Manual Ifrs Group Accounting Guide-Lines

KWS GROUP IFRS ACCOUNTING GUIDELINES Chapter I
Date: Oct. 9, KWS AG FINANCIAL MANAGEMENT/CONTROLLING

2009
Status: Sept. 30, Page 1 of 221
2009
MANUAL
IFRS GROUP ACCOUNTING GUIDE-
LINES
Date: Oct. 9, 2009 KWS AG FINANCIAL MANAGEMENT
Status: Sept. 30, 2009 Page 2 of 221
1 ORGANISATIONAL AND GENERAL ISSUES ______________________________ 7

1.1 Introduction ____________________________________________________________ 7
1.2 Accounting language and accounting currency _______________________________ 7
1.3 Deadlines, addresses and contact persons ____________________________________ 8
1.4 Organisation of the KWS Reporting Activities_______________________________ 11
1.4.1 KWS Reporting Activities _____________________________________________________ 11
1.4.2 Reporting by regions __________________________________________________________ 13
1.4.3 Reporting activities for Actual/Forecast/Planned ____________________________________ 15
1.4.4 Data entry / versions __________________________________________________________ 16
1.4.5 Contents of reports/item plans___________________________________________________ 17
1.4.6 Data entry in Data Entry Tool (DET) _____________________________________________ 18
1.4.6.1 Definition of the entry method for fixed assets _________________________________ 18
1.4.6.1.1 Gross value method____________________________________________________ 18
1.4.6.1.2 Net value method _____________________________________________________ 19
1.4.6.2 Data entry in version 100 (actual company) __________________________________ 20
1.4.6.2.1 Data entry of fixed assets _______________________________________________ 20
1.4.6.2.2 Data entry of current assets______________________________________________ 22
1.4.6.2.3 Data entry of deferred tax assets __________________________________________ 22
1.4.6.2.4 Data entry of prepaid expenses ___________________________________________ 23
1.4.6.2.5 Data entry of equity ___________________________________________________ 23
1.4.6.2.6 Data entry of long-term interest-bearing, long-term accounts payable, financial leasing
and other liabilities______________________________________________________________ 24
1.4.6.2.7 Data entry of long-term accruals__________________________________________ 24
1.4.6.2.8 Data entry of short-term financial liabilities, short-term trade payables and financial
leasing 25
1.4.6.2.9 Data entry of short-term accruals _________________________________________ 25
1.4.6.2.10 Data entry of deferred tax liabilities ______________________________________ 26
1.4.6.2.11 Data entry in the profit and loss account ___________________________________ 27
1.4.6.3 Data entry in version 200 (profit centers) _____________________________________ 28
1.4.6.3.1 Data entry of fixed assets _______________________________________________ 28
1.4.6.3.2 Data entry of current assets______________________________________________ 28
1.4.6.3.3 Data entry of long-term trade payables _____________________________________ 29
1.4.6.3.4 Data entry of long-term accruals__________________________________________ 29
1.4.6.3.5 Data entry of short-term accounts payable __________________________________ 30
1.4.6.3.6 Data entry of short-term accruals _________________________________________ 30
1.4.6.3.7 Data entry in the income statement________________________________________ 30
1.4.6.3.8 Data entry of appendix entries at the company level for general profit-center-independent
information 31
1.4.6.3.9 Data entry of appendix entries per profit center for directly creditable information___ 31
1.4.7 Standard reporting with the data entry tool (DET) ___________________________________ 32
1.4.7.1 Reported financial data ___________________________________________________ 32
1.4.7.2 Additional financial data __________________________________________________ 34
1.4.8 Reporting with Active Excel ____________________________________________________ 35
1.4.9 KWS intercompany balance ____________________________________________________ 38
1.4.10 Validation of provided data for version 100 (company) and 200 (profit center) __________ 42
1.4.11 Reporting packages / Deadlines _______________________________________________ 42
1.4.12 Time frame for quarterly and year-end closing ___________________________________ 44
1.5 Organisational procedure, allocation of duties _______________________________ 46
1.6 General principles, principles for entry, valuation and disclosure _______________ 47
1.6.1 Accounting sections __________________________________________________________ 47
1.6.2 General entry and valuation rules ________________________________________________ 47
1.6.3 Individual principles:__________________________________________________________ 47
1.6.3.1 Accounting and valuation methods __________________________________________ 47
1.6.3.2 Continuation of business __________________________________________________ 47

1.6.3.3 Concept of allocating revenue and expenses to applicable accounting periods_________ 47
1.6.3.4 Consistency of presentation ________________________________________________ 48
1.6.3.5 Essentiality and combination of entries _______________________________________ 48
1.6.3.6 Offsetting of entries ______________________________________________________ 48
1.6.3.7 Comparative information__________________________________________________ 48
1.6.3.8 Structure and content _____________________________________________________ 48
1.6.4 Consolidations in the KWS Group _______________________________________________ 49
1.6.5 Currency conversion __________________________________________________________ 49
1.6.6 Matching of expenses and income as per June 30th and per quarter ______________________ 49
1.6.6.1 Accrual of returns _______________________________________________________ 49
1.6.6.2 Accruals of royalties _____________________________________________________ 51
1.6.6.3 Accruals of breeding services ______________________________________________ 52
1.7 KWS scope of consolidation ______________________________________________ 53
1.7.1 Delimitation of the KWS scope of consolidation ____________________________________ 53
1.7.1.1 Subsidiaries ____________________________________________________________ 53
1.7.1.2 Joint venture ___________________________________________________________ 53
1.7.1.3 Associated company _____________________________________________________ 53
1.7.2 Included companies KWS-group ________________________________________________ 54
1.8 List of abbreviations ____________________________________________________ 56
2 KWS GROUP ACCOUNTING AND CONSOLIDATION REGULATIONS _______ 58
2.1 Fixed assets ____________________________________________________________ 64
2.1.1 Overall intangible assets _______________________________________________________ 65
2.1.1.1 Licenses, industrial property rights and similar rights ____________________________ 65
2.1.1.2 Goodwill ______________________________________________________________ 66
2.1.2 Tangible assets ______________________________________________________________ 68
2.1.2.1 Land, similar rights and buildings, including buildings on third party land ___________ 72
2.1.2.2 Technical equipment and machines __________________________________________ 72
2.1.2.3 Other equipment, plant and office equipment __________________________________ 73
2.1.2.4 Prepayments____________________________________________________________ 74
2.1.3 Biological assets _____________________________________________________________ 75
2.1.3.1 Livestock ______________________________________________________________ 75
2.1.3.2 Living plants ___________________________________________________________ 75
2.1.4 Financial assets ______________________________________________________________ 76
2.1.4.1 Shares in subsidiaries_____________________________________________________ 76
2.1.4.2 Shares in joint ventures ___________________________________________________ 77
2.1.4.3 Shares in associated companies _____________________________________________ 77
2.1.4.4 Loans _________________________________________________________________ 78
2.1.4.5 Other financial assets (held-to-maturity) ______________________________________ 79
2.1.4.6 Real estate held as financial investment ______________________________________ 80
2.2 Current assets__________________________________________________________ 81
2.2.1 Stocks _____________________________________________________________________ 82
2.2.1.1 Raw materialsand supplies_________________________________________________ 82
2.2.1.2 Work in process _________________________________________________________ 83
2.2.1.2.1 Work in process from multiplication of certified/commercial sugar beet seed by third
parties 85
2.2.1.3 Unfinished biological assets and agricultural products ___________________________ 86
2.2.1.4 Finished goods and services _______________________________________________ 89
2.2.2 Trade receivables and other receivables ___________________________________________ 93
2.2.2.1 Trade receivables ________________________________________________________ 94
2.2.2.2 Receivables from finance leasing ___________________________________________ 96
2.2.2.3 Receivables from finance activities and other assets _____________________________ 97
2.2.3 Cash and cash equivalents______________________________________________________ 99
2.2.3.1 Securities ______________________________________________________________ 99
2.2.3.2 Hedge Accounting ______________________________________________________ 100
2.2.3.2.1 Fair value hedge _____________________________________________________ 101
2.2.3.2.2 Cash Flow hedge_____________________________________________________ 101

2.2.3.2.3 Hedge of a net investment in a foreign entity _______________________________ 101
2.2.3.3 Checks, cash balance, bank balance ________________________________________ 102
2.3 Deferred tax assets _____________________________________________________ 103
2.4 Prepaid expenses ______________________________________________________ 105
2.5 Equity _______________________________________________________________ 107
2.5.1 Subscribed / share capital _____________________________________________________ 108
2.5.2 Reserves __________________________________________________________________ 109
2.5.2.1 Capital reserves (Addit. paid in capital) _____________________________________ 109
2.5.2.2 Revenue reserves _______________________________________________________ 110
2.5.2.2.1 Legal reserves _______________________________________________________ 111
2.5.2.2.2 Reserve for own shares ________________________________________________ 111
2.5.2.2.3 Statutory reserves ____________________________________________________ 111
2.5.2.2.4 Other revenue reserves ________________________________________________ 112
2.5.3 Accumulated profit/accumulated loss ____________________________________________ 112
2.5.3.1 Unappropriated retained earnings brought forward/cumulative losses brought forward _ 113
2.5.3.2 Net income / net loss for the current year ____________________________________ 113
2.5.3.3 Accumulated profit of the current year before first consolidation __________________ 113
2.5.3.4 Net income before change of quota _________________________________________ 113
2.5.3.5 Application of profits____________________________________________________ 113
2.5.4 Currency conversion rate differences ____________________________________________ 114
2.5.5 Other comprehensive income (OCI) _____________________________________________ 114
2.6 Minority shareholder___________________________________________________ 116
2.7 Borrowed capital ______________________________________________________ 116
2.7.1 Long-term borrowed capital ___________________________________________________ 117
2.7.1.1 Long-term interest-bearing loans___________________________________________ 117
2.7.1.2 Long-term trade payables ________________________________________________ 118
2.7.1.3 Long-term liabilities from finance leasing____________________________________ 119
2.7.1.4 Other long-term liabilities ________________________________________________ 120
2.7.1.5 Long-term provisions____________________________________________________ 121
2.7.1.5.1 Accruals for income taxes (long-term provisions I) __________________________ 121
2.7.1.5.2 Provisions for pension and similar obligations (long-term provisions II)__________ 121
2.7.1.5.3 Provisions for restoration third party properties (long-term provisions II) _________ 132
2.7.1.5.4 Other long-term provisions (long-term provisions II)_________________________ 133
2.7.2 Short-term borrowed capital ___________________________________________________ 135
2.7.2.1 Short-term finance liabilities ______________________________________________ 135
2.7.2.2 Short-term trade payables ________________________________________________ 136
2.7.2.3 Short-term liabilities from finance leasing ___________________________________ 137
2.7.2.4 Short-term tax liabilities _________________________________________________ 137
2.7.2.5 Other short-term liabilities________________________________________________ 138
2.7.2.6 Short-term provisions ___________________________________________________ 138
2.8 Deferred tax liabilities __________________________________________________ 140
2.9 Deferred income _______________________________________________________ 141
2.10 Principles of organization of the profit and loss account ______________________ 143
2.10.1 Contents of internal and external items ________________________________________ 143
2.10.2 The Cost-Of-Sales Method__________________________________________________ 143
2.11 Contents of the profit and loss statement___________________________________ 144
2.11.1 Sales ___________________________________________________________________ 144
2.11.1.1 Sales certified/commercial seeds (34111100) _________________________________ 145
2.11.1.2 Sales royalties (34111200)________________________________________________ 146
2.11.1.3 Sales basic seed (34111300) ______________________________________________ 146
2.11.1.4 Sales breeding services (34111400)_________________________________________ 146
2.11.1.5 Sales Tech-Fee_________________________________________________________ 146
2.11.1.6 Other sales (34111510-34111540)__________________________________________ 147

2.11.2 Cost of sales _____________________________________________________________ 147
2.11.2.1 Material costs certified/commercial seeds (34112100) __________________________ 147
2.11.2.2 Material costs basic seeds (34112200) ______________________________________ 148
2.11.2.3 Royalty costs (34112300) ________________________________________________ 149
2.11.2.4 Tech fee expenses ______________________________________________________ 149
2.11.2.5 Manufacturing costs (34112400) ___________________________________________ 149
2.11.2.5.1 Manufacturing expenses (34112410) ____________________________________ 149
2.11.2.5.2 Other manufacturing income (34112420) _________________________________ 150
2.11.2.6 Other cost of sales (34112500) ____________________________________________ 150
2.11.3 Contribution margin 1 (34110000)____________________________________________ 151
2.11.4 Selling (34120000) ________________________________________________________ 151
2.11.4.1 Selling expenses (34121000) ______________________________________________ 151
2.11.4.2 Other selling income (34122000) __________________________________________ 152
2.11.5 Contribution margin 2 (34100000)____________________________________________ 152
2.11.6 Research & Development (34200000) _________________________________________ 152
2.11.6.1 Research & Development expenses (34210000) _______________________________ 153
2.11.6.2 Income from Research & Development (34210000) ____________________________ 154
2.11.7 Administration (34300000) _________________________________________________ 154
2.11.7.1 Administration expenses (34310000) _______________________________________ 154
2.11.7.2 Other administration income (34320000) ____________________________________ 156
2.11.8 Other operating income and expenses (34400000)________________________________ 156
2.11.8.1 Other miscellaneous income (34411000) ____________________________________ 157
2.11.8.2 Income from the reversal of valuation allowances on receivables (34412000) ________ 157
2.11.8.3 Other operating expenses (34420000) _______________________________________ 158
2.11.8.3.1 Other miscellaneous expenses (34421000) ________________________________ 158
2.11.8.3.2 Write-offs and valuation allowances on debts (34422000) ____________________ 159
2.11.9 Alternative valuation of goods ZS (34510000) __________________________________ 159
2.11.9.1 Deviation cost of materials, STANDARD from ACTUAL (34510000) _____________ 160
2.11.9.1.1 Cost of materials against ACTUAL (34511000)____________________________ 160
2.11.9.1.2 Reverse cost of materials against STANDARD (34512000) __________________ 160
2.11.9.2 Write down and/or destruction of stocks (34520000) ___________________________ 161
2.12 Operating result IFRS __________________________________________________ 161
2.13 Financial result (35000000) ______________________________________________ 162
2.13.1 Result from participations (35110000)_________________________________________ 162
2.13.1.1 Income from subsidiaries and joint ventures (35110000) ________________________ 163
2.13.1.2 Income from associated companies (35120000) _______________________________ 163
2.13.1.3 Income from participations (35130000) _____________________________________ 164
2.13.1.4 Income from profit transfer (35140000) _____________________________________ 164
2.13.1.5 Income from write-ups on financial assets (35150000)__________________________ 165
2.13.1.6 Write-down on subsidiaries and joint ventures (35160000) ______________________ 165
2.13.1.7 Write-down on participations of financial assets (35170000) _____________________ 166
2.13.1.8 Expenses from transfer of lossse (35180000) _________________________________ 166
2.13.1.9 Income from reversal of badwill (full consolidation) ___________________________ 167
2.13.1.10 Depreciation of goodwill (equity consolidation) (35193000) ___________________ 167
2.13.1.11 Income from reversal of badwill (equity consolidation) (35194000) _____________ 168
2.13.2 Net interest income (35200000) _____________________________________________ 168
2.13.2.1 Interest income and similar income (35210000) _______________________________ 168
2.13.2.2 Interest expense and similar expenses (35220000) _____________________________ 169
2.13.2.3 Income from securities of current assets (35230000) ___________________________ 170
2.13.2.4 Income from other securities and loans of financial assets (35240000) _____________ 170
2.13.2.5 Write-down on securities (35250000) _______________________________________ 171
2.13.2.6 Income from write-ups on securities (35260000) ______________________________ 171
2.14 Result from ordinary activities ___________________________________________ 172
2.15 Result after taxes (32000000) ____________________________________________ 172
2.15.1 Taxes (36000000)_________________________________________________________ 173
2.15.1.1 Tax on income (36100000) _______________________________________________ 173

2.15.1.2 Deferred taxes (36200000) _______________________________________________ 173
2.16 Transferred profits from profit and loss transfer agreements (EAV) (37200000)__ 174
2.17 Net income (31000000)__________________________________________________ 174
2.17.1 Extraordinary result (38000000) ___________________ Fehler! Textmarke nicht definiert.
2.17.1.1 Extraordinary income (38100000)________________ Fehler! Textmarke nicht definiert.
2.17.1.2 Extraordinary expenses (38200000) ______________ Fehler! Textmarke nicht definiert.
2.17.2 Interest of minority shareholder (39000000) ____________________________________ 175
2.18 Annex _______________________________________________________________ 175
2.18.1 Annex to the annual financial statement of the entire corporation (ZANHGES001 – Notes
Yearend I) 175
2.18.2 Annex for all profit centers to the financial statements (ZANHGES002 – Notes Yearend II)184
2.18.3 Notes – Additional information division CORN _________________________________ 186
3 FIRST TIME APPLICATION OF THE IAS/IFRS __________________________ 194
3.1 Opening balance sheet __________________________________________________ 194
3.2 Exemptions /simplification provisions _____________________________________ 195
3.2.1 Consolidation / mergers ______________________________________________________ 195
3.2.2 Fair value or revaluation ______________________________________________________ 195
3.2.3 Pension reserves ____________________________________________________________ 195
3.2.4 Currency conversion rate differences ____________________________________________ 195
3.2.5 Hybrid financial instruments ___________________________________________________ 196
3.2.6 Adjustment posting of financial instruments_______________________________________ 196
3.2.7 Hedge accounting ___________________________________________________________ 196
3.2.8 Estimations ________________________________________________________________ 196
3.2.9 Comparative information _____________________________________________________ 197
3.2.10 Information relating to the effects of conversion _________________________________ 197
4 QUARTERLY FINANCIAL REPORTING ________________________________ 198
4.1 Process instruction for set-up of provisions for interim financial reporting ______ 199
4.2 Annex for quarterly reporting (ZANHGES003 – Notes Quarter) ______________ 200
4.3 Tax computation within the quarterly closing ______________________________ 204
5 CASH FLOW STATEMENT____________________________________________ 205
5.1 Duty to compile _______________________________________________________ 205
5.2 Presentation of the cash flow statement____________________________________ 205
6 FORMS_____________________________________________________________ 206
6.1 Sample forms _________________________________________________________ 206
6.1.1 Balance sheet_______________________________________________________________ 207
6.1.2 Profit and loss account _______________________________________________________ 213
6.1.3 Annex ____________________________________________________________________ 215
6.1.3.1 Annex on company level _________________________________________________ 215
6.1.3.2 Annex on profit center level ______________________________________________ 219
1 ORGANISATIONAL AND GENERAL ISSUES
1.1 Introduction
The legal obligation of the KWS CONSOLIDATED FINANCIAL STATEMENT
On the basis of the directive (EC) No. 1606/2002 of July 19th 2002, KWS SAAT AG (here-
inafter referred to as KWS or KWS AG) must compile a consolidated KWS FINANCIAL
STATEMENT according to “international accounting standards”. In terms of this direc-
tive, the “International Accounting Standards“ (IAS), the “International Financial Reporting
Standards“ (IFRS) and interpretations connected therewith (SIC/IFRIC-interpretations), later
alterations of these standards and interpretations connected therewith as well as future stan-
dards and interpretations connected therewith, which have been issued or accepted by the In-
ternational Accounting Standard Board (IASB) are termed international accounting stan-
dards.
Basically all national and foreign subsidiaries must be included in a consolidated financial
statement. IAS 27.13 regulates exceptions for exclusion. The general principle of essential-
ity applies to subsidiaries of subordinate significance. The reasons for non-inclusion of a
subsidiary must be stated.
Form, content, publication periods to be adhered to, auditing and diverse other demands on
the KWS consolidated financial statement are regulated in the IAS and in national regula-
tions such as e.g. the “German Code of Corporate Governance“, the Companies Act and the
like.
The IAS-conform individual financial statement of subsidiaries and associated compa-

nies must present the assets, liabilities, financial position and profit or loss as well as
the cash flow of a company in accordance with the actual circumstances. The IAS
must be correctly applied for this purpose. A financial statement may not be termed as con-
form to the IAS, so long as it does not comply with all requirements of every applicable
standard and every applicable interpretation of the Standing Interpretations Committee. Ap-
plication of inadequate accounting methods can neither be remedied via specification of the
applied accounting and valuation method, nor via the notes to the accounts or additional ex-
planations.
As a basic principle, accounting and valuation must take place uniformly throughout the
group. Congenial issues must be handled according to the same method.
1.2 Accounting language and accounting currency
The KWS-GROUP accounting language is ENGLISH, with the exception of the German-
speaking countries, where the KWS-GROUP accounting language is GERMAN.
Accordingly this manual was compiled in GERMAN and ENGLISH.

The reporting currency for the consolidated financial statement is EURO (€). For the sake of
clarity, the amounts must be rounded off to THAUSEND EURO (T€ = 1000 €).
The entities inform only in local currency ( for simplification in 1000 local currency with
point two)
Currency conversion of the subsidiaries and associated companies accounting in foreign cur-
rency takes place according to IAS 21, particularly IAS 21.30 ff. IAS 29 must be applied in
high-inflation countries.
Determination of the categorisation as a high-inflation country takes place through

KWS SAAT AG on an annual basis in concert with the certified accountants.
1.3 Deadlines, addresses and contact persons
The deadlines for the KWS consolidated financial statements arise from the legal require-
ment for publication of the COMPANY REPORT of KWS SAAT AG and the KWS Group.
In order to safeguard the adherence to legally predetermined deadlines for publication of the
consolidated financial statement, it is compulsory to observe the deadlines for submission of
the group annual accounting documents set by the group management.
The following deadlines must also be observed:
Last deadline for calculation of benefits and billing for services between subsidiaries and as-
sociated companies:
Calculation of benefits (e.g. calculation of cultivation costs, interest calculation) must take
place at least semi-annually for the periods July 1st to December 31st and January 1st to
June 30th. Accounting for the second half of the year (January to June) must take place by
July 15th at the very latest.
The accounts receivable and accounts payable, revenue and expenditure resulting from the
intra-group business relations (deliveries, cultivation, credits etc.) must be concerted among
the respective subsidiaries and associate companies by July 25th at the very latest.
In accordance with IAS 27.19, companies contained in the KWS scope of consolidation,
whose financial year ends on 31.12, are obliged to draw up an IAS-interim report by the
group accounting date (30.06).
Mr Hans-Joachim Diedrich is entrusted with the compilation of the KWS CONSOLI-

DATED FINANCIAL STATEMENT. He is available for queries and information at all
times. Of course you may also contact the head of the financial management department,
Mr Steffen Heise or Mr Wolfgang Hessel (manager financial accounting).
Address: KWS SAAT AG

Group Accounting
P.O. Box 1463
D-37555 Einbeck
E-mail: h.diedrich@kws.com / info@kws.com

Fax: +49 5561 311 644
Phone: +49 5561 311 381 S. Heise

+49 5561 311 283 W. Hessel
+49 5561 311 247 H.-J. Diedrich
Obligation to give information
The representatives of the subsidiaries and associate companies are obliged to provide the
persons in charge at KWS AG, the gentlemen
S. Heise
W. Hessel
H.-J. Diedrich
with all information required for the KWS CONSOLIDATED FINANCIAL STATEMENT.
Moreover, they are obliged to cooperate with the respective representatives of other subsidi-
aries and associate companies as regards coordination of accounts receivable, accounts pay-
able, revenue and expenditure from business connections between subsidiaries and associate
companies.
As per April, 30 of every year, all subsidiaries and affiliated companies are bound to inform
Mr. Matthias Siewert – Group Accounting, which auditing firm will perform the year-end
audit.
E-mail: m.siewert@kws.com
Fax: +49 5561 311 417
Phone: +49 5561 311 644
The representatives of subsidiaries and associate companies are also obliged to provide the
representatives of the accounting firm examining the KWS CONSOLIDATED FINANCIAL
STATEMENT,
Deloitte & Touche GmbH

Accounting firm
Certified Accountant Dr. F. Beine
Certified Accountant M. Bukowski
Georgstr. 52
D-30159 Hanover,
with all information required for the KWS CONSOLIDATED FINANCIAL STATEMENT.
The representatives of the quarterinformation and budget (one year and midterm budget) in
the controlling department are:
KWS-group/services: Sabine Harms

+495561 311 520
s.harms@kws.com
Sugarbeet: Helmut Grefe

+495561 311 276
h.grefe@kws.com
Corn: Heinrich Pigge

+495561 311 452
h.pigge@kws.com
Cereals: Peter Hilmer

+495051 477 116
hilmer@kws-lochow.de
Research & development: Robert Heidhues

+495561 311 351
r.heidhues@kws.com
Einbeck, November 20, 2008
KWS SAAT AG
THE EXECUTIVE BOARD
P. von dem Bussche H. Duenbostel

1.4 Organisation of the KWS Reporting Activities
1.4.1 KWS Reporting Activities
KWS Reporting Activities are organised in accordance with the key business activities
under reporting by segment and are divided into three product segments - sugar beet,
sweet corn and cereals - plus the segment propagation & services. Propagation services
are charged to the respective product segments at licence fees, as customary in that par-
ticular market. Furthermore, holding and administration costs are charged to the product
segments. Oil and field seed activities are included in the segments sweet corn and cere-
als, as per their respective allocation under company law.
In addition to that, internal divisional reporting is performed for the divisions sugar
beets, corn and cereals, as well as cross-product service activities. Within divisional re-
porting, the functions Production, Research & Development, Marketing and Administra-
tion are allocated to the individual, specific divisions. Oil and field seed activities are also
included in the divisions sweet corn and cereals, as per their respective allocation under
company law.
The goal of the internal divisional profit and loss statement is a product-oriented assess-
ment of activities, taking all functions (including R&D) into account, whereas the goal of
external reporting by segments is the assessment of activities in consideration of market
risks.
Segment definitions:
The segment sugar beets (ZR) contains reports on propagation, processing, marketing
and administration activities for sugar beet seeds (R&D activities ZR are allocated to the
segment propagation & service).
The segment corn (MA) contains reports on the propagation, processing, marketing and
administration activities for grain and silo corn as well as oil and field seeds (R&D activi-
ties MA are allocated to the propagation & service segment).
The segment cereals (GT) contains reports on the propagation, processing, marketing
and administration activities for hybrid rye, wheat and barley as well as oil and field
seeds (R&D activities GT are allocated to the propagation & service segment).
The segment Research & Services (Z&D) includes summaries of the Research & De-
velopment activities as well as central group functions (board of directors, company co-
ordination, cross-divisional research & development) service functions (logistics, infor-
matics, finance, personnel, purchasing/engineering, etc.), the potato activities (multiplica-
tion, production and selling of potato seed stock including administrative activities) and
agricultural activities of KWS.
Definition of divisions:
The Sugar Beets Division (ZR) includes reports on research/development, propagation,

processing, marketing and administration activities for sugar beet seed.
The Corn Division (MA) includes reports on research/development, propagation, proc-

essing, marketing and administration activities for grain and silo corn as well as oil and
field seeds.
The Cereals Division (MA) includes reports on research/development, propagation,

processing, marketing and administration activities for hybrid rye, wheat and barley as
well as oil and field seeds.
The Services Division (DL) includes summaries of central group functions (board of di-
rectors, company coordination, cross-divisional research & development) central service
functions (logistics, informatics, finance, personnel, purchasing/engineering, etc.), the po-
tato activities (research and breeding, multiplication, production and selling of potato
seed stock including administrative activities) as well as agricultural activities of KWS.
Definitions of profit centres:
Representation of segments as well as divisions requires the set-up of profit centres as

common data basis. The following profit centres have been defined (the abbreviations of
the centralised entry tool are included in brackets).
Sugar beet (ZR-ZR): Propagation, processing, marketing of ZR-seed as well as ad-

ministration activities.
R&D Sugar beet (ZR-FE): Research & breeding of ZR seed
Facilities (ZR-ANL): Development, construction and sale of ZR-treatment facilities.
Corn (MA-MA): Propagation, processing, marketing of MA-seed as well as ad-

ministration activities.
R&D Corn (MA-FE-MA):Research & breeding of MA seed
Oil/field seed (MA-ÖF): Propagation, treatment, marketing of ÖF-seed (without rape,

because of a new profit center)1)
R&D oil/field seed (MA-FE-OF): Research and development of oil and field seed
Rape segment corn (MA-RA): Distribution/production of rape seed in the segment corn 2)
R&D rape segment corn: (MA-RA-FE): Research and development of rape seed
Cereals (GT-GT) Propagation, processing and marketing of GT-seed as well as

administration activities.
R&D cereals (GT-FE): Research & breeding of GT seed
Rape segment cereals (GT-RA): Distribution/production of rape seed in the segment

cereals 2)
R&D rape segment cereals: (GT-RA-FE): Research and development of rape seed
Central functions: (CF-CF): Central group and service functions.
Central R&D functions (CF-FE): Central R&D activities (cannot be allocated to the
products)
Agriculture (CF-LDW): Agricultural activities of KWS-Güter
Consulting (CF-CONS): Services/holding companies (e.g. Intersaat)
Potato (CF-KA): Multiplication, production and selling of potato seed stock as

well as administrative activities
Potato R&D (CF-KA-FE): Reasearch and breeding of potato seed stock
1) only applicable to the sweet corn division/segment; no separation for cereals, because
no profit centre has been defined; P&L only up to Contribution Margin 1 (Sales and Cost
of Sales; no figures in the balance sheet -> figures were shown under Corn (MA-MA).
2) Definition rape: Winter and summer rape. P&L disclosure only until contribution
margin 1 (sales and COS). No balance sheet items -> Data are shown among corn (MA-
MA) respectively cereals (GT-GT).
1.4.2 Reporting by regions
In addition to primary reporting on divisions and segments, secondary reporting on re-

gions is performed.
In accordance with internal regional control, European countries are allocated to the fol-
lowing regions: Germany, France, Central Europe, Northern Europe, Southern Europe,
South-East Europe, Eastern Europe. Apart from that, the additional regions of Northern
America, Central/South America, Africa, Middle East and East Asia have been defined
for the purpose of determining overall data.
For external reporting, these regions are combined in the following groups of regions:
Germany, Europe, America, other countries.
The following overview illustrates the allocation of countries, regions and groups of re-
gions:
Allocation of countries and regions:
South Europe: Italy, Spain, Portugal, Greece, Malta

South-East-Europe: Austria, Hungary, Croatia, Slovenia, Bulgaria, Romania, Jugoslawien,
Yugoslavia
Central Europe: Poland, Czech Republic, Slovakia, Estland, Lettland, Litauen, Belarus
Northern Europe: Netherland, Luxembourg, Belgium, Schwitzerland, Great Britain, Ire-

land, Denmark, Sweden, Finnland, Norway
Eastern Europe: Ukraine, Russian Federation, Moldavia, Kirgisia, Kazakhstan, Uzbekistan,
Turkmenistan, Azerbaijan, Georgia, Armenia
North America: USA, Canada
Central / South America: Argentina, Chile
Africa: Egypt, Tunisia, Morocco, Libya, South Africa
Middle East: Lebanon, Pakistan, Iran, Syria, Turkey
East Asia: China, Japan, North Korea
All further not specified countries are seized under a respective land's group
( for example "Other countries Northern Europe").
1.4.3 Reporting activities for Actual/Forecast/Planned

Reporting on the actual status
In addition to the annual statement of accounts, a semi-annual statement of accounts as

well as quarterly statements of accounts will have to be prepared under IFRS.
- Annual statement of account, June 30.

- Semi-annual statement of account ,Dec. 31.
- Quarterly statements of account, Sept. 30 and March 31.
Forecast reporting
In the course of business, annual planning is compared to current forecasts. In this con-
text, planning is updated on the basis of latest findings on the development of the busi-
ness. The forecasts show the anticipated actual result as per June 30 and are updated on
a quarterly basis:
- Forecast 1st quarter

- Forecast 2nd quarter
- Forecast 3rd quarter
- Forecast 4th quarter (no separate deadline for the submission of data)
Annual/medium term planning
KWS-plans are compiled during the period from March to June. In addition to annual
planning, plans for three additional business years are compiled within the framework of
medium term planning.
1.4.4 Data entry / versions
The data for the reports listed in 1.4.3 are entered into a centralised data entry tool
(DET). Data acquisition is performed on different levels, which are controlled via ver-
sions and periods:
ACTUAL company: Version 100
ACTUAL profit centre division: Version 200
Profit centre, segment: Version 203
Forecast profit centre, division: Version 300
Forecast profit centre, segment: Version 303
Planning, division: Version 400
Planning, segment: Version 403
Data entry is performed in the versions 100, 200, 300 and 400. The versions 203, 303,
403 are derived from the versions above, by means of modified allocations.
Regarding the respective reports, the following information is required for data entry in
the DET, in addition to the business year:
Company Profit Centre Profit Centre Period

Division Segment
Annual statement of accounts 100 200 203 12

Semi-annual statement of accounts 100 200 203 6
Quarterly statement of accounts 3 months 100 200 203 3
Quarterly statement of accounts 9 months 100 200 203 9
Forecast 1st quarter 300 303 3
Forecast 2nd quarter 300 303 6
Forecast 3rd quarter 300 303 9
Forecast 4th quarter 300 303 12
(no separate deadline for submission of data)
Annual planning 400 403 3

Medium term planning 1st year 400 403 6
Medium term planning 2nd year 400 403 9
Medium term planning 3rd year 400 403 12
The entry of submitted dated is performed on company and/or profit centre level.
The following additional allocations to accounts have to be entered:

- Partner information: Indicate “of the company” when relationships between associated
companies included in the scope of consolidation are concerned, or “external third par-
ties” when relationships outside the scope of consolidation are concerned.
- Country or region: to be entered depending on version, profit centre and item line
(identified for each item line below)
- Break-down information/duration: to be entered depending on version and item line
(identified for each item line below)
1.4.5 Contents of reports/item plans
Balance sheet (refer to item plan - classification point 6.1.1).
Reporting within the framework of the balance sheet is performed on:
- company level
- Profit-Center level
The balance sheet for Profit-Center only includes reports on items which can be allo-
cated as follows:
Assets: Intangible assets, tangible assets, biological assets, stocks, trade accounts receiv-
able.
Liabilities: Liabilities from deliveries and services, short- and long-term provision for
pensions and similar obligations, reorganisations and other reserves.
Here, reporting is by profit centres. The Profit-Center Oil-/Fieldseeds (MA-ÖF) has no

separate balance sheet -> figures were shown under Corn (MA-MA).
If, for example, an asset is used by several profit centres, is has to be allocated to that
profit centre which utilises it predominantly.
Profit and loss statement (refer to item plan - outline point 6.1.2).
There are two outline schemes for the profit and loss statement:
- the external classification scheme according to IFRS
- the internal classification scheme according to contribution costing.
which are coordinated with each other. The difference lies in the allocation of items.
(e.g. R&D costs are shown as a separate function in the internal scheme; under manufac-
turing costs within the external scheme). Data entry in the centralised entry tool (DET) is
performed exclusively within the internal classification scheme.
Information to be included in the Notes (refer to Appendix point 6.1.3)
Information to be included in the notes includes:

- Information to be included in the notes as per IFRS
- Additional Information: Personnel, Investments, Cost-Groups
- Divisional information to be included in the notes for Sugarbeet, Corn, Oil-
/Fieldseeds
1.4.6 Data entry in Data Entry Tool (DET)
1.4.6.1 Definition of the entry method for fixed assets
1.4.6.1.1 Gross value method
For the gross value method the acquisition or manufacturing costs and the depreciation (the
total amounts) have to be shown in total amounts (cumulative). The residual book value is
the result of cumulative acquisition or manufacturing costs, additions/disposals of the cur-
rent year less cumulative depreciation and addition/disposals of depreciation of the current
year.
The gross value method has to be used only in version.
Example for the opening balance as per June 30th, 2003.

Acq. costs addition disposal Write-ups Deprec. cur- Deprec. Residual
cumula- rent year cumula- book
tive tive value
1.000,00 200,00 800,00
For the opening balance only the sub-items 100 and 150 have to be used.
Example for the opening balance as per June 30th, 2004

tive tive value
1.000,00 300,00 50,00 150,00 200,00 900,00
Example for the opening balance as per June 30th, 2005 and following
tive tive value

1.250,00 200,00 50,00 150,00 350,00 1.000,00
For all opening balances prepared later than June 30th, 2003, the sub-items from 1.4.6.2.1
have to be used except for the sub items for group purposes. The cumulative acquisition or
manufacturing costs and cumulative depreciation will be transfered by the system in the next
periode. The balance carried forward takes always place only on the 1st of July of the follow-
ing fiscal year. The current movements have to be shown in the quarter, half year and the
year-end statement.
1.4.6.1.2 Net value method
For reasons of simplification the changes have to be shown only on net amounts.
The net value method has to be used in version 200, 300 and 400.

tive tive value
800,00 800,00
For the opening balance only sub-item 100 has to be use.

tive tive value
800,00 100,00 900,00
The addition of 100,00 consists of an addition of 300,00 , a disposal of 50,00 and deprecia-
tions of 150,00 in 2003/04.
Example for the opening balance as per June 30th, 2005 and following.
Acq. addition disposal Write-ups Deprec. cur- Deprec. Residual
costs curent year cumula- book
mulative tive value
900,00 100,00 1.000,00
The addition of 100,00 consists of an addition of 200,00 , a write-up of 50,00 and deprecia-
tions of 150,00 in 2004/05.
The cumulative acquisition or manufacturing costs and cumulative depreciation will be

transfered by the system in the next periode. The balance carried forward takes always place
only on the 1st of July of the following fiscal year. The current movements have to be shown
in the quarter, half year and the year-end statement.
1.4.6.2 Data entry in version 100 (actual company)
1.4.6.2.1 Data entry of fixed assets
For data entry of fixed assets the gross value method has to be used with the following sub-
items.
Movement type Description

100 Acq. costs opening balance
105 * Acq. costs opening balance currency translation
108 * Acq. costs currency translation sub groups
110 Acq. costs addition
115 Acq. costs addition affiliated companies
120 Acq. costs addition consolidation group (only for first consolidation)
125 Acq. costs disposal
130 Acq. costs disposal affiliated companies
135 * Acq. costs disposal consolidation group
140 Acq. costs transfer
145 Acq. costs write-ups financial assets
150 Accum. depr. opening balance
155 * Currency translation accum. depr. opening balance
158 * Currency translation sub-group accum. depr. opening balance
160 Current year depr. additions
165 Current year depr. additions affiliated companies
167 * Currency translation for additions of current year depr.
168 * Currency translation for additions of current year depr. sub groups
170 Accum. depr. addition consolidation group (only for first consolida-
tion)
175 Accum. depr. disposal
180 Accum. depr. disposal affiliated companies
185 * Accum. depr. disposal consolidation group
190 Accum. depr. transfers
195 Write-ups
197 * Write-ups currency translation
198 * Write-ups currency translation sub groups
* this sub-items have to be used only for group purposes and are not allowed for using in
the individual financial statement
Affiliated companies are subsidiaries and joint ventures.

If a specification for partner units has to be required (e.g. financial assets) the respective
company (not a profit center) has to be selected.
Subitem 145 has to be used exclusively for write-ups of financial assets (e.g. appreciation
value because of an increase of stock market price). If the reason for the depreciation is not
to apply, the financial asset has to be write-up.
1.4.6.2.2 Data entry of current assets
1.4.6.2.2.1 Stocks
Stocks have to entered without sub items and movement types.
Stocks of finished goods which following from deliveries by subsidiaries and jount ventures
have to be entered with a partner unit (company). If the delivery of stocks contains an inter-
company profit the additional data have to be completed from both companies (supplier and
receiver). The supplying company (normally the division controlling) has to inform the re-
ceiving company if an intercompany profit has to be eliminated.
1.4.6.2.2.2 Trade receivables and other receivables
Receivables have to be divided into receivables with subsidiaries, joint ventures, associated
companies and third parties. Under point 1.7.2. of the guideline the companies are deter-
mined into subsidiaries, joint ventures and associated companies. This structur is obliga-
tory.
The receivables have to be entered according to their term. For this purpose the following
sub-items have to be used:
Sub-item Term
200 Term until one year
210 Term longer than one year
By entry receivables with subsidiaries, joint ventures and associated companies the partner
unit (company) has to be specified.
1.4.6.2.2.3 Cash and cash equivalents
No sub-items, movement types and additional information are required.
1.4.6.2.3 Data entry of deferred tax assets
Deferred tax assets have to be entered considering the structure (per item of the balance
sheet). For this purposes the following movement types have to be used.

700 Opening balance
705 * Currency translation opening balance
708 * Currency translation opening balance sub groups

710 Income from tax rate change
720 Expenses from tax rate change
730 Income
740 Expenses
750 Additions consolidation group (only for first consolidation)
760 * Disposals consolidation group
770 Transfer
1.4.6.2.4 Data entry of prepaid expenses
No sub-items, movement types and additional information are required.
1.4.6.2.5 Data entry of equity
For data entry the following movement types are available:
Movement types Description

600 Opening balance
605 First consolidation (only for first consolidation)
610 Capital increase from revenue reserves
615 Capital decrease from revenue reserves
620 Increase
625 Decrease
630 Increase in addit. paid in capital
635 Decrease in addit. paid in capital
640 Additions consolidation group (only valid to 30.06.2004 – position is
blocked in the DET – new see 605)
650 Increase from hyper inflation
655 Decrease from hyper inflation
Reorganizations into revenue reserves or out of revenue reserves into other equity positions
are displayed for the consequential consolidation with flow types 610 and 615.
The capital reduction and increase of the subscribed capital and capital reserves are dis-
played with flow types 630 and 635.
Flow types 620 and 625 have to be used for facts of the subsequent consolidation (e.g. in-
crease of other revenue reserves from net income for the year, changes in OCI) as well as for
special facts.
Die Bewegungsarten 620 und 625 werden sowohl für Sachverhalte der Folgekonsolidierung
(z.B. Erhöhung der anderen Gewinnrücklagen aus dem Jahresüberschuss, Veränderung des
OCI) als auch für spezielle Sachverhalte verwendet.
These include:
- mergers
- full or partial rebookings (companies are reallocated)
- liquidations
- full and partial asset retirements.
The subitems 650 and 655 have to be used for hyper inflation adjustments and apply pres-
ently at KWS group only for Turkey and Romania. Due to a modified economic situation in
a country reasons can argue for the existence of hyper inflation. In a hyper inflation country
reporting is not convenient without adjustments, because of huge depreciation the compari-
son of figures is misleading. The IAS do not determine an absolute limit for the existence of
hyper inflation. However IAS 29.3 gives clues when a hyper inflation country is assumed.
These clues have to be checked stringently by the assumption of hyper inflation. The equity
with its subitems 650 and 655 is the offsetting entry on the liabilities side of the balance
sheet for adjustments owing to the influence of inflation in the assets (e.g. adjustments in
fixed assets).
These flow types find application for all equity positions.
1.4.6.2.6 Data entry of long-term interest-bearing, long-term accounts payable, finan-

cial leasing and other liabilities
Liabilities are to be classified by subsidiary, joint venture, associated enterprise and foreign
third party. On page 43 and the following is the guideline laid down that determines which
companies are subsidiaries, joint ventures and associated enterprises. This classification is
binding.
When entering liabilities with subsidiaries, joint ventures and associated enterprises, the re-
spective partner unit (company) has to be indicated.
1.4.6.2.7 Data entry of long-term accruals
Accruals are subdivided into accruals I and accruals II. This is a necessary system-wide ac-
crual since accruals I (tax accruals) are not part of the equity and liabilities segment.
The following flow types are available for data entry of accruals I and II.

500 Opening balance
505 * Opening balance currency translation
508 * Sub-group currency translation
510 Addition
512 Interest increase
514 Interest decrease

520 Consumption
525 Reversal
535 Transfer
When it comes to long-term accruals, allocations (BWA 510) must be at cash value. Flow
types 512 and 514 reflect the interest component of accrual allocations. Numerically this is a
percentage share of the opening balance. Releases (BWA 525) are to be considered only if
the cause of the accrual formation is omitted or the accrual has been set too high.
It has already been mentioned at this point that accruals for outstanding invoices are to be
reported under accounts payable and provisions for personnel under other liabilities.
1.4.6.2.8 Data entry of short-term financial liabilities, short-term trade payables and
financial leasing
binding.
spective partner unit (company) has to be indicated.
1.4.6.2.9 Data entry of short-term accruals
Accruals are subdivided into accruals I and accruals II. This is a necessary system-wide ac-
crual since accruals I (tax accruals) are not part of the equity and liabilities segment.
The following flow types are available for data entry of accruals I and II.
500 Opening balance
510 Increase
520 Availment
525 Reversal
535 Transfer
Releases (BWA 525) are to be considered only if the cause of the accrual formation is omit-
ted or the accrual has been set too high.
1.4.6.2.10 Data entry of deferred tax liabilities
Passive deferred taxes are entered based on the classification (by balance sheet account).
Use the flow types below for this purpose.
800 Opening balance
808 * Opening balance sub-group currency translation
810 Income from tax rate change
820 Expenses from tax rate change
830 Income
840 Expenses
870 Transfer
1.4.6.2.11 Data entry in the profit and loss account
When recording the profit and loss account, e.g. turnover with subsidiaries, joint ventures
and associated enterprises, the respective partner unit (KWS company) or third party
(999) has to be indicated.
In addition, the region is queried for the revenue and expense posi-
tions. In version 100 "AARDUMMY" (no country and no region) is
always indicated. This characteristic can not be eliminated for
data entry in version 100 since it is version-independent.
1.4.6.3 Data entry in version 200 (profit centers)
Data entries are made not at the company level but only at the profit center
level. In version 200 only selected positions of assets and equity/liabilities
are entered (see 1.4.5. Definition of assets segment and equity/liabilities
segment). The income statement has to be created up to the operating income.
1.4.6.3.1 Data entry of fixed assets
The net method is to be used for data entry of fixed assets. When opening the window "sub-
positions" all existing flow types are shown. During data entry only BWA 100 is used for
the opening balance sheet. In the following year only the net value, that is, an addition or
a retirement, is recorded. The accumulated purchasing or production costs are carried over
by the system to the next period. The balance is always brought forward on July 1 of the fol-
lowing year, that is, not at the semi-annual closing. Current changes are entered on the semi-
annual and year-end closing.
If a declaration of partner units is made (e.g., with financial assets), the respective profit
center (no company) is to be selected.
1.4.6.3.2 Data entry of current assets
1.4.6.3.2.1 Stocks
Stocks have to entered without sub items and movement types.
Stocks of finished goods which following from deliveries by subsidiaries and jount ventures
have to be entered with a partner unit (company). As partner unit the profit center of the de-
livering company has to be used mandatory. If the delivery of stocks contains an intercom-
pany profit the additional data have to be completed from both companies (supplier and re-
ceiver). The supplying company (normally the division controlling) has to inform the receiv-
ing company if an intercompany profit has to be eliminated.
1.4.6.3.2.2 Trade receivables and other receivables
Receivables have to be divided into receivables with subsidiaries, joint ventures, associated
companies and third parties. Under point 1.7.2. of the guideline the companies are deter-
mined into subsidiaries, joint ventures and associated companies. This structur is obliga-
tory.
The receivables have to be entered according to their term. For this purpose the following
sub-items have to be used:
Sub-item Term
200 Term until one year
210 Term longer than one year
By entry receivables with subsidiaries, joint ventures and associated companies the partner
unit (profit center) has to be specified.
1.4.6.3.3 Data entry of long-term trade payables
Long-term accounts payables are to be classified by subsidiary, joint venture, associated en-
terprise and foreign third party. On page 43 and the following is the guideline laid down that
determines which companies are subsidiaries, joint ventures and associated enterprises. This
classification is binding.
spective partner unit (profit center) has to be indicated.
1.4.6.3.4 Data entry of long-term accruals
Version 200 only has accruals II since only these are a component of the equity/liabilities
segment.
The following flow types are available for data entry of accruals II.

500 Opening balance
510 Addition
520 Consumption
525 Reversal
535 Transfer
When it comes to long-term accruals, allocations (BWA 510) must be at cash value. Flow
types 512 and 514 reflect the interest component of accrual allocations. Numerically this is a
percentage share of the opening balance. Releases (BWA 525) are to be considered only if
the cause of the accrual formation is omitted or the accrual has been set too high.
It has already been mentioned at this point that accruals for outstanding invoices are to be
reported under accounts payable and provisions for personnel under other liabilities.
1.4.6.3.5 Data entry of short-term accounts payable
binding.
spective partner unit (profit center) has to be indicated.
1.4.6.3.6 Data entry of short-term accruals
Version 200 only has accruals II since only these are a component of the equity/liabilities
segment.
The following flow types are available for data entry of accruals II.

500 Opening balance
510 Addition
520 Consumption
525 Reversal
535 Transfer
Releases (BWA 525) are to be considered only if the cause of the accrual formation is omit-
ted or the accrual has been set too high.
1.4.6.3.7 Data entry in the income statement

All turnover and earnings:
a) with partner unit ( foreign third party or KWS profit center) and
b) region (only the country) are to be entered.
Expenditures are entered only with region (quarter and half year region, year end only
the country).
The single items of the income statement are clarified in 2.11.
1.4.6.3.8 Data entry of appendix entries at the company level for general profit-center-
independent information
Data entry is done right down to interest expenditures, interest profits and non-scheduled
write-down of financial assets without partner unit and sub-positions. For the single items no
additions or retirements are to be presented.
The liabilities for investments contained in accounts payable are to be presented separately.
Personnel costs are to be shown according to cost-categories-oriented format based on the

prescribed classification.
To determine the average number of employees in the fiscal year, the actual quantity at the
end of the quarter (Sept. 30, Dec. 31, Mar. 31 and June 30) is to be taken as the basis. This
quantity per quarter is to be added up and then divided by four.
If active and passive deferred taxes are balanced out each other, they are to be indicated
here.
Other operating income and expenditures are to be classified by account.
If enterprises are purchased or sold, the share of cash and cash equivalents in the purchas-
ing/selling price and the purchased or sold cash and cash equivalents are to be indicated.
Exceptional costs must be assigned to the listed positions and meet this criteria.
1.4.6.3.9 Data entry of appendix entries per profit center for directly creditable infor-
mation
Investments in fixed assets (only the investments not the total value of the fixed assets) are
to be indicated per asset group. Furthermore, amortizations of fixed assets are to be clarified
per profit center.
Other non-cash expenditures and earnings have to be indicated according to the pre-
scribed classification.
Overdue accounts receivable, earnings and losses from the sale of equity interests as well as
extraordinary depreciation have to be indicated.
To determine the average number of employees in the fiscal year, the actual quantity at the
end of the quarter (Sept. 30, Dec. 31, Mar. 31 and June 30) is taken as the basis. This quan-
tity per quarter is added up and then divided by four.
1.4.7 Standard reporting with the data entry tool (DET)
With DET the possibility exists to illustrate the entered data as a log. This standard report
can also be printed out to make the data available for the auditors directly. The log can be
accessed as follows:
Data entry Log Reported financial data or additional financial data
1.4.7.1 Reported financial data
Afterwards the data entry log has to be configurated according to the illustrated data.
The selections (version, period etc.) are taken over from the global parameters. In the report
header the consolidation unit and the data entry layout have to be selected. The flag for the
display of subassignments should be setted, because of the display of subitems and partner
units the log is getting meaningful. As meaningful subassignments the subitem, the partner
unit and the region are considered. Reported data in group currency and standardizing en-
tries in group and local currency must not be selected, because reported data have to be en-
tered and audited generally in local currency. On this account the flag has to be setted on re-
ported data in local currency. For the output type the possibility exists to illustrate the data
directly in the DET (Microsoft Access report) or as a pivot table in Microsoft Excel.
Access report
Pivot table
Both output types are useful for any layouts (balance sheet, p&l account, annex etc.). By us-
ing the pivot table it is necessary that the company and the period will be inserted manually.
1.4.7.2 Additional financial data
The selections (version, period etc.) are taken over from the global parameters. Besides the
consolidation unit supply and inventory data can be analyzed.
Subitems are not available for the additional financial data. For the output type exists only
the possibility to illustrate the data direct in the DET (Access report).
Example: Log for inventory data
1.4.8 Reporting with Active Excel
The Active Excel reports have to be used before data delivery to the corporate headquarters
in order to check the statements concerning to plausibility. The validations, which are in-
stalled in the reports cannot be achieved from the DET, because they are spanned about
various versions. Active Excel have to be started about the menu >Start >Programs >SAP
Interactive Excel. The fastest and easiest way is to start the report with a double click. Af-
terwards the connection to the DET has to be established via the menu >SAP >Log on.
In the following window the path for each user to the respective DET has to be registered
one-time. With a double click on the entry “other MS-Access database” and the operation
“browse” the path can be specified.
The logon occurs with the user ID and the password.
For using the provided IFRS reports macros have to be enabled.
click
After logging in a request occurs if the data should be refreshed. The yellow marked fields
consist of parameters like the period, the fiscal year or the partner unit. These can be adapted
everytime.
adaption
For the profit centers not relevant the partner unit 999 has to be used. In order not to have an
automatical update of the data with every change the flag under >SAP >Refresh values
automatically should be deactivated.
After the changes of the parameters have been made the update of the whole workbook can
be started under >Consolidation >Import data >Workbook.
For updating the actual sheet and not the whole workbook this can be activated among >Im-
port data >Active matrix.
1.4.9 KWS intercompany balance
Before preparation of the financial statement the intercompany balance have to be done with
the forms which are designed for this reconciliation. For the correct handling the following
example has to be used.
1. Form (reconciliation of receivables)

• Basically the receivable is leading (obligation for intercompany balance).
• The requesting company shows a receivable and reports this to the confirming
company.
• The confirming company has to report his payable.
• If you get differences in the amount and/or account classification you will find
red warnings.
• The requesting company is obliged to resolve the differences.
INTERCOMPANY BALANCE KWS-GROUP
Please check - receivables unequal payables => DATE:
Requesting company: KWS SAAT AG Confirming company: KWS MAIS GMBH
Term Amount Currency Term Amount Currency Ctrl.

13211000 Trade receivables long 250,00 EUR 23210000 Trade payables long 250,00 EUR
13211000 with subsidiaries short 1.000,00 EUR 24210000 with subsidiaries short 1.000,00
13212000 Trade receivables long 23220000 Trade payables long
13212000 with joint ventures short 24220000 with joint ventures short
13221000 Receivables finance long 23310000 Payables finance long
13221000 leasing with subsidiaries short 24310000 leasing with subsidiaries short
13222000 Receivables finance long 23320000 Payables finance long
13222000 leasing with joint ventures short 24320000 leasing with joint ventures short
13231000 Receivables finance activities/ long 23410000 Other liabilities subsidiaries long
13231000 other assets with subsidiaries short 500,00 EUR 24120000 Finance liabilities subsidiaries short 500,00 EUR
13232000 Receivables finance activities/ long 23420000 Other liabilities joint ventures long
13232000 other assets with joint ventures short 24130000 Finance liabilities joint ventures short
12421000 Loans with subsidiaries long 23120000 Loans with subsidiaries long
12422000 Loans with joint ventures long 23130000 Loans with joint ventures long
2. Form (reconciliation of payables)

• If you have a receivable and a payable against the same consolidated company
you have to complete this form, too.
Please check - payables unequal receivables => DATE:
Requesting company: KWS SAAT AG Confirming company: KWS MAIS GMBH
Term Amount Currency Term Amount Currency Ctrl.

23210000 Trade payables long 13211000 Trade receivables long
24210000 with subsidiaries short 200,00 EUR 13211000 with subsidiaries short 200,00 EUR
23220000 Trade payables long 13212000 Trade receivables long
24220000 with joint ventures short 13212000 with joint ventures short
23310000 Payables finance long 13221000 Receivables finance long
24310000 leasing with subsidiaries short 13221000 leasing with subsidiaries short
23320000 Payables finance long 13222000 Receivables finance long
24320000 leasing with joint ventures short 13222000 leasing with joint ventures short
23410000 Other liabilities subsidiaries long 13231000 Receivables finance activities/ long
24120000 Finance liabilities subsidiaries short 13231000 other assets with subsidiaries short
23420000 Other liabilities joint ventures long 13232000 Receivables finance activities/ long
24130000 Finance liabilities joint ventures short 13232000 other assets with joint ventures short
23120000 Loans with subsidiaries long 12421000 Loans with subsidiaries long
23130000 Loans with joint ventures long 12422000 Loans with joint ventures long
3. Form (reconciliation of trade receivables based on profit center level)

• The control field of the third form is linked with the entered figures of the first
form (red warnings).
• This form makes the preparation of the group liability consolidation more easier.
• Additionally, mandatory partner information will be delivered which are essential
for entry the financial statement in the version 200 of the DET system.
Requesting company:
Confirming company:
Date:
Trade receivables
Profit Center subsidiaries subsidiaries joint ventures joint ventures
long short long short
13211000 13211000 13212000 13212000
ZR-ZR
ZR-ANL
ZR-FE
MA-MA
MA-ÖF
MA-FE-MA
MA-FE-ÖF
GT-GT
GT-FE
CF-CF
CF-FE
CF-LDW
CF-CONS
Total 0,00 0,00 0,00 0,00
Ctrl.
Trade payables
Profit Center subsidiaries subsidiaries joint ventures joint ventures
long short long short
23210000 24210000 23220000 24220000
ZR-ZR
ZR-ANL
ZR-FE
MA-MA
MA-ÖF
MA-FE-MA
MA-FE-ÖF
GT-GT
GT-FE
CF-CF
CF-FE
CF-LDW
CF-CONS
Total 0,00 0,00 0,00 0,00
Ctrl.
Only when the partner unit informs in which profit center the corresponding posting was ef-
fected by using these schedule, the data entry can takes place correctly (see below example).
After the requesting company has entered its data completely the file will be sent to the con-
firming company per eMail. The confirming company will insert its data into the file. If no
differences arise the confirmed file will be sent to the requesting company. Otherwise the
differences have to be resolved. After reconciliation and if you are not able to resolve the
differences please forward the forms to the group accounting department.
Receivables and payables have to be shown only under the position “joint ventures” if both
companies are joint ventures. If one company is a subsidiary and the other one is a joint ven-
ture both companies have to be classified the receivables and payables under the position
“subsidiary”.
1.4.10 Validation of provided data for version 100 (company) and 200 (profit center)
After data entry and before data export the companies have to verify their data via Active-
Excel-Tool.
After receiving all financial statements the financial department-group accounting has to oc-
cur once more a validation of version 100 and 200 via Activ-Excel-Tool. This tool checks if
profit center assets, profit center liabilities, profit center income and profit center expenses
(version 200) will correspond with the amounts shown in version 100 (company level). The
checkup has to be occurred promptly (not longer than two days) after receiving the data
files. If a variance between the versions is existing the supplying company has to be in-
formed. The differences have to be clarified by the company. The revised data have to be
available to KWS again. The checkup of the delivered data files has to be executed again.
The checkup has to be documented and saved on the central data memory (server J).
1.4.11 Reporting packages / Deadlines
Annual statement of accounts
Version 100 ACTUAL company 10th of August

Period 12
- Profit and loss statement up to net income of the year at company level
- Balance sheet at company level
- Complete movement-schedule information for fixed assets, equity and accruals
Version 200 ACTUAL profit center 10th of August

Period 12
- Profit and loss statement up to statement of operating result at profit center level.
- Balance sheet segment - assets and liabilities at profit center level with simplified
movement-schedule information for fixed assets, equity and accruals
- IFRS-information have to be included in the notes at company/profit center level
- Additional information at profit center level: headcount and personnel costs, invest-
ments, type of costs and other division information.
Semi-annual and quarterly financial statement of accounts
Version 100 ACTUAL company 31st of October, 31st of

Period 3, 6 and 9 January and 30th of April
- Profit and loss statement up to net income of the year at company level
- Balance sheet at company level

- Complete movement-schedule information for fixed assets, equity and accruals
Version 200 ACTUAL profit center 31st of October, 31st of

Period 3, 6 and 9 January and 30th of April
- Profit and loss statement up to statement of operating result at profit center level
- IFRS-information have to be included in the notes at company level
Annual / middle term planning
Version 400 BUDGET – profit center and company 3rd of April
Period 3 (1-year-budget), Period 6 (1. midterm-year), Periode 9 (2. midterm-year), Pe-

riod 12 (3. midterm-year)
- Interest-, participation-, taxes- and extraordinary-result at company level
- Other assets and liabilities at company level
- Additional information on profit center: personnel costs, investments, type of costs and
other division information.
The balance-carried-forward have to be copied from the 3. Act. Forecast (Version

300, Period 9) into the 1-year budget (Version 400, Period 3).
Actual forecast
Version 300 Actual Forecast - profit center and company
1. Act. Forecast: 31st of October

2. Act. Forecast: 31st of January
3. Act. Forecast: 3rd of April
Period 3 (1. Act. Forecast), Period 6 (2. Act. Forecast), Period 9 (3. Act. Forecast, Pe-
riod 12 (4. Act. Forecast)
- Balance sheet segment - assets and liabilities under profit center with simplified
movement-schedule information for fixes assets, equity and accruals
- Interest-, participation-, taxes- and extraordinary-result at company level
- Other assets and liabilities at company level
- Additional information on profit center: personnel costs, investments, type of costs and
other division information.
The figures of the 1-year-budget (Version 400, Period 3) have to be copied into the
1. Actual Forecast (Version 300, Periode 3). After correcting the figures according
to current findings the first actual forecast will be completed.
The figures of the 1 Act. Forecast (Version 300, Period 3) have to be copied into the
to current findings the second actual forecast will be completed.
The figures of the 2 Act. Forecast (Version 300, Period 6) have to be copied into the
to current findings the third actual forecast will be completed.
Up to now it is not necessary to prepare the figures for the 4. Actual Forecast in
DET. If there are changes in the figures according to current findings, please con-
tact your division controller.
1.4.12 Time frame for quarterly and year-end closing
The following time frame can be used as a guide for preparing quarterly statements.
Day of follo-
wing month
Deadline for external invoices 8.
Beginning of intercompany balance (receivables / liabilities) 9.
Fixed assets valuation local GAAP (per profit center) 10.
Fixed assets valuation IFRS (per profit center) 12.
Accruals valuation local GAAP (per profit center) 10.
Accruals valuation IFRS (per profit center) 12.
Internal service charges 13.
Ending of intercompany balance (receivables / liabilities) 15.
Receivables valuation local GAAP (per profit center) 15.
Receivables valuation IFRS (per profit center) 16.
Liabilities valuation local GAAP (per profit center) 15.

Liabilities valuation IFRS (je Profit Center) 16.
Cost accounting 16.
Inventory valuation local GAAP (per profit center) 16.
Inventory valuation IFRS per profit center (incl. agricultural live-stock) 18.
Balance sheet, profit and loss account according to IFRS 20.
Sales and cost of sales local GAAP (per profit center) 22.
Sales and cost of sales IFRS (per profit center) 23.
Selling and administration expenses local GAAP (per profit center) 22.
Selling and administration expenses IFRS (per profit center) 23.
P&L cost of sales method, devision and segment report local GAAP 22.
P&L cost of sales method, devision and segment report IFRS 23.
Data entry DET on company and profit center level 24.
Check company and profit center (V100/V200) in Active Excel 26.
Annex IFRS in DET 28.
Analysis and annotation 30.
Data transfer / confirmation data are delivered/saved on central server 31.
The deadline for the year-end closing is the 15th of August. This time table for preparation
the statements applies further on, because the temporary extension of two weeks has to con-
tain the audit of the statements by the auditors.
1.5 Organisational procedure, allocation of duties
The organisational procedure and the allocation of duties during compilation of the KWS
CONSOLIDATED FINANCIAL STATEMENT basically presents itself as follows:
SUBSIDIARY, JOINT VENTURE, ASSOCIATED COMPANY
- Compilation of an unconsolidated individual /interim report for the period from July
1st to June 30th in accordance with the IAS benchmark determined in the KWS
GROUP ACCOUNTING GUIDELINES. Coordination of accounts receivable, ac-
counts payable, revenue and expenditure must take place immediately after the clos-
ing date for entries.
- Auditing and attestation of the financial statements by certified accountants. The se-
lection of certified accountants must be concerted with the group management prior
to the audit assignment.
- On-schedule transmission of the KWS ANNUAL ACCOUNTING DOCUMENTS
KWS SAAT AG
Receiving inspections and plausibility checks:

Substantial alterations to the previous year and adherence to deadlines
Balance sheet identity (last year’s figures)
Recordation of financial statements and consolidation to a turnover balance
Recordation and assessment of the additional information.
KONSOLIDATION or CONSOLIDATING ENTRIES
Consolidation of capital
Asset history sheet consolidation
Consolidation of debts
Consolidation of expenditure and revenue
Equity accounting
Elimination of interim results
Deferred taxes from consolidation
Consolidation of notes to the accounts
Compilation of reports
Audit and attestation
Disclosure
Analysis report
Feedback with subsidiaries and associate companies, e.g.: regarding
extrapolation of additional orders
Suggestions for improvement
News/reorganisation
1.6 General principles, principles for entry, valuation and disclosure
1.6.1 Accounting sections
According to IAS 1.7, a complete financial statement contains the following sections:
BALANCE SHEET
PROFIT AND LOSS STATEMENT
STATEMENT OF ALTERATION OF THE EQUITY CAPITAL
CASH FLOW STATEMENT
ACCOUNTING AND VALUATION METHODS AS WELL AS EXPLANATORY SUP-
PLEMENTARY INFORMATION.
1.6.2 General entry and valuation rules
The annual statement of accounts must convey a picture of the assets, liabilities, financial
position and profit or loss as well as of the company’s cash flow in accordance with the ac-
tual circumstances.
1.6.3 Individual principles:
1.6.3.1 Accounting and valuation methods
The accounting and valuation methods must be selected and applied in such a way that the
financial statement corresponds with all provisions of each applicable IAS and the respec-
tive interpretations. Should an IAS standard be unavailable for the accounting issue, the fol-
lowing criteria must be observed:
- Provisions of other IAS and interpretations that deal with similar issues
- Regulations presented in the basic concept (framework)
- Regulations of other standard setting bodies and industrial practices, as far as these
are compatible with the IAS.
Special cases must always be entered in the balance sheet in concert with the group man-
agement.
1.6.3.2 Continuation of business
While compiling the financial statement, the management must estimate the company’s abil-
ity to continue business operations.
1.6.3.3 Concept of allocating revenue and expenses to applicable accounting periods

A company must draw up its financial statement, with the exception of the cash flow state-
ment, in accordance with the concept of allocating revenue and expenses to applicable
accounting periods.
1.6.3.4 Consistency of presentation
Presentation and identification of entries in the financial statement must be maintained from
one period to the next, provided the reasons stated in IAS 1.27 do not require an alteration.
1.6.3.5 Essentiality and combination of entries
Every essential entry must be accounted for separately in the financial statement. Inessential
amounts must be combined with amounts of similar nature or with functions and do not need
to be accounted for separately.
1.6.3.6 Offsetting of entries
Asset values and debts must not be offset with each other, provided offsetting is not de-
manded or permitted by an IAS. Offsetting of revenue entries and expenditure entries must
only be applied for IAS 1.34.
1.6.3.7 Comparative information
Provided an IAS does not permit or stipulate anything else, comparative information regard-
ing the previous period must be stated for all quantitative information.
1.6.3.8 Structure and content
A financial statement must be clearly identifiable as such. Every part of the financial state-
ment must be clearly marked. A financial statement must be drawn up at least annually.
Compilation of legally prescribed semi-annual statements or quarterly statements must also
take place in an IAS-conform manner. Every company must account for short-term and
long-term assets and debts as separate itemised groups in the balance sheet. The minimum
itemisation method of both the balance sheet and profit and loss statement is uniformly de-
termined throughout the group and must be applied by all subsidiaries and associate compa-
nies. The alteration of equity capital must be specified in a separate compilation. A cash
flow statement must be drawn up.
The supplementary information in the financial statement must contain:
Information about the basic principles of compilation of the financial statement and the
accounting and valuation methods
Information requested by the IAS
Additional information for presentation of the actual circumstances.
Supplementary information must be presented systematically. Each item of the balance

sheet, profit and loss statement and cash flow statement must have a cross reference to the
annex.
1.6.4 Consolidations in the KWS Group
- Consolidation of capital
- Consolidation of debts
- Consolidation of expenditure and revenue
must be carried out for both subsidiaries and joint ventures. All intra-group information and
connections, which must be provided by subsidiaries, must also be provided by joint ven-
tures.
1.6.5 Currency conversion

Reporting currency is the currency in which the financial statement is drawn up. Reporting
currency in the KWS consolidated financial statement is EURO (€).
Foreign currency is every other currency apart from the reporting currency.
Currency conversion in the reporting currency EURO will made principle in Einbeck.
The reporting entity inform exclusiv in local currency (in 1000 local currency units
TLC).
The following procedure must be adhered to during conversion of the financial statements of
subsidiaries and associate companies:
Both monetary and non-monetary assets and debts must be converted in accordance with
the key date rate;
The revenue and expenditure items must be converted according to the average annual
rate. IAS 29 applies to high inflation countries.
All arising conversion rate differences must be recorded in a separate entry in equity
capital without affecting profits.
1.6.6 Matching of expenses and income as per June 30th and per quarter
1.6.6.1 Accrual of returns
As basis of calculation previous values are used for accruals of returns of goods. The follow-
ing example helps to make the postings and the approach clear.
On the previous values (previous period) a quota of returns will be determined, e.g. 10 per-
cent. Consequently the following postings arise:
1. posting: sales a/c debit 100; accruals a/c credit 100

2. posting: accruals a/c debit 50; cost of sales a/c credit 50
Finally only the margin in the amount of 50 will accrue. Consequently, the balance sheet
and the profit and loss account are as follows:
With the set-up of returns as per June 30th, the proceeding is to be used similar to March
31st. That means that it concerns the same postings. By July 1st the accruals have to be
turned back (cancellation of the postings of June 30th). Actual returns, which arrived in July
and August, are recorded then as follows:
1. posting: sales a/c debit; trade receivables a/c credit

2. posting: inventories a/c debit; cost of sales a/c credit
If discounts are granted in July and August on the sales of the last financial year, then these
are to be shown as follows:
Posting as per 30.06.: sales a/c debit; accruals a/c credit
Posting in July/August: accruals a/c debit;

Accruals too small! non-periodic expenses a/c debit;
trade receivables a/c credit
Posting in July/August: accruals a/c debit;

Accruals too high! trade receivables a/c credit
income from reversal of accruals a/c credit
1.6.6.2 Accruals of royalties
An accrual of royalties applies to sales in corn, rape and sunflowers. These accrual occurs by
the responsible persons of KWS MAIS GmbH. Accruals of royalties are posted only in the
group accounting. Invoicing of the final royalty invoice occurs for rape sales on December
31st and for all other crops on June 30th.
1.6.6.3 Accruals of breeding services
Invoicing of breeding services to KWS SAAT AG has to be done by the fifth day of the fol-
lowing month. The settlement date has to be within the invoiced period (quarter). Should be
the accounting documents not be complete an estimation of the breeding costs has to be
made. The breeding services can be alternatively invoiced on basis of the budgeted quarter.
Differences from the previous period have to be invoiced in the following period.
1.7 KWS scope of consolidation
1.7.1 Delimitation of the KWS scope of consolidation
A parent company that compiles a consolidated financial statement must basically consoli-
date all national and foreign subsidiaries. IAS 27.13 regulates exceptions for exclusion from
the consolidated financial statement. The general principle of essentiality (analog. frame-
work 44) applies to subsidiaries of subordinate significance. The reasons for non-inclusion
of a subsidiary must be stated.
The list of included subsidiaries and associate companies is contained in...???
The subsidiaries and associate companies mentioned therein are subdivided as follows:
1.7.1.1 Subsidiaries
A subsidiary is a company that is controlled by a different company (described as parent

company).
1.7.1.2 Joint venture
A Joint venture is a contractual agreement, in which two or more parties carry out an eco-
nomic activity that is subject to joint management. A partner company must enter its shares
in a jointly managed unit in the balance sheet of its consolidated financial statement (pro-
portional consolidation).
1.7.1.3 Associated company
An associated company is a company on which the shareholder can exert significant influ-
ence and which neither presents subsidiaries nor a joint venture of the shareholder. Signifi-
cant influence is assumed with 20 % and more of the voting rights and represents participa-
tion in decision-making processes without dominating these.
Depending on the type of inclusion of the subsidiaries and associate companies in the KWS
CONSOLIDATED FINANCIAL STATEMENT, the requirements in this manual apply
within a graduated scope.
The directives and explanations apply to their full extent to fully consolidated subsidiaries
and joint ventures.
Full consolidation means that all assets and debts, charged up against the investment book
values and the receivables from and liabilities towards affiliated companies as well as all
expenditures and revenue, offset against intra-group expenditures and revenue are entered in
the consolidated financial statement.
Proportional consolidation means that all assets and debts in proportion, charged up
against the investment book values and the proportional receivables from and liabilities to-
wards affiliated companies as well as the proportionate expenditure and revenue, charged up
against proportional intra-group expenditure and revenue are entered in the consolidated fi-
nancial statement. Not the percentage of votes, but rather the capital share is decisive for the
proportionate fraction to be included. For joint ventures, all receivables and liabilities with
subsidiaries and joint ventures of the KWS scope of consolidation must be accounted for
and specified for each company under the position “receivables or liabilities with subsidiar-
ies and joint ventures“.
The Equity-Method is an accounting method, by means of which the shares in an associ-

ated company is first posted with the acquisition costs and subsequently adjusted in accor-
dance with the shareholder’s shares in the changing net assets of the associate company. The
profit and loss statement shows the shareholder’s shares in the profit of the associate com-
pany.
Subsidiaries and associate companies entered in the balance sheet at book values must solely
compile an IAS-financial statement to their balance sheet key date and must participate in
the reconciliation of receivables and liabilities.
Book value accounting means that interest of the respective subsidiary and associate com-
pany is entered in the balance sheet at acquisition costs or current market value.
1.7.2 Included companies KWS-group

Num Company short- Holding company Type Consolidation
ber name
1000 KWS SAAT AG KWS x Holding Full consolidation
1102 KWS LOCHOW GMBH KWL KWS SAAT AG Subsidi- Full consolidation
ary
1104 KWS KLOSTERGUT WBH KWS SAAT AG Subsidi- Full consolidation
WIEBRECHTSHAIUSEN ary
GMBH
1105 PLANTA ANGEWAND- PLT KWS SAAT AG Subsidi- Full consolidation
TE PFLANZENGENETIK ary
UND BIOTECHNOLO-
GIE GMBH
1108 KWS SAATFINANZ SFZ KWS SAAT AG Subsidi- Full consolidation
GMBH ary
1111 RAGIS KARTOFFEL- RAG KWS SAAT AG Subsidi- Full consolidation
ZUCHT & HANDELS- ary
GESELLSCHAFT MBH,
Klein Wanzleben
1115 EURO-HYBRID GMBH EHY KWS SAAT AG Subsidi- Full consolidation
ary
1116 KWS INTERSAAT ITS KWS SAAT AG Subsidi- Full consolidation

GMBH ary
1117 KWS MAIS GMBH KMA KWS SAAT AG Subsidi- Full consolidation
ary
1118 AGROMAIS AMA KWS MAIS GMBH Subsidi- Full consolidation
SAATZUCHT GMBH ary
1119 DELITZSCH PFLAN- DEL KWS INTERSAAT Subsidi- Full consolidation
ZENZUCHT GMBH GMBH ary
1204 RAZES HYBRIDES RH-F KWS FRANCE Subsidi- Full consolidation
S.A.R.L. S.A.R.L. ary
1205 KWS FRANCE S.A.R.L.. KW-F KWS SAAT AG Subsidi- Full consolidation
ary
1206 KWS MAIS FRANCE KM-F KWS MAIS GMBH Subsidi- Full consolidation
S.A.R.L. ary
1209 KWS UK LTD. KW-UK KWS LOCHOW Subsidi- Full consolidation
GMBH ary
1211 KWS ITALIA S.P.A. KW-I KWS SAAT AG Subsidi- Full consolidation
ary
1212 KWS SEME D.O.O. KW-YU KWS SAAT AG Subsidi- Full consolidation
ary
1213 KWS SJEME D.O.O. KW-HR KWS MAIS GMBH Subsidi- Full consolidation
ary
1215 KWS BENELUX B.V. KW-NL KWS MAIS GMBH Subsidi- Full consolidation
ary
1216 KWS SEMINTE S.R.L. KW-RO KWS MAIS GmbH Subsidi- Full consolidation
ary
1221 KWS AUSTRIA SAAT KW-A KWS MAIS GMBH Subsidi- Full consolidation
GMBH ary
1225 KWS LOCHOW- KWL- KWS LOCHOW Subsidi- Full consolidation
POLSKA SP.Z O.O. PL GMBH ary
1226 KWS POLSKA SP.Z KW-PL KWS SAAT AG Subsidi- Full consolidation
O.O. ary
1233 SEMENA AG SMA KWS SAAT AG Subsidi- Full consolidation
ary
1234 KWS SCANDINAVIA KW-DK KWS INTERSAAT Subsidi- Full consolidation
A/S GMBH ary
1235 KWS SEMENA S.R.O. KW-SK KWS MAIS GMBH Subsidi- Full consolidation
ary
1236 KWS SEMILLAS IBERI- KW-E KWS INTERSAAT Subsidi- Full consolidation
CA S.L. GMBH ary
1237 KWS TÜRK TARIM TI- KW-TR KWS INTERSAAT Subsidi- Full consolidation
CARET A.S. GMBH ary
1238 KWS MAGYARORSZÁG KW-H KWS MAIS GMBH Subsi- Full consolidation
KFT. diary
1242 KWS OSIVA S.R.O. KW-CZ KWS MAIS GMBH Subsidi- Full consolidation
ary
1243 KWS SEMENA KW-BG KWS MAIS GMBH Subsidi- Full consolidation
BULGARIA E.O.O.D. ary
1252 KWS UKRAINE LTD. KW-UA EURO-HYBRID Subsidi-
Full consolidation
GMBH ; KWS SAAT- ary
FINANZ GMBH
1253 KWS RUS LTD. KW- KWS SAAT AG Subsidi- Full consolidation
RUS ary
1301 KWS SEEDS INC. KW-U INTERSAAT GMBH ; Subsidi- Full consolidation
KWS SAAT AG ary
1302 BETASEED INC. BTS KWS SEEDS INC. Subsidi- Full consolidation
ary
1303 GREAT LAKES HY- GLH KWS SEEDS INC. Subsidi- Full consolidation
BRIDS INC. ary
1304 Van Rijn-KWS B.V. vR-KW RAGIS KARTOF- Subsidi- Quota consolidation
FELZUCHT & HAN- ary
DELSGESELL-
SCHAFT MBH
1305 BETASEED FRANCE BTS-F BETASEED INC. Subsidi- Full consolidation
S.A.R.L. ary
1306 ACH SEEDS INC. ACH BETASEED INC. Subsidi- Full consolidation
ary
1350 KWS ARGENTINA S.A. KW-RA KWS MAIS GMBH Subsidi- Full consolidation
ary
1411 SEMILLAS KWS CHILE KW- KWS SAAT AG Subsidi- Full consolidation
LTDA. RCH ary
2202 SOCIETE DE MOM KWS LOCHOW Joint Quota consolidation
MARTINVAL S.A. GMBH Venture
2280 KWS R&D RUS LTD. KW- KWS RUS LTD. Subsidi- Full consolidation
RD- ary
RUS
2501 AGRELIANT GENETICS AGR-U GREAT LAKES HY- Joint Quota consolidation
LLC. BRIDS INC. Venture
2510 AGRELIANT GENETICS AGR-C KWS SAAT AG Joint Quota consolidation
INC. Venture
1.8 List of abbreviations

abbreviation meaning
Abs. paragraph
AfA deduction for depreciation (depreciation)
Acq. costs Acquistion costs
AMC Acquistion or manufacturing costs
AVK general administrative costs
bspw. for example
BWA movement type
bzw. respectively
d.h. i.e.
dt deciton
EAV profit and loss transfer agreement
Excl. exclusive
EG European Community
EStG Income Tax Act
€ EURO
ggf. if appropriate
GJ financial year
GuV profit and loss statement
GuV-Pos.: profit and loss statement position
HaBi trade balance
HGB German Commercial Code
HK manufacturing costs
i.d.R. as a rule
IAS International Accounting Standards

IFRS International Financial Reporting Standards
i.V.m. in connection with
incl. Including
KTBL Kuratorium for Technic und Building in Agricultur
LW national currency
o.ä. or the like
o.g. above-mentioned
RW residual value
SBA other operating expenditure
SI sub item
sog. so-called
TBG subsidiary and associate company
TBG-Nr. number of the subsidiary and associate company
(according to the list KWS SCOPE OF CONSOLIDATION)
T€ thousand Euro (1000 €)
TLW thousand national currency (1000 LW)
u.U. owing to circumstances
UKV cost of sales accounting
usw. and so forth
vgl. compare to
VJ previous year
VK distribution costs
z.B. e.g.
z.Zt. at present
KWS GROUP IFRS ACCOUNTING GUIDELINES Chapter III
2 KWS GROUP ACCOUNTING AND CONSOLIDATION

REGULATIONS
INTRODUCTION
The following specifications per position concern the general itemisation, accounting, valua-
tion and explanation regulations as well as the binding accounting and valuation regulations
determined for the KWS GROUP.
The documents to be submitted to KWS SAAT AG for the consolidated financial statement
must be compiled exclusively in accordance with the following guidelines.
The balance sheet positions and the profit and loss statement positions are described in the or-
der listed in the forms.
THE INDIVIDUAL BALANCE SHEET POSITIONS
12000000 FIXED ASSETS
12100000 INTANGIBLE ASSETS

12110000 Licenses, industrial property rights and similar rights
12120000 Goodwill
12200000 TANGIBLE ASSETS

12210000 Land, similar rights and buildings, including buildings on third party
land
12220000 Technical equipment and machines
12230000 Other equipment, plant and office equipment
12240000 Prepayments and equipment under construction
12300000 BIOLOGICAL ASSETS

12310000 Livestock
12320000 Plants
12400000 FINANCIAL ASSETS

12410000 Shares
12411000 Shares in subsidiaries
12412000 Shares in joint ventures
12413000 Shares in associated companies
12420000 Loans
12421000 Loans to subsidiaries
12422000 Loans to joint ventures
12423000 Loans to associated companies
1242400 Loans to third parties
12430000 Other financial assets (held-to-maturity)
13000000 CURRENT ASSETS
13100000 INVENTORIES
13110000 Raw materials and supplies
13120000 Work in process
13130000 Unfinished biological assets
13140000 Finished goods and services
13200000 TRADE RECEIVABLES AND OTHER RECEIVABLES

13210000 Trade receivable
13211000 Trade receivables with subsidiaries
13212000 Trade receivables with joint ventures
13213000 Trade receivables with associated companies
13214000 Trade receivables with third parties
13220000 Receivables from finance leasing

13221000 Receivables from finance leasing with subsidiar-
ies
13222000 Receivables from finance leasing with joint ven-
tures
13223000 Receivables from finance leasing with associated
companies
13224000 Receivables from finance leasing with third par-
ties
13230000 Receivables from finance activities and other assets

13231000 Receivables from finance activities with subsidi-
aries
13232000 Receivables from finance activities with joint
ventures
13233000 Receivables from other receivables and other as-
sets with associated companies
13234000 Receivables from other receivables and other as-
sets with third parties
13235000 Receivables from tax refund claims
13300000 CASH AND CASH EQUIVALENTS

13310000 SECURITIES
13311000 Securities: available-for-sale
13312000 Securities: trading
13320000 CHECKS, CASH BALANCE, BANK BALANCE

Checks, cash balance, bank balance
14000000 DEFERRED TAX ASSETS

15000000 PREPAID EXPENSES
16000000 CAPITAL DEFICIT (negative equity)
21000000 EQUITY
21100000 SUBSCRIBED CAPITAL
21200000 CAPITAL RESERVE (Addit. paid in capital)
21300000 REVENUE RESERVES
21310000 Legal reserve
21320000 Reserve for own shares
21330000 Statutory reserves
21340000 Other revenue reserves
21400000 ACCUMMULATED PROFIT/ACCUMULATED LOSS
21410000 Unappropriated retained earnings brought forward/Cumulative
losses brought forward
21420000 Net income / Net loss for the current year
21430000 Accumulated profit of the current year before first consolidation
21440000 Net income before change of quota
21450000 Application of profits
21451000 Dividend issued in current year
21452000 Transfer from revenue reserves
21452100 Transfer from legal reserve
21452200 Transfer from reserve for own shares
21452300 Transfer from statutory reserves
21452400 Transfer from other revenue reserves
21453000 Transfer to revenue reserves
21453100 Transfer to legal reserve
21453200 Transfer to reserve for own shares
21453300 Transfer to statutory reserves
21453400 Transfer to other revenue reserves
21500000 CURRENCY CONVERSION RATE DIFFERENCE
21600000 OTHER COMPREHENSIVE INCOME (OCI)
21610000 OCI from unrealised gains/losses out of securities (fixed assets)
/ other financial assets
21620000 OCI from unrealised gains/losses out of securities (current as-
sets) / available-for-sale
22000000 MINORITY SHAREHOLDER

22100000 MINORITY SUBSCRIBED CAPITAL
22200000 MINORITY CAPITAL RESERVE
22300000 MINORITY REVENUE RESERVE
22310000 Minority legal reserve
22320000 Minority reserve for own shares
22330000 Minority statutory reserves
22340000 Minority other revenue reserves
22400000 MINORITY ACCUMMULATED PROFIT/ACCUMULATED LOSS
22410000 Minority unappropriated retained earnings brought forward /
cumulative losses brought forward
22420000 Minority net income / net loss for the year

22430000 Minority accumulated profit of the current year before first con-
solidation
22440000 Minority net income before change of quota
22450000 Minority application of profits
22451000 Minority dividend distribution
22454000 Minority transfer from revenue reserves
22454100 Minority transfer from legal reserve
22454200 Minority transfer from reserve for own shares
22454300 Minority transfer from statutory reserves
22454400 Minority transfer from other revenue reserves
22455000 Minority transfer to revenue reserves
22455100 Minority transfer to legal reserve
22455200 Minority transfer to reserve for own shares
22455300 Minority transfer to statutory reserves
22455400 Minority transfer to other revenue reserves
22500000 MINORITY CURRENCY CONVERSION RATE DIFFERENCE
22600000 MINORITY OTHER COMPREHENSIVE INCOME (OCI)
22610000 Minority OCI from unrealised gains/losses out of securities
(fixed assets) / other financial assets
22620000 Minority OCI from unrealised gains/losses out of securities (cur-
rent assets) / available-for-sale
BORROWED CAPITAL
23000000 LONG-TERM BORROWED CAPITAL

23100000 Long-term interest-bearing loans
23110000 Long-term interest-bearing loans with lending institutions (bank
loans)
23120000 Long-term interest-bearing loans with subsidiaries
23130000 Long-term interest-bearing loans with joint ventures
23140000 Long-term interest-bearing loans with associated companies
23150000 Long-term interest-bearing loans out of hybrid financing instru-
ments (derivatives)
23160000 Other long-term interest-bearing loans
23200000 Long-term trade payables
23210000 Long-term trade payables with subsidiaries
23220000 Long-term trade payables with joint ventures
23230000 Long-term trade payables with associated companies
23240000 Long-term trade payables with third parties
23300000 Long-term liabilities from finance leasing
23310000 Long-term liabilities from finance leasing with subsidiaries
23320000 Long-term liabilities from finance leasing with joint ventures
23330000 Long-term liabilities from finance leasing with associated com-
panies
23340000 Long-term liabilities from finance leasing with third parties
23400000 Other long-term liabilities
23410000 Other long-term liabilities with subsidiaries
23420000 Other long-term liabilities with joint ventures

23430000 Other long-term liabilities with associated companies
23440000 Other long-term liabilities with third parties
23450000 Other remaining long-term liabilities
23500000 Long-term provisions
23510000 Long-term provisions I
23511000 Accruals for income taxes
23520000 Long-term provisions II
23521000 Provisions for pension and similar obligations
23532000 Provisions for restoration third party properties
23543000 Other long-term provisions
24000000 SHORT-TERM BORROWED CAPITAL
24100000 Short-term finance liabilities
24110000 Short-term finance liabilities with lending institutions (bank li-
abilities)
24120000 Short-term finance liabilities with subsidiaries
24130000 Short-term finance liabilities with joint ventures
24140000 Short-term finance liabilities with associated companies
24150000 Other short-term finance liabilities
24200000 Trade payables
24210000 Trade payables with subsidiaries
24220000 Trade payables with joint ventures
24230000 Trade payables with associated companies
24240000 Trade payables with third parties
24300000 Liabilities from finance leasing
24310000 Liabilities from finance leasing with subsidiaries
24320000 Liabilities from finance leasing with joint ventures
24330000 Liabilities from finance leasing with associated companies
24340000 Liabilities from finance leasing with third parties
24400000 Short-term tax liabilities
24500000 Other short-term liabilities
24600000 Short-term provisions
24610000 Short-term provisions I
24611000 Accruals for income taxes
24610000 Short-term provisions II
24621000 Provisions for pension
24632000 Provisions for restoration third party properties
24643000 Other short-term provisions
25000000 DEFERRED TAX LIABILITIES
26000000 DEFERRED INCOME
THE INDIVIDUAL POSITIONS OF THE PROFIT AND LOSS ACCOUNT AFTER

COST OF SALES FORMAT
34000000 Operating result IFRS

34100000 Contribution margin II

34110000 Contribution margin I
34111000 Sales
34111100 Sales certified/commercial seed
34111200 Sales royalties
34111300 Sales basic seed
34111400 Sales breeding services
34111500 Other sales
34112000 Cost of sales
34112100 Material costs certified/commercial seed
34112110 Seeds
34112120 Treatment material
34112130 Packaging
34112200 Material costs basic seed
34112300 Royalty costs
34112400 Manufacturing costs
34112410 Manufacturing expenses
34112420 Other manufacturing income
34112500 Other cost of sales
34120000 Selling expenses

34121000 Selling expenses
34122000 Other selling income
34200000 Research and development expenses

34230000 Research and development Saat AG
34210000 Research and development expenses
34220000 Income from research and development
34300000 Administration expenses

34310000 Administration expenses
34320000 Other administration income
34400000Other operating income and expenses

34411000 Other miscellaneous income
34420000 Other operating expenses
34421000 Other miscellaneous expenses
34422000 Write-offs and valuation allow-
ances on debts
34500000 Additional mat. costs (diff. nom./act. and stocks)
34510000 Difference nom./actual material costs cert.seed
34511000 Material costs certified seed actual
34511100 Seeds actual
34511200 Treatment material actual
34511300 Packaging actual
34512000 Reverse material costs nominal
34512100 Seeds nominal
34512200 Treatment material nominal
34512300 Packaging nominal

34520000 Write down and/or destruction of stocks
35000000 Financial result

35100000 Result from participations
35110000 Income from subsidiaries and joint ventures
35120000 Income from associated companies
35130000 Income from participations
35140000 Income from profit transfer
35150000 Income from write-ups on financial assets
35160000 Write-down on subsidiaries and joint ventures
35170000 Write-down on participations of financial assets
35180000 Expenses from transfer of losses (only for Planta GmbH)
35191000 Depreciation of goodwill (full / equitycons.)
35192000 Income from reversal of negative goodwill (full / equity)
35193000 Depreciation of goodwill (equity cons.)
35194000 Income from reversal of negative goodwill (equity cons.)
35200000 Net interest income
35210000 Interest income and similar income
35220000 Interest expenses and similar expenses
35230000 Income from securities of the current assets
35240000 Income from other securities / loans of fin.assets
35250000 Write-down on securities
35260000 Income from write-ups on securities
36000000 Taxes
36100000 Taxes on income
36200000 Deferred taxes
37000000 Income and expenses from p&l transfer agreements

37100000 Income from transfer of losses
37200000 Transferred profits from p & l transfer
32000000 Income before taxes
38000000 Extraordinary result

38100000 Extraordinary income
38200000 Extraordinary expenses
39000000 Interest of minority shareholder
39999999 Net income
2.1 Fixed assets
The fixed assets are subdivided into

intangible assets
tangible assets
biological assets
financial assets.
The development of the fixed capital assets during the financial year must be accounted for in
the annual financial statement in form of an asset history sheet, which must be compiled ac-
cording to the direct gross method.
The asset history sheet must be publicised in the annex or balance sheet.
The valuation principles for the fixed capital assets are regulated in the guideline for each
group of assets.
Benefits of public authorities must be entered in the balance sheet in accordance with IAS 20
and must be depreciated on determination of the book value. Balance sheet entry of an accrual
item on the liabilities side does not take place. The benefits of public authorities have to be
shown in the annex.
2.1.1 Overall intangible assets
The intangible assets must be subdivided into
- Concessions, industrial property rights and similar rights

- Goodwill
2.1.1.1 Licenses, industrial property rights and similar rights
General accounting, valuation and supplementary regulations:
IAS 38 must be applied to accounting and valuation of intangible assets.

An intangible asset is an identifiable, non-monetary asset without a physical asset breakdown
value, which is used for manufacture of products or rendering of services, leasing to third par-
ties or for internal accounting purposes. An asset is a resource, of which the company has the
authority to dispose due to past events and which is expected to provide the company with fu-
ture economical benefit.
An intangible asset must only be assessed if:

- it the company is also likely to gain future economical benefit from the asset; and;
- if the acquisition costs or manufacturing costs of the asset can be reliably assessed.
An intangible asset resulting from research may not be entered on the assets side. Research
costs must be recorded as expenditure in the accounting period in which they accrue.
An intangible asset resulting from development may only be entered on the assets side, if it
complies with the conditions of IAS 38.45.
Compliance with the conditions requires the existence of detailed budgetary accounts and in-
formative cost accounting. Separation of research and development costs must be particularly
safeguarded.
Benchmark method to be applied in the KWS Group:
After initial entry, an intangible asset must be entered with its acquisition or manufac-
turing costs, less all cumulative depreciation and cumulative diminution expenditure.
If a company is unable to differentiate between the research phase and the development phase
of an internal project for creation of an intangible asset, the company treats the expenditure
connected with this project as though it has solely accrued in the research phase.
Self- created brand names, printed titles, publishing rights, lists of customers and similar is-
sues may not be entered on the assets side.
The financial statement must contain, for each group of intangible assets, the information re-
quired according to IAS 38.107. One must distinguish between self-created intangible assets
and other intangible assets.
KWS regulations:
Development costs may only be entered on the assets side if particular, specified pre-
conditions exist. Entry on the assets side is always necessary if it is very likely the devel-
opment work will lead to future inflow of financial means, which cover the respective
development costs in excess of the normal costs. Various criteria must also be cumula-
tively fulfilled regarding the development project and the product (type) to be devel-
oped. These pre-conditions presently do not exist in the KWS Group and development
costs must not be entered on the assets side.
2.1.1.2 Goodwill

Calculation and balance sheet entry of the goodwill for the consolidated financial statement is
regulated in IAS 22.
A surplus in acquisition costs of the company acquisition, exceeding the purchaser’s shares in
the attributable current market value. The identifiable assets and debts on the date of the ex-
change procedure must be described as goodwill and entered as a property asset. Separable
acquired property assets, which are subject to temporal use, must be systematically depreci-
ated according to the useful life. If the useful life is indefinite, the goodwill must be subjected
to an impairment test, either on an annual basis or in the event of signs of diminution of value.
Necessary depreciation must be accounted for as expenditure of the accounting period.
An acquired goodwill must be examined on an annual basis by means of an impairment

test. A self-created goodwill may not be entered on the assets side.
In the individual financial statement of a parent company, shares in subsidiaries, which are in-
cluded in the consolidated financial statement must either be:
- entered in the balance sheet with their acquisition costs;
- entered in the balance sheet according to the equity method, as described in IAS 28;
- or entered in the balance sheet as financial means available for sale, as described in
IAS 39.
Accounting according to the equity method takes place in the KWS Group, exclusively
in the consolidated financial statement. In individual financial statements, all shares in
subsidiaries must be entered in the balance sheet to acquisition costs or as financial
means available for sale.
KWS regulations:
None
Data entry:
Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3)
Version
Company X
Profit Center X X X
Country
Region
Partner 1)
Movement schedule in- X X X X
formation
Term
1) A partner information is required for consolidated affiliated companies
2) In version 100 the data will be required for the complete movement schedule
3) Only a simplified movement schedule will be required for the versions
200, 300 and 400 which consist of the opening balance, additions and disposals
2.1.2 Tangible assets
IAS 16 must be applied to balance sheet entry and valuation of tangible assets.
Tangible assets comprise are assets owned by a company for purposes of manufacture or sup-
ply of goods and services, for leasing to third parties or for administrative purposes and
which, according to expectations, are used longer than one accounting period.
A tangible asset must be entered as a property asset, if it is likely that the company will ac-
quire future economical benefits connected with this asset; and if the acquisition or manufac-
turing costs can be reliably determined.
KWS regulations:
The following usage periods must be applied uniformly throughout the group for systematic
depreciation of tangible assets:
Building 15 to 50 years
dar. tenements 50 years
office and production buildings massive construction 40 years
warehouses massive construction 40 years
warehouses lightweight construction 15 to 20 years
garage 40 years
greenhouses 17 to 20 years
Other buildings 7 to 25 years

dar. outside facilities 15 to 20 years
roads, paths, sides 25 years
other structural works 7 to 20 years
Operating facilities 5 to 15 years

dar. power facilities 10 years
other electrical systems 10 years
other technical systems 8 years
Machines and apparatus 5 to 15 years

dar. production machines 10 years
agricultural machines 10 years
fork-lift trucks 8 years
Laboratory and research 5 to12 years

dar. greenhouse equipment 10 years
laboratory furniture 12 to 13 years
laboratory apparatus 5 to 13 years
Vehicles 5 to 10 years
dar. haulers and tumbrils 8 to 10 years

heavy goods vehicle 8 years
passenger car 3 to 8 years
other vehicles 8 years
EDP systems 3 to 7 years

dar. EDP systems 5 to 8 years
PC 3 to 5 years
Plant and equipment 5 to 15 years

dar. office fittings 12 to 13 years
workshop fittings 10 years
tenements fittings 10 yaers
telecommunications 8 years
media devices 5 years
other equipment 8 years
Intangible assets 5 to 10 years

dar. breeding material 10 years
varieties protection / licence 10 years
other rights / film 10 years
trade-mark fodder beet 10 years
host system software 8 years
office/PC software 3 to 5 years
other software 8 years
seeling rights according contract
Intangible assets which are recognized on the basis of a PPA (purchase price allocation) have
to be depreciated with the useful life of the PPA. This applies particularly customer bases, li-
censed varieties and unfinished breeding. If no PPA exists, the useful lifes according to KWS
group guideline have to be used.
Used fixed assets have to be depreciated over the probable remaining life time. Thereby
the real useful life is authoritative.
A tangible asset that is to be entered as a property asset must be assessed with its acquisition
or manufacturing costs during initial recordation. Costs of termination and reestablishment of
location are counted among the acquisition or manufacturing costs, provided these amounts
are to be shown as reserves on the liabilities in accordance with IAS 37.
After its initial entry as a property asset, a tangible asset must be entered to its acquisition
costs. less the accumulated depreciation and accumulated diminution expenditure.
Current upkeep expenses for an asset have to be treated as expenses of the period. Wage and
material costs as well as small spares are included (IAS 16.12). Major inspec-
tions/maintenance without a concrete requirement of maintenance and repair have to be capi-
talized as a replacement purchase according to IAS 16.14.
Items to be capitalized:
New inner walls of buildings
New heating inclusive change-over from oil to gas
Loft/attic conversion inclusive new roof and gained useful areas
Items not to be capitalized:

Coating and /or paperhanging of inner walls, coating of an outer front
Replacement of a damaged blower (heating)
Roofing a leaky roof
According to IAS 23.8 borrowing costs have to be capitalized as a part of the acquisition
or manufacturing costs, if the following premises are fulfilled:
- is about a qualifying asset
- borrowing costs have to be directly attributable.
A qualifying asset is an asset that necessarily takes a substantial period of time to get
ready for its intented use or sale (e.g. buildings, manufacturing facilities, etc.). For gen-
erally borrowed funds which are also used the for financing of qualifying assets, the
weighted average of the borrowing costs shall be taken as a capitalization rate (IAS
23.14). The beginning of the capitalization of borrowing costs occurs on that date when
the following conditions are fulfilled cumulatively (IAS 23.17):
- it incurs expenditures for the asset
- it incurs borrowing costs
- it undertakes activities that are necessary to prepare the asset for its intended
use or sale.
If the active development of a qualifying asset is suspended during extended periods, the
capitalization of borrowing costs has to be suspended according to IAS 23.20. The capi-
talization is ceased when substantially all the activities necessary to prepare the qualify-
ing asset for its intended use or sale are complete (IAS 23.22).
Other borrowing costs shall be recognized as an expense in the period in which it incurs
them.
The alternative permissible method of IAS 16 for revaluation of tangible assets is not
applied in the KWS Group. Revaluation carried out according to state law must be can-
celled.
Depreciation takes place according to the economical useful life of the property assets. The
linear depreciation method must be used exclusively. Valuation measures motivated by tax
cannot be transferred onto the financial statement. Economically necessary, deviant usage pe-
riods have to be explained in the annex.
The information according to IAS 16.73 and 74 must be provided in the financial statement.
According to IAS 36.8, a company must on each balance sheet key date assess whether any
clue exists as to whether the value property asset could be debased. The net sale value or us-
age value according to IAS 36 must be determined for this purpose and compared to the book
value. If the attainable amount of a property asset proves to be lower than the book value,
then the book value must be lowered to the attainable amount. The diminution expenditure
must immediately be recorded as expenditure in the profit ands loss statement. If the esti-
mated diminution expenditure exceeds the book value of the property asset, then the company
must only, and only then, enter a debt, if a different IAS requests this. In the event of diminu-
tion of value, possible depreciation expenditure must be adapted for the remaining useful life.
According to IAS 20.24, benefits of public authorities for property assets, inclusive of non-
monetary benefits must either be presented in the balance sheet as accrual items on the liabili-
ties side or set off on determination of the book value of the property asset.

Benefits of public authorities must be set off on determination of the book value.
The information according to IAS 20.39 and 40 must be provided in the financial statement.
Finance-leasing relationships must be entered in the balance sheet in accordance with IAS 17.
Lessees must enter property asset finance-leasing relationships and debts to the same amount,
namely to the amount of the attributable current market value of the object of lease at the be-
ginning of the leasing relationship, or with the actual cash value of the minimum leasing
payments, provided this value is lower. The interest rate underlying the leasing relationship
discount factor on calculation of the actual cash value of the minimum leasing payment, pro-
vided it could be determined in a viable manner. If this is not the case, the lessee’s marginal
interest rate for borrowed capital must be applied.
Leasing payments must be divided into costs of financing and redemption proportion of the
remaining debt. The costs of financing must be distributed across the term of the leasing rela-
tionship in such a way that a steady interest rate on the remaining debt emerges throughout
the accounting period.
In every accounting period, finance leasing leads to depreciation expenditure for depreciable
property assets, as well as to financing expenditure. The depreciation principles for deprecia-
ble objects of lease must correspond to the principles that are applied to depreciable property
assets owned by the company. Depreciation must be calculated in accordance with IAS 16,
tangible assets and IAS 38, intangible assets. If at the beginning of the lease relationship it is
not certain that the property is transferred to the lessee, the property asset must be completely
depreciated across the shorter of the two periods, term of leasing relationship or useful life.
The information according to IAS 17.23 and 27 must be stated in the financial statement.
Leasing relationships in the financial statements of the lessors must be entered in the balance
sheet in accordance with IAS 17.28 to 48. IAS 17.49 to 57 must be applied for Sale-and-
leaseback-Transactions.
Component Approach
According IAS 16.43 property, plant and equipment have to be split and accounted into their
different parts if:
- the cost of a part of property, plant and equipment must be a significant part in
relation to the whole property, plant and equipment; and
- the significant parts must have different useful lifes.
2.1.2.1 Land, similar rights and buildings, including buildings on third party land
This position comprises the company’s entire real estate, inclusive of the buildings and com-
pany buildings on foreign (e.g leased) premises.
This position also comprises facilities that serve the use of the building (e.g. elevators, heat-
ing, lighting and air conditioning systems).
KWS regulations:
The acquisition costs for land must not be systematically (strictly forbidden) depreciated.
Should irregular depreciation be necessary, this must be accounted for and specified on its
merits.
The acquisition or manufacturing costs for buildings must be systematically depreciated.

Should irregular depreciation be necessary, this must be accounted for and specified on its
merits.
2.1.2.2 Technical equipment and machines
This position contains equipment and machines connected to the actual production process
and which are not an economical part of a building.
KWS regulations:
In the KWS GROUP, this position contains equipment and machines that directly serve the
production and processing of seeds, as well as supply facilities for electricity, heating and
cooling energy:
Position content:
conveyor systems and warehouse vehicles (e.g. conveyor belts, bagged goods conveyors,
fork-lift trucks)
drying systems
dust removal systems and filter systems
seed-processing and seed-cleaning machines
seed treatment systems (e.g. seed dressing and pilling machines)
weighing machines
packaging systems
silos, containers
soil conditioning machines (e.g. compost machines, potting and reporting machines)
agricultural machines (e.g. ploughs, harrows, sowing machines, plant protection spraying ma-
chines)
Harvesters (e.g. beet harvesters, combine harvesters, charging generators)
electrical devices (e.g. current transformers, emergency backup generators)
Machines and facilities for power and heat generation (e.g. combined heat and power station,
oil storage tank)
Facilities for cold production (e.g cooling systems, cooling chambers, climate chambers)
Miscellaneous
Valuation:
The acquisition and manufacturing costs are systematically depreciated across the average
useful life.
Disposals are valuated at the residual book value at the end of the month of disposal (pro rata
temporis).
2.1.2.3 Other equipment, plant and office equipment
This position contains other equipment and facilities, which do not directly serve actual pro-
duction, and which are not an economical part of a building.
KWS regulations:
In the KWS GROUP, this position contains equipment and devices that do not directly serve
the production and processing of seeds, as well as research and laboratory facilities:
Position content:
vehicle fleet (e.g. passenger cars, heavy goods vehicles, tractors)
company-owned tanking farm
office furniture and equipment
public relations inventory (e.g. company film, film and photography equipment) data process-
ing systems, Personal Computers, printers, radio equipment
laboratory facilities and equipment (e.g. microscopes, heating cabinets, refrigerators, seed
cabinets, laboratory trolleys, small seed-dressing machines)
workshop facilities, tools
greenhouse facilities (e.g. seed tables, lighting systems, irrigation systems)
plastic greenhouses
irrigation systems
alarm devices (e.g. fire detectors, loudspeakers)
canteen facilities
all kinds of low value commodities
miscellaneous
Valuation:
The acquisition and manufacturing costs are systematically depreciated across the average
useful life.
Disposals are valuated at the residual book value at the end of the month of disposal (pro rata
temporis).
Assets with maximum acquisition costs less than 1,000 Euro have to be capitalized as low-
cost assets. These assets have to be depreciated completely and have to be shown as a disposal
in the fixed assets movement schedule. Assets with acquisition costs of more than 1,000 Euro
have to be depreciated systematically with the straight-line method across the average useful
life (see page 67 and the following).
2.1.2.4 Prepayments
Prepayments effected for acquisition of tangible fixed assets only must be recorded here.
Equipment under construction are not yet commissioned equipment on the balance sheet key
date. Reclassification into the appropriate position of the tangible assets takes place after
commissioning. This means that capital expenditures which were started and accomplished
during the business year are shown as addition to the relevant position of tangible fixed assets
and not any longer as prepayments.
KWS regulations:
Should prepayments for acquisition of property assets of subsidiaries and associate companies
be entered in the balance sheet here, and then these must be accounted for and specified sepa-
rately.
Data entry:
Version
Company X
Profit Center X X X
Country
Region
Partner 1)
formation
Term
2) In version 100 the data will be required for the complete movement schedule.
3) Only a simplified movement schedule will be required for the versions 200, 300 and
400 which consist of the opening balance, additions and disposals.
2.1.3 Biological assets
2.1.3.1 Livestock
Livestock is entered in the balance sheet according to IAS 41.
Livestock (e.g. dairy cows), which serve business operations for a longer term (longer than a
normal course of a business cycle), must be entered in the balance sheet to their attributable
current market value here. Profit or loss from initial entry of a biological asset to the attribut-
able current market value must be allocated in the equity capital, not affecting income, in ac-
cordance with IFRS 1.
KWS regulations:
none
2.1.3.2 Living plants

Living plants are entered in the balance sheet according to IAS 41.
Living plants (e.g. orchards, forestry stocks), which serve business operations for a longer
term (longer than a normal course of business cycle), must be entered in the balance sheet to
their attributable current market value here. Profit or loss from entry of a biological asset to
the attributable current market value must be included in the result of the accounting period.
KWS regulations:
None
Data entry:
Version
Company X
Profit Center X X X
Country
Region
Partner 1)
formation
Term
2.1.4 Financial assets
In the financial assets increases in value by rise of the stock exchange course are to be repre-
sented with subitem 145 (acquisition costs write-up financial assets). This subitem is to used
exclusively for financial asstes. The contra account for such increases (not affecting the in-
come) is the OCI (Other Comprehensive Income), which is a subaccount of the equity.
2.1.4.1 Shares in subsidiaries
Balance sheet entry of subsidiaries takes place according to IAS 27.29 to 31.
In the KWS Group, all shares in subsidiaries must be shown in the balance sheet with their
acquisition costs in the individual financial statement of a parent company. IAS 36.88 to 93
must be applied in the event of diminution in value of this property asset. IAS 36.107 to 112
must be observed for increased valuation. Acquisition costs and possible diminution in value
must be presented separately for each company in the asset history sheet.
If a company is held for the purpose of sale, the financial asset available for sale must be en-
tered in the balance sheet in accordance with IAS 39 financial instruments. This property must
be allocated according to the term of the intent to sell.
KWS regulations:
Valuation allowances on shares in subsidiaries have to be announced separately to the head-

quarters via e-mail.
2.1.4.2 Shares in joint ventures
A joint venture is a contractual agreement, in which two or more parties conduct a commer-
cial activity that is subject to joint management. Joint Ventures are proportionately included
in the KWS Group. The proportional consolidation is an accounting method, by means of
which the partner company’s share in all asset values, debts, revenue and expenditure of a
jointly managed unit is combined with the respective items of the partner company’s financial
statement.
In its consolidated financial statement, a partner company must enter in the balance sheet its
shares in a jointly managed unit. With the report applicable report format, the asset values,
debts, revenue and expenditure of the jointly managed unit are combined with the identical
items of the Group.
IAS 36.88 to 93 must be applied on occurrence of diminution in value of this asset value. IAS
36.107 to 112 must be observed for increased valuation. Acquisition costs and possible dimi-
nution in value must be presented separately for each company in the asset history sheet.
KWS regulations:
Valuation allowances on shares in joint ventures have to be announced separately to the head-
quarters via e-mail.
2.1.4.3 Shares in associated companies
Shares in associated companies are entered in the balance sheet according to IAS 28.
An associated company is a company on which the shareholder can exert significant influence
and which is neither represents a subsidiary nor a joint venture of the shareholder. Significant
influence is the possibility to participate in the associate company’s fiscal and business policy
decision-making processes, without being able to control these decision-making processes. If
a shareholder holds 20 % and more of the associated company’s voting rights, it is assumed
that significant influence exists.
The shares in an associated company must be entered in the balance sheet with their acquisi-
tion costs in the shareholder’s individual financial statement, if these are not exclusively held
with a view to sale in the near future.
On occurrence of diminution of this asset value, IAS 36.88 to 93 must be applied. IAS 36.107
to 112 must be observed for increased valuation. Acquisition costs and possible diminution of
value must be specified separately for each company in the asset history sheet.
Shares in an associated company must be entered in the balance sheet in the consolidated fi-
nancial statement according to the equity method. If these shares are held for the purpose of
resale or are they subject to stringent, long-term limitations, then valuation takes place accord-
ing to IAS 39, financial instruments. If these conditions are fulfilled in accordance with IAS
28.11, valuation according to the equity method must be discontinued.
KWS regulations:
Valuation allowances on shares in associated companies have to be announced separately to

the headquarters via e-mail.
Data entry:
Version
Company X X X
Profit Center
Country
Region
Partner 1) X X X
Movement schedule in- X X X
formation
Term
2.1.4.4 Loans
Loans have to be devided according to the debtor in to loans agains subsidiaries, against Joint
Ventures, against associated companies and against third parties. The standard to be used in
the accounting of loans is IAS 39, especially IAS 39.10 in connection with IAS 39.19 has to
be taken into concideration. Long-term interest bearing loans are not be discounted.
To determine if it is a loan or a receivable the intention of duration is decisive. With a con-

tractually duration of four years and more the finance receivable will be allocated to the fi-
nancial assets, thus the loans. There it does not depend on the residual term, i.e. the respective
credits will be shown as loans till the final redemption.
Trade receivables have not to be shown among loans even if they are long-term (statement
among current assets).
Depreciations on loans, also for subsidiaries, have to be shown among other operating ex-
penses. Write-ups on loans, also for subsidiaries, have to be shown among other operating in-
come. Depreciations as well as write-ups on loans have in no case to be shown in the finan-
cial result.
Data entry:
Version
Company X X X
Profit Center
Country
Region
Partner 1) X X X
formation
Term
2.1.4.5 Other financial assets
For other financial assets, it must be examined whether such a financial investment is to be
appropriately entered in the balance sheet according to the equity method, corresponding to
IAS 28, i.e. the shareholder exerts significant influence on the associated company. The
shareholder’s company applies the regulation from IAS 31 (joint venture) in a similar manner,
in order to determine whether the proportional consolidation or equity method is the appropri-
ate accounting method. In case neither the equity method nor proportional consolidation is
appropriate, the company must balance these financial investments according to IAS 39, fi-
nancial instruments.
Write-ups of financial assets (e.g. appreciation value because of an increase of stock market
price) have to be shown exclusively with subitem 145. If the reason for the depreciation is not
to apply, the financial asset has to be write-up.
The financial assets must be subdivided into the following categories in accordance with IAS
39.10:
a) financial investments to be held up to the final maturity (Held-to-Maturity),
b) credits and accounts receivable extended by the company,
c) asset values available for sale (Available-for-Sale).
Financial investments to be held up to the final maturity are asset values with fixed or deter-
minable payments and fixed periods of validity, which the company wishes to and is able to
hold up to maturity (e.g. fixed interest-bearing securities). Basic rule: Securities are normally
not HtM investments, because they have an unlimited maturity. These are assigned to other
financial assets. Credits and accounts receivable extended by the company have to be indi-
cated among loans respectively receivables. Financial assets available for sale depending on
the type of assets have to be shown among securities of current assets or among other finan-
cial assets. The composition of other financial assets have to be explained in the annex.
Changes in value of “held-to-maturity assets“ must be accounted for, affecting net income,
in the profit and loss statement.
Changes in value of “available-for-sale assets” must be accounted for not affecting in-
come in the equity among the position “other comprehensive income (OCI)”.
All financial instruments that cannot be allocated to the financial assets must be accounted for
in the circulating assets in accordance with the determined categories.
Data entry:
Version
Company X X X
Profit Center
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Region
Partner 1)
formation
Term
2.1.4.6 Real estate held as financial investment
According to IAS 40 real estate are shown among the position “real estate held as financial
investment”, when the real estate were acquired exclusively to achieve income from rent and
lease as well as income from increased values.
Data entry:
Version
Company X X X
Profit Center
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Partner 1)
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2.2 Current assets
In general
Only tangible assets, which, on the closing key date, are not determined to continuously serve
business operations must be accounted for in the circulating assets.
The circulating assets are subdivided into:

- stocks,
- trade receivables and other receivables,
- receivables from finance leasing,
- receivables from finance activities and other assets and
- cash and cash equivalents
The circulating assets must be valuated at the attributable current market value or to continued
acquisition/manufacturing costs.
Details regarding valuation are given with the description of individual positions.
The accounting and valuation principles relating to circulating assets must be specified in the
annex.
KWS regulations:
Stocks from intra-group business connections must be accounted for and specified separately.
This particularly affects the stock from deliveries from subsidiaries and associate companies
and the receivables from subsidiaries and associate companies.
2.2.1 Stocks
Stocks are entered in the balance sheet according to IAS 2 and IAS 41.
Stocks are property assets,

a) which are kept for sale in normal course of business;
b) which are undergoing manufacture for such sale; or
c) which, in form of raw materials, auxiliary materials and operating supplies, are intended
for use during manufacture or for rendering of services.
The net sale value is the estimated attainable sales revenue in normal course of business, less
the estimated costs up until completion and the estimated required distribution costs.
The acquisition or manufacturing costs of stocks must include all costs of machining and
processing (inclusive of necessary production overheads), which have accrued in order to put
the stocks at their present location and into their present condition.
Stocks must be valuated with the lowest value from acquisition or manufacturing costs
and net sale value. Agricultural products and biological assets must be valuated at the at-
tributable current market value in accordance with IAS 41.
KWS regulations:
The respective position content is specified in the description of the individual positions.
Stocks from deliveries of subsidiaries and associate companies must be accounted for and
specified separately.
Prepayments received for stocks must not be deducted from stocks, but must be accounted
for under liabilities.
2.2.1.1 Raw materialsand supplies
Raw materials and supplies are externally procured materials, which are still unprocessed, not
yet exhausted and which are included in the product or effect the production flow.
Raw materials become integral parts of the products, subordinate to main parts and auxiliary
materials. Supplies are consumed during manufacture of the products.
KWS regulations:
In the KWS GROUP, seeds are in principle not accounted for as raw material, but as an
unfinished product, finished product or as goods.
Position content:
materials for seed treatment (e.g. seed dressing agent, coating matter)
packaging material
plant protecting agent and fertiliser
combustibles and fuels, lubricants
laboratory and testing material
workshop material
office material
promotional gifts and other advertising material
canteen and casino stocks
miscellaneous
Valuation:
Raw materials, auxiliary materials and operating supplies must be valuated with the lowest
value from acquisition or manufacturing costs and the net sales value. If valuation takes
place to acquisition or manufacturing costs, then the value must be determined with the aid of
the “average method” or FIFO-method (first in – first out). The LIFO-method (last in – first
out) must not be applied. The applied method must be stated in the annex.
Data entry:
Version
Company X
Profit Center X X X
Country
Region
Partner 1)
Movement schedule in-
formation
Term
2.2.1.2 Work in process
Products that have already been machined or processed, but not complete on the balance sheet
date must be accounted for as work in process.
KWS regulations:
Position content:
Delimitation between work in process and finished goods must take place as follows in the
KWS GROUP:
Work in process are goods that are, in fact, normally not sold in their stage of completion.
Fictitious saleability (e.g as animal feed or occasional sale within the scope of special transac-
tions) is not aimed at. In this sense, cultivated seeds and field inventory (growing crops) must
always be treated as unfinished. Basic seeds (BS) can according the expected use ( sale or
own multiplication) classified in work in progress or finished goods.
Finished goods are products that are normally actually sold in their stage of completion.
If seeds are used for both further processing and sale, then, due to past experience, future use
application must be estimated.
The stocks from deliveries of subsidiaries and associate companies must be reported and
specified separately.
Valuation:
Work in process must be valuated at continued acquisition or manufacturing costs.
Reproducers’ settlement price (depending on type, seed form, country of growth and crop
year) plus the acquisition costs (e.g. freight-, insurance costs and customs expenses) make up
the acquisition costs.
The production costs accumulating beside the acquisition costs must be considered.
Acquisition costs and production costs together make up the manufacturing costs.
Individual valuation is undertaken; special fictitious consumption sequences are presently not
supposed.
The acquisition or manufacturing costs may not be recoverable if stocks are damaged, entirely
completely or partially out of date or if their sales price has declined. Devaluation of stocks to
the net sales price normally takes place in form of individual value adjustment.
Calculation method for balance sheet entry:
purchase price/reproducers’ settlement price

+ ancillary acquisition costs
= acquisition costs
+ production costs
= manufacturing costs
./. individual value adjustments (devaluation)
= balance sheet entry
Data entry:
Version
Company X
Profit Center X X X
Country
Region
Partner 1)
formation
Term
2.2.1.2.1 Work in process from multiplication of certified/commercial sugar beet seed

by third parties
The seed production of certified/commercial sugar beet seed has to be effected by plant culti-
vation or direct cultivation. Independent of the cultivation method allocation of material and
assumption of services have to be capitalized as work in process, if an invoicing of the costs
to the multiplicator does not occur. Local tax regulations (e.g. separate stating of free sales
for free deliveries of basic seed in Italy as well as the capitalization of consulting and sup-
port fees in France) are not to be used in the IFRS statement.
Worksteps of seed multiplication:
1. Allocation of basic seed

If the allocation of basic seed to the multiplier occurs without invoicing, the seeds
allocation has to be capitalized with acquisition and manufacturing costs.
2. Purchase and sale of produced cuttings (only for plant cultivation)
The cuttings multiplier sells the produced cuttings to KWS or a KWS subsidiary.
Here a price per cutting or a flat fee per unit of area can be used. These purchased
cuttings are delivered to the seed multiplier. If this delivery takes place without in-
voicing to the seed multiplier, the cuttings have to be capitalized with acquisition and
manufacturing costs.
3. Realization of necessary worksteps (for the multiplication on the part of KWS with-
out invoicing to the multiplier) and free allocation of material (e.g. manure, plant
protection product) also have to be capitalized with acquisition and manufacturing
costs as work in process. Transport expenses arising, costs for warehousing and simi-
lar costs are also to be included.
4. Consulting fees and checkups of the cultivation by KWS are not a part of multi-
plication costs and must not be capitalized as work in process. These expenses
have to be shown in the company’s results for the period.
5. The certified/commercial seed (natural form) produced by the seed multiplier has to
be capitalized according to the delivered quality as work in process.
2.2.1.3 Unfinished biological assets and agricultural products
The evaluation of unfinished biological assets and agricultural products is done according to
IAS 41. Agricultural activity and indirectly the scope of application of IAS 41 is defined in
IAS 41.5. Agricultural activity is the management of sales-oriented biological transformation
of biological assets into agricultural products or into additional biological assets by an enter-
prise. If the seed will multiplicate on own or leased agricultural land it is your own responsi-
bility and risk. Consequently the seed multiplication has to be capitalized among unfinished
biological assets (agricultural live-stock). The arising acquisition and manufacturing costs are
the basis for the calculation of the assigned value on the different production stages, because
no active market for seed multiplication is available. Moreover there is a lack of distribu-
tion appointed biological transformation, because seed cannot be dealed in this production
stage. In proportion to the other following production stages (treatment etc.) the agricultural
activity is circumstantial. Besides the terms of variety registrations and variety property rights
have to be observed .
Determining the assigned value for field stock according to IAS 41.12 as part of consoli-
dated balancing of accounts according to IAS/IFRS
IAS 41.12 requires the evaluation of field stock at the ascribable current value. IAS 41.8 de-
fines the ascribable current value as the amount at which contracting, expert contracting part-
ners independent from each other would exchange the assets. Since an active market for field
stock does not exist, the value has to be calculated according to the specifications of IAS
41.18ff. The assigned value required in this case by IAS 41 for field stock corresponds to the
economic utilization value. The economic utilization value represents an intermediate value
between cost value (expenditure charges) and capitalized earnings value (crop charges). The
economic utilization value is determined by applying standardized data. The economic utiliza-
tion value is calculated as follows:
1. Calculating average market performance including the associated premium

Data source: Kuratorium für Technik und Bauwesen in der Landwirtschaft (KTBL) stan-
dard contribution margins currently for Germany (outside Germany local standards are
applied). The KTBL standard contribution margins lie in the core of finance group
accounts in Einbeck and can be queried or viewed there.
Crop fruits are divided into output classes which reflect certain natural yield levels on the
regional level. The average yields for the division come respectively from the previous
year. The assumed prices are average prices of the fiscal year. These are net prices in
whose calculation average drying costs were considered. If there are divergent possibili-
ties for exploitation of individual crop fruits (for example, malting barley/feed barley), a
mixed price is assumed. To determine market performance, the establishment is assigned
to the relevant region and the output class determined for the crop fruit. Market perform-
ance can then be taken from the table "Output and costs of land utilization". If these are
market fruits entitled to premiums, then the average premium associated to the production
is taken from the special table within the standard contribution margins and added to
market performance. For the most part, this involves premiums for grain/corn, oil seeds
as well as protein plants. Basically, the premium entitlement is legally claimable every
June 30 (in Germany for grain, corn, oil seeds as well as protein plants) so that in these
cases activation of the premium in the context of IAS 41.34 is done on the balance sheet
date. IAS 41.34 ff is to be tested respectively for other premiums and the balancing of ac-
counts on Sept. 30, Dec. 31 and Mar. 31.
2. Correcting items market assessment: matching expectations

Under this item expected adjustments are made with regard to market performance of in-
dividual crop fruits. Above all, this involves adjustments of expected transfer prices. In
this connection, a brief market assessment is made based on objective market reports (for
example, trading companies or the International Grain Council - IGC). It is important
that, if adjustments of the transfer prices are made, only the harvest prices expected in the
future are considered since the overall standard IAS 41 is focused on the harvest time and
storage and the later sale of the harvest are viewed as subsequent activities that are not
included in IAS 41. Under the framework of this correcting item, adjustments should also
be made if channels of distribution not recorded in standardized data collections are ex-
pected for the marketing of individual fruits.
3. Direct costs
The costs of seed/planting stock, manure, pesticide as well as other costs (insurance) are
subsumed under direct costs. These costs are taken directly from KTBL data gathering of
the current year.
4. Direct costing free performance (contribution margin I)

This value results from the subtraction of direct costs from market performance including
the associated premium.
5. Costs of job execution

The costs of job execution are based on fixed and variable machinery costs as well as the
work performed multiplied by an hourly wage that is uniform for the group. The hourly
wage is recalculated every year new and laid down in the policy. All data is taken from
KTBL data collections. There is data for the cultivation of 2, 5, 10, 20, 40 and 80 hectares
farmland units. Consequently, the average size of farmland units is calculated for each es-
tablishment in order to determine the costs of job execution. Furthermore, the cultivation
method is established.
6. Modified contribution margin (contribution margin II)

This is obtained by subtracting the job execution costs from the direct costing free per-
formance.
7. Pro-rated division of the modified contribution margin

The modified contribution margin is to be divided on the balance sheet date. This division
is to be measured against the progress of the production cycle. Based on the progress of
the production cycle, with winter and summer crops as well as winter and summer rape a
pro-rated increase of the modified contribution margin is to be made at 70%, with sugar
beets and potatoes at 50% and with corn at 60%.
8. Standard manufacturing costs

They include costs accruing up until the balance sheet date for seed, pesticide, manure,
crop hail insurance as well as machinery costs, including depreciation and direct labor
costs plus additional compensation. They correspond to the manufacturing cost assess-
ment allowed by tax law for field stock. The standard manufacturing costs are identified
for various balance sheet dates, scales of operations and employment systems. Select the
standard manufacturing costs that include 100% work remuneration.
9. Economic utilization value

The economic utilization value is calculated by adding the pro-rated increased modified
contribution margin to the standard manufacturing cost. This is not a pure capitalized
earnings value (crop charges) but an assigned value that corresponds to the defined speci-
fications from IAS 41.8.
Calculating the economic utilization cost
Market performance including associated premium
- Adjustments of expected sales prices based on

objective market assessments
- Direct costs
= Direct costing free performance (contribution margin I)
- Costs of job execution
= Modified contribution margin (contribution margin II)
% rate
= Pro-rated contribution margin II
+ Standard manufacturing costs
= Economic utilization cost
A biological asset is livestock or a living plant. Agricultural products are the fruits of the
company’s biological assets.
Biological assets and agricultural products must be valuated at their attributable current mar-
ket value. The attributable current market value is based on the present location and condi-
tion, minus the estimated sales costs. The sales costs do not include transport and other neces-
sary costs, in order to provide a market with property assets. Profit or loss from initial entry
of a biological asset to the attributable current market value must be settled in equity capital,
not affecting net income, in accordance with IFRS 1.
Position content:
agricultural field inventory

livestock (which is not allocated to the fixed capital assets)
stocks of agricultural products (e.g. cereals)
Field inventory of seed propagation also belongs to the unfinished biological assets. This is
only valid for self-propagation. In case of propagation by third parties the capitalization of in-
ventories is not applied.
Position content:
seed propagation sugar beets
seed propagation sweet corn
seed propagation cereals
Data entry:
Version
Company X
Profit Center X X X
Country
Region
Partner 1)
formation
Term
2.2.1.4 Finished goods and services
Stocks that are complete on the balance sheet key date, after machining or processing, and
which are to be sold in this condition, must be accounted for as finished goods (also basic
seeds).
Goods are property assets, which the company making up the balance has acquired and
wishes to resell without machining or processing.
Finished goods and services must be valuated with the lowest value from acquisition or
manufacturing costs and net sales value.
KWS regulations:
Valuation:
Calculation of the continued acquisition or manufacturing costs for finished goods and ser-
vices takes place analogous the method for work in process.
Reproducers’ settlement price (depending on type, seed form, country of growth and crop
year) plus the acquisition costs (e.g. freight, insurance costs and customs expenses) make up
the acquisition costs.
The production costs accumulating beside the acquisition costs must be considered.
Acquisition costs and production costs together make up the manufacturing costs.
Individual valuation is undertaken; special fictitious consumption sequences are presently not
supposed.
The acquisition or manufacturing costs may not be recoverable if stocks are damaged, entirely
completely or partially out of date or if their sales price has declined. Devaluation of stocks to
the net sales price normally takes place in form of individual value adjustment.
Calculation method for balance sheet entry:
Purchase price/reproducers’ settlement price

+ ancillary acquisition costs
= acquisition costs
+ production costs
= manufacturing costs
./. individual value adjustments (devaluation)
= balance sheet entry
If the net sales value is lower than the continued acquisition or manufacturing costs, then
stocks must be valuated with the net sales value.
Uniform Accounting Guideline of Inventory within the Division Corn:
IAS 2.11 applies for Measurement of Inventories.
“Inventories are usually written down to net realisable value item by item...” (IAS 2.29)
According to past experience, the following inventories must be at least written down:
Qualitative Write-down:
Inventories with a germination < 90% (to be proved by the germination test of the winter prior
to the valuation date) are to be written down by 100%. Untreated inventories may be shown in
the balance sheet at the current price of consumable corn, provided that those inventories are
usable as consumable corn.
A write-down can be abandoned in the case that a mixture with other inventories of higher
quality (e.g. new crop) is possible and allowed and a germination of at least 90% after the
mixture is to be expected. A respective confirmation in written form is to be centrally solic-
ited at the production department (MA-P). Would this confirmation not be on hand at MA-P
until one month after the due date, a measurement not in accordance with the guideline, can
be realized.
Quantitative Write-down:
Inventories at a very high reach of stocks (so called "Slow Mover") are to be written down
quantitatively. The reach of stocks is measured according to the budget resp. midterm plan-
ning at the due date prior to the last spring (shown in the “BMS-System” of the division corn).
In the case that a sales planning on the level of varieties does not exist, the sales data of the
last-mentioned period is to be continued unchanged.
Write- downs are to be made as follows:
25%
Inventories which are projected onto the 3rd day after the valuation date
50%
Inventories which are projected onto the 4th day after the valuation date
100%
Inventories which are projected onto the 5th day after the valuation date
Example:
Variety "X" is available on stocks as at 30.06.01 with 10.000 units. According to crop estima-
tion 5000 units will still be produced during calendar year 2001. Production during the fol-
lowing years is not planned.
The budget forecast for the mid-term period provides sales figures as follows:
2001/2002 Sales: 5.000 units

2002/2003 Sales: 3.000 units
2003/2004 Sales: 1.500 units
2004/2005 Sales: 1.000 units
Sales figures for the season 2005/2006 on the level of varieties do not exist. That is the reason
why the sales volume which had been planned for 2004/2005 is updated unchanged.
2005/2006 Sales: 1.000 units
Stocks per variety resulting from this calculation presumably are as at:
June 30, 2004 amounting to 5.500 units
June 30, 2005 amounting to 4.500 units
June 30, 2006 amounting to 3.500 units.
Solution:
The Financial Statements as at June 30, 2001show write-downs as follows:
1.000 units by 25%, (5.500 ./. 1.000 ./. 3.500)

1.000 units by 50% (4.500 ./. 3.500)
3.500 units by 100%
Consequently a write-down as of 4.250 units is to be effected.
Data entry:
Version
Company X
Profit Center X X X
Country
Region
Partner 1) X X X X
formation
Term
2.2.2 Trade receivables and other receivables
Balance sheet entry of trade receivables and other receivables values takes place according to
IAS 32 in connection with IAS 39 (particularly IAS 39.19).
The dominant classification criterion is conform with the “debtor’s party” and the term for ac-
counts receivable (residual term up to 1 year and exceeding 1 year).
The actually expected payment receipt, even if this will exceed the contractually agreed pay-
ment deadline, is authoritative for calculation of the residual term.
Value adjustments on receivables must be set off on the assets side.
Lump sum valuation allowance

Receivables which are more than 180 and less than 360 days overdue have tobe write down
with 50%. Receivables which are more than 360 days overdue have to be written down com-
pletely (100%). This regulation does not apply only in exceptional cases, e.g. if the receivable
is hedged by a bank guarantee.
Receivables in foreign currency must be converted by means of the conversion rate valid on
the balance sheet key date. Currency conversion rate differences must be recorded as expendi-
ture or revenue in the accounting period in which they have accrued (IAS 21.15).
Besides, lump sum valuation allowances have to be set up on basis of experiences. The basis
is therefor the default rate of the last three years (average percentage rate).
Specific valuation allowances on receivables

Due to internal evidence (e.g. default in payments or information about financial difficulties –
file for insolvency) accounts receivables have to be checked regarding their objective recov-
erability according to IAS 39.59. If an impairment is existing, the present value of the ex-
pected and projected cash flows is to be calculated (IAS 39.63). If the present value is lower
than the carrying amount, the receivable has to be depreciated irregularly until these present
value has been reached. Specific valuation allowances take priority over lump sum valuation
allowances.
Outstanding subscribed capital contributions

Called outstanding contributions must be shown as an asset values on the assets side. Un-
called outstanding capital contributions may not be shown on the assets side. These uncalled
outstanding capital contributions must be set off open from the equity capital.
Expenditure for start-up and expansion of business operation

An asset capitalization prohibition exists for such expenditure. Such a business transaction
must be recorded as expenditure in the profit and loss statement.
The following categories and financial assets must be defined:

1. financial investments to be held up to the final maturity (see other financial assets)
2. credits (see loans) and receivables issued by companies
3. financial assets available for sale (see securities)
4. financial assets held for trading purposes (see securities).
Offsetting of financial asset values against financial liabilities (IAS 32.33 ff)
Offsetting of financial asset values and liabilities and specification of net amounts in the bal-
ance sheet must take place, if a company
a) has a legal claim to charge the recorded amounts off against each other; and
b) intends to either effect settlement on a net basis, or, via utilisation of the respective prop-
erty asset, tries to simultaneously redeem the corresponding liabilities.
An individual case examination must always be carried out on settlement and must, where
appropriate, be specified in the annex.
If receivables as well as liabilities of the same category (trade/finance) with subsidiaries /

joint ventures of KWS group are existing, these receivables and liabilities have to be off-
set. This applies to V100 as well as to V200.
Short-term receivables are normally not to be discounted (IAS 39.111. line 3). Long-term re-
ceivables must be checked for fixed terms. It must be checked whether a fixed term is speci-
fied for long-term receivables. On existence of a fixed term, the respective receivable must
continue to be discounted (IAS 39.73). If a term has not been determined; then the receivable
must continue to be valuated with the acquisition costs.
All financial assets must be checked for signs of diminution in value in accordance with
the provisions from articles 109-119. This must be recorded, affecting net income, in the
result of the accounting period.
If a contingent asset exists according to IAS 37.31 and the following, it has to be shown in the
annex.
KWS regulations:
The respective position content and valuation is more closely described with the description
of the individual positions.
2.2.2.1 Trade receivables
Accounts receivable for sales and services must be subdivided as follows:
Trade receivables with subsidiaries

Trade receivables with joint ventures
Trade receivables with associated companies
Trade receivables with third parties
The revenues corresponding to the receivables stated here must be accounted for as sales
revenue in the profit and loss statement.
All of the company’s asset values from sales and services must be accounted for here. Ful-
filment and performance of the sales and services in accordance with the contract is pre-
condition for display. The receivables displayed for here must be accounted for as sales reve-
nue in the profit and loss statement.
In DET position 13214000 short-term trade receivables with third parties are shown. In DET
position 13215000 long-term trade receivables with third parties are shown. With the follow-
ing subitems a receivable movement schedule can be prepared (this applies to version 100 as
well as 200!), so that the requirements of IFRS 7 (changes in receivables as well as valuation
allowances, time frames) are fulfilled.
Subitem 400 Opening balance trade receivables (gross as per July, 1)

Subitem 410 Addition of trade receivables (correspond to the sales incl. VAT)
Subitem 420 Disposal of trade receivables (e.g. payment receipts, bad debt write-off)
Subitem 450 Opening balance valuation allowances (gross as per July,1)
Subitem 460 Addition of valuation allowances (match to pos. 34422000)
Disclosure in the notes under pos. 51124082
Subitem 470 Disposal (consumption) of valuation allowances (e.g. bad debt write-
off)
Subitem 480 Reversal of valuation allowances (match to pos. 34412000)
Disclosure in the notes under pos. 51124092
Credit notes are shown as negative amounts among subitem 410.

The net book value of the trade receivables will be calculated automatically by the DET. This
value has to be split into so-called time frames in the company notes (pos. 51124010). There-
for the following subitems are available:
Subitem 411 Not depreciated and not overdue

Subitem 412 Not depreciated and overdue (0-60 days)
Subitem 415 Not depreciated and overdue (more than 180 days)
Subitem 416 Depreciated and not overdue
For trade receivables which are depreciated and not overdue, the net book value has to be
shown, so after valuation allowances (depreciation). Trade receivables which are already
overdue and have not been depreciated by 100% are not requested in the time frames. Due to
this fact, the total amount of the time frames can be deviated from the net book value of the
trade receivables in the balance sheet.
The following validations regarding valuation allowances on trade receivables with third par-
ties are working.
- P&L item 34422000 with the total of notes position 51124082 and 51125206
- Subitem 480 of balance sheet item 13214000 and 13215000 with P&L item 34412000
- P&L item 34412000 with notes position 51124092
Data entry:
Version
Company X
Profit Center X X X
Country
Region
Partner 1) X X X X
formation
Term X X X X
2.2.2.2 Receivables from finance leasing
Receivables from finance leasing with subsidiaries

Receivables from finance leasing with joint ventures
Receivables from finance leasing with associated companies
Receivables from finance leasing with third parties
All of the company’s asset values from finance leasing must be accounted for here. Fulfilment
according to contract is precondition for display. The receivables displayed for here must be
accounted for as sales revenue in the profit and loss statement. At the moment in the KWS-
group only exists operate leasing which has to be indicated among trade receivables according
to the person of the debtor. In case of finance leasing the group management has to be in-
formed. Accounting takes place after checking and consultancy.
Data entry:
Version
Company X X X
Profit Center
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Region
Partner 1) X X X
formation
Term X X X
2.2.2.3 Receivables from finance activities and other assets
Receivables from finance activities with subsidiaries

Receivables from finance activities with joint ventures
Receivables from other receivables and other assets with associated companies
Receivables from other receivables and other assets with third parties
Data entry:
Version
Company X X X
Profit Center
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Region
Partner 1) X X X
formation
Term X X X
Receivables from tax refund claims
Data entry:
Version
Company X X X
Profit Center
Country
Region
Partner 1)
formation
Term X X X
All not yet recorded receivables and other asset values must be accounted for here.
Receivables which are resulted from prepayments to multiplier have to be categorized as fi-
nance receivables. Consequently such facts have to be shown among “Receivables from other
receivables and other assets with third parties” (item 13234000). Because this prepayments
are short-term and do not serve the common business purpose they must not be shown
among loans with third parties.
Stamps and all types of tokens are allocated among other receivables and other assets and not
among cash and cash equivalents (IAS 7.6). Income which was generated from sale of these
tokens has to be shown among other operating income.
Receivables from other receivables and other assets with third parties (totals item 13234000)
split into the following position:
13234100 thereof derivatives

13234200 thereof prepayments
13234300 thereof creditors with a debit balance
13234400 thereof loans to third paties
13234500 thereof others.
The receivables from other receivables and other assets with third parties have to be split into
so-called time frames in the company notes (pos. 51124020). Therefor the following subitems
are available:
Subitem 411 Not depreciated and not overdue

Subitem 415 Not depreciated and overdue (more than 180 days)
Subitem 416 Depreciated and not overdue
For other receivables/other assets which are depreciated and not overdue, the net book value
has to be shown, so after valuation allowances (depreciation). Other receivables/other assets
which are already overdue and have not been depreciated by 100% are not requested in the
time frames. Due to this fact, the total amount of the time frames can be deviated from the net
book value of the other receivables/other assets in the balance sheet.
Position content:
other claims against the state (e.g subsidy claims)

suppliers with debit balances
premium reserves from insurances
insurance claims
advance salaries and wages to employees
short and medium-term credits to employees
deferred interest claims
rendered downpayments or advance payments, provided they are not to be displayed in other
balance sheet positions
claims from sale of fixed capital assets
reminder items, memo values
miscellaneous
2.2.3 Cash and cash equivalents
Balance sheet entry of cash and cash equivalents takes place according to IAS 32 in connec-
tion with IAS 39.
2.2.3.1 Securities
IAS 39 regulates the accounting of all original (e.g. loans, securities, receivables and liabili-
ties) and derivative (e.g. forward contracts, options, swaps, futures and forwards) financial in-
struments. Exceptions according to IAS 39.2 are e.g. shares in subsidiaries, shares in joint
ventures and shares in associated companies. Definitions and examples for derivatives have to
be seen in the annex for IAS 39, A9 and the following.
The following financial assets categories must be defined:
1. financial assets held for trading purposes

2. financial assets available for sale
Securities or shares in companies (associate companies also), which do not or do no longer

serve long-term investment and which accordingly belong to the circulating assets, must be
accounted for here.
The “tradings” must initially be entered with their acquisition costs, which correspond to the
attributable current market value of the rendered return service. With initial valuation of secu-
rities, the transaction costs must be included. Tradings are intended for short-term disposal in
order to generate profits from short-term fluctuations. They might be also a part of portfolios
for which indices exist on short-term profit taking in the younger past. After initial recorda-
tion, the securities must be valuated with their attributable current market value (fair value),
without deduction of the transaction costs that may have accrued during sale or alternative
disposal. Profit and loss from the valuation to the attributable current market value (fair value)
for securities held for trading purposes (tradings) must be accounted for in the result of
the accounting period (13312000).
The available-for-sale must initially be entered with their acquisition costs, which correspond
to the attributable current market value of the rendered return service. With initial valuation of
securities, the transaction costs must be included. Financial assets available for sale represent
the catchall element. It concerns of securities, which neither might be classified as “tradings”
nor as “held-to-maturity”. After initial recordation, the securities must be valuated with their
attributable current market value (fair value), without deduction of the transaction costs that
may have accrued during sale or alternative disposal. For these category, financial assets
available for sale, not affecting profits (13311000), unrealized profits and temporary losses
from valuation to the attributable current market value must be accounted for not affecting
profits in equity capital, in the position “other comprehensive income (OCI)“. Permanent
depreciations have to be entered affecting income and if necessary to be written-up affecting
income.
KWS regulations:
The item 13311000 securities: available-for-sale has to be entered with a subitem. The
subitems 300 external securities and 310 KWS SAAT AG securities are available.
Associate companies may only acquire shares of KWS AG with the express consent of the
Executive Board of KWs AG.
2.2.3.2 Hedge Accounting
Financial derivatives which are used for hedging of business dealings fraught with risk (un-
derlying transaction) might be classified under specific premises as a covering transaction
(hedge). For a hedge a valuation unit is needed which consists of an underlying transaction
and a covering transaction. If no valuation unit exists the underlying and covering transaction
are to be valuated stand-alone. For the underlying transaction, this takes place depending on
its character with net book value (e.g. loans) or fair value (e.g. securities in curent assets). The
covering transaction has to be valuated exclusively with the fair value.
Fair value
As fair value, the current market value of an asset or a liability is identified. This corresponds
normally to the current market price or the replacement costs. For calculation of the current
market value an accepted valuation scheme might be underlain alternatively (e.g. discounted
cash flow method).
Essential premises (IAS 39.88)

• Documentation of covering connection and explanation of the covering strategy
• The hedge has to be profoundly efficient related to the changes of current market value
or cash flows, which are assigned to the secured risk: for practice this mean under-
lying and covering transaction have to be correlated negatively not less than 80%
• By hedging of cash flows a high probability of occurence for a projected transaction is
necessary, which underlies the hedge
• Reliable valuation for efficiency of a covering transaction, i.e. current market value or
cash flows of the underlying transaction and current market value of the covering
transaction have to be determined reliably
• Consecutive valuation and appraisal of a high efficiency of the covering transaction
during the whole reporting period
2.2.3.2.1 Fair value hedge

• Derivatives are used for hedging the risk (changes in value) of capitalized assets and
capitalized liabilities, IAS 39.86 (a)
• Changes in value of underlying and covering transaction are recorded affecting in-
come no income effect for correlation of 100%
• Changes in market value resulting from a revaluation of the covering transaction are
recorded in full in the result of the period affecting income, IAS 39.89 (a)
• For the underlying transaction an affecting income write-up or write-down of the net
book value occurs in amount of the change in market value (result of the period),
which are assigned to the secured risk, IAS 39.89 (b)
• Secured risks might be price risks, interest risks, valuta risks as well as risks of default
2.2.3.2.2 Cash Flow hedge

• A derivative is used for hedging of projected and fraught with risk cash flows (e.g. un-
completed transactions, projected transactions) of an underlying transaction, which
may have effects to the result of the period, IAS 39.86 (b)
• For the covering transaction, already existing balance sheet items (e.g. payment of in-
terests for a variable interest-bearing bond) are considered as well as accrued transac-
tions (e.g. expected purchase or sale of a machine)
• Not affecting income entry of changes in value for covering transaction (effective
part) direct in the equity (OCI), IAS 39.95 (a)
• Effects on the profit are shown in the result of the period after realization of the under-
lying transaction (ineffective part), IAS 39.95 (b)
2.2.3.2.3 Hedge of a net investment in a foreign entity

• Hedging valuta risks of the result contribution from foreign entities, IAS 39.86 (c)
• Capitalization occurs analog cash flow hedge
• Not affecting income entry of changes in value for covering transaction (effective
part) direct in the equity (OCI), IAS 39.102 (a)
• Effects on the profit are shown in the result of the period after realization of the under-
lying transaction (ineffective part), IAS 39.102 (b)
Hedging against valuta risks based on an obligation might be capitalized as fair value hedge
or cash flow hedge, IAS 39.87.
If an expected transaction will be afterwards a financial asset, a financial liability or a fixed

obligation, then the connected gains and losses according to IAS 39.95 (cash flow hedge),
which were directly entered into the equity, have to be reposted into the result of the period.
This applies the period which were affected by the acquired asset or the assumed liability,
IAS 39.97 and 39.98.
By compliance with the requirements for embedded derivatives according to IAS 39.11, the
financial headquarters is to inform imperatively. Examples for embedded derivatives are men-
tioned in the annex A30. of IAS 39.
2.2.3.3 Checks, cash balance, bank balance
Balance sheet entry of cash takes place according to IAS 32 in connection with IAS 39.
Liquid assets are entered in the balance sheet in this position.
Stamps and all types of tokens are allocated among other receivables and other assets and not
among cash and cash equivalents (IAS 7.6).
Fixed-term deposits must also be displayed as bank balance.
Foreign currency holdings and currency credits at foreign credit institutions, which are due on
a daily basis must be entered according to the buying rate for foreign currency on the balance
sheet key date.
KWS regulations:
This position must be subdivided as follows:
Position content:
Cash
Checks
cash at bank on current accounts
fixed-term deposit credits at banks
miscellaneous
Data entry:
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Term
2.3 Deferred tax assets

Balance sheet entry of deferred taxes on the assets side takes place according to IAS 12.
Deferred tax claims are the profits tax amounts, which are rebateable in future accounting pe-
riods and amounts resulting from:
1. deductible temporary differences;
2. the balance of not yet utilised taxl loss carry forward; and
3. the balance of not yet utilised tax credits carry forward.
Temporary differences are differentials between the book value of an asset value or an asset
value or debt in the balance sheet at its tax value.
Temporary differences can be:
1. taxable temporary differences, which represent temporary differences that lead to amounts
that are assessable during calculation of the income (fiscal loss) of future periods liable for
taxation, if the book value of the property asset is realised or the debt is satisfied; or
2. deductible temporary differences that lead to amounts that are as assessable during calcu-
lation of the result of future accounting periods liable for taxation (fiscal loss), if the book
value of the property asset is realised or a debt is satisfied.
The tax value of a property asset or a debt is the amount attributable to this property asset or
debt for fiscal purposes.
Deferred taxes must be entered on temporal differences, provided they have accrued without
affecting net income and provided their cancellation presumably leads to tax burden or relief
in future financial years. The quasi-permanent differences are also counted among temporal
differences.
Deferred tax assets on temporal differences must be entered, provided their realisation is suf-
ficiently probable. They must also be entered on both tax loss carry forward and tax credits,
provided it is sufficiently probable that the tax advantage connected herewith can be real-
ised. Thereby the tax advantage is to valuate in the amount like a realization is possible in
the next five years.
Obligation to enter deferred taxes also exists, if temporal differences arise within the scope
of capital consolidation.
Deferred taxes must be valuated according to the anticipated valid tax rate at the time of
cancellation of the temporal differences. Deferred taxes must not be discounted. The book
value of deferred tax assets must be checked for recoverability on every closing key date
and, if necessary, must be subjected to irregular depreciation.
Current tax assets and current tax liabilities have to be offset according to IAS 12.71 if the
following premises are fulfilled:
1. the entity has a legally unforceable right to set off the recognized amounts and
2. the entity intends either to settle on a net basis , or to realize the asset and settle
the liability simultaneously.
Deferred tax assets and deferred tax liabilities have to be offset according IAS 12.74 if the
following premises are fulfilled:
1. the entity has a legally unforceable right to set off current tax assets against cur-
rent tax liabilities and
2. the deferred tax assets and the deferred tax liabilities relate to income taxes levied
by the same taxation authority on either
i. the same taxable entity or
ii. different taxable entities which intend either to settle current tax liabilities
and assets on a net basis, or to realize the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of def-
fered tax liabilities or assets are expected to be settled or recovered.
KWS regulations:
Deferred tax assets must be calculated for each balance sheet item.
Deferred taxes on tax losses carry-forward have to be capitalized mandatorily, if the follow-
ing preconditions are fulfilled:
- usage of tax losses carry forward according to local tax law is permitted
- positive results before taxes in the mid-term planning.
Deferred taxes have to be shown in the DET among position 14011000 and 36200000.
Data entry:
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Company X X X
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Term
2.4 Prepaid expenses

Prepaid expenses are entered in the balance sheet according to IAS 1.25 to 26
Disposals from payment means before the closing key date, as far as they become expenditure
(with the of receipt of goods or services, no financial assets), are displayed for a certain period
of time after the closing key date.
A certain period of time means that the period to which the expenditure must be allocated is
exactly determinable on the calendar.
Basically, advance payments from contracts, for which the contracting partner renders his re-
turn service in the subsequent financial year, e.g. advance payment of contributions, rent, in-
surance premiums or interest, must be entered in the balance sheet here.
KWS regulations:
none
In the KWS GROUP, the position is subdivided as follows:
Position content:
advance payment of contributions and fees
advance payment of rent
advance payments of motor vehicle tax
advance payment of insurance premiums
miscellaneous
Data entry:
Version
Company X X X
Profit Center
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Partner 1)
formation
Term
2.5 Equity
In general
Equity capital is the residual amount of the asset values remaining after deduction of all debts
and is subdivided into:
subscribed capital (or share capital),
capital reserve,
revenue reserves,
accumulated profit1
difference between currency conversion and
other comprehensive income.
According to IFRS, special items under fiscal law must not be formed, due to strict separation
between accounting based on commercial law and accounting based on tax law.
KWS regulations:
A revaluation surplus must not be formed in the equity capital, since the fixed capital assets
are valuated according to the benchmark method, thus to historic acquisition or manufacturing
costs.
Public benefits for asset values are not treated as deferred items in a special item, but are de-
preciated on determination of the book value according to IAS 20.24. .
The development in the equity index must be described (reference to IAS 1.86).
1
also contains negative results (loss)
Equity index
in TLC
Subscribed Capital Revenue Accumulated Other Equity
capital reserve reserves profit comprehensive
income
status 01. Juliy X -1 0
repurchase of own shares 0
issue of own shares 0
payment of dividends 0
annual surplus X 0
alterations in revenue reserves 0
alterations resulting from currency conversion 0
alterations not affecting net profit IAS 39 0
other alterations 0
Status 30. June X 0 0 0 0 0 0
check: 0
2.5.1 Subscribed / share capital
The subscribed capital corresponds to the amount to which the shareholders’ liability is lim-
ited, i.e. the basic capital with a joint stock company or capital stock with a limited liability
company.
Special regulations (type of shares, proprietary shares, multiple voting rights and the like.) re-
garding the subscribed capital must be specified in the annex.
The subscribed capital must be entered to the nominal value.
KWS regulations:
The share property if third parties (strangers to the KWS GROUP) must be specified.
Varying types of capital (preferential shares, multiple voting right shares must be specified.
Provided that the subscribed capital has not yet been fully deposited, it must be accounted for
as called capital in the KWS GROUP – as presented in the example below:
Example:
subscribed capital 500 T€
./. outstanding capital contributions 250 T€
= deposited capital 250 T€
+ called outstanding capital contributions 150 T€
called capital 400 T€
Called outstanding capital contributions (in the example 150 T€) must be accounted for as re-
ceivables on the assets side. Display takes place under the balance sheet item accounts receiv-
able from other receivables and other property assets, subdivided into subsidiaries, joint ven-
tures or towards third parties.
Alternative display of the outstanding capital contributions as special items on the assets side
must not take place.
Subscribed capital development must be presented in the statement of shareholders´ equity.
Data entry:
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2.5.2 Reserves
Outstanding reserves are accounted for according to the following classification criterion:
Capital reserve (external origin) and
Revenue reserve (internal origin –from the result-)
Type and purpose of each reserve must be specified within the equity.
2.5.2.1 Capital reserves (Addit. paid in capital)
Capital reserves are deposited reserves, i.e. shareholders’ capital investments, as far as they
cannot be allocated to the subscribed capital. Capital reserves that must be particularly speci-
fied:
the amount attained in excess of the nominal value on issue of shares (issue–agio);
the amount of additional payments into equity made by shareholders, even if they are granted
special rights or merits for this purpose.
Development of capital reserves during the financial year must be presented in the statement
of shareholders´equity.
Data entry:
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Term
2.5.2.2 Revenue reserves
Amounts that are formed from the result during the financial year or a former financial year
are accounted for here. These may be legal, for own shares, statutory or other revenue re-
serves.
Type and purpose (legal, statutory and so forth) of each reserve must be specified within the
equity.
Development of the revenue reserves during the financial year must be presented in the eq-
uity.
KWS regulations:
none
Data entry:
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Company X X X
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Term
2.5.2.2.1 Legal reserves
Legally stipulated reserves from the result must be accounted for here in accordance with the
respective regulation of state law.
KWS regulations:
Development of the legal reserves must be specified and explained in the annex.
2.5.2.2.2 Reserve for own shares
In case the company holds own shares a reserve at the same rate has to be shown. This reserve
can be created chargeable to an excisting other profit reserve (recapitalization).
A corresponding reserve has to be created for shares in the parent company.
The reserve has to be liquidated so far as the assigned value of the own shares is reduced.
2.5.2.2.3 Statutory reserves
If the Articles of Association provide for formation of specific reserves from the result, the
use of which may possibly be limited, then these reserves must be accounted for.
KWS regulations:
Development of statutory reserves must be specified in the annex.

2.5.2.2.4 Other revenue reserves
All revenue reserves formed, via shareholders’ decision, during compilation of the balance
sheet or within the scope of the profit distribution must be accounted for here, provided pres-
entation under the already mentioned revenue reserves cannot be considered.
KWS regulations:
Development of other reserves must be presented and explained in the annex.
2.5.3 Accumulated profit/accumulated loss
Accumulated profits/accumulated losses contain the accumulated result at the beginning of

the accounting period plus the result of the accounting period. Partial or complete profit ap-
propriation (dividends and allocation to reserves) takes place on the basis of these accumu-
lated profits.
KWS regulations:
The reconciliation statement of accumulated profit of the previous year to accumulated profit
if the financial year must be presented in the statement of shareholders´ equity and, where ap-
propriate, specified in the annex.
Data entry:
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Company X X X
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Term

2.5.3.1 Unappropriated retained earnings brought forward/cumulative losses brought

forward
The accumulated profit / accumulated loss of the previous year has to be indicated as unap-
propriated retained earnings brought forward/cumulative losses brought forward.
2.5.3.2 Net income / net loss for the current year
The result of the current financial year has to be shown here.
2.5.3.3 Accumulated profit of the current year before first consolidation
The sum out of the result carried forward and the result of the current financial year amounts
to the accumulated profit of the current year before first consolidation.
2.5.3.4 Net income before change of quota
This means a technical term which includes the net income before change of quota.
2.5.3.5 Application of profits
The result can be used partly or completely as follows:
- dividend issued in current year
- transfer from revenue reserves

Transfers from revenue reserves have to be devided into the single groups (legal reserve, re-
serve for own shares, statutory reserves and other revenue reserves).
- transfers to revenue reserves

Transfers to revenue reserves have to be devided into the single groups (legal reserve, reserve
for own shares, statutory reserves and other revenue reserves).
2.5.4 Currency conversion rate differences
An annual financial statement compiled in foreign currency must be converted into the report-
ing currency (Euro) in accordance with the predetermined rates. Asset values and debts are
converted according to the rates on the balance sheet key date. The positions of the profit and
loss statement are converted according to the average annual rates. Exchange rate differences
resulting herefrom are accounted for in the equity capital, without affecting net income, under
the item “changes resulting from currency conversion”.
The conversion of foreign currencies into EURO will be made in Einbeck. All subsidiar-
ies inform only in local currencies.
KWS regulations:
Formation of the item “changes resulting from currency conversion” must be specified in the
annex.
Data entry:
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Term
2.5.5 Other comprehensive income (OCI)
Applicable standard is IAS 39.

Securities of fixed assets and current assets are valuated at market prices. The securities of
current assets and a proportion of securities of the fixed assets are categorised as “asset values
available for sale“. In this case, all not yet realised changes in market value (fair value) after
deduction of deferred taxes are accounted for, without affecting net income, within the equity,
under the item “other comprehensive income (OCI)“.
OCI has to be devided into two categories:

- OCI from unrealised gains/losses out of securities (fixed assets) / other financial assets
(21610000)
- OCI from unrealised gains/losses out of securities (current assets) / available-for-sale
(21620000)
Translation of the term has been deliberately waived, since it is a generally accepted and
common term.
KWS regulations:
Formation of the item “other comprehensive income“ must be specified in the annex.
The total of subitem 620 and 625 of balance sheet item 21610000 and 21620000 is validated
with notes position 51190030 (Net amount of other comprehensive income after tax).
Additional information in company notes (see IAS 1.90 – 1.94):

51190000 (OCI) = sum position
51190010 (Components of other comprehensive income before tax)
51190020 (Amount of income tax relating to each component of other comprehensive in-
come)
51190030 (Net amount of other comprehensive income after tax)
51190040 (Amount of reclassification adjustments in OCI)
E.g.
- changes in revaluation surplus
- actuarial gains and losses on defined benefit plans
- gains and losses arising from translating the financial statements of a foreign operation
- gains and losses on remeasuring available-for-sale financial assets
- the effective portion of gains and losses on hedging instruments in a cash flow hedge
Data entry:
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2.6 Minority shareholder
Applicable standard: IAS 27.26

The item minority shareholder is an independent balance sheet item that represents neither
equity nor borrowed capital.
KWS regulations:
The equity of the minority shareholder is defined as the remaining balance of assets of minor-
ity shareholder after deduction of all liabilities and is subdivided into:
- Minority subscribed capital

- Minority capital reserve
- Minority revenue reserve
- Minority accumulated profit/accumulated loss
- Minority currency conversion rate difference and
- Minority other comprehensive income (OCI)
Thus, the interest of minority shareholder in equity is subdivided as explained under point 2.5
equity.
2.7 Borrowed capital
Applicable standards: IAS 1 and IAS 32
Borrowed capital is subdivided into:

- long-term borrowed capital and
- short-term borrowed capital.
Valuation is specified on description of the individual positions.
The accounting and valuation principles of borrowed capital must be specified in the annex.
Offsetting of asset values and debts (e.g. receivables from and liabilities to one and the same
company) is only permissible where requested or explicitly permitted by the IAS. According
to IAS 32.33, offsetting must take place if a legal settlement claim exists. In this case realisa-
tion of asset value and liability or settlement on a net basis is possible.
KWS regulations:
The respective balance sheet items of borrowed capital must be subdivided into their most
important integral parts.
Stocks from intra-group business connections must also be stated and specified. This particu-
larly concerns debts towards subsidiaries, joint venture and associate companies.
If a contingent liability exists according to IAS 37.27 and the following, it has to be shown in
the annex.
2.7.1 Long-term borrowed capital
Long-term in terms of the IAS basically means a residual term exceeding one year after the
balance sheet key date. Financial liabilities are entered with their acquisition costs on initial
recordation. Possible transaction costs must hereby be included. In subsequent accounting pe-
riods, financial liabilities must be valuated according to continued acquisition costs. Sole ex-
ceptions are liabilities that are held for trading purposes and derivative financial instruments
according to IAS 39.93. These must be shown in the balance sheet with their attributable cur-
rent market value. The amount concerned is appropriate for possible exchange of asset values
or settlement of liabilities between experts, persons willing to conclude contracts and inde-
pendent business associates.
2.7.1.1 Long-term interest-bearing loans
Applicable standards: IAS 1, IAS 32 and IAS 39
Interest-bearing liabilities with a residual term of one year must be classified as long-term, if
an issue according to IAS 1.63 exists, e.g. if the original term of the liabilities exceeds one
year.
KWS regulations:
Long-term interest-bearing loans must be subdivided into:
Long-term interest-bearing loans with lending institutions (bank loans)

Long-term interest-bearing loans with subsidiaries
Long-term interest-bearing loans with joint ventures
Long-term interest-bearing loans with associated companies
Long-term interest-bearing loans out of hybrid financing instruments (derivatives)
Other long-term interest-bearing loans.
All items, particularly the intra-group assets, must be sufficiently presented and specified in
the annex. With bank credits, essential individual items (amounts exceeding 100 T€) must be
stated separately with the name of the bank.
Data entry:
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Company X X X
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Term
2.7.1.2 Long-term trade payables
Obligations with a determined degree of obligation and a determined amount must be entered
as liabilities. It is thereby irrelevant whether the liability is of an economical or legal nature.
An obligation can only be entered in the balance sheet in the event of liability towards exter-
nal third parties. Internal obligations cannot be shown as liabilities.
Existence of a long-term liability and how this is to be entered in the balance sheet in subse-
quent on initial recordation and in subsequent accounting periods has already been explained.
Liabilities in foreign currency must be recorded according to the transaction rate (at the time
of accrual of the liability). These liabilities must be entered in the balance sheet on the balance
sheet key date, according to the fair value – the attributable current market value – and must
subsequently be converted into Euro.
KWS regulations:
The long-term trade payables must be subdivided into:
Long-term trade payables with subsidiaries

Long-term trade payables with joint ventures
Long-term trade payables with associated companies
Long-term trade payables with third parties
Data entry:
Version
Company X
Profit Center X X X
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Region
Partner 1) X X X X
formation
Term
2.7.1.3 Long-term liabilities from finance leasing
Long-term liabilities from finance leasing with subsidiaries

Long-term liabilities from finance leasing with joint ventures
Long-term liabilities from finance leasing with associated
Long-term liabilities from finance leasing with third parties
Here all liabilities from finance leasing of the company have to be indicated. The specific per-
formance is required for the statement. The liabilities indicated here have to be registered as
expenses in the profit and loss account. At the moment in the KWS-group only exists operate
leasing which has to be indicated among trade receivables according to the person of the
debtor. In case of finance leasing the group management has to be informed. Accounting
takes place after checking and consultancy.
Data entry:
Version
Company X X X
Profit Center
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Region
Partner 1) X X X
formation
Term
2.7.1.4 Other long-term liabilities
Other long-term liabilities with subsidiaries

Other long-term liabilities with joint ventures
Other long-term liabilities with associated companies
Other long-term liabilities with third parties
The other long-term liabilities with subsidiaries, joint ventures and associated companies have
to be indicated detailed in the annex. In case of other long-term liabilities and other long-term
liabilities with third parties substantial single items (amounts above 100 T€) have to be indi-
cated separately.
Data entry:
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Company X X X
Profit Center
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Region
Partner 1) X X X
formation
Term
2.7.1.5 Long-term provisions
Note: The distribution in long-term provisions I and long-term provisions II was made
because of technical reasons.
2.7.1.5.1 Accruals for income taxes (long-term provisions I)
Standard to be applied: IAS 12 and IAS 37
Among accruals for income taxes all taxes for the current financial year as well as open peri-
ods of tax audit have to be indicated, for which the company is taxpayer and for which no as-
sessment has been made (see IAS 12.12). Assessed taxes have to be recorded as short-term
tax liabilities.
For the set-up of tax accruals for prior years, e.g. due to a tax audit, the expenses have to be
shown as tax expenses and not as non-periodic expenses.
Data entry:
Version
Company X X X
Profit Center
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Partner 1)
formation
Term
2.7.1.5.2 Provisions for pension and similar obligations (long-term provisions II)
Applicable standard: IAS 19
The IAS differentiate between contribution-oriented and provision-oriented old-age pension

schemes. With contribution-oriented pension schemes, the company commits itself to pay-
ment of contributions to pension insurance carriers and pension pension funds that do not give
reasons for further obligations to pay. As a result, this is not a reserve, but current expenditure
of the accounting period. Provision-oriented pension schemes, e.g. company pension, must be
entered on the liabilities side and are calculated according to the Projected-Unit-Credit-
Method, a cash entitlement procedure. Beside the demographic assumptions, the discount fac-
tor, salary and pension development, increase in expenditure for costs of illness and antici-
pated revenue from planned assets are thereby takes as a basis. The capital market interest
rate, valid on the balance sheet key date, for first-rate, fixed interest-bearing industrial or gov-
ernment bond issues must be applied. Entry of actuarial profit and loss takes place on the ba-
sis of the corridor method (10%-corridor). According to IAS 19.92 a part of the actuarial
gains and losses shall recognize as income or expense if the net cumulative unrecognized ac-
tuarial gains and losses at the end of the previous reporting period exceeded the greater of:
• 10% of the present value of the defined benefit obligation at that date (before deduct-
ing plan assets); and
• 10% of the fair value of any plan assets at that date.
All commitments must be included as a liability. So-called old and new commitments are no
longer differentiated between.
Jubilee funds, special leave for long service and occupational disability benefits are counted
among the other due payments to employees (similar obligations). These must be recorded
in other provisions.
Provisions for deferred compensation have to be balanced with the receivables towards the in-
surer. The remaining difference have to be shown in the balance sheet and have to be ex-
plained in the annex.
KWS rule:
As per June 30 of ones year, pension expert opinions have to provide together with the annual
report to the group accounting.
Basically accruals for pensions have to be classified as long-term even if they will be paid
within one year. For this reason existing short-term accruals for pensions have to be reclassi-
fied with subitem 535 as long-term as per June 30, 2006.
The interest component of the pensions allocation has to be shown separately with subitem
512 and is equal to the p&l item 35270000 “interest expenses accruals for pensions”.
Post-employment benefits (IAS 19.24)
According to IAS 19.24 you have to differentiate between defined contribution plans and de-
fined benefit plans. Due to these fact the following notes have to be done in the year-end an-
nex on company level:
a) Defined contribution plans (51181000)

• In P&L included expenses for plans of the employer (51181010)
The amount for a defined contribution plan, which was recognized as an expense has to
show in the financial statement.
• In P&L included expenses for plans of the state (51181020)
A Sate plan is to handle in the same way as a multi-employer plan. (see IAS 19.36).
b) Defined benefit plans (51182000)

• Present value of the defined benefit obligation (51182010)
• Not recognized actuarial gains / losses (51182020)
• Not yet recognized past service cost (51182030)
• Fair value of the plan assets (if any) at balance sheet date (51182040)
• Used rate to discount benefit obligation (51182050)
• Current service cost (51182060)
• Interest cost (51182070)
• Expected returns of any plan assets (51182080)
• Expected increase of salaries (51182090)
• Expected increase of pension (51182100)
Definitions
Defined contribution plans

Plans for post-employment benefits under which an enterprise pays fixed amounts into a sepa-
rate entity (a fund) and will have no legal or constructive obligation to pay further contribu-
tions if the fund does not hold sufficient assets in order to pay all employee benefits relating
to employee service in the current and prior periods.
Defined benefit plans

Defined benefit plans are post-employment benefit plans other than defined contribution
plans. It is a matter of the classic pension provision.
Present value of a defined benefit obligation

The present value of a defined benefit obligation is the present value, without deducting any
plan assets, of expected future payments required to settle the obligation resulting from em-
ployee service in the current and prior periods.
Plan assets
Plan assets comprise assets held by a long-term employee benefit fund and qualifying insur-
ance policies.
Return on plan assets

The return on plan assets is interest, dividends and other revenue derived from the plan assets,
together with realized and unrealized gains and losses on the plan assets, less any costs of ad-
ministering the plan and less any tax payable by the plan itself.
Actuarial gains and losses

Actuarial gains and losses comprise of experience adjustments (the effects of differences be-
tween the previous actuarial assumptions and what has actually occurred) and the effects of
changes in actuarial assumptions.
Experience adjustments
Adjustments, which are arisen out of the difference between prior actuarial assumptions be-
yond the prospective development and the actually development.
Interest cost
Interest cost is the increase during a period in the present value of a defined benefit obligation
which arises because the benefits are one period closer to settlement (notes position
51182070, P&L position 35270000).
Past service cost

Past service cost is the increase in the present value of the defined benefit obligation for em-
ployee service in prior periods, resulting in the current period from the introduction of, or
changes to, post-employment benefits or other long-term employee benefits. Past service cost
may be either positive (where benefits are introduced or improved) or negative (where exist-
ing benefits are reduced). If a plan e.g. arranges before the change 5% of the employees gross
salary as a contribution and the plan is increased retrospectively to 6%, 1% of the total sala-
ries of prior periods has to be transferred subsequently to the pension fund for each employee
who is entitled for benefit.
Fair Value
Fair value is the amount for which an asset could be exchanged or a liability settled between
knowledgeable, willing parties in an arm’s length transaction.
Valuation:
Determination of the percentage rates for interest rate, increase in salaries and pensions, cost
increase in expenditure for costs of illness must take place according to the country-specific
previous year’s change and the future developments.
Data entry:
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Company X
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Example: Defined Benefit Obligation

Calculation method
The “Projected Unit Credit Method (PUCM)” is the prescribed valuation method according to
IAS 19, which is the system of single premium financing for the annual benefit increment in
consideration of trends.
The following values have to be calculated:
1. Defined Benefit Obligation (DBO)

For active claimants the DBO is the present value of the total expected and dynamic provision
services which are allocated based on services done according to the PUCM. For the calcula-
tion, a prospective benefit trend has to be considered as well as a prospective pension trend.
For pensioners and retired persons with vested benefits the DBO complies with the present
value of prospective provision services in consideration of a prospective pension trend.
2. Current Service Cost

For active employees the current service cost is the calculated present value of the benefit in-
crement at the beginning of a fiscal year plus an interest rate until the year-end according to
the PUCM. The trends which are considered in the calculation of the DBO also have to be in-
cluded in the equation.
3. Interest Cost
The interest cost corresponds to the annual interest rate of the calculated DBO at the begin-
ning of the fiscal year in consideration of the mature benefit payments for less than a year.
4. Pension Cost (Expense)

For defined benefit systems the expense refer to the balanced and accrued expense for a com-
pany pension scheme acording to IAS 19. It consists of the following single amounts:
+ Current Service Cost

+ Interest Cost
+/- Amortization Amounts
5. Amortization Items
Actuarial gains and losses are amortized as a result of the deviation of the actual movement to
the expected assumptions or by changing of these assumptions. For pension provisions, the
part of actuarial gains and losses has to be amortized at least to the average residual period of
service of the active employees which exceed 10% of the DBO at the end of the prior report-
ing period.
6. Curtailment/Settlements
Curtailments and settlements have to be considered.
7. Transfer payments
Transfer payments are the balance of asset transfers resulting from changing the subjection of
individual subsidiaries within the group.
8. Defined Benefit Liability (DBL)

DBL describes the provision in the balance for the respective balance sheet date which has to
be capitalized according to IAS 19.
Basis of calculation
The calculation assumptions and valuation methods at the beginning and end of the reporting
year can be summarized as follows:
As actuarial retirement age, the advanced retirement age were used according to the German
social security law from 2007.
For the entry of actuarial gains and losses the company uses the so-called “corridor”-method
according to IAS 19.92-93.
Provisions for fiscal year 2006/07
The movements of the provisions for fiscal year 2006/07 are as follows:
P&L expense in the fiscal year 2007/08
The expense in the P&L for fiscal year 2007/08 are:

Information for the notes

2.7.1.5.3 Provisions for restoration third party properties (long-term provisions II)
Note: The split into long-term provisions I and II was made because of technical reasons.
Standard to be applied: IAS 37.70
To form an accrual for restoration expenses the general requirements for balancing an accrual
as well as the requirements according to IAS 37.72 have to be fulfilled. For the assessment
only those expenses directly connected with the restructuring and therefore arising compulso-
rily are to be taken into consideration and not hose expenses connected with current activities
of the company (redundancy expenses against employees).
In case of expenses for future business as re-education all transfer of employees, marketing
activities or capital expenditures in new systems and distribution networks an accrual cannot
be formed (IAS 37.81).
Data entry:
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Company X
Profit Center X X X
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Partner 1)
formation
Term
2.7.1.5.4 Other long-term provisions (long-term provisions II)
An accrual is a liability, which is uncertain regarding its maturity or its amount.
The following preconditions must be cumulatively fulfilled in order to form an accrual:
A current obligation from a past event must exist;

the outflow of funds for fulfilment of the obligation must be probable;
reliable estimation of the obligation amount must exist.
Fulfilment of an obligation is considered probable, if more militates in favour of rather than

against this. If an existing liability can merely be unreliably estimated, it must be entered in
the balance sheet as contingent liability (compare to IAS 37.86). Provisions must be checked
and adjusted on every balance sheet key date. If fulfilment of the obligation is no longer prob-
able, the accrual must be cancelled affecting net income. Provisions may not be formed for
expenditure of future business activity, so-called expenditure provisions.
Election provisions do not exist according to IAS!!!
Provisions for uncertain liabilities (according to merits and/or amount), i.e. if an uncertain ob-
ligation towards a third party has legally originated or was economically caused (nature of li-
abiltiy), must be formed.
With long-term provisions, the amount to be paid must be compounded via foreseeable cost
increases and subsequently discounted to its actual cash value via a market interest rate. Long-
term in terms of the IAS is a residual term exceeding one year after the balance sheet key
date.
The probability of outflow of funds must be taken as a target when forming provisions. The
accrual must be reliably appraisable; if necessary, statistic estimation forms the measure of
value.
KWS regulations:
The provisions must be subdivided into their essential elements and must be presented in an
provisions movement schedule. The provisions (except the net pension provisions) must also
be structured according to maturity, as follows:
mature in the subsequent financial year

residual term exceeding one year
Provisions movement schedule

in TLC
Status Addition Reversal Interest increase/ Transfer Consumption Status
01.07.XX-1 Interest decrease postings 30.06.XX
Tax
Reorganisation
Others
0 0 0 0 0 0 0
Column addition: with long-term provisions, addition at actual cash value only
Column reversal: only to be considered, if the reason for formation of provisions
is inapplicable or if the provision has been too highly assessed
Column interest in-/decrease: interest part of provision increase/decrease – calculative a per-
centage of the opening balance
Column consumption: basically to be considered resulting neither in profit or loss
Provisions for liabilities towards subsidiaries, joint ventures and associated companies must
be stated and specified separately.
Individual provisions exceeding 100 T€ must be specified separately in the annex as regards
their nature and valuation.
The methods of proceeding for valuation of provisions, e.g. cost increase rate, discount factor,
inclusion of certain costs, and must also be specified in the annex.
Examples for the acceptance of economic cause up to the balance sheet date (according to
IAS 37):
• Guaranteeing
• Bonuses to employees
• Projected anniversary bonuses
• Commitments for commissions (only commissions which are already arised)
• Paybacks for hires
• Vacation commitments
• Land rent
• Royalties
• Travelling expenses
• Waste disposal
• Fees for year-end audit and preparation of the tax declaration
Data entry:
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Company X
Profit Center X X X
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Term
2.7.2 Short-term borrowed capital
Short-term in terms of the IAS basically means a maximum residual term of one year. Finan-
cial liabilities are assessed according to their acquisition costs on initial recordation. Possible
transaction costs must be included hereby. In subsequent accounting periods, financial liabili-
ties must be valuated according to continued acquisition costs. Sole exceptions are liabilities
that are held for trading purposes and derivative financial instruments according to IAS 39.93.
These must be entered in the balance sheet with the attributable current market value. The
amount concerned is appropriate for possible exchange of asset values or settlement of liabili-
ties between experts, persons willing to conclude contracts and independent business associ-
ates.
A liability must always be classified as short-term, if its amortisation takes place within the
financial year or one year after the balance sheet key date at the very latest. Exceptions from
this rule may be extracted from standards 1.61 to 1.65, e.g. liabilities with an original term of
several years.
Liabilities in foreign currency must be recorded according to the transaction rate (at the time
of accrual of the debt. This liability must be balanced on the balance sheet key date in accor-
dance with the fair value – the attributable current market value and subsequently converted
into Euro.
2.7.2.1 Short-term finance liabilities
This position has already been explained factually among the long-term interest-bearing loans
and the short-term borrowed capital.
The following sub-position are part of the short-term finance liabilities:

- Short-term finance liabilities with lending institutions (bank liabilities)
- Short-term finance liabilities with subsidiaries
- Short-term finance liabilities with joint ventures
- Short-term finance liabilities with associated companies
- Other short-term finance liabilities
Prepayments received for stocks must not be deducted from stocks, but must be shown
among short-term finance liabilities (see page 80).
Data entry:
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Company X X X
Profit Center
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Partner 1) X X X
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Term
2.7.2.2 Short-term trade payables
Trade payables have been already explained factually among the position long-term trade
payables. The sub-positions are identical as well. If trade payables with a duration of more
than one year exist they will have to be indicated among the long-term borrowed capital under
position long-term trade payables.
Data entry:
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Company X
Profit Center X X X
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Region
Partner 1) X X X X
formation
Term
2.7.2.3 Short-term liabilities from finance leasing
Liabilities from finance leasing have been already explained factually among the position
long-term liabilities from finance leasing. The sub-positions are identical as well.
Data entry:
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Company X X X
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2.7.2.4 Short-term tax liabilities
Taxes already assessed have to be indicated among the position short-term tax liabilities.
Data entry:
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Company X X X
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2.7.2.5 Other short-term liabilities
Among other short-term liabilities substantial single items (amounts above 100T€) have to be
indicated separately.
Data entry:
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Company X X X
Profit Center
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Partner 1)
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Term
2.7.2.6 Short-term provisions
Note: The distribution in long-term provisions I and long-term provisions II was made be-
cause of technical reasons.
Provisions have been already explained factually among the position long-term provisions.
The sub-positions are identical as well.
- short-term accruals for income taxes (short-term provisions I)

For the set-up of tax accruals for prior years, e.g. due to a tax audit, the expenses have to be
shown as tax expenses and not as non-periodic expenses.
Data entry:
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Company X X X
Profit Center
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Partner 1)
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Term
- short-term provisions for pensions (short-term provisions II)

Basically accruals for pensions have to be classified as long-term even if they will be paid
within one year. For this reason existing short-term accruals for pensions have to be reclassi-
fied with subitem 535 as long-term as per June 30, 2006.
- short-term provisions for restoration third party properties (short-term provisions II)
- other short-term provisions (short-term provisions II), 24623000
Balance sheet item 24623000 (other short-term provisions) has to be split in the following
three items:
- 24623000 (other short-term provisions from sales transactions)
- 24623010 (other short-term provisions from purchase transactions)
- 24623020 (other short-term provisions from other transactions)
This means that the provisions have to be divided into the different transactions. The carry
forward is shown among item 24623000 (sales transactions). If the carry forward is also re-
lated to purchase and/or other transactions, please transfer the corresponding amount by using
subitem 535 (same procedure like subitem 140 for fixed assets).
Examples for short-term provisions from sales transactions:

- guaranteeing
- sales and distribution provisions (credit note to issue)
- returns
- tech-fee / royalties
- provisions if they are related to sales transactions
Examples for short-term provisions from purchase transactions:

- commitments from land rent
Examples for short-term provisions from other transactions:

- provisions if they are not related to sales transactions
- risk of litigation
- paybacks for hires
- commitments on wages and salaries, employee bonuses
Data entry:
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Company X
Profit Center X X X
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2.8 Deferred tax liabilities

According to the concept “temporary differences“, a balance sheet-oriented delimitation

method, an obligation to carry as both liability and asset exists for deferred taxes. Deferred tax
liabilities must be formed on all temporary differences (temporal and quasi-permanent differ-
ences) between the book value and the national tax balance sheet. A deferred tax liability
must always be formed, if:
assets in the IAS balance sheet > assets in the tax balance sheet
liabilities in the IAS balance sheet < liabilities in the tax balance sheet
Deferred tax liabilities must not be formed for issues of the regulations IAS 12.15 and
IAS 12.39. The recoverability of deferred tax claims must be checked anew on every balance
sheet key date. Offsetting of deferred taxes is strictly prohibited. Deferred tax claims and tax
provisions must not be discounted. On valuation of latency, the tax rates that are valid or an-
nounced on the balance sheet key date must be applied. Deferred taxes must be recorded af-
fecting net income, with the exception of:
- business transactions that are directly entered in equity, or
- mergers in form of company acquisition.
Deferred taxes are normally also cancelled affecting net income.
KWS regulations:
The item “deferred taxes“ must be sufficiently specified and presented in the annex.
Data entry:
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2.9 Deferred income

Applicable standards: IAS 1.25 and IAS 1.26
Proceeds (= payments) prior to the closing key date must be accounted for here, as far as they
present revenue for a certain period after the closing key date.
“A certain period“ means that the period to which the revenue can be allocated is determin-
able on the calendar.
Accrued items (proceeds/payment prior to the balance sheet key date) must be recorded as
miscellaneous receivables and other asset values.
Advance payments from mutual agreements, for which the accounting party renders his return
service in the next financial year, may be entered in the balance sheet here; e.g. received ad-
vance payments for rent or interest.
KWS regulations:
Essential positions (amounts exceeding 50 T€) must be stated and specified separately.
The position is presently subdivided as follows in the KWS GROUP:
Position content:
- advance lease payment
- miscellaneous
Data entry:
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Company X X X
Profit Center
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Partner 1)
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Term
THE INDIVIDUAL POSITIONS OF THE PROFIT AND LOSS STATEMENT AC-

CORDING TO COST-OF-SALES METHOD
2.10 Principles of organization of the profit and loss account
2.10.1 Contents of internal and external items

Separate data preparation, the way it was done up to now, of external P&L data on the one
hand (according to commercial law, or IFRS in future) and of internal P&L data on the other
hand (according to the gross margin scheme), will no longer be necessary in future. The
contents of the two approaches have been adapted to one another. The basis for data capture is
the internal P&L item plan (more detailed approach), whose item lines will be explained in
detail in the following. This internal information is then transferred automatically to the
external P&L approach.
Relevant differences between internal and external reporting are:
- Use of gross margin subtotals for examination of gross margins for variety or seed form
gross margins (gross margin 1) and country/region gross margins (gross margin 2).
- Different assignment of item lines:
-> Statement of research and development costs in the internal reporting system as a
separate function (acc.: sales, administration), while in external accountancy, R&D costs
appear among manufacturing costs.
-> Use of standard manufacturing cost rates in internal accountancy for KWS SAAT AG
and KWS Mais GmbH instead of (to some extent, this also refers to other companies).
-> Within internal accountancy, any other operating income are listed within the functions of
Production, Sales, Research & Development and Administration, as far as they can be
allocated to these departments (e.g. income from R&D subsidies are listed in the item
"Research & Development income"). In the external approach, this item is allocated to "other
operating income".
2.10.2 The Cost-Of-Sales Method

For KWS consolidated statements, the Cost-Of-Sales Method (COSM) is to be employed.
According to this method, turnovers within the period are positioned against the expenditures
incurred in making them.
In the COSM, expenditures are not broken down according to expense types (as in the Total
Cost Method (TCM), but organized according to functional divisions (production costs, sales,
research, development and administrational costs).
For distribution of expenditures to functional divisions, it is generally necessary to refer to

data from cost accounting. All expenses are to be distributed to the four functional divisions,
and only in exceptional cases can they be allocated to "other operating expenses". For easier
handling of allocation/adjustment problems, a brief explanation of their content shall be given
as follows.
The individual items of the profit and loss statement must only include factually incurred
expenses and income.
Detailed references in the enclosures based on the cost-of-sales method are to be taken into
account according to IAS 1.83 und IAS 1.84.
2.11 Contents of the profit and loss statement

Key lines of the profit and loss statement:
34111000 Sales
34112000 ./. Cost of sales
34110000 = Contribution margin 1
34120000 ./. Selling expenses
34100000 = Contribution margin 2
34200000 ./. Research & Development expenses
34300000 ./. Administration expenses
34400000 +/./. Other operating income and expenses
34500000 ./. Alternative valuation of goods / devaluation and annihilation of
stocks
34000000 = Operating result IFRS
35000000 +/./. Financial result
33000000 = Result from ordinary activities
36000000 ./. Taxes
37000000 +/./. Income and expenses from profit and loss transfer agreements
32000000 = Result after taxes
38000000 +/./. Extraordinary result
31000000 = Net income
2.11.1 Sales
Proceeds from the sale of typical products within the framework of ordinary business opera-
tions have to be entered under this item (applicable standard: IAS 18).
There is the obligation to make a net statement, i.e. proceeds reductions (refer to IAS 18.10.)
and turnover tax have to be deducted.
Gross sales proceeds (for finished and unfinished products, by-products, invoiced
packaging and freight costs, waste products if applicable)
./. Reductions of proceeds (cash discounts, rebates, credits)
./. Turnover tax (similar, sales-dependent taxes, if applicable)
= Net sales proceeds
The total of all sales proceeds in added up from the following items:
- Sales certified/commercial seed

- Sales royalties
- Sales basic seed
- Sales breeding services
- Other sales
Furthermore, they are differentiated according to the following criteria:
- Sales proceeds from external third parties, i.e. customers outside the KWS scope of
consolidation.
- from consolidated, affiliated companies, i.e. sales proceeds from customers included
in the consolidated annual accounts of the KWS-Group as fully consolidated affiliated
companies. -> in Version 100. service relationships Company <-> Company-> in Ver-
sion 200-400 Service relationships Profit Centre <-> Profit Centre
- from unconsolidated affiliated companies, i.e. sales proceeds with companies which
are affiliated, but not included in the consolidated annual accounts of the KWS-Group.
Sales proceeds are entered in the decentralised entry tool with the following supplementary
information.
Supplementary info Version Version Version Version Version

/ 100 200 200 300 400
Version (6+12) (3+9)
Company X
Profit Centre X X X X
Country X X X
Region is derived from
the country
X 1) is derived from
the country
is derived from
the country
Partner X X X X X
1) Date entry by group of regions (Germany, Europe, America, other countries)
2.11.1.1 Sales certified/commercial seeds (34111100)
All sales proceeds from the sale of certified seeds, experimental seed and merchandise are en-
tered here by company and/or profit centre, with country or region and partner.
Special regulation for multiplication of commercial sugarbeet seeds
Applicable for: KWS Italia, KWS France, KWS Chile, KWS Türk
For the multiplication of commercial sugarbeet seeds, sales with profit center 1000ZR-ZR
(KWS SAAT AG) have to be allocated to region AARDUMMY in version 200. This is only
allowed in that special case!
2.11.1.2 Sales royalties (34111200)
All sales proceeds resulting from the grant of marketing rights for our own species to affili-
ated companies or external third parties are entered here by company and/or profit centre,
with country or region and partner (licence fee for breeders).
2.11.1.3 Sales basic seed (34111300)
All sales proceeds from the sale of basic seeds are entered here by company and/or profit cen-
tre, with country or region and partner.
2.11.1.4 Sales breeding services (34111400)
Here, sales proceeds from breeding services are shown, which are performed within the
KWS-Group. For example, sales which KWS-France obtained with breeding services per-
formed for KWS SAAT AG (and invoiced to KWS SAAT AG) are to be entered here.
Also breeding services performed for external third parties, e.g. the breeding services by
AgReliant for Limagrain, have to be entered here.
2.11.1.5 Sales Tech-Fee
All sales from tech-fee (right of use for GMO) are shown here.
KWS regulations:
Special regulation (temporary) for internal allocation of sales tech-fee for division sugar beet.
The allocation of tech-fee for sugar beet seed takes place according to the executed input of
research and development for ¾ to the segment research and services. Correspondingly ¼ of
the tech-fee is attributed to the distribution service in the respective market. Proportional
R&D input has to be considered in the corresponding market region.
Example: North America RR-Sugarbeets Betaseed
Allocation of the tech-fee in profit center (100%)

Germany North America Total
ZR-ZR ./. 25 25
ZR-FE 50 25 75
Total 50 50
2.11.1.6 Other sales (34111510-34111540)
Other sales proceeds are, by way of example, defined as business transactions as below:
- Sales proceeds from agriculture

- Sales proceeds from the sale of facilities
- Services for insurance transactions of KWS SAATFINANZ GMBH
2.11.2 Cost of sales

(manufacturing costs of sales)
In keeping with character and purpose of the cost of sales procedure, this item is to include
manufacturing costs of the products sold and the services billed.
The term “manufacturing costs of sales” in the sense of the cost of sales procedure is subject
to rather vast interpretations in the KWS-GROUP. It includes any and all expenses incurred
during manufacturing the products sold.
Manufacturing costs include all activities in connection with propagation, manufac-

ture/treatment, storage and handling (during the production process) of seeds.
2.11.2.1 Material costs certified/commercial seeds (34112100)
Utilisation of standard manufacturing costs and actual manufacturing costs:
For the companies KWS SAAT AG and KWS Mais GmbH (possibly additional companies in
future as well) the planned standard rates of manufacturing costs are budgeted under Actual
(sold quantity x standard rate of manufacturing costs). These standard rates and actual ex-
penses are reconciled in the line “Deviation, cost of materials, STANDARD from ACTUAL
(refer to 2.11.9,1, page 108).
All other affiliated companies enter the actual cost of materials for certified/commercial
seeds under the following items - a reconciliation in the line “Deviation, cost of materi-
als, STANDARD from ACTUAL” as mentioned above is not required. If separation into
the items seed, dressing and packaging is not possible, the entry is made under item
„34112110 input of goods, certified seeds“.
Many affiliates buy finished, certified/commercial seeds. These will be entered there under
“Input of goods, ZS-seed" (refer to the allocation indicated below).
The totals line “Cost of materials, certified/commercial seed” includes the following individ-
ual items:
- Input of goods, certified/commercial seeds (34112110)

- Dressing/coating, certified/commercial seeds (34112120)
- Packaging material, certified/commercial seeds (34112130)
Data entry:

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Company X
Country X X X
Region is derived from is derived from is derived from
the country the country the country
Partner
2.11.2.2 Material costs basic seeds (34112200)
Here, the respective costs of materials for basic seeds are entered, as opposed to the sales of
basic seeds for the period.
Data entry:

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Partner
2.11.2.3 Royalty costs (34112300)
Licence fees have to be paid on the sale of species based in whole or in part on the genetics of
third parties or TBG’s. They are entered under this item.
Data entry:

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Company X
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2.11.2.4 Tech fee expenses
All expenses for tech fees (fees for the right of use, genetically modified properties of plants)
were recorded here.
If a discount for an early payment of trait royalty expenses is given, this discount has to be
shown as a reduction of trait royalty expenses and not as an other operating income.
2.11.2.5 Manufacturing costs (34112400)
The manufacturing costs item is divided into the items “expenses, production” and “proceeds,
production, other”.
2.11.2.5.1 Manufacturing expenses (34112410)
Cost centre areas and/or cost centres within the production function (Examples):
Manufacturing: Incoming goods, drying, cleaning, treatment, pilling, enhancement with active
agents, packaging, storage, outgoing goods.
Support of manufacture: Planning department, quality control, repairs/maintenance, produc-

tion engineering, purchasing of means of production.
Propagation/production support: Coordination of production, seed propagation
Production management
Data entry:

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Company X
Country
Region X MA only X MA only X MA only
Partner
Whether and to which extent allocation to regions will take place here, is currently being
agreed/decided in the sweet corn division (result expected for the next 1-2 weeks)! The same applies
to the following functional costs items!
2.11.2.5.2 Other manufacturing income (34112420)
All proceeds generated in connection with the production function are entered here. For ex-
ample proceeds from leasing production machines.
Data entry:

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Region X MA only X MA only X MA only
Partner X X X X X
2.11.2.6 Other cost of sales (34112500)

Other manufacturing costs are, by way of example, defined as business transactions as below:
- Agricultural manufacturing costs

- Manufacturing costs for services of the Company, Management, Organisation and
Data Processing (MOD)
- Manufacturing costs from business with facilities.
Data entry:

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Partner
2.11.3 Contribution margin 1 (34110000)

Contribution margin 1 is determined by calculating the difference between sales proceeds and
manufacturing costs.
2.11.4 Selling (34120000)

The item selling is divided into the items “selling expenses” and “other selling income” as be-
low:
2.11.4.1 Selling expenses (34121000)
All expenses incurred during the financial year in connection with marketing the goods and
services produced (seed and services) are entered as selling expenses.
Sellingg expenses are, just like manufacturing costs, determined by distribution of the differ-
ent types of costs to cost centres/functions.
Cost centre areas and/or cost centres within the selling function (examples):
Sales: Sales management and departments (secretary’s offices included), consultation of-
fices, Agroservice.
Marketing support: Marketing, logistics, warehouses for finished goods
Product management / coordination
Data entry:

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2.11.4.2 Other selling income (34122000)
All proceeds generated in connection with the selling function are entered here. For example
the proceeds from recharging an advertising campaign to another company of the KWS-
Group.
Data entry:

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2.11.5 Contribution margin 2 (34100000)

Contribution margin 2 is determined by calculating the difference between contribution mar-
gin 1 and marketing costs.
2.11.6 Research & Development (34200000)

The item research & development is divided into the following items: “research & develop-
ment expenses” and “income from research & development".
2.11.6.1 Research & Development expenses (34210000)
Research and development costs
Research is defined as independent, scheduled discovery of new scientific or technological

knowledge. Costs for research have to be entered as expenditure immediately (prohibition of
capitalisation).
Development is defined as the application of research results or other knowledge to a plan or
design for the production of new or considerably enhanced materials, products, procedures or
similar items. Development takes place prior to the start of commercial production or exploi-
tation. Development costs are only eligible for capitalisation, if certain precisely identified re-
quirements are fulfilled (IAS 38.45). Capitalisation is necessary in all cases, where develop-
ment activities will, with reasonable probability, lead to inflows of financial means in future,
which will cover not only regular costs but also the corresponding development costs. In addi-
tion to that, various criteria regarding the development project and the product (species) to be
developed have to be fulfilled cumulatively. These requirements are currently not met
within the KWS-Group, so that there are no development costs eligible for capitalisa-
tion.
Invoices from breeding stations to group companies have to be calculated on the basis of
IFRS and not on the basis of local rules.
Cost centre areas and/or cost centres within the research & development function (exam-
ples):
Breeding: Product breeding activities
Breeding stations and laboratories
R&D management/service: R&D management, administration, patent management, handling

of international matters,
data processing, training
Seed process technology, production research
Data entry:

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R&D costs are only entered by regions in the profit centres FE-MA and FE-ÖF, and only for
KWS SAAT AG.
2.11.6.2 Income from Research & Development (34210000)
All proceeds generated in connection with the research & development function are entered
here. For example the proceeds from grants for research projects and by-products.
Data entry:

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Region 1) X X X
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1) R&D proceeds are only entered by regions for the profit centres FE-MA and FE-ÖF.
2.11.7 Administration (34300000)
The item Administration is divided into the items “administration expenses” and “other ad-
ministration income” as below:
2.11.7.1 Administration expenses (34310000)
All activities in connection with the direction /management of the company as well as com-
mercial and general/technical functions across the company.
Cost centre areas and/or cost centres within the administration function (examples):
Management: Direction of the company, management, divisional management
Commercial functions: Purchasing, finance, controlling, personnel,

informatics, communications, law, quality management, environmental protection
General operational services: car pool, workshop, management of proper-

ties/buildings/domestic facilities, energy, operational safety, health and safety at work, waste
disposal
Data entry:

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Region 1) X X X
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1) Administration expenses are only entered by regions for the profit centres FE-MA and FE-
ÖF.
2.11.7.2 Other administration income (34320000)
All proceeds generated in connection with the administration function are entered here. For
example proceeds from the performance of administration services (e.g. re-charging of ad-
ministration services for AgroMais GmbH).
Data entry:

/ 100 200 200 300 400
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Company X
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Region 1) X X X
Partner X X X X X
1) Administration proceeds are only entered by regions for the profit centres MA and ÖF.
2.11.8 Other operating income and expenses (34400000)

The item other operating income and expenses is divided into the following items: “other
miscellaneous income” (items which cannot be allocated to the functions mentioned above)
and "other operating income".
Facts which were shown in the past as extraordinary expenses or income are now a part of the
other operating expenses or income.
2.11.8.1 Other miscellaneous income (34411000)
This item serves as summary item for income (e.g. within functions) which are not shown un-
der other income items. It also contains income from other periods.
Income deriving from other periods have to be identified in the Notes.
Content of this item (examples):

- Income from disposal/sale of intangible asses and tangible assets.
- Income from write-ups to intangible assets and tangible assets.
- Income from incoming payments for accounts which had been adjusted in value or written
off, as well as income from interest appreciations for accounts from which unaccrued inter-
est had been deducted previously.
- Income from the reduction of value adjustments
- Income from the dissolutions of reserves which are not required any longer.
- other income, e.g.:
- Income from foreign currencies
- Insurance benefits
- Compensation of damages by the Government (damages caused in military
manoeuvres)
- Income from rent and lease contracts
- Income from the set-off of services rendered to/by affiliates, joint ventures and asso-
ciated companies, to the extent that these cannot be allocated to other functions
- Government assistance and allowances (not applicable to investment subsidies)
- Miscellaneous reimbursements of costs
- Income from cafeterias
Other operational income from business relations with affiliates, joint ventures and associated
companies have to be identified and explained separately for each company.
Income by/from affiliates, joint ventures and associated companies have to be reconciled for
each company. This process has to be initiated by the company showing the income in its fi-
nancial statements. The company showing the expenditure has to identify in the correspond-
ing items of the profit and loss statement, how the corresponding expenditure has been
booked by it.
2.11.8.2 Income from the reversal of valuation allowances on receivables (34412000)
Furthermore the income from the reversal of valuation allowances on receivables are a part of
the other operating income. Normally, they arise from payment receipts of already devaluated
but not written off receivables.
Data entry:

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Partner X X X X X
1) Other miscellaneous income are only entered by regions for the profit centres MA, FE-MA,
ÖF and FE-ÖF.
2.11.8.3 Other operating expenses (34420000)
The item other operating expenses is divided into the following items: “other miscellaneous
expenses” and “write-offs and valuation allowances on debts ":
2.11.8.3.1 Other miscellaneous expenses (34421000)
This item only contains expenses which cannot be allocated to the functional areas (other
miscellaneous expenses), i.e. especially expenses for other periods and neutral expenses has to
be entered here.
Expenses for other periods has to be identified and explained in the Notes.
The following situations are covered by other miscellaneous expenses:

- Losses from disposal/sale of intangible asses and tangible assets.
- Expenses for foreign currencies
- Costs due to the legal form of the company (e.g. costs for the annual statement of accounts)
- Expenses for housing
- Miscellaneous neutral expenses and/or expenses from other periods
- Depreciation of goodwill: Depreciation of goodwill of fully consolidated companies is re-
corded here. Joint ventures are treated as fully consolidated companies in this context. Good-
will is an adjustment item of capital consolidation to be entered under the assets side. It has to
be capitalised under intangible assets.
Data entry:

/ 100 200 200 300 400
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Company X
Country
Region 1) X X X
Partner
1) Other miscellaneous expenses are only entered by regions for the profit centres MA, FE-
MA, ÖF and FE-ÖF.
2.11.8.3.2 Write-offs and valuation allowances on debts (34422000)
This item contains write-offs and valuation allowances on debts.
The following situations are covered under this expenses:
- Losses and value adjustments in current assets

- Value adjustments of accounts receivable, deductions of unaccrued interest of accounts re-
ceivable bearing no or low interest.
- Bad debt losses
Data entry:

/ 100 200 200 300 400
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Company X
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Partner
2.11.9 Alternative valuation of goods ZS (34510000)

The item Alternative valuation of goods ZS is divided into the following items:
- Deviation cost of materials, STANDARD from ACTUAL and

- Depreciation/destruction of stocks.
The item “Deviation, cost of materials, STANDARD from ACTUAL ” is only relevant
for companies applying standard rates of manufacturing costs in their ACTUAL state-
ment - currently KWS SAAT AG and KWS Mais GmbH.
2.11.9.1 Deviation cost of materials, STANDARD from ACTUAL (34510000)
The item “Deviation cost of materials, STANDARD from ACTUAL” shows the reconcilia-
tion between actual expenses of financial accounting (the item “Cost of materials against AC-
TUAL") below, and the standard costs recorded under manufacturing costs.
The two items below are only relevant for companies utilising standard manufacturing costs
for their manufacturing costs (e.g. KWS SAAT AG, KWS Mais GmbH).
2.11.9.1.1 Cost of materials against ACTUAL (34511000)
Cost of material actually booked by financial account is recorded here. These are composed
of:
34511100 Use of goods certified seed against ACTUAL
34511200 Dressing/coating certified seed against ACTUAL
34511300 Packaging material, certified seed against ACTUAL
Data entry:

/ 100 200 200 300 400
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Company X
Country X X X
Partner
2.11.9.1.2 Reverse cost of materials against STANDARD (34512000)

Standard costs recorded under manufacturing costs are recorded here as “contra item” against
actual values.
34512100 Rev.: Use of goods, certified/commercial seed against ACTUAL
34512200 Rev.: Dressing/coating, certified/commercial seed against ACTUAL
34512300 Rev.: Packaging material, certified/commercial seed against ACTUAL
Data entry:

/ 100 200 200 300 400
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2.11.9.2 Write down and/or destruction of stocks (34520000)
Implemented depreciations and destructions of stocks are recorded in this item line.
Data entry:

/ 100 200 200 300 400
Version (6+12) (3+9)
Company X
Country
Region 1) X X X
Partner
1) Depreciation and destruction of stocks is only entered by regions for the profit centres
MA and ÖF.
2.12 Operating result IFRS

The operating result IFRS is derived from the following items of the profit and loss statement:
Contribution margin 2
./. Research & Development
./. Administration expenses
+/./. Other operational proceeds and expenses
./. Alternative valuation of goods ZS and Depreciation/destruction of stocks
= Operating result IFRS
For the following items
- Financial result
- Taxes
- Income and expenses under profit and loss transfer agreements (EAV) and
- Extraordinary result
data are recorded on company level (not profit centre level).
2.13 Financial result (35000000)

The financial result is derived from the following items of the profit and loss statement:
2.13.1 Result from participations (35110000)

Income from subsidiaries and joint ventures
Income from associated companies
Income from participations
Income from profit transfer
Income from write-ups on financial assets
Write-down on subsidiaries and joint ventures
Write-down on participations of financial assets
Expenses from transfer of losses (only for Planta GmbH)
Depreciation of goodwill (full and equity consolidation)
Income from reversal of negative goodwill (full and equity consolidation)
Depreciation of goodwill
Income from reversal of negative goodwill
2.13.1.1 Income from subsidiaries and joint ventures (35110000)
Dividends and shares in the profit of subsidiaries and joint ventures have to be shown here in
particular.
Income has to be shown as gross income, i.e. including creditable taxes on income.
This income has to be shown separately in the Notes.
Income from subsidiaries and joint ventures under the KWS SCOPE OF CONSOLIDATION
has to be identified and explained separately for each company.
Data entry:

/ 100 200 200 300 400
Version (6+12) (3+9)
Company X X X
Profit Centre
Country
Region
Partner X X X
2.13.1.2 Income from associated companies (35120000)
Dividends and shares in the profit of associated companies have to be recorded here in par-
ticular. Furthermore, pro-rata annual surpluses, which have not been distributed yet but are to
be allocated to the Group are shown here. This is done in the consolidated annual account
only, not the individual annual accounts of the companies.
This income has, as per IAS, to be identified as a separate item 28.28 in the profit and loss
statement and explained in the Notes.
Income from associated companies under the KWS SCOPE OF CONSOLIDATION has to be
identified and explained separately for each company.
Data entry:

/ 100 200 200 300 400
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2.13.1.3 Income from participations (35130000)
Dividends and shares in the profit of companies, in which shares are held, have to be recorded
here in particular.
This income has to be shown separately in the Notes.
Data entry:

/ 100 200 200 300 400
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Partner X X X
2.13.1.4 Income from profit transfer (35140000)
Income from profit transfer agreements or similar agreements has to be recorded here for the
parent company. Income from profit pools has to be recorded here as well.
Data entry:

/ 100 200 200 300 400
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Partner X X X
2.13.1.5 Income from write-ups on financial assets (35150000)
The following income from write-ups has to be recorded here:

Income from write-ups on subsidiaries.
Income from write-ups on joint ventures.
Income from write-ups on participations.
As the depreciation of value has been recorded in the past with an effect on results, the write-
up (value made up for) has to show an effect on results as well. However, the write-up must
not exceed the acquisition costs carried on. When indications for a write-up are present, the
Group management has to be informed and the write-up may only be recorded upon agree-
ment.
The indicated income has to be explained in the Notes.
Data entry:

/ 100 200 200 300 400
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2.13.1.6 Write-down on subsidiaries and joint ventures (35160000)
Depreciations on subsidiaries and joint ventures are to be recorded here. They may only be
recorded as extra-budgetary depreciations on the basis on an impairment test and upon agree-
ment with the Group management.
Depreciations are to be shown separately for each company and have to be explained in the
Notes.
Data entry:
/ 100 200 200 300 400
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Partner
2.13.1.7 Write-down on participations of financial assets (35170000)
Write-downs on participations of financial assets have to be recorded here. They may only be
recorded as extra-budgetary depreciations on the basis on an impairment test and upon agree-
ment with the Group management.
Write-down are to be shown separately for each participation and have to be explained in the
Notes.
Data entry:

/ 100 200 200 300 400
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Country
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Partner
2.13.1.8 Expenses from transfer of lossse (35180000)
Losses to be taken over by the parent company under profit and loss transfer agreements dur-
ing the financial year have to be recorded here.
Data entry:

/ 100 200 200 300 400
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2.13.1.9 Income from reversal of badwill (full consolidation)
The amount of reversal of badwill of fully consolidated companies is recorded here. Joint ven-
tures are treated as fully consolidated companies in this context. Badwill is an adjustment item
of capital consolidation to be entered under the liabilities side.
Data entry:

/ 100 200 200 300 400
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2.13.1.10 Depreciation of goodwill (equity consolidation) (35193000)
Depreciation of goodwill of equity consolidated companies is recorded here. Goodwill is an

adjustment item of capital consolidation to be entered under the assets side. It has to be capi-
talised under intangible assets.
Data entry:

/ 100 200 200 300 400
Version (6+12) (3+9)
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2.13.1.11 Income from reversal of badwill (equity consolidation) (35194000)
The amount of reversal of badwill in equity consolidated companies is recorded here. Badwill
is an adjustment item of capital consolidation to be entered under the liabilities side.
Data entry:

/ 100 200 200 300 400
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2.13.2 Net interest income (35200000)

Interest income and similar income
Interest expense and similar expenses
Income from securities of current assets
Income from other securities and loans of financial assets
Write-down on securities
Income from write-ups on securities
The values from business relations with affiliates, joint ventures and associated companies
(refer to Chapter I, KWS SCOPE OF CONSOLIDATION) included in the individual items
have to be recorded separately (partner information).
Proceeds from items representing business relations with affiliates, joint ventures and associ-
ated companies have to be reconciled for each company. This process has to be initiated by
the company showing the proceeds in its financial statements. The company showing the ex-
penditure has to identify in the items of the profit and loss statement, how the corresponding
expenditure has been booked by it.
2.13.2.1 Interest income and similar income (35210000)
All interest and similar income not referring to financial assets are to be recorded here.
Income from interest or dividends from securities under current assets has to be recorded here
as well.
Income has to be shown as gross income, i.e. including allocatable taxes on income.
Income from affiliates, joint ventures and associated companies, e.g. interest from settlements
of fixed term deposits, has to be identified separately in the Notes.
Please observe the prohibition to balance accounts.
This item currently comprises the following income in the KWS-GROUP:
Content of item:
(1) Interest and dividends from securities under current assets
(2) Interest from deposits with credit institutions (banks)
(3) Interest from short and medium term loans and accounts receivable to affiliates, joint
ventures and associated companies
(4) Income from discounts
(5) Other, e.g. interest on loans shown in the item accounts receivable and other assets.
Interest and similar income from affiliates, joint ventures and associated companies have to be
identified and explained separately for each company (partner information).
Data entry:

/ 100 200 200 300 400
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Partner X X X
2.13.2.2 Interest expense and similar expenses (35220000)
This item is a summary item for interest and similar expenses.
Costs of payment transactions as e.g. bank charges, overdraft commissions or commitment

and handling fees may not be recorded here, they have to be shown as general administration
costs.
Expenses towards affiliates, joint ventures and associated companies have to be identified
separately in the Notes.
Please observe the prohibition to balance accounts.
This item currently comprises the following expenses in the KWS-GROUP:
Content of item:
Interest for long-term loans from credit institutions

Interest for short-term loans from credit institutions

Interest for loans from affiliates, joint ventures and associated companies.
Discount expenditure
Other, e.g.
- default interest
- disagio or write-off of a disagio
Interest and similar expenses of affiliates, joint ventures and associated companies have to be
identified and explained separately for each company (partner information).
Data entry:

/ 100 200 200 300 400
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Partner X X X
2.13.2.3 Income from securities of current assets (35230000)
Income from the disposal/sale of securities of current assets has to be recorded here.
Data entry:

/ 100 200 200 300 400
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Partner
2.13.2.4 Income from other securities and loans of financial assets (35240000)
Income from all items of the financial assets, except income from the balance sheet item
“Shares in subsidiaries, joint ventures, associated companies and shareholdings” have to be
recorded here.
Income from the periodic appreciation (write-up) of unaccrued interest on discounted long-
term loans of financial assets have to be recorded here as well.
Income has to be shown as gross income, i.e. including allocatable taxes on income.
A partner information has to be given here.
Data entry:

/ 100 200 200 300 400
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Partner X X X
2.13.2.5 Write-down on securities (35250000)
Write-downs on securities of current assets have to be recorded here.
Write-downs for the individual securities have to be explained in the notes.
Data entry:

/ 100 200 200 300 400
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Company X X X
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2.13.2.6 Income from write-ups on securities (35260000)
Write-ups on securities of current assets have to be recorded here, if the reason for deprecia-
tion has ceased to exist later. The write-up may not cause the security to exceed the projected
acquisition costs which would have occurred, if no extra-budgetary depreciation had been per-
formed (IAS 39.114). Write-ups for the individual securities have to be explained in the
notes.
Data entry:

/ 100 200 200 300 400
Version (6+12) (3+9)
Company X X X
Profit Centre
Country
Region
Partner
2.14 Result from ordinary activities
Applicable standard: IAS 8.16 to IAS 8.18
This subtotal represents the result from ordinary activities, i.e. all activities undertaken by a
company within the framework of its business operations, as well as related activities under-
taken by the company in order to promote such activities, accruing as additional activities or
as a consequence of such activities. Expenses and income which is ordinary by origin but very
important by amount, type or cause of accrual have to be shown separately in the notes to the
financial statement.
The result from ordinary activities is composed of the following items:

- Operating result IFRS
- Financial result
2.15 Result after taxes (32000000)
This item represents a subtotal similar to the setup of the profit and loss statement as per IAS,
and is composed of the following items:
- Result from ordinary activities
- Taxes
- Profits transferred under profit and loss transfer agreement
2.15.1 Taxes (36000000)
2.15.1.1 Tax on income (36100000)
According to IAS 1.75 and IAS 12.77, tax expenditure of a period, which is to be allocated to
ordinary operations, has to be shown separately in the profit and loss statement.
This includes current taxes which are dependent on results (tax on income), foreign taxes
which are equivalent to domestic income taxes, and tax benefits from the consideration of
countable losses carried forward.
Payments of arrears and reimbursements of the respective taxes for previous years have to be
shown here; they have to be identified in the Notes as components from other periods.
The key types of taxes have to be identified and explained separately. Tax expenditure for
other periods or set-off reimbursements have to be identified.
Foreign taxes leading to a taxation of income as well as of capital have to be divided in corre-
spondence with these two components.
Interest on tax back payments (e.g. due to a tax audit) are not to allaocate to the tax result but
to the interest result.
Data entry:

/ 100 200 200 300 400
Version (6+12) (3+9)
Company X X X
Profit Centre
Country
Region
Partner
2.15.1.2 Deferred taxes (36200000)
The recording of deferred tax assets/liabilities which were set off against each other with ef-
fect on results has to be performed here. Deferred taxes may, as a matter of principle, not be
balanced, unless the facts under IAS 12.74 are fulfilled cumulatively.
The item “deferred taxes” has to be explained and presented to a sufficient extent in the
Notes.
Data entry:

/ 100 200 200 300 400
Version (6+12) (3+9)
Company X X X
Profit Centre
Country
Region
Partner
2.16 Transferred profits from profit and loss transfer agreements (EAV) (37200000)
Here, the profits transferred to the parent company under (partial) profit transfer agreements
have to be recorded under the affiliated company. Transferred profits from profit pools have
to be recorded here as well.
Data entry:

/ 100 200 200 300 400
Version (6+12) (3+9)
Company X X X
Profit Centre
Country
Region
Partner
2.17 Net income (31000000)
The net income is composed of the items result after taxes, extraordinary result and the inter-
est of minority shareholder (in conformity with IAS 8.10).
The result for the period shows the success achieved during the financial year, prior to the ap-
propriation of yields.
The transitory calculation from net income to net profit/net loss has to be presented in the
breakdown of equity.
2.18 Interest of minority shareholder (39000000)
This is the share of the minority shareholders in the annual result (annual surplus/annual defi-
cit). It reduces the Group result (IAS 1.75 and IAS 27.26).
This item is to be shown in the consolidated annual account only.
The extraordinary result as per IAS 1.36 (c) in connection with IAS 28.28 has to be incorpo-
rated into the result of the minorities as well.
Data entry:

/ 100 200 200 300 400
Version (6+12) (3+9)
Company X X X
Profit Centre
Country
Region
Partner
2.19 Annex
2.19.1 Annex to the annual financial statement of the entire corporation

(ZANHGES001 – Notes Yearend I)
Accounts payable for goods and services out of investments
The total amount of accounts payable for goods and services out of investments is to name
here. This is needed for the cash flow statement, to show the occurred cash flows in the re-
porting period. The cash flow statement is crated only for the consolidated financial state-
ment.
Contingent Assets
Is the inflow of economic benefit probable, but not included in the financial statements to the
balance sheet date, the amount is to specify as contingent asset (IAS 37.89).
Contingent Liabilities
If the possibility of an outflow at fulfillment is not improbable und not show so far in the fi-
nancial statements, the amount is to state as contingent liability (IAS 37.86).
Personnel Expenditures
Here wages and salaries, social spending and expenses for retirement pension and other sup-
port of the entire year are shown.
Workforce of permanent employees after age structure
The number of permanent employees is to divide into the distinct age ranges. The number of
permanent employees for the annual financial statements is determined as the average of the
four quarters of the reporting year.
Earnings from selling of equity holdings
Here is shown the earnings (profit or loss) from selling of equity holdings.
Earnings from exchange differences
Incomes and expenditures resulting from exchange differences are given here (IAS 21.9,
21.11a and 21.15).
Deferred Taxes
For all temporary differences between the IFRS balance and the national tax balance deferred
tax assets and deffered tax liabilities are to be formed. The incomes and expenditures result-
ing from this temporal difference, as well as the incomes and expenditures from allowance for
losses are to proven under this position.
Fiscal allowances for losses
The management has to give an estimated planning of the time and amount, when the fiscal
allowances for losses are used up or usable.
Balancing deferred tax assets and deferred tax liabilities

Should be deviated in exceptional cases from the principle of the balancing prohibition (IAS
12.74), is the balancing including the corresponding asset and debt positions to be proven
here.
Deviation of tax expenditures
The determination of the deferred taxes is to be done with a planned tax rate. The deviation of
the actual to this planned tax rate is to show here in per cent. Same applies to the absolute tax
expenditure, which results from the tax rate deviation.
Adjustments of value on inventory (IAS 2.34, 2.31)
- In the income statement charged appreciation of adjustments of value

Here the reversals of valuation adjustments on supplies already value-adjusted are captured as
reduction of the expenditure for material and supplies in the income statement.
- In the income statement charged expenditure from adjustments of value

Expenditures for adjustments of value on supplies, which were represented success-
effectively in the income statement, are recorded under this position.
- Direct in equity capital charged appreciation from adjustments of value

Here are shown the reversals of valuation adjustments on supplies already value-adjusted as
increase in equity capital.
- Direct in equity capital charged expenditure from adjustments of value

Expenditures from adjustments of value on supplies, which were charged success-neutrally as
reduction of equity capital, are recorded under this position.
Furthermore the adjustments of value on supplies in the categories commodities, auxiliary

material and fuels, incomplete products, incomplete biological net assets and finished prod-
ucts are shown separately.
Adjustments of value on accounts receivable (IAS 39.109 and the following)
- In the income statement charged appreciation from adjustments of value

Here the reversals of valuation adjustments on accounts receivable already value-adjusted are
captured as reduction of the expenditures for material and supplies in the income statement.

Expenditures for adjustments of value on accounts receivable, which were charged success-

Here are shown the reversals of valuation adjustments on accounts receivable already value-
adjusted as increase in equity capital.

Expenditures for adjustments of value on accounts receivable, which were charged success-
neutrally as reduction of equity capital, are recorded under this position.
Expenditure for the formation of adjustments of value
The expenditures for the formation of adjustments of value on accounts receivable are to di-
vide into trade accounts receivable, accounts receivable from finance lease and accounts re-
ceivable from financing activity and other net assets.
Income from the reversal of adjustments of value
The incomes from the reversal of adjustments of value on accounts receivable are to divide
into trade accounts receivable, accounts receivable from finance lease and accounts receivable
from financing activity and other net assets.
Other operating expenditure and income
Other operating income
- Income from service charges affiliated companies

Here are shown income from service charges with other affiliated and holding companies (e.g.
pass on of personnel expenditure, lying out of fees etc.).
- Income from departure of fixed assets

Incomes resulting from sales of fixed assets over the book value are proven here.
- Income from appreciation of fixed assets

Given reasons for an irregular depreciation were void, are the incomes, which result due to the
appreciation requirement (IAS 36.99) in the subsequent periods, to show under this position.
- Income from release of liability reserve

If it is no longer probable that with the fulfillment of an obligation a cash outflow is to be ex-
pected, is the liability reserve success-effectively to release (IAS 37.59). The income result-
ing from this is to be proven here.
- Income from hedging

Here incomes resulting from hedging operations are shown.
- Income from exchange differences

Incomes, which result from exchange differences, are proven here (s. IAS 21.9, 21.11a and
21.15).
- Income from the reversal of adjustments of value on accounts receivable

Adjustments of value on accounts receivable must be reversed success-effectively, if the fac-

tual situation changed in a way that the claim is safe, e.g. by a bank guarantee (see also for
this page 770 section 2.2.2). Incomes resulting from this are shown here.
- Income from bad debts recovered

If the reconciliation of a claim is no more to be expected (e.g. irrecoverable claim because of
insolvency of the customer), the claim is to write off. Should be registered unexpected an in-
flow over the entire or a partial amount, this income is to be proven here.
- Income from subsidies for agriculture

Incomes from subsidies of the public hand for agricultural enterprises (e.g. support of eco-
logical methods) are specified under this position.
- Income from received compensations

Here are shown incomes from received compensations, e.g. remunerations from maneuvers.
- Income related to other periods

Operational, but not concerning the current period, incomes are to be proven under this posi-
tion.
- Other miscellaneous operating income

Other operational incomes, not assigned to one of the upper, are shown under this position.
Other operational expenditures
- Losses from the departure of fixed assets

Losses resulting from sales of fixed assets under the book value are proven here.
- Depreciation on goodwill
The goodwill has to undergo an Impairment test annually. If the book value is higher than the
proceedsable amount (net sale proceeds or usage value), the goodwill must be depreciated
success-effectively on its proceedsable amount. This depreciation expenditure is to be speci-
fied under the depreciation of the goodwill.
- Expenditure from the writing off on accounts receivable

With irrecoverableness of a claim, which is usually caused by inability to pay (insolvency) of
the debtor, this claim must be written off. The expenditures resulting from this are to be
proven here.
- Expenditure from the adjustment of value on accounts receivable

Is it certain that a claim is doubtful and reduced in the value, this claim must be depreciated
success-effectively. The expenditure is capture under this position.
- Expenditure from hedging

Expenditures, which result from hedging operations, are shown here.
- Losses from exchange differences

Expenditures, which result from exchange differences, are proven here (s. IAS 21.9, 21.11a
and 21.15).
- Expenditure from accumulation of interest-bearing liability reserves

Long-term liability reserves (running time > 1 year) underlie cost increases e.g. the inflation
rate. Therefore these reserves must be accumulated. The expenditures resulting from this must
be recorded under this position, with exception of the expenditure for pension reserves, which
is proven under the interest result.
- Costs of the legal form

Expenditures like e.g. costs of legal form change, publication of the financial statements, su-
pervisory board meetings etc. are captured here.
- Expenditure for residential houses

Here are given the expenditures for the maintenance of residential houses in the property of
the company.
- Expenditures related to other periods

Operational, but not concerning the current period, expenditures are proven under this posi-
tion.
- Other miscellaneous operating expenditures

Other operational expenditures, not assigned to one of the upper, are shown under this posi-
tion.
Information to the acquisition of enterprises
- Information to the purchase price and the means of payment

Under this position are to be revealed the total amount of all purchase prices of enterprises,
the total amount of the purchase price portions of the means of payment and the total amount
of all means of payment acquired with enterprises.
- Amount of with enterprises acquired stock of other net assets and liabilities
Acquired stock of other net assets and liabilities, which flowed in by the acquisition of an en-
terprise, are to be presented in the following structure:
• Fixed assets
• Current assets inclusive deferred balances exclusive liquid founds
• Reserves
• Liabilities inclusive deferred balances
Information to the sales of enterprises
- Information to the selling price and the means of payment

Under this position are to be revealed the total amount of all selling prices of enterprises, the
total amount of the selling price portions of the means of payment and the total amount of all
means of payment sold with enterprises
- Amount of with enterprises sold stock of other net assets and liabilities
Sold stock of other net assets and liabilities, which flowed out by the sale of an enterprise, are
to be presented in the following structure:
• Fixed assets
• Reserves
Income from interest
The received interests, which are obtained with affiliated companies and joint ventures, are to
be proven under this position.
Interest expenditures
The paid interests, which are obtained with affiliated companies and joint ventures, are to be
proven under this position. In addition the interest expenditures from finance lease contracts
are to be proven separately.
Accounts receivable from financing activity and other assets
The accounts receivable from financing activity and other assets are to divide into rights to tax
refunds against the fiscal authorities, claims from derivatives financial instruments and inter-
est claims against third-party.
Irregular depreciation on fixed assets
Under this position are to be given only the irregular depreciations of the financial assets. Ir-
regular depreciations of other positions of the fixed assets are shown in the profit center ap-
pendix.
Extraordinary positions
Extraordinary income
Extraordinary incomes are to be presented in conformance with the structure given in the ap-
pendix. Closer information about when an income is extraordinary is taken from the section
2.17.1 and 2.17.1.1.
Extraordinary expenditure
Extraordinary expenditures are to be presented in conformance with the structure given in the
appendix. Closer information about when expenditure is extraordinary is taken from the sec-
tion 2.17.1 and 2.17.1.1.
Average number of employees (51136100)
The total number of employees average for all companies which are included in the consoli-
dated financial statement is to be indicated. For this purpose you have to calculate the em-
ployees average of all four quarters as at September 30th, December 31st, March 31st and
June 30th.
Managing directors of affiliated companies are counted among employees for group
statement purposes. In the individual financial statement (local GAAP) managing directors
are not employees, but in the IFRS group statement they are like heads of permanent estab-
lishments of the group top management. Exception: Managing directors which are on the
payroll of another affiliated company and draw their salary from it - no double count
e.g. an employee of KWS SAAT AG is additionally a managing director of an external
affiliated company and doesn't count as an employee of the external company. Consequently
only the executive board doesn't count as employees.
Other tax information
- Tax income related to other periods (51137100)

Beneath this tax income is to be understood, which is related to another accounting period.
Tax refund for expired assessment period
Mark-down of tax accruals
Disposal of tax accruals
- Tax expenses related to other periods (51137200)

Beneath this tax expenses are to be understood, which are related to another accounting pe-
riod.
Tax back payment for expired assessment period
Increase of tax accruals
Set-up of tax accruals
- Tax credits (51137300)

Tax credits e.g. for distributed profits have to be entered here.
- Miscellaneous tax effects (51137400)

Miscellaneous tax effects might be arisen from changes of the tax rate.
- Tax portion for tax-free income (5113751)

Proportional taxes for tax-free income have to be shown here.
Received grants
Received dividends from subsidiaries
- Tax portion for non-deductible expenses (5113752)

Proportional taxes for non-deductible expenses have to be shown here.

Part of entertainment expenses
Fines
Part of interest on long-term debt for trade tax purposes
- Tax portion for temporary differences, but no deferred taxes were setted-up (5113753)
For temporary differences, deferred taxes have to be set-up basically. Should this be omit for
a fact, the tax portion for that temporary difference is to be entered.
Financial credits
Here are the amounts captured for borrowing and the repayment of financial credits with
third-parties (banks, insurance).
Present value of deferred compensation according to expert opinion (51150000)
This position has to be used only by domestic (germany) companies.
Post-employment benefits (IAS 19.24)
According to IAS 19.24 you have to differentiate between defined contribution plans and de-
fined benefit plans. Due to these fact the following notes have to be done in the year-end an-
nex on company level:
a) Defined contribution plans

• In P&L included expenses for plans of the employer
• In P&L included expenses for plans of the state
b) Defined benefit plans

• Present value of the defined benefit obligation
• Not recognized actuarial gains / losses
• Not yet recognized past service cost
• Fair value of the plan assets (if any) at balance sheet date
• Used rate to discount benefit obligation
• Current service cost
• Interest cost
• Expected returns of any plan assets
• Expected increase of salaries
• Expected increase of pension
Value added statement
For the value added statement the following costs are required and have to be splitted into
cost of sales, selling costs, administration costs and other operating expenses.
51171000 Personnel expenses

51172000 Depreciation
51173000 Other taxes (no income taxes)
2.19.2 Annex for all profit centers to the financial statements (ZANHGES002 – Notes
Yearend II)
Segmental reporting
Investments in fixed assets
For the segment reporting and the cash flow statement are the investments in individual posi-
tions of the fixed assets to show in conformance with the structure in the appendix. Invest-
ments are captured in the DET under the transaction type 110 (additions of acquisition costs).
Depreciation on fixed assets
For the segment reporting and the cash flow statement are the depreciations to show in con-
formance with the same structure as the investments on the individual positions of the fixed
assets. Depreciations are captured in the DET under the transaction type 160 (additions of de-
preciation).
Other not payment-effective positions
Income from adjustment of value
- Income from adjustments of value of short term liability reserves

The incomes from adjustments of value of short term liability reserves are to be divided after
whether they result from tax reserves, from pension reserves or other short term liability re-
serves.
- Income from adjustments of value of long-term liability reserves

The incomes from adjustments of value of long-term liability reserves are to be divided after
whether they result from tax reserves, from pension reserves or other long-term liability re-
serves.
- Income from adjustments of value of the current assets

The incomes from adjustments of value of the current assets are to be divided after whether
they result from the inventory stock, the trade accounts receivable, the claims from finance
lease or the claims from financing activities and other assets.
Expenditures from adjustment of value

- Expenditures from adjustments of value of short term liability reserves

The expenditures from adjustments of value of short term liability reserves are to be divided
after whether they result from tax reserves, from pension reserves or other short term liability
reserves.
- Expenditures from adjustments of value of long-term liability reserves

The expenditures from adjustments of value of long-term liability reserves are to be divided
after whether they result from tax reserves, from pension reserves or other long-term liability
reserves.
- Expenditures from adjustments of value of the current assets

The expenditures from adjustments of value of the current assets are to be divided after
whether they result from the inventory stock, the trade accounts receivable, the claims from
finance lease or the claims from financing activities and other assets.
Overdue of accounts receivable
Claims from finance lease and claims from financing activity and other assets, which are al-
ready overdue, are to be captured here separated.
Other operational income and other operational expenditure
Profits and losses from the sale of equity holdings are to be captured under this position.
Irregular depreciation in the fixed assets
Under this position are to be given the irregular depreciations of the intangible assets, the
goodwill and tangible assets. Irregular depreciations of the financial asset are shown in the
appendix of the entire corporation (s. section 2.18.1).
Workforce after employment relationship
The number of employees for the annual financial statements is determined as the average of
the four quarters of the reporting year (see also 2.18.1 annex on company level). Furthermore
it is to divide into permanent employees, fixed term employees and apprentices/trainees.
Personnel expenditures
The personnel expenditures of the reporting year are also to divide into permanent employees,
fixed term employees and apprentices/trainees.
Adjustments of value on inventory and accounts receivable (IAS 2.34 in conjunction

with 2.31 and IAS 39.109 and the following)
- In the Income statement charged appreciations from adjustments of value for each
segment
Here the reversals of valuation adjustments on inventory and accounts receivable already
value-adjusted are captured as reduction of the expenditures for material and supplies in the
income statement for each segment.
- In the income statement charged expenditure from adjustments of value for each
segment
Expenditures for adjustments of value on inventory and accounts receivable, which were
charged success-effectively in the income statement, are recorded under this position for each
segment.
- Direct in equity capital charged appreciation from adjustments of value for each
segment
Here are shown the reversals of valuation adjustments on inventory and accounts receivable
already value-adjusted as increase in equity capital for each segment.
- Direct in equity capital charged expenditure from adjustments of value for each seg-
ment
Expenditures for adjustments of value on inventory and accounts receivable, which were
charged success-neutrally as reduction of equity capital, are recorded under this position for
each segment.
2.19.3 Notes – Additional information division CORN
Divisional annex information Corn (corn, oilseed crops, other crops as far as assigned to
the division corn)
Why necessary?
• Needed to create defined reports of the KWS Reporting Package (de-

velopment of sales volume by countries/region, which can not be gen-
erated from P&L).
• Some data are needed for headquarter budgets/forecast (royalties)
• Base for the explanation/comments regarding the development of the

business.
Which kind of data category?
The annex information corn are needed for the following versions and periods
• Version 400, periods 3, 6, 9 and 12 (budget following year and mid-

term).
• Version 300, periods 3, 6, 9 (if necessary also 12).
• Version 200, only period 12 (year end closing).
(Layout „ZINFMA01“)
Discription Assignments Comment/Explanations

Position PC, Country Func-
Compa- tion
ny, Di-
vision
52000000 Division-Additional
Information
52400000 Costs of agroservice X X (Sel- Agroservice = Sales
Corn - all cost groups ling) driven performance tri-
(1.000 NC) als (expenses of this ac-
tivity has to be taken
from a separate Cost
center)
52100000 Current Assets
52120000 Corn: Certified seed
52121000 Inventory value (1.000 X 0 0 Net value of certified
national currency) corn seed inventory af-
ter devaluation
52122000 Quantitative inventory X 0 0 Total certified seed stock
(U/50 TK) converted to U/50TK
52130000 Corn: Basic seed
52131000 Inventory value (1.000 X 0 0 Net value of ba-

national currency) sic/foundation corn seed
inventory after devalua-
tion
52132000 Quantitative inventory X 0 0 MVK = 1000 living Ker-
(1.000 MVK) nels
52230000 Corn: Sales informa-
tion certified seed
52231000 Sales volume
52231100 Regular/normal sales Regular certified corn
(1.000 U/50TK) Seed sales (direct sales)
52231110 Konventional Hybrids X X 0
52231120 GMO-Hybrids X X 0
52231200 Whole- Wholesale and sales
sale/extraordinary with low prices in order
sales (1.000 U/50TK) to avoid destroyment
Total volume all varie-
52231210 ties X X 0

Compa- tion
ny, Di-
vision
52231300 Production for other Sales volume based on a
companies (1.000 production agreement
U/50TK) with third party and in-
tragroup
52231310 Total volume all varie- X X 0
ties
52232000 Sales (1.000 national
currency)
52232100 Regular/normal sales
52232110 Sales Konventional X X 0 Sales value konv.

Hybrids Hybrids
52232120 Sales GMO-Hybrids X X 0 Sales value GMO Hy-
brids without "Tech
Fee"
52232130 Share of Sales Tech X X 0 Sales value "Tech Fee",
Fee (including evtl. from
wholesale/extrord. Sales)
52232200 Wholesa-
le/extraordinary sales
52232210 Total sales all varieties X X 0 Value of the a.m. volume
52232300 Production for other
companies
52232310 Total sales all varieties X X 0 Value of the a.m. volume
52233000 Gross margin-after
Royalties (1.000 na-
tional currency)
52233100 Regular/normal sales
52233110 Seed / Germplasm X X 0 Gross margin after roy-

alties without deviation
standard-actual (with-
out Tech Fee)
52233120 Net Technology Servi- X X 0 Gross margin out of
ce ee "Sales Tech Fee" (in-
cluding evtl. from
wholesale/extrord. Sales)

Compa- tion
ny, Di-
vision
52233200 Wholesa-
le/extraordinary sales
52233210 Total sales all varieties X X 0 Gross margin of the a.
m. sales without devia-
tion standard-actual
(without NTSF)
52233300 Production for other
companies
52233310 Total sales all varieties X X 0 Gross margin without
deviation stand.-actual
52234000 Royalties Germplasm
(1.000 national cur-
rency)
52234100 Royalties to KWS X X 0 Royalties for germplasm
52234200 Royalties to Third Par- X X 0 Royalties for germplasm
ty
52240000 Corn: Basic seed
52241000 Sales volume (1.000 X X 0 Only Sales volume

MVK) (value = separate P&L-
position)
Rape Seed (Layout „ZINFRA01“)

Compa- tion
ny, Di-
vision
52160000 Rape seed : Certified X 0 0
seed (Hybrids+konv.)
52161000 Inventory value rape X 0 0 Net value of certified
seed (1.000 national rape seed inventory af-
currency) ter devaluation
52162000 Quantitative inventory X 0 0 Total seed stock volume
rape seed (1.000 U) converted to 1000 U

Compa- tion
ny, Di-
vision
52170000 Rape seed : Basic X 0 0
seed
52151000 Inventory value rape X 0 0 Net value of rape basic
seed (1.000 national seed inventory after de-
currency) valuation
52270000 Rape Seed: Sales in-
formation certified
seed
52271100 Sales Volume Rape X X 0 Number of Units "open
"open pollinated" olinated"
(1.000 U/2Mio Ker-
nels)
52271200 Sales Volume Rape X X 0 Number of Units
Hybrids (1.000 "Hybrids"
U/1,5Mio Kernels)
52272100 Sales Rape "open pol- X X 0 Sales value of the a.m.
linated" (1.000 na- Volume
tional currency)
52272200 Sales Rape Hybrids X X 0 Sales value of the a.m.

(1.000 national cur- Volume
rency)
52273100 COS Rape "open pol- X X 0 Total COGS without
linated" without Roy- royalties (and without
alty (1.000 nat. cur- deviation standard-
rency) actual)
52273200 COS Rape Hybrids X X 0 Total COGS without
without Royalty royalties (and without
(1.000 national cur- deviation standard-
rency) actual)
52274100 Royalty "open polli- X X 0 Royalty expenses
nated" (1.000 national (Group and Third
currency) Party)
52274200 Royalty Rape Hybrids X X 0 Royalty expenses
(1.000 national cur- (Group and Third
rency) Party)
Other Oil/Fieldseed crops: Sunflower, Soja … (Layout „ZINFOF02“)

Com- tion
pany,
Divisi-
on
52140000 Other Oil- and field-
seed: Certified seed
52143000 Inventory value sun- X 0 0 Net value of certified
flowers (1.000 national sunflower seed inventory
currency) after devaluation
sunflowers converted to 1000 U/150
(1.000U/150TK) TK
52145000 Inventory value soy- X 0 0 Net value of certified
beans (1.000 national soybean seed inventory
currency) after devaluation
soybeans (1000 U) converted to 1000 U
52147000 Inventory value other X 0 0 Net value of certified
crops (1.000 national seed inventory other ÖF-
currency) crops after devaluation
52150000 Other Oil- and field- X 0 0

seed: Basic seed
52151000 Inventory value (1.000 X 0 0 Net inventory value of
national currency) total basic seed ÖF-
crops (Rape separate po-
sition 52151000)
52250000 Oil- and fieldseed:
Certified seed
52250001 Sunflowers
52250600 Sales volume sunflow- X X 0

ers (1.000 U/150 TK)
52250700 Sales sunflowers X X 0
(1.000 national curren-
cy)
52250800 COS sunflowers with- X X 0 COS without royalties
out royalties (1.000 na- (and without deviation
tional currency) standard-actual)
52250900 Royalties sunflowers X X 0 Royalty expenses
(1.000 national curren- (Group and Third
cy) Party)

Com- tion
pany,
Divisi-
on
52250002 Soybeans
Sales volume soybeans
- konv. Varieties
52251110 (1.000 U) X X 0
Sales volume soybeans
- GMO-Varieties
52251120 (1.000 U) X X 0
Sales Soja konv. Va-
rieties (1.000 national Sales value konv. Varie-
52251210 currency) X X 0 ties
Sales Soja GMO-
Varieties (1.000 na- Sales value GMO Varie-
52251220 tional currency) X X 0 ties without "Tech Fee"
Share of Sales Tech
Fee Soja (1.000 na-
52251230 tional currency) X X 0 Sales value "Tech Fee",
Gross margin Soy- Gross margin after roy-

bean-after Royalties alties without deviation
(1.000 national cur- standard-actual (with-
52251310 rency) X X X out Tech Fee)
Net Technology Sevice
Fee Soybean (1.000 Gross margin out of
52251320 national currency) X X X "Sales Tech Fee"
Royalties Soybean
Germplasm (1.000 na-
52251330 tional currency) X X X Royalty expenses
Other crops oil and
52250003 fieldseed
Sales other crops oil-
and fieldseeds (1.000
52251600 national currency) X X 0 Total Sales number
COS other crops oil- Total COS number
and fieldseeds (1.000 without deviation stan-
52251700 national currency) X X 0 dard-actual
3 FIRST TIME APPLICATION OF THE IAS/IFRS
The standard IFRS 1 must be bindingly applied for initial compilation of an IFRS-financial
statement.
The first annual financial statement based on IFRS in this sense is the first publicised annual
financial statement,
a) to which all IFRS can be applied and

b) which contains an explicit, unrestricted annotation that the financial statement on hand is
conform to the regulations of the IFRS.
3.1 Opening balance sheet

A company must compile an IFRS opening balance sheet at the time of conversion.
The time of conversion is the beginning of the first financial period, for which the company
compiles to the full extent, comparative information for the initial IFRS financial statement.
Example:
A company intends to compile an initial IFRS financial statement for the financial year end-
ing on 30.06.2005. For this purpose, the company must at least publicise comparative infor-
mation for the year 2004. The IFRS opening balance sheet must therefore be compiled for the
01.07.2003. The opening balance sheet does not have to be publicised.
Accounting and valuation principles

A company must, for all accounting periods presented in the initial IFRS financial state-
ment, apply the same accounting and valuation principles that are also applied for the cur-
rent reporting period. Accordingly, no old versions of IFRS may be applied, but rather only
those valid at the time of reporting.
New IFRS, the application of which will become compulsory in future, yet which may al-
ready be used voluntarily, may also be applied for the initial IFRS financial statement. Thus
the IFRS opening balance sheet of a company must:
a) consider all asset values and debts, which are liable for inclusion according to the IFRS;
b) not consider asset values and debts, the entry of which is prohibited by the IFRS;
c) in accordance with the local accounting regulations, classify asset values and debts differ-
ently in comparison to the previous management, where appropriate; and
d) consult the IFRS as basis for valuation of all entered asset values and debts.
Alterations arising in the IFRS opening balance sheet, in comparison to the financial state-
ment based on the local accounting regulations, must be recorded in the profit reserves or in a
different suitable equity capital item.
The historic acquisition or manufacturing costs must be taken as a basis for conversion of the
fixed capital assets.
For calculation of the net value, the depreciation (preferentially linear) must be exclusively
calculated in accordance with the predetermined IFRS useful life. Special tax depreciation
may not be considered.
3.2 Exemptions /simplification provisions

IFRS 1 permits several exceptions and simplifications on initial use of the IFRS. The excep-
tions must be exclusively applied to the issues described and may not be analogously trans-
ferred to similar issues.
3.2.1 Consolidation / mergers

On initial application of the IFRS, a company may waiver retroactive adaptation of consolida-
tion measures in connection with mergers and may incorporate the goodwills that have origi-
nated in former years into the IFRS opening balance sheet in accordance with local account-
ing regulations. However, if a company decided to revaluate all mergers as of a certain past
date on the basis of the IFRS, then it must do this for all mergers that have taken place after
this date. If a company exercises the voting right to waiver the retroactive adaptation after its
initial IFRS financial statement, then the asset values and debts from the merger are basically
entered and valuated in the IFRS opening balance sheet in accordance with the local financial
statement. Yet individual entry and valuation circumstances may require supplementary adap-
tations that are described in detail in IFRS 1. The voting right to waiver retroactive adap-
tation is exercised in the KWS Group.
3.2.2 Fair value or revaluation

A company may valuate objects of tangible assets and intangible assets, at the current market
value, in the IFRS opening balance sheet, provided the conditions for estimation according to
IAS 38 are fulfilled. This voting right must not be applied in the KWS Group.
3.2.3 Pension reserves

IAS 19 provided a company with the possibility of evaluating the pension reserves on the ba-
sis of an actuarial forecast at the beginning of the financial year. The differentiation between
the forecast pension reserves and the pension reserves actually determined on the closing key
data can only be considered, affecting net income, during the subsequent accounting periods,
within the scope of the so-called corridor method.
Not the difference between expected and actual reserve to the subsequent period, but solely
the amount lying outside the corridor, is distributed within the scope of the corridor method.
3.2.4 Currency conversion rate differences

IAS 21 demands that individual currency conversion rate differences are separately recorded
and that the apportionable, cumulative currency conversion rate differences are considered
during calculation of capital gains or loss in the event of deconsolidation of a foreign unit. Yet
IFRS 1 permits the initial user to waive these regulations for the IFRS opening balance sheet.
It is assumed that all accumulated currency conversion rate differences are “0” in the IFRS
opening balance sheet. Solely the currency conversion rate differences originated in after the
IFRS opening balance sheet must therefore be considered in the event of deconsolidation of
affected subsidiaries.
3.2.5 Hybrid financial instruments

IAS 32 fundamentally demands for hybrid financial instruments to be initially subdivided into
an equity capital and a borrowed capital component and accordingly entered in the balance
sheet. In cases in which the borrowed capital component is no longer outstanding, this finan-
cial component would have to be allocated to two different items in the IFRS opening balance
sheet. The borrowed capital component would be contained in profit reserves or in the profit
carried forward and the equity capital would represent an original equity capital element.
IFRS 1 permits waiver of this separation in the IFRS opening balance sheet, provided the li-
abilities component is no longer outstanding.
The balance sheet entry must by previously agreed with the group management in the
event of existence of hybrid financial instruments.
3.2.6 Adjustment posting of financial instruments

The preconditions for adjustment posting of financial assets and debts according to IAS 39
must not be prospectively applied until commencement of IAS 39. That means that a new user
of IFRS may not enter in his IFRS financial statement, financial instruments, which he has ad-
justed in his local financial statements prior to the 01.01.2001. This regulation particularly re-
lates to transactions in which receivables were disposed of (securitisation). Appraisal of such
transactions differing from the local accounting regulations could have lead to disproportion-
ately high expenditure during the IFRS conversion.
Nevertheless, a new user should:
a) enter all derivative claims and other claims, which have arisen after an adjustment posting
and which still exist at the time of the IFRS conversion; and
a) consolidate all special-purpose associations controlled by him, even if these already exist
prior to IFRS conversion or even if these hold financial assets or debts that have been ad-
justed in past local financial statements.
3.2.7 Hedge accounting

According to IAS 39, a company must in its IFRS opening balance sheet:
a) valuate all derivatives according to the current market value and
b) cancel all profit and loss from derivatives, which have been recorded, where applicable not
affecting net income, in a financial statement compiled according to local accounting re-
gualtions. A hedging-relationship that does not fulfil the preconditions for a hedging relation-
ship in accordance with IAS 39 may not be incorporated into the IFRS opening balance sheet.
3.2.8 Estimations
Estimations at the time of the IFRS opening balance sheet should be made in accordance with
the estimations available at the time of estimation on the local financial statement, unless
these later turned out to be a gross error.
Example:
A company compiles its opening balance sheet on the 01.01.2004. On the 30.07.2004 a piece
of information, which ought to lead to reestimation of an issue shown in the local financial
statement on the 31.12.2003, becomes known. According to IFRS 1, this new perception does
not lead to alteration of the estimation in the IFRS opening balance sheet, but must be consid-
ered in the subsequent financial statement on 31.12.2004, thus affecting the profit and loss
statement.
3.2.9 Comparative information

In accordance with IAS 1, the initial IFRS financial statement must contain at least one com-
parison period. Some companies publicise historic time series of selected financial ratios.
IFRS 1 does not request that this historic data must be conform to the assessment and valua-
tion regulations of IFRS. Yet a company that publicises such ratios must:
a) clearly identify the ratios, which have been determined on the basis of local accounting
regulations and
b) explain the nature of the essential deviations, which arise in comparison to an IFRS finan-
cial statement. Yet these deviations do not have to be quantified.
3.2.10 Information relating to the effects of conversion

A company must specify the affects that the IFRS conversion has on the publicised items, the
financial performance and the cash flow. The initial IFRS financial statement should also con-
tain reconciliation statements of the valuation rate according to local accounting regulations
and the IFRS valuation rate for the following positions:
a) equity capital (at the time of conversion and on the closing key date)
b) annual surplus of the accounting period
IFRS 1 must be applied to the opening balance per July 1st 2003.
KWS GROUP IFRS ACCOUNTING GUIDELINES Chapter IV
4 QUARTERLY FINANCIAL REPORTING
The basis for quarterly reporting has to be IAS 34 (Interim Financial Reporting). The mini-
mum components of an interim financial report in accordance with IAS 34.8 are the follow-
ing:
- condensed balance sheet
- condensed income statement
- condensed equity movement schedule
- condensed cash flow statement
- selected explanatory notes.
The cash flow statement required by IAS 34 will only be prepared by the group accounting.
The preparation of the annex is also necessary for quarterly closing. All events and transac-
tions which are material for the current quarterly report have to be shown. Therefor the IAS
defines in IAS 34.16 the minimum components (if relevant). Furthermore you have to deliver
additional division notes.
All relevant IAS standards have to be considered like in an annual financial report. You have
to take care about the following aspects:
- Ensure that the bookkeeping is up to date. Invoicing has to be effected promptly
after delivery.
- All depreciation has to be booked for the period.
- Evaluation of stocks
o Stocktaking is not necessary for interim financial reporting.
o An adequate and orderly inventory accounting has to be ensured.
- Bad debts devaluation has to be checked.
- Foreign currencies have to be balanced with the exchange rate of the quarter.
- Provisions
o Check all provisions which you have booked for the last year-end closing.
o Provisions have to be endowed every quarter with 25 percent of the total
amount, if this procedure does not lead to apparent errors (e.g. vacation
provisions).
o For set-up of provisions use process instruction as mentioned below.
- Sales, cost of sales and personnel costs have to be accrued.
- In deciding if a deferral has to be booked, materiality should be assessed in rela-
tion to the interim period financial data. Material for the group is 5% of the total
amount of each balance sheet or profit and loss item.
- If necessary provide all documents which are needed by your outsource partner.
The outsource partner are requested to support the country manager in preparation
of needed information.
4.1 Process instruction for set-up of provisions for interim financial reporting
- You have to calculate the total annual expenses for each item.
- The total amount has to be splitted up in equal shares for all four quarters.
o 25% of total expenses every quarter
o Debit entry: expense
o Credit entry: provision
- The incoming invoices have to be booked as usage towards the accrued provision
of the previous year.
o Debit entry: provision
o Credit entry: creditor
- At the business year-end potential reversals or increased consumptions have to be
booked.
o Debit entry: provision
o Credit entry: income from reversals of provisions
or:
o Debit entry: expense
o Credit entry: provision (increased consumption)
Example:
Expenses for shareholders´ meeting (total amount 100 T€)
Quarter Description Entry (T€) Balance (T€)
carry forward -80
I -25 -105
II -25 -130
III -25
invoice 65 -90
IV -25
invoice 10
reversal of provision (previous year) 5 -100
4.2 Annex for quarterly reporting (ZANHGES003 – Notes Quarter)
Accounts payable for goods and services out of investments
The total amount of accounts payable for goods and services out of investments is to name
here. This is needed for the cash flow statement, to show the occurred cash flows in the re-
porting period. The cash flow statement is crated only for the consolidated financial state-
ment.
Contingent Assets
Is the inflow of economic benefit probable, but not included in the financial statements to the
balance sheet date, the amount is to specify as contingent asset (IAS 37.89).
Contingent Liabilities
If the possibility of an outflow at fulfillment is not improbable und not show so far in the fi-
nancial statements, the amount is to state as contingent liability (IAS 37.86).
Adjustments of value on inventory (IAS 2.34, 2.31)
- In the income statement charged appreciation of adjustments of value

Here the reversals of valuation adjustments on supplies already value-adjusted are captured as
reduction of the expenditure for material and supplies in the income statement.

Expenditures for adjustments of value on supplies, which were represented success-

Here are shown the reversals of valuation adjustments on supplies already value-adjusted as
increase in equity capital.

Expenditures from adjustments of value on supplies, which were charged success-neutrally as
reduction of equity capital, are recorded under this position.
Furthermore the adjustments of value on supplies in the categories commodities, auxiliary

material and fuels, incomplete products, incomplete biological net assets and finished prod-
ucts are shown separately.
Other operating expenditure and income
Other operating income

- Income from service charges with affiliated companies

Here are shown incomes from service charges with other affiliated and holding companies
(e.g. pass on of personnel expenditure, lying out of fees etc.).
- Income from departure of fixed assets

Incomes resulting from sales of fixed assets over the book value are proven here.
- Income from appreciation of fixed assets

Given reasons for an irregular depreciation were void, are the incomes, which result due to the
appreciation requirement (IAS 36.99) in the subsequent periods, to show under this position.
- Income from release of liability reserve

If it is no longer probable that with the fulfillment of an obligation a cash outflow is to be ex-
pected, is the liability reserve success-effectively to release (IAS 37.59). The income result-
ing from this is to be proven here.
- Income from hedging

Here incomes resulting from hedging operations are shown.
- Income from exchange differences

Incomes, which result from exchange differences, are proven here (s. IAS 21.9, 21.11a and
21.15).
- Income from the reversal of adjustments of value on accounts receivable

Adjustments of value on accounts receivable must be reversed success-effectively, if the fac-
tual situation changed in a way that the claim is safe, e.g. by a bank guarantee (see also for
this page 77 section 2.2.2). Incomes resulting from this are shown here.
- Income from bad debts recovered

If the reconciliation of a claim is no more to be expected (e.g. irrecoverable claim because of
insolvency of the customer), the claim is to write off. Should be registered unexpected an in-
flow over the entire or a partial amount, this income is to be proven here.
- Income from subsidies for agriculture

Incomes from subsidies of the public hand for agricultural enterprises (e.g. support of eco-
logical methods) are specified under this position.
- Income from received compensations

Here are shown incomes from received compensations, e.g. remunerations by maneuvers.
- Income related to other periods

Operational, but not concerning the current period, incomes is to be proven under this posi-
tion.
- Other miscelleanous operational incomes

Other operational incomes, not assigned to one of the upper, are shown under this position.
Other operational expenditures
- Losses from the departure of fixed assets

Losses resulting from sales of fixed assets under the book value are proven here.
- Depreciation on goodwill (full consolidation)

The goodwill has to undergo an Impairment test annually. If the book value is higher than the
proceedsable amount (net sale proceeds or usage value), the goodwill must be depreciated
success-effectively on its proceedsable amount. This depreciation expenditure is to be speci-
fied under the depreciation of the goodwill.
- Expenditure from the writing off on accounts receivable

With irrecoverableness of a claim, which is usually caused by inability to pay (insolvency) of
the debtor, this claim must be written off. The expenditures resulting from this are to be
proven here.
- Expenditure from the adjustment of value on accounts receivable

Is it certain that a claim is doubtful and reduced in the value, this claim must be depreciated
success-effectively. The expenditure is capture under this position.
- Expenditure from hedging

Expenditures, which result from hedging operations, are shown here.
- Losses from exchange differences

Expenditures, which result from exchange differences, are proven here (s. IAS 21.9, 21.11a
and 21.15).
- Expenditure from accumulation of interest-bearing liability reserves

Long-term liability reserves (running time > 1 year) underlie cost increases e.g. the inflation
rate. Therefore these reserves must be accumulated. The expenditures resulting from this must
be recorded under this position, with exception of the expenditure for pension reserves, which
is proven under the interest result.
- Costs of the legal form

Expenditures like e.g. costs of legal form change, publication of the financial statements, su-
pervisory board meetings etc. are captured here.
- Expenditure for residential houses

Here are given the expenditures for the maintenance of residential houses in the property of
the company.
- Expenditures related to other periods

Operational, but not concerning the current period, expenditures are proven under this posi-
tion.
- Other miscelleanous operational expenditures

Other operational expenditures, not assigned to one of the upper, are shown under this posi-
tion.
Information to the acquisition of enterprises
- Information to the purchase price and the means of payment

Under this position are to be revealed the total amount of all purchase prices of enterprises,
the total amount of the purchase price portions of the means of payment and the total amount
of all means of payment acquired with enterprises.
- Amount of with enterprises acquired stock of other net assets and liabilities
Acquired stock of other net assets and liabilities, which flowed in by the acquisition of an en-
terprise, are to be presented in the following structure:
• Fixed assets
• Reserves
Information to the sales of enterprises
- Information to the selling price and the means of payment

Under this position are to be revealed the total amount of all selling prices of enterprises, the
total amount of the selling price portions of the means of payment and the total amount of all
means of payment sold with enterprises
- Amount of with enterprises sold stock of other net assets and liabilities
Sold stock of other net assets and liabilities, which flowed out by the sale of an enterprise, are
to be presented in the following structure:
• Fixed assets
• Reserves
Other positions
Furthermore are to specify obligations to purchase of tangible assets, in the financial state-
ment not included bad debts and the employee number at the report time (number of employ-
ees at the end of the quarter - 30.09., 31.12., 31.03.).
Financial credits
Here are the amounts captured for borrowing and the repayment of financial credits with
third-parties (banks, insurance).
4.3 Tax computation within the quarterly closing
In the quarterly reporting, taxes on income have to be calculated and shown according to the
quarterly result before taxes (result of ordinary activities) as well as in the year-end closing.
This applies for positive as well as for negative results before taxes. Tax expenses arise from a
positive result before taxes. These tax expenses have to correspond to the local tax income
rate and have to be shown in the DET plus possible tax expenses related to other periods and
minus possible tax income related to other periods.
Example: Result before taxes 1,000

Calculated local tax rate 30%
Tax expenses for the period 300
+ Tax expenses related to other periods (affecting payment) 100
./. Tax income related to other periods (affecting payment) 50
Total tax expenses to date (affecting P&L in the DET) 350
The tax expenses for the period have to be posted as follows:
Debit posting: 36100000 Taxes on income

Credit posting: 24611000 Short-term accruals
Tax income arises when there is a negative result before taxes within the quarter as well as a
positive result before taxes in that fiscal year or a positive result in the following years
(budget/forecast), because for quarterly purposes a tax refund claim is lodged with the tax au-
thority. The tax income which has to be shown in the DET corresponds to the local tax in-
come rate minus possible tax expenses related to other periods and plus possible tax income
related to other periods.
Exception: You have to set the capitalization aside when a loss is estimated for the whole fis-
cal year and the loss can’t be charged with taxable profits of other fiscal years according to
the country-specific tax law (loss carryback or loss carryforward).
Example: Result before taxes -1,000

Calculated local tax rate 30%
Tax income for the period 300
./. Tax expenses related to other periods (affecting payment) 100
+ Tax income related to other periods (affecting payment) 50
Total tax income to date (affecting P&L in the DET) 250
The tax income for the period has to be posted as follows:
Debit posting: 13235000 Receivables from tax refund claims

Credit postings: 36100000 Taxes on income
KWS GROUP IFRS ACCOUNTING GUIDELINES Chapter V
5 CASH FLOW STATEMENT
5.1 Duty to compile
Each company must draw up a cash flow statement according to IAS 7 and present it as an in-
tegral part of the financial statement for every accounting period.
5.2 Presentation of the cash flow statement
The cash flow statement must contain the cash flow during the reporting period, which is
classified according to business activity, investment and financing activity.
KWS GROUP IFRS-ACCOUNTING GUIDELINES Chapter VI
6 FORMS
6.1 Sample forms

The data entry is to be made with a data entry tool (DET) for the software SAP EC-CS used
by KWS. The data entry is to be made on a central server in Einbeck. Should be the necessary
technical requirements for a central data entry are not available a decentral data entry tool is
to be used. Basically the decentral data entry has to be arranged with the financial department-
group accounting.
The following position plan (group chart of accounts) is to be applied bindigly.

6.1.1 Balance sheet

6.1.2 Profit and loss account

6.1.3 Annex
6.1.3.1 Annex on company level

6.1.3.2 Annex on profit center level


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KWS GROUP IFRS ACCOUNTING GUIDELINES Chapter I

Date: Oct. 9, KWS AG FINANCIAL MANAGEMENT/CONTROLLING

1 ORGANISATIONAL AND GENERAL ISSUES ______________________________ 7

1.6.3.2 Continuation of business __________________________________________________ 47

2.2.3.2.2 Cash Flow hedge_____________________________________________________ 101

2.11.1.6 Other sales (34111510-34111540)__________________________________________ 147

2.15.1.1 Tax on income (36100000) _______________________________________________ 173

1 ORGANISATIONAL AND GENERAL ISSUES

The legal obligation of the KWS CONSOLIDATED FINANCIAL STATEMENT

The IAS-conform individual financial statement of subsidiaries and associated compa-

1.2 Accounting language and accounting currency

Accordingly this manual was compiled in GERMAN and ENGLISH.

Determination of the categorisation as a high-inflation country takes place through

1.3 Deadlines, addresses and contact persons

The following deadlines must also be observed:

Mr Hans-Joachim Diedrich is entrusted with the compilation of the KWS CONSOLI-

Address: KWS SAAT AG

E-mail: h.diedrich@kws.com / info@kws.com

Phone: +49 5561 311 381 S. Heise

Obligation to give information

Deloitte & Touche GmbH

KWS-group/services: Sabine Harms

Sugarbeet: Helmut Grefe

Corn: Heinrich Pigge

Cereals: Peter Hilmer

Research & development: Robert Heidhues

Einbeck, November 20, 2008

THE EXECUTIVE BOARD

P. von dem Bussche H. Duenbostel

1.4 Organisation of the KWS Reporting Activities

1.4.1 KWS Reporting Activities

The Sugar Beets Division (ZR) includes reports on research/development, propagation,

The Corn Division (MA) includes reports on research/development, propagation, proc-

The Cereals Division (MA) includes reports on research/development, propagation,

Definitions of profit centres:

Representation of segments as well as divisions requires the set-up of profit centres as

Sugar beet (ZR-ZR): Propagation, processing, marketing of ZR-seed as well as ad-

R&D Sugar beet (ZR-FE): Research & breeding of ZR seed

Facilities (ZR-ANL): Development, construction and sale of ZR-treatment facilities.

Corn (MA-MA): Propagation, processing, marketing of MA-seed as well as ad-

R&D Corn (MA-FE-MA):Research & breeding of MA seed

Oil/field seed (MA-ÖF): Propagation, treatment, marketing of ÖF-seed (without rape,

Cereals (GT-GT) Propagation, processing and marketing of GT-seed as well as

R&D cereals (GT-FE): Research & breeding of GT seed

Rape segment cereals (GT-RA): Distribution/production of rape seed in the segment

Central functions: (CF-CF): Central group and service functions.

Agriculture (CF-LDW): Agricultural activities of KWS-Güter

Consulting (CF-CONS): Services/holding companies (e.g. Intersaat)

Potato (CF-KA): Multiplication, production and selling of potato seed stock as

Potato R&D (CF-KA-FE): Reasearch and breeding of potato seed stock

1.4.2 Reporting by regions

In addition to primary reporting on divisions and segments, secondary reporting on re-

Allocation of countries and regions:

South Europe: Italy, Spain, Portugal, Greece, Malta

Northern Europe: Netherland, Luxembourg, Belgium, Schwitzerland, Great Britain, Ire-

1.4.3 Reporting activities for Actual/Forecast/Planned

In addition to the annual statement of accounts, a semi-annual statement of accounts as

- Annual statement of account, June 30.

- Forecast 1st quarter

Annual/medium term planning

1.4.4 Data entry / versions

Company Profit Centre Profit Centre Period