzerland (a member of the
Executive Board and Chairman of the Audit Committee)
Membership of comparable German and foreign oversight
boards:
■■ Louis Dreyfus Holding B.V., Amsterdam, (member of the
Supervisory Board and Audit Committee)
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)
7.8 Board 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
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 (until December 14, 2017)
Dr. Marie Th. Schnell
Munich
Graduate in Communications
Deputy Chairwoman of the Supervisory Board of
KWS SAAT SE
(since December 14, 2017)
Victor W. Balli
Oberrieden (Switzerland)
Chemical Engineer
(since December 14, 2017)
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
Christine Coenen
Einbeck
Interpreter
Employee representative and Chairwoman of the
European Employee Committee (EEC)
(since December 14, 2017)
Dr. Berthold Niehoff
Einbeck
Agricultural Scientist
Employee Representative
(until December 14, 2017)
Dr. Arend Oetker
Berlin
Honorary member of the Supervisory Board of KWS SAAT SE
132 Annual Financial Statements | Notes for the KWS Group 2017/2018 | 7. Other Notes
Annual Report 2017/2018 | KWS Group Supervisory Board Committees
Committee
Audit Committee
Chairman
Members
Hubertus von Baumbach (until 2017/12)
Victor Balli (since 2017/12)
Andreas J. Büchting
Jürgen Bolduan
Committee for Executive Affairs
Andreas J. Büchting
Nominating Committee
Andreas J. Büchting (until 2017/12)
Marie Th. Schnell (since 2017/12)
Hubertus von Baumbach (until 2017/12)
Marie Th. Schnell (since 2017/12)
Cathrina Claas-Mühlhäuser
Marie Th. Schnell (until 2017/12)
Andreas J. Büchting (since 2017/12)
Cathrina Claas-Mühlhäuser
Mandates (06/30/2018)
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 & 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 2017/2018 | Annual Financial Statements 133
KWS Group | Annual Report 2017/2018 Independent Auditor’s Report
To KWS SAAT SE
Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that
our audit has not led to any reservations relating to the legal
Report on the audit of the consolidated financial
compliance of the consolidated financial statements and of
statements and of the group management report
the group management report.
Opinions
Basis for the opinions
We have audited the consolidated financial statements of
We conducted our audit of the consolidated financial state-
KWS SAAT SE, Einbeck, and its subsidiaries (the Group),
ments and of the group management report in accordance
which comprise the consolidated statement of comprehen-
with Sec. 317 HGB and the EU Audit Regulation (No 537/2014,
sive income for the fiscal year from 1 July 2017 to 30 June
referred to subsequently as “EU Audit Regulation”) and in
2018, and the consolidated statement of financial position
compliance with German Generally Accepted Standards for
as at 30 June 2018, consolidated statement of changes in
Financial Statement Audits promulgated by the Institut der
equity and consolidated statement of cash flows for the fis-
Wirtschaftsprüfer [Institute of Public Auditors in Germany]
cal year from 1 July 2017 to 30 June 2018, and notes to the
(IDW). Our responsibilities under those requirements and
consolidated financial statements, including a summary of
principles are further described in the “Auditor’s responsi-
significant accounting policies. In addition, we have audited
bilities for the audit of the consolidated financial statements
the group management report of KWS SAAT SE, which was
and of the group management report” section of our auditor’s
combined with the management report of the Company, for
report. We are independent of the group entities in accor-
the fiscal year from 1 July 2017 to 30 June 2018. In accor-
dance with the requirements of European law and German
dance with the German legal requirements, we have not
commercial and professional law, and we have fulfilled our
audited the content of the parts of the group management
other German professional responsibilities in accordance
report listed in the appendix to the auditor’s report.
with these requirements. In addition, in accordance with Art.
In our opinion, on the basis of the knowledge obtained in
not provided non-audit services prohibited under Art. 5 (1) of
the audit,
the EU Audit Regulation. We believe that the audit evidence
■■ the accompanying consolidated financial statements
we have obtained is sufficient and appropriate to provide a
comply, in all material respects, with the IFRSs as adopt-
basis for our opinions on the consolidated financial state-
ed by the EU, and the additional requirements of German
ments and on the group management report.
10 (2) f) of the EU Audit Regulation, we declare that we have
commercial law pursuant to Sec. 315e (1) HGB [“Handels-
gesetzbuch”: German Commercial Code] and, in compli-
Key audit matters in the audit of the consolidated
ance with these requirements, give a true and fair view of
financial statements
the assets, liabilities and financial position of the Group
Key audit matters are those matters that, in our profes-
as at 30 June 2018 and of its financial performance for the
sional judgment, were of most significance in our audit of
fiscal year from 1 July 2017 to 30 June 2018, and
the consolidated financial statements for the fiscal year
■■ the accompanying group management report as a whole
from 1 July 2017 to 30 June 2018. These matters were
provides an appropriate view of the Group’s position. In all
addressed in the context of our audit of the consolidated
material respects, this group management report is con-
financial statements as a whole, and in forming our opinion
sistent with the consolidated financial statements, com-
thereon; we do not provide a separate opinion on these
plies with German legal requirements and appropriately
matters.
presents the opportunities and risks of future develop-
ment. Our opinion on the group management report does
not cover the content of the parts of the group manage-
ment report listed in the appendix to the auditor’s report.
134 Annual Financial Statements | Notes for the KWS Group 2017/2018 | Independent Auditor’s Report
Annual Report 2017/2018 | KWS Group Below, we describe what we consider to be the key
Reference to related disclosures
audit matters:
With regard to the recognition and measurement policies
applied for the recognition of revenue from the sale of
(1) Revenue recognition from the sale of seeds
seeds, refer to the disclosure on the recording of income
and expenses in the section “Accounting policies” in the
Reasons why the matter was determined to be a key
notes to the consolidated financial statements.
audit matter
In the consolidated financial statements of KWS SAAT SE,
(2) Current and deferred income taxes
revenue from the sale of seeds is recognized when risk
passes, taking contractually agreed return deliveries into
Reasons why the matter was determined to be a key
consideration. In light of the large number of different
audit matter
contractual agreements and the resulting judgment exer-
The KWS SAAT SE Group operates in different legal juris-
cised in assessing expected return deliveries, we consider
dictions with the resulting complexity of matters affecting
revenue recognition to be complex and therefore to pose
the recognition of current and deferred income taxes,
an elevated risk of incorrect recognition.
namely the transfer prices used, changes in tax legislation
Auditor’s response
and intragroup financing. To calculate the provision for tax
obligations and deferred tax items, the executive directors
During our audit, we considered, based on the criteria
of KWS SAAT SE must exercise judgment in assessing
defined in IAS 18, the accounting policies applied in ac-
tax matters, estimating tax risks and recognizing deferred
cordance with the internal accounting instructions in the
taxes.
consolidated financial statements of KWS SAAT SE for the
recognition of revenue. Our auditor’s response included an
Auditor’s response
examination of whether the significant opportunities and
The executive directors of KWS SAAT SE regularly engage
risks passed to the buyers upon the sale of the seeds. We
external tax experts to validate their own risk assess-
analyzed the process implemented by the management
ment. We called on our tax specialists to consider these
board of KWS SAAT SE and the accounting and valuation
tax assessments. Our specialists also analyzed the cor-
requirements for the recognition of seed sales, in particular
respondence with the competent tax authorities and the
taking into account the findings from actual return deliver-
assumptions used to calculate provisions for current taxes
ies. Based on analytical procedures defined group-wide,
and deferred taxes, considering in particular the applicable
we examined whether the significant revenue items for
transfer prices, based on their knowledge and experience of
fiscal year 2017/2018 correlate with the corresponding trade
how the authorities and courts currently apply the relevant
receivables to identify any irregularities in the development
legal provisions. In addition, we involved tax specialists from
of revenue. With a view to the recognition of revenue on an
our international network with the relevant knowledge of the
accrual basis, we also obtained balance confirmations from
respective local jurisdictions and regulations. We critically
customers and performed data analyses to identify any
assessed the assumptions on the recoverability of deferred
irregularities in comparison with the prior year. We ana-
tax assets, in particular by analyzing the assumptions with
lyzed the recognition of revenue based on the contractual
respect to projected future taxable income and by com-
arrangements on a sample basis with regard to the require-
paring them to the internal business plan. Our auditor’s
ments of IAS 18. Based on analytical procedures carried out
response also included the disclosures in the notes to the
on historical data and the analysis of the underlying con-
consolidated financial statements of KWS SAAT SE on cur-
tracts, we examined the calculation of expected return deliv-
rent and deferred income taxes.
eries of seeds and their deduction from revenue. Overall, our
procedures relating to the recognition of revenue from the
sale of seeds did not lead to any reservations.
Independent Auditor’s Report | Notes for the KWS Group 2017/2018 | Annual Financial Statements 135
KWS Group | Annual Report 2017/2018 Our procedures regarding the recognition of current and
Responsibilities of the executive directors and the
deferred income taxes did not lead to any reservations.
Supervisory Board for the consolidated financial state-
ments and the group management report
Reference to related disclosures
The executive directors are responsible for the preparation
With regard to the recognition and measurement policies
of the consolidated financial statements that comply, in all
applied for current and deferred income taxes and the
material respects, with IFRSs as adopted by the EU and
related disclosures on judgments by the executive directors
the additional requirements of German commercial law
and sources of estimation uncertainty, refer to the disclo-
pursuant to Sec. 315e (1) HGB, and that the consolidated
sure on deferred taxes and income tax provisions in the
financial statements, in compliance with these require-
section “Accounting policies” in the notes to the consolidat-
ments, give a true and fair view of the assets, liabilities,
ed financial statements and, with regard to the information
financial position and financial performance of the Group.
on income taxes, no. 24 “Taxes” in section 4 “Notes to the
In addition, the executive directors are responsible for such
statement of financial position” in the notes to the consoli-
internal control as they have determined necessary to en-
dated financial statements.
able the preparation of consolidated financial statements
that are free from material misstatement, whether due to
Other information
fraud or error.
The Supervisory Board is responsible for the Supervisory
Board report. In all other respects, the executive directors are
In preparing the consolidated financial statements, the ex-
responsible for the other information. The other information
ecutive directors are responsible for assessing the Group’s
comprises the parts of the group management report listed
ability to continue as a going concern. They also have the
in the appendix to the auditor’s report as well as the other
responsibility for disclosing, as applicable, matters related
parts of the annual report, except for the audited consolidat-
to going concern. In addition, they are responsible for
ed financial statements and group management report and
financial reporting based on the going concern basis of ac-
our auditor’s report, in particular the responsibility statement
counting unless there is an intention to liquidate the Group
pursuant to Sec. 297 (2) Sentence 4 HGB, the “Foreword by
or to cease operations, or there is no realistic alternative
the Executive Board” section of the annual report and the
but to do so.
Supervisory Board’s report pursuant to Sec. 171 (2) AktG
[“Aktiengesetz”: German Stock Corporation Act]. We ob-
Furthermore, the executive directors are responsible for
tained a version of this other information prior to issuing our
the preparation of the group management report that,
auditor’s report.
as a whole, provides an appropriate view of the Group’s
position and is, in all material respects, consistent with the
Our opinions on the consolidated financial statements and
consolidated financial statements, complies with German
on the group management report do not cover the other
legal requirements, and appropriately presents the oppor-
information, and consequently we do not express an opinion
tunities and risks of future development. In addition, the
or any other form of assurance conclusion thereon.
executive directors are responsible for such arrangements
In connection with our audit, our responsibility is to read the
sary to enable the preparation of a group management
other information and, in so doing, to consider whether the
report that is in accordance with the applicable German
and measures (systems) as they have considered neces-
other information
legal requirements, and to be able to provide sufficient
appropriate evidence for the assertions in the group man-
■■ is materially inconsistent with the consolidated financial
agement report.
statements, with the group management report or our
knowledge obtained in the audit, or
■■ otherwise appears to be materially misstated.
136 Annual Financial Statements | Notes for the KWS Group 2017/2018 | Independent Auditor’s Report
Annual Report 2017/2018 | KWS Group The Supervisory Board is responsible for overseeing the
and obtain audit evidence that is sufficient and appro-
Group’s financial reporting process for the preparation of
priate to provide a basis for our opinions. The risk of not
the consolidated financial statements and of the group
detecting a material misstatement resulting from fraud
management report.
is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepre-
Auditor’s responsibilities for the audit of the consoli-
sentations or the override of internal control
dated financial statements and of the group manage-
■■ Obtain an understanding of internal control relevant to the
ment report
audit of the consolidated financial statements and of ar-
Our objectives are to obtain reasonable assurance about
rangements and measures (systems) relevant to the audit
whether the consolidated financial statements as a whole
of the group management report in order to design audit
are free from material misstatement, whether due to fraud
procedures that are appropriate in the circumstances, but
or error, and whether the group management report as a
not for the purpose of expressing an opinion on the effec-
whole provides an appropriate view of the Group’s position
tiveness of these systems.
and, in all material respects, is consistent with the consol-
■■ Evaluate the appropriateness of accounting policies used
idated financial statements and the knowledge obtained in
by the executive directors and the reasonableness of
the audit, complies with the German legal requirements and
estimates made by the executive directors and related
appropriately presents the opportunities and risks of future
disclosures.
development, as well as to issue an auditor’s report that
■■ Conclude on the appropriateness of the executive direc-
includes our opinions on the consolidated financial state-
tors’ use of the going concern basis of accounting and,
ments and on the group management report.
based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may
Reasonable assurance is a high level of assurance, but is
cast significant doubt on the Group’s ability to continue
not a guarantee that an audit conducted in accordance
as a going concern. If we conclude that a material un-
with Sec. 317 HGB and the EU Audit Regulation and in
certainty exists, we are required to draw attention in the
compliance with German Generally Accepted Standards
auditor’s report to the related disclosures in the consoli-
for Financial Statement Audits promulgated by the Institut
dated financial statements and in the group management
der Wirtschaftsprüfer (IDW) will always detect a material
report or, if such disclosures are inadequate, to modify
misstatement. Misstatements can arise from fraud or error
our respective opinions. Our conclusions are based on the
and are considered material if, individually or in the aggre-
audit evidence obtained up to the date of our auditor’s re-
gate, they could reasonably be expected to influence the
port. However, future events or conditions may cause the
economic decisions of users taken on the basis of these
Group to cease to be able to continue as a going concern.
consolidated financial statements and this group manage-
■■ Evaluate the overall presentation, structure and content
ment report.
of the consolidated financial statements, including the
disclosures, and whether the consolidated financial state-
We exercise professional judgment and maintain profession-
ments present the underlying transactions and events in
al skepticism throughout the audit. We also:
a manner that the consolidated financial statements give
a true and fair view of the assets, liabilities, financial po-
■■ Identify and assess the risks of material misstatement of
sition and financial performance of the Group in compli-
the consolidated financial statements and of the group
ance with IFRSs as adopted by the EU and the additional
management report, whether due to fraud or error, design
requirements of German commercial law pursuant to Sec.
and perform audit procedures responsive to those risks,
315e (1) HGB.
Independent Auditor’s Report | Notes for the KWS Group 2017/2018 | Annual Financial Statements 137
KWS Group | Annual Report 2017/2018 ■■ Obtain sufficient appropriate audit evidence regarding the
We also provide those charged with governance with a state-
financial information of the entities or business activities
ment that we have complied with the relevant independence
within the Group to express opinions on the consolidated
requirements, and communicate with them all relationships
financial statements and on the group management re-
and other matters that may reasonably be thought to bear
port. We are responsible for the direction, supervision and
on our independence and where applicable, the related
performance of the group audit. We remain solely respon-
safeguards.
sible for our audit opinions.
■■ Evaluate the consistency of the group management report
From the matters communicated with those charged with
with the consolidated financial statements, its conformity
governance, we determine those matters that were of most
with [German] law, and the view of the Group’s position it
significance in the audit of the consolidated financial state-
provides.
ments of the current period and are therefore the key audit
■■ Perform audit procedures on the prospective information
matters. We describe these matters in our auditor’s report
presented by the executive directors in the group man-
unless law or regulation precludes public disclosure about
agement report. On the basis of sufficient appropriate
the matter.
audit evidence, we evaluate, in particular, the significant
assumptions used by the executive directors as a basis
Other legal and regulatory requirements
for the prospective information, and evaluate the proper
derivation of the prospective information from these as-
Further information pursuant to Art. 10 of the
sumptions. We do not express a separate opinion on the
EU Audit Regulation
prospective information and on the assumptions used
We were elected as group auditor by the annual general
as a basis. There is a substantial unavoidable risk that
meeting on 14 December 2017. We were engaged by the
future events will differ materially from the prospective
Supervisory Board on 30 May 2018. We have been the
information.
group auditor of KWS SAAT SE without interruption since
fiscal year 2016/2017.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
We declare that the opinions expressed in this auditor’s
timing of the audit and significant audit findings, includ-
report are consistent with the additional report to the audit
ing any significant deficiencies in internal control that we
committee pursuant to Art. 11 of the EU Audit Regulation
identify during our audit.
(long-form audit report).
German Public Auditor responsible for the engagement
The German Public Auditor responsible for the engagement
is Dr. Christian Janze.
138 Annual Financial Statements | Notes for the KWS Group 2017/2018 | Independent Auditor’s Report
Annual Report 2017/2018 | KWS Group Appendix to the auditor’s report:
The following are the parts of the Group management report
that are unaudited:
■■ The combined non-financial statement for KWS SAAT SE
and the KWS Group contained in section 2.9 “Combined
non-financial statement for the KWS Group” of the group
management report, including any information in other
sections referred to in this statement. The respective
sections are marked “NFE” in the margin;
■■ The information in section 2.6.1 “Corporate governance
report and statement on corporate governance” and
■■ The information in section 2.6.2 “Declaration of conformity
in accordance with Sec. 161 AktG.”
■■ Neither have we audited the content of the following
information that is not typical or required for a group man-
agement report. This relates to any information whose
disclosure in the group management report is not required
pursuant to Secs. 315, 315a HGB or Secs. 315b to 315d HGB.
■■ Section 2.4.3 “Resource-efficient processes and climate
protection,”
■■ Section 2.5.3 “Good working conditions” and
■■ Section 2.5.4 “Social commitment.”
Hanover, 25 September 2018
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft
Ludwig
Dr. Janze
Wirtschaftsprüfer
Wirtschaftsprüfer
[German Public Auditor]
[German Public Auditor]
Independent Auditor’s Report | Notes for the KWS Group 2017/2018 | Annual Financial Statements 139
KWS Group | Annual Report 2017/2018
Independent Auditor’s Limited Assurance Report
The assurance engagement performed by Ernst & Young (EY) relates exclusively to the German PDF version of the combined
non-financial statement 2017/2018 of KWS SAAT SE. The following text is a translation of the original German Independent
Assurance Report.
To KWS SAAT SE, Einbeck
We have performed a limited assurance engagement on the
Our audit firm applies the national statutory regulations
group non-financial statement of KWS SAAT SE according
and professional pronouncements for quality control, in
to § 315b HGB (“Handelsgesetzbuch”: German Commercial
particular the by-laws regulating the rights and duties of
Code), which is combined with the non-financial statement
Wirtschaftsprüfer and vereidigte Buchprüfer in the exercise
of the parent company according to § 289b HGB, consisting
of their profession [Berufssatzung für Wirtschaftsprüfer
of the chapter “2.9.2 Combined Non-Financial Declaration
und vereidigte Buchprüfer] as well as the IDW Standard on
for the KWS Group” in the combined management report
Quality Control 1: Requirements for Quality Control in audit
and the chapters “2.1 Fundamentals of the KWS Group,”
firms [IDW Qualitätssicherungsstandard 1: Anforderungen
“2.4.1 Product innovations,” “2.4.2 Plant and process safety,”
an die Qualitätssicherung in der Wirtschaftsprüferpraxis
“2.5.2 Recruitment & qualification” and “2.6.3 Business
(IDW QS 1)].
Ethics & Compliance” in the group management report
being incorporated by reference (hereafter combined non-
C. Auditor’s responsibility
financial statement), for the reporting period from 1 July 2017
Our responsibility is to express a limited assurance conclu-
to 30 June 2018.
sion on the combined non-financial statement based on the
assurance engagement we have performed.
A. Management’s responsibility
The legal representatives of the Company are responsible
We conducted our assurance engagement in accordance
for the preparation of the combined non-financial state-
with the International Standard on Assurance Engagements
ment in accordance with §§ 315c in conjunction with 289c
(ISAE) 3000 (Revised): Assurance Engagements other than
to 289e HGB.
Audits or Reviews of Historical Financial Information, issued
by the International Auditing and Assurance Standards
This responsibility includes the selection and application of
Board (IAASB). This Standard requires that we plan and per-
appropriate methods to prepare the combined non-financial
form the assurance engagement to obtain limited assurance
statement as well as making assumptions and estimates
about whether the combined non-financial statement of
related to individual disclosures, which are reasonable in the
the Company has been prepared, in all material respects,
circumstances. Furthermore, the legal representatives are
in accordance with §§ 315c in conjunction with 289c to
responsible for such internal controls that they have con-
289e HGB. In a limited assurance engagement the assur-
sidered necessary to enable the preparation of a combined
ance procedures are less in extent than for a reasonable
non-financial statement that is free from material misstate-
assurance engagement and therefore a substantially lower
ment, whether due to fraud or error.
level of assurance is obtained. The assurance procedures
selected depend on the auditor's professional judgment.
B. Auditor’s declaration relating to independence and
quality control
Within the scope of our assurance engagement, which has
We are independent from the entity in accordance with the
been conducted between May and September 2018, we
provisions under German commercial law and professional
performed, amongst others the following assurance and
requirements, and we have fulfilled our other professional
other procedures:
responsibilities in accordance with these requirements.
140 Annual Financial Statements | Notes for the KWS Group 2017/2018 | Independent Auditor’s Report
Annual Report 2017/2018 | KWS Group
■■ Inquiries of employees and inspection of documents
F. Engagement terms and liability
regarding the selection of topics for the combined non-
The “General Engagement Terms for Wirtschaftsprüfer and
financial statement, the risk assessment and the concepts
Wirtschaftsprüfungsgesellschaften [German Public Au-
of the parent company and the group for the topics that
ditors and Public Audit Firms]” dated 1 January 2017 are
have been identified as material
applicable to this engagement and also govern our relations
■■ Inquiries of employees at group level responsible for data
with third parties in the context of this engagement (https://
capture and consolidation as well as the preparation of
www.ey.com/Publication/vwLUAssets/EY-idw-aab-2017-
the combined non-financial statement, to evaluate the
en/$FILE/EY-idw-aab-2017-en.pdf). In addition, please refer
reporting processes, the data capture and compilation
to the liability provisions contained there in no. 9 and to
methods as well as internal controls to the extent relevant
the exclusion of liability towards third parties. We assume
for the assurance of the combined non-financial statement
no responsibility, liability or other obligations towards third
■■ Inspection of relevant documentation of the systems
parties unless we have concluded a written agreement to
and processes for compiling, analyzing and aggregating
the contrary with the respective third party or liability cannot
relevant data in the reporting period, and testing such
effectively be precluded.
documentation on a sample basis
■■ Inquiries and inspection of documents on a sample basis
We make express reference to the fact that we do not up-
relating to the collection and reporting of selected state-
date the assurance report to reflect events or circumstances
ments and data
arising after it was issued unless required to do so by law. It
■■ Analytical procedures at the level of the group and
is the sole responsibility of anyone taking note of the result
selected sites regarding the quality of the reported data,
of our assurance engagement summarized in this assur-
■■ Evaluation of the presentation of disclosures in the
ance report to decide whether, and in what way, this result
combined non-financial statement.
is useful or suitable for their purposes and to supplement,
verify or update it by means of their own review procedures.
D. Assurance conclusion
Based on our assurance procedures performed and assur-
ance evidence obtained, nothing has come to our attention
that causes us to believe that the combined non-financial
Munich, 25 September 2018
statement of KWS SAAT SE for the period from 1 July 2017
to 30 June 2018 has not been prepared, in all material
Ernst & Young GmbH
respects, in accordance with §§ 315c in conjunction with
Wirtschaftsprüfungsgesellschaft
289c to 289e HGB.
E. Intended use of the assurance report
We issue this report on the basis of the engagement agreed
Nicole Richter
Annette Johne
with KWS SAAT SE. The assurance engagement has been
Wirtschaftsprüferin
Wirtschaftsprüferin
performed for the purposes of the Company and the report
[German Public Auditor]
[German Public Auditor]
is solely intended to inform the Company as to the results of
the assurance engagement and must not be used for pur-
poses other than those intended. The report is not intended
to provide third parties with support in making (financial)
decisions.
Independent Auditor’s Report | Notes for the KWS Group 2017/2018 | Annual Financial Statements
141
KWS Group | Annual Report 2017/2018
Declaration by Legal Representatives
We declare to the best of our knowledge that the consolidated
financial statements give a true and fair view of the assets,
financial position and earnings of the Group in compliance
with the generally accepted standards of consolidated
accounting, and that an accurate picture of the course of
business, including business results, and the Group’s 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 25, 2018
KWS SAAT SE
THE EXECUTIVE BOARD
H. Duenbostel
L. Broers
E. Kienle
P. Hofmann
142 Declaration by Legal Representatives
Annual Report 2017/2018 | KWS Group
Additional Information
Financial calendar
Datum
November 27, 2018
December 14, 2018
February 26, 2019
May 16, 2019
October 23, 2019
November 26, 2019
December 17, 2019
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 2018/2019
Annual Shareholders’ Meeting in Einbeck
Semiannual Report 2018/2019
Quarterly Report 9M 2018/2019
Publication of 2018/2019 financial statements,
annual press and analyst conference in Frankfurt
Quarterly Report Q1 2019/2020
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
3.20
Dividend proposal 2018
2.80
2.30
1.80
1.90
25%
20%
23.7
08/09
24.3
20.8
21.7
24.7
19.6
23.6
23.2
21.6
21.2
17/18
Dividend payment in €
Dividend ratio (total
dividends/net income) in %
KWS Group | Annual Report 2017/2018
Additional Information
143
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
Sustainability (interim)
Editor
Financial Press
Thilo Resenhoeft
Wolf-Gebhard von der Wense-
KWS SAAT SE
Wolf-Gebhard von der Wense
thilo.resenhoeft@kws.com
sustainability@kws.com
Grimsehlstrasse 31
investor.relations@kws.com
Phone: +49 5561 311 1616
Phone: +49 5561 311 968
P.O. Box 1463
Phone: +49 5561 311 968
Safe harbor statement
37555 Einbeck
Germany
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 Hollis Bennett Christian Bruch Marcelo Coelho Jan Eric Euler Eberhard Franke
Frank Stefan Kimmel Gerhard Launer Julia Lormis Thorsten Schmidtkord Alex Telfer Frank Tusch
KWS Gruppenarchiv
Date of publication: October 24, 2018
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.
144 Additional Information
Annual Report 2017/2018 | KWS Group
KWS SAAT SE
Grimsehlstrasse 31
P.O. Box 1463
37555 Einbeck/Germany
www.kws.com