KWS GROUP IFRS ACCOUNTING GUIDELINES Chapter I Date: Oct.

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MANUAL IFRS GROUP ACCOUNTING GUIDELINES

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1

ORGANISATIONAL AND GENERAL ISSUES ______________________________ 7
1.1 1.2 1.3 1.4 Introduction ____________________________________________________________ 7 Accounting language and accounting currency _______________________________ 7 Deadlines, addresses and contact persons ____________________________________ 8 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 1.6

Organisational procedure, allocation of duties _______________________________ 46 General principles, principles for entry, valuation and disclosure _______________ 47
47 47 47 47

1.6.1 Accounting sections __________________________________________________________ 1.6.2 General entry and valuation rules ________________________________________________ 1.6.3 Individual principles:__________________________________________________________ 1.6.3.1 Accounting and valuation methods __________________________________________

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47 47 48 48 48 48 48 49 49 49 49 51 52 53 53 53 53 54

1.6.3.2 Continuation of business __________________________________________________ 1.6.3.3 Concept of allocating revenue and expenses to applicable accounting periods_________ 1.6.3.4 Consistency of presentation ________________________________________________ 1.6.3.5 Essentiality and combination of entries _______________________________________ 1.6.3.6 Offsetting of entries ______________________________________________________ 1.6.3.7 Comparative information__________________________________________________ 1.6.3.8 Structure and content _____________________________________________________ 1.6.4 Consolidations in the KWS Group _______________________________________________ 1.6.5 Currency conversion __________________________________________________________ 1.6.6 Matching of expenses and income as per June 30th and per quarter ______________________ 1.6.6.1 Accrual of returns _______________________________________________________ 1.6.6.2 Accruals of royalties _____________________________________________________ 1.6.6.3 Accruals of breeding services ______________________________________________

1.7

KWS scope of consolidation ______________________________________________ 53

1.7.1 Delimitation of the KWS scope of consolidation ____________________________________ 1.7.1.1 Subsidiaries ____________________________________________________________ 1.7.1.2 Joint venture ___________________________________________________________ 1.7.1.3 Associated company _____________________________________________________ 1.7.2 Included companies KWS-group ________________________________________________

1.8

List of abbreviations ____________________________________________________ 56 Fixed assets ____________________________________________________________ 64
65 65 66 68 72 72 73 74 75 75 75 76 76 77 77 78 79 80

2

KWS GROUP ACCOUNTING AND CONSOLIDATION REGULATIONS _______ 58
2.1
2.1.1 Overall intangible assets _______________________________________________________ 2.1.1.1 Licenses, industrial property rights and similar rights ____________________________ 2.1.1.2 Goodwill ______________________________________________________________ 2.1.2 Tangible assets ______________________________________________________________ 2.1.2.1 Land, similar rights and buildings, including buildings on third party land ___________ 2.1.2.2 Technical equipment and machines __________________________________________ 2.1.2.3 Other equipment, plant and office equipment __________________________________ 2.1.2.4 Prepayments____________________________________________________________ 2.1.3 Biological assets _____________________________________________________________ 2.1.3.1 Livestock ______________________________________________________________ 2.1.3.2 Living plants ___________________________________________________________ 2.1.4 Financial assets ______________________________________________________________ 2.1.4.1 Shares in subsidiaries_____________________________________________________ 2.1.4.2 Shares in joint ventures ___________________________________________________ 2.1.4.3 Shares in associated companies _____________________________________________ 2.1.4.4 Loans _________________________________________________________________ 2.1.4.5 Other financial assets (held-to-maturity) ______________________________________ 2.1.4.6 Real estate held as financial investment ______________________________________

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

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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 2.4 2.5

Deferred tax assets _____________________________________________________ 103 Prepaid expenses ______________________________________________________ 105 Equity _______________________________________________________________ 107
108 109 109 110 111 111 111 112 112 113 113 113 113 113 114 114

2.5.1 Subscribed / share capital _____________________________________________________ 2.5.2 Reserves __________________________________________________________________ 2.5.2.1 Capital reserves (Addit. paid in capital) _____________________________________ 2.5.2.2 Revenue reserves _______________________________________________________ 2.5.2.2.1 Legal reserves _______________________________________________________ 2.5.2.2.2 Reserve for own shares ________________________________________________ 2.5.2.2.3 Statutory reserves ____________________________________________________ 2.5.2.2.4 Other revenue reserves ________________________________________________ 2.5.3 Accumulated profit/accumulated loss ____________________________________________ 2.5.3.1 Unappropriated retained earnings brought forward/cumulative losses brought forward _ 2.5.3.2 Net income / net loss for the current year ____________________________________ 2.5.3.3 Accumulated profit of the current year before first consolidation __________________ 2.5.3.4 Net income before change of quota _________________________________________ 2.5.3.5 Application of profits____________________________________________________ 2.5.4 Currency conversion rate differences ____________________________________________ 2.5.5 Other comprehensive income (OCI) _____________________________________________

2.6 2.7

Minority shareholder___________________________________________________ 116 Borrowed capital ______________________________________________________ 116
117 117 118 119 120 121 121 121 132 133 135 135 136 137 137 138 138

2.7.1 Long-term borrowed capital ___________________________________________________ 2.7.1.1 Long-term interest-bearing loans___________________________________________ 2.7.1.2 Long-term trade payables ________________________________________________ 2.7.1.3 Long-term liabilities from finance leasing____________________________________ 2.7.1.4 Other long-term liabilities ________________________________________________ 2.7.1.5 Long-term provisions____________________________________________________ 2.7.1.5.1 Accruals for income taxes (long-term provisions I) __________________________ 2.7.1.5.2 Provisions for pension and similar obligations (long-term provisions II)__________ 2.7.1.5.3 Provisions for restoration third party properties (long-term provisions II) _________ 2.7.1.5.4 Other long-term provisions (long-term provisions II)_________________________ 2.7.2 Short-term borrowed capital ___________________________________________________ 2.7.2.1 Short-term finance liabilities ______________________________________________ 2.7.2.2 Short-term trade payables ________________________________________________ 2.7.2.3 Short-term liabilities from finance leasing ___________________________________ 2.7.2.4 Short-term tax liabilities _________________________________________________ 2.7.2.5 Other short-term liabilities________________________________________________ 2.7.2.6 Short-term provisions ___________________________________________________

2.8 2.9 2.10

Deferred tax liabilities __________________________________________________ 140 Deferred income _______________________________________________________ 141 Principles of organization of the profit and loss account ______________________ 143
Contents of internal and external items ________________________________________ 143 The Cost-Of-Sales Method__________________________________________________ 143 144 145 146 146 146 146

2.10.1 2.10.2

2.11

Contents of the profit and loss statement___________________________________ 144

2.11.1 Sales ___________________________________________________________________ 2.11.1.1 Sales certified/commercial seeds (34111100) _________________________________ 2.11.1.2 Sales royalties (34111200)________________________________________________ 2.11.1.3 Sales basic seed (34111300) ______________________________________________ 2.11.1.4 Sales breeding services (34111400)_________________________________________ 2.11.1.5 Sales Tech-Fee_________________________________________________________

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147 147 147 148 149 149 149 149 150 150 151 151 151 152 152 152 153 154 154 154 156 156 157 157 158 158 159 159 160 160 160 161

2.11.1.6 Other sales (34111510-34111540)__________________________________________ 2.11.2 Cost of sales _____________________________________________________________ 2.11.2.1 Material costs certified/commercial seeds (34112100) __________________________ 2.11.2.2 Material costs basic seeds (34112200) ______________________________________ 2.11.2.3 Royalty costs (34112300) ________________________________________________ 2.11.2.4 Tech fee expenses ______________________________________________________ 2.11.2.5 Manufacturing costs (34112400) ___________________________________________ 2.11.2.5.1 Manufacturing expenses (34112410) ____________________________________ 2.11.2.5.2 Other manufacturing income (34112420) _________________________________ 2.11.2.6 Other cost of sales (34112500) ____________________________________________ 2.11.3 Contribution margin 1 (34110000)____________________________________________ 2.11.4 Selling (34120000) ________________________________________________________ 2.11.4.1 Selling expenses (34121000) ______________________________________________ 2.11.4.2 Other selling income (34122000) __________________________________________ 2.11.5 Contribution margin 2 (34100000)____________________________________________ 2.11.6 Research & Development (34200000) _________________________________________ 2.11.6.1 Research & Development expenses (34210000) _______________________________ 2.11.6.2 Income from Research & Development (34210000) ____________________________ 2.11.7 Administration (34300000) _________________________________________________ 2.11.7.1 Administration expenses (34310000) _______________________________________ 2.11.7.2 Other administration income (34320000) ____________________________________ 2.11.8 Other operating income and expenses (34400000)________________________________ 2.11.8.1 Other miscellaneous income (34411000) ____________________________________ 2.11.8.2 Income from the reversal of valuation allowances on receivables (34412000) ________ 2.11.8.3 Other operating expenses (34420000) _______________________________________ 2.11.8.3.1 Other miscellaneous expenses (34421000) ________________________________ 2.11.8.3.2 Write-offs and valuation allowances on debts (34422000) ____________________ 2.11.9 Alternative valuation of goods ZS (34510000) __________________________________ 2.11.9.1 Deviation cost of materials, STANDARD from ACTUAL (34510000) _____________ 2.11.9.1.1 Cost of materials against ACTUAL (34511000)____________________________ 2.11.9.1.2 Reverse cost of materials against STANDARD (34512000) __________________ 2.11.9.2 Write down and/or destruction of stocks (34520000) ___________________________

2.12 2.13

Operating result IFRS __________________________________________________ 161 Financial result (35000000) ______________________________________________ 162
162 163 163 164 164 165 165 166 166 167 167 168 168 168 169 170 170 171 171

2.13.1 Result from participations (35110000)_________________________________________ 2.13.1.1 Income from subsidiaries and joint ventures (35110000) ________________________ 2.13.1.2 Income from associated companies (35120000) _______________________________ 2.13.1.3 Income from participations (35130000) _____________________________________ 2.13.1.4 Income from profit transfer (35140000) _____________________________________ 2.13.1.5 Income from write-ups on financial assets (35150000)__________________________ 2.13.1.6 Write-down on subsidiaries and joint ventures (35160000) ______________________ 2.13.1.7 Write-down on participations of financial assets (35170000) _____________________ 2.13.1.8 Expenses from transfer of lossse (35180000) _________________________________ 2.13.1.9 Income from reversal of badwill (full consolidation) ___________________________ 2.13.1.10 Depreciation of goodwill (equity consolidation) (35193000) ___________________ 2.13.1.11 Income from reversal of badwill (equity consolidation) (35194000) _____________ 2.13.2 Net interest income (35200000) _____________________________________________ 2.13.2.1 Interest income and similar income (35210000) _______________________________ 2.13.2.2 Interest expense and similar expenses (35220000) _____________________________ 2.13.2.3 Income from securities of current assets (35230000) ___________________________ 2.13.2.4 Income from other securities and loans of financial assets (35240000) _____________ 2.13.2.5 Write-down on securities (35250000) _______________________________________ 2.13.2.6 Income from write-ups on securities (35260000) ______________________________

2.14 2.15

Result from ordinary activities ___________________________________________ 172 Result after taxes (32000000) ____________________________________________ 172
Taxes (36000000)_________________________________________________________ 173

2.15.1

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Tax on income (36100000) _______________________________________________ 173 Deferred taxes (36200000) _______________________________________________ 173

2.16 2.17

Transferred profits from profit and loss transfer agreements (EAV) (37200000)__ 174 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
Annex to the annual financial statement of the entire corporation (ZANHGES001 – Notes 175 Annex for all profit centers to the financial statements (ZANHGES002 – Notes Yearend II)184 Notes – Additional information division CORN _________________________________ 186

2.18.1 Yearend I) 2.18.2 2.18.3

3

FIRST TIME APPLICATION OF THE IAS/IFRS __________________________ 194
3.1 3.2 Opening balance sheet __________________________________________________ 194 Exemptions /simplification provisions _____________________________________ 195
Consolidation / mergers ______________________________________________________ Fair value or revaluation ______________________________________________________ Pension reserves ____________________________________________________________ Currency conversion rate differences ____________________________________________ Hybrid financial instruments ___________________________________________________ Adjustment posting of financial instruments_______________________________________ Hedge accounting ___________________________________________________________ Estimations ________________________________________________________________ Comparative information _____________________________________________________ Information relating to the effects of conversion _________________________________ 195 195 195 195 196 196 196 196 197 197

3.2.1 3.2.2 3.2.3 3.2.4 3.2.5 3.2.6 3.2.7 3.2.8 3.2.9 3.2.10

4

QUARTERLY FINANCIAL REPORTING ________________________________ 198
4.1 4.2 4.3 Process instruction for set-up of provisions for interim financial reporting ______ 199 Annex for quarterly reporting (ZANHGES003 – Notes Quarter) ______________ 200 Tax computation within the quarterly closing ______________________________ 204 Duty to compile _______________________________________________________ 205 Presentation of the cash flow statement____________________________________ 205 Sample forms _________________________________________________________ 206
207 213 215 215 219

5

CASH FLOW STATEMENT____________________________________________ 205
5.1 5.2

6

FORMS_____________________________________________________________ 206
6.1
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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1
1.1

ORGANISATIONAL AND GENERAL ISSUES
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 (hereinafter referred to as KWS or KWS AG) must compile a consolidated KWS FINANCIAL STATEMENT according to “international accounting standards”. In terms of this directive, 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 standards and interpretations connected therewith, which have been issued or accepted by the International Accounting Standard Board (IASB) are termed international accounting standards. 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 essentiality 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 regulations 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 companies 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 conform 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. Application 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 explanations. 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 Germanspeaking countries, where the KWS-GROUP accounting language is GERMAN. Accordingly this manual was compiled in GERMAN and ENGLISH.

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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 currency 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 requirement 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 associated 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 CONSOLIDATED FINANCIAL STATEMENT. He is available for queries and information at all

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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 h.diedrich@kws.com / info@kws.com +49 5561 311 644 +49 5561 311 381 +49 5561 311 283 +49 5561 311 247 S. Heise W. Hessel H.-J. Diedrich

E-mail: Fax: Phone:

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 subsidiaries and associate companies as regards coordination of accounts receivable, accounts payable, 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: Fax: Phone: m.siewert@kws.com +49 5561 311 417 +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

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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 Helmut Grefe +495561 311 276 h.grefe@kws.com Heinrich Pigge +495561 311 452 h.pigge@kws.com Peter Hilmer +495051 477 116 hilmer@kws-lochow.de Robert Heidhues +495561 311 351 r.heidhues@kws.com

Sugarbeet:

Corn:

Cereals:

Research & development:

Einbeck, November 20, 2008 KWS SAAT AG THE EXECUTIVE BOARD P. von dem Bussche H. Duenbostel

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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 particular 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 cereals, 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 reporting, the functions Production, Research & Development, Marketing and Administration 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 assessment 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 activities 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 & Development activities as well as central group functions (board of directors, company coordination, cross-divisional research & development) service functions (logistics, informatics, finance, personnel, purchasing/engineering, etc.), the potato activities (multiplication, production and selling of potato seed stock including administrative activities) and agricultural activities of KWS.

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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, processing, 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 directors, company coordination, cross-divisional research & development) central service functions (logistics, informatics, finance, personnel, purchasing/engineering, etc.), the potato 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 administration activities.

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

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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): Potato (CF-KA): Services/holding companies (e.g. Intersaat) 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 (MAMA) respectively cereals (GT-GT).

1.4.2 Reporting by regions In addition to primary reporting on divisions and segments, secondary reporting on regions is performed. In accordance with internal regional control, European countries are allocated to the following regions: Germany, France, Central Europe, Northern Europe, Southern Europe,

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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 regions:

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

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Northern Europe: Netherland, Luxembourg, Belgium, Schwitzerland, Great Britain, Ireland, 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 context, planning is updated on the basis of latest findings on the development of the business. 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.

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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 versions 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 Annual statement of accounts Semi-annual statement of accounts 100 100 Profit Centre Profit Centre Period Division Segment 200 200 200 200 300 300 300 300 400 400 400 400 203 203 203 203 303 303 303 303 403 403 403 403 12 6 3 9 3 6 9 12 3 6 9 12

Quarterly statement of accounts 3 months 100 Quarterly statement of accounts 9 months 100 Forecast 1st quarter Forecast 2nd quarter Forecast 3rd quarter Forecast 4th quarter
(no separate deadline for submission of data)

Annual planning Medium term planning 1st year Medium term planning 2nd year Medium term planning 3rd year

The entry of submitted dated is performed on company and/or profit centre level. The following additional allocations to accounts have to be entered:

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- Partner information: Indicate “of the company” when relationships between associated companies included in the scope of consolidation are concerned, or “external third parties” 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 allocated as follows: Assets: Intangible assets, tangible assets, biological assets, stocks, trade accounts receivable. 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-

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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 current 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. curcumularent year tive 1.000,00

Deprec. cumulative 200,00

Residual book value 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 Acq. costs addition disposal Write-ups Deprec. curcumularent year tive 1.000,00 300,00 50,00 150,00 Deprec. cumulative 200,00 Residual book value 900,00

Example for the opening balance as per June 30th, 2005 and following Acq. costs addition disposal Write-ups Deprec. cur- Deprec. cumularent year cumula-

Residual book

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200,00

50,00

150,00

tive 350,00

value 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 following 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. Example for the opening balance as per June 30th, 2003. Acq. costs addition disposal Write-ups Deprec. cur- Deprec. cumularent year cumulative tive 800,00 For the opening balance only sub-item 100 has to be use. Example for the opening balance as per June 30th, 2004. Acq. costs addition disposal Write-ups Deprec. cur- Deprec. Residual cumularent year cumula- book 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 depreciations 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. costs curent year cumulamulative tive 900,00 100,00 Residual book value 1.000,00 Residual book value 800,00

The addition of 100,00 consists of an addition of 200,00 , a write-up of 50,00 and depreciations 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

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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 subitems. Description Acq. costs opening balance Acq. costs opening balance currency translation Acq. costs currency translation sub groups Acq. costs addition Acq. costs addition affiliated companies Acq. costs addition consolidation group (only for first consolidation) Acq. costs disposal Acq. costs disposal affiliated companies Acq. costs disposal consolidation group Acq. costs transfer Acq. costs write-ups financial assets Accum. depr. opening balance Currency translation accum. depr. opening balance Currency translation sub-group accum. depr. opening balance Current year depr. additions Current year depr. additions affiliated companies Currency translation for additions of current year depr. Currency translation for additions of current year depr. sub groups Accum. depr. addition consolidation group (only for first consolidation) 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. Movement type 100 105 * 108 * 110 115 120 125 130 135 * 140 145 150 155 * 158 * 160 165 167 * 168 * 170

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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.

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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 intercompany 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 receiving 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 determined into subsidiaries, joint ventures and associated companies. This structur is obligatory. The receivables have to be entered according to their term. For this purpose the following sub-items have to be used: Sub-item 200 210 Term Term until one year 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. Movement type 700 705 * Description Opening balance Currency translation opening balance

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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 * this sub-items have to be used only for group purposes and are not allowed for using in the individual financial statement 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: Description Opening balance First consolidation (only for first consolidation) Capital increase from revenue reserves Capital decrease from revenue reserves Increase Decrease Increase in addit. paid in capital Decrease in addit. paid in capital Additions consolidation group (only valid to 30.06.2004 – position is blocked in the DET – new see 605) 645 * Disposals consolidation group 650 Increase from hyper inflation 655 Decrease from hyper inflation * this sub-items have to be used only for group purposes and are not allowed for using in the individual financial statement 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 displayed with flow types 630 and 635. Flow types 620 and 625 have to be used for facts of the subsequent consolidation (e.g. increase of other revenue reserves from net income for the year, changes in OCI) as well as for special facts. Movement types 600 605 610 615 620 625 630 635 640

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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 presently 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 comparison 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, financial 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 respective 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 accrual 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. Movement types 500 505 * 508 * 510 512 Description Opening balance Opening balance currency translation Sub-group currency translation Addition Interest increase

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514 Interest decrease 515 Additions consolidation group (only for first consolidation) 520 Consumption 525 Reversal 530 * Disposals consolidation group 535 Transfer * this sub-items have to be used only for group purposes and are not allowed for using in the individual financial statement 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 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 respective 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 accrual 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. Movement types Description 500 Opening balance 505 * Opening balance currency translation 508 * Sub-group currency translation 510 Increase 512 Interest increase 514 Interest decrease 515 Additions consolidation group (only for first consolidation) 520 Availment 525 Reversal 530 * Disposals consolidation group

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535 Transfer * this sub-items have to be used only for group purposes and are not allowed for using in the individual financial statement 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.

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. Movement type Description 800 Opening balance 805 * Opening balance currency translation 808 * Opening balance sub-group currency translation 810 Income from tax rate change 820 Expenses from tax rate change 830 Income 840 Expenses 850 Additions consolidation group (only for first consolidation) 860 * Disposals consolidation group 870 Transfer * this sub-items have to be used only for group purposes and are not allowed for using in the individual financial statement

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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 positions. 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.

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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 "subpositions" 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 following year, that is, not at the semi-annual closing. Current changes are entered on the semiannual 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 delivering company has to be used mandatory. If the delivery of stocks contains an intercompany 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 receiving 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 determined into subsidiaries, joint ventures and associated companies. This structur is obligatory.

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The receivables have to be entered according to their term. For this purpose the following sub-items have to be used: Sub-item 200 210 Term Term until one year 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 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 respective 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. Movement type Description 500 Opening balance 505 * Opening balance currency translation 508 * Sub-group currency translation 510 Addition 512 Interest increase 514 Interest decrease 515 Additions consolidation group (only for first consolidation) 520 Consumption 525 Reversal 530 * Disposals consolidation group 535 Transfer * this sub-items have to be used only for group purposes and are not allowed for using in the individual financial statement

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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 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 respective 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. Movement type Description 500 Opening balance 505 * Opening balance currency translation 508 * Sub-group currency translation 510 Addition 512 Interest increase 514 Interest decrease 515 Additions consolidation group (only for first consolidation) 520 Consumption 525 Reversal 530 * Disposals consolidation group 535 Transfer * this sub-items have to be used only for group purposes and are not allowed for using in the individual financial statement 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. 1.4.6.3.7 Data entry in the income statement

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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-centerindependent 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 purchasing/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 information 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 prescribed classification.

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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 quantity 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.

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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 entries in group and local currency must not be selected, because reported data have to be entered and audited generally in local currency. On this account the flag has to be setted on reported 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.

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Access report

Pivot table

Both output types are useful for any layouts (balance sheet, p&l account, annex etc.). By using 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).

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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 installed 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. Afterwards the connection to the DET has to be established via the menu >SAP >Log on.

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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.

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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.

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For updating the actual sheet and not the whole workbook this can be activated among >Import 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: Confirming company:
Currency EUR EUR 23210000 Trade payables 24210000 with subsidiaries 23220000 Trade payables 24220000 with joint ventures 23310000 Payables finance 24310000 leasing with subsidiaries 23320000 Payables finance 24320000 leasing with joint ventures 23410000 Other liabilities subsidiaries 500,00 EUR 24120000 Finance liabilities subsidiaries 23420000 Other liabilities joint ventures 24130000 Finance liabilities joint ventures 23120000 Loans with subsidiaries 23130000 Loans with joint ventures

Requesting company:

KWS SAAT AG
Term Amount 250,00 1.000,00

KWS MAIS GMBH
Term long short long short long short long short long short long short long long 500,00 EUR Amount 250,00 Currency EUR 1.000,00 Ctrl.

13211000 Trade receivables 13211000 with subsidiaries 13212000 Trade receivables 13212000 with joint ventures 13221000 Receivables finance 13221000 leasing with subsidiaries 13222000 Receivables finance 13222000 leasing with joint ventures 13231000 Receivables finance activities/ 13231000 other assets with subsidiaries 13232000 Receivables finance activities/ 13232000 other assets with joint ventures 12421000 Loans with subsidiaries 12422000 Loans with joint ventures

long short long short long short long short long short long short long 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.

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INTERCOMPANY BALANCE KWS-GROUP
Please check - payables unequal receivables =>

DATE: Confirming company:
Currency 13211000 Trade receivables 200,00 EUR 13211000 with subsidiaries 13212000 Trade receivables 13212000 with joint ventures 13221000 Receivables finance 13221000 leasing with subsidiaries 13222000 Receivables finance 13222000 leasing with joint ventures 13231000 Receivables finance activities/ 13231000 other assets with subsidiaries 13232000 Receivables finance activities/ 13232000 other assets with joint ventures 12421000 Loans with subsidiaries 12422000 Loans with joint ventures

Requesting company:

KWS SAAT AG
Term Amount

KWS MAIS GMBH
Term long short long short long short long short long short long short long long 200,00 EUR Amount Currency Ctrl.

23210000 Trade payables 24210000 with subsidiaries 23220000 Trade payables 24220000 with joint ventures 23310000 Payables finance 24310000 leasing with subsidiaries 23320000 Payables finance 24320000 leasing with joint ventures 23410000 Other liabilities subsidiaries 24120000 Finance liabilities subsidiaries 23420000 Other liabilities joint ventures 24130000 Finance liabilities joint ventures 23120000 Loans with subsidiaries 23130000 Loans with joint ventures

long short long short long short long short long short long short long 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.

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INTERCOMPANY BALANCE KWS-GROUP
Requesting company: Confirming company: Date: Trade receivables
Profit Center subsidiaries long 13211000 subsidiaries short 13211000 joint ventures long 13212000 joint ventures short 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 Ctrl.

0,00

0,00

0,00

0,00

Trade payables
Profit Center subsidiaries long 23210000 subsidiaries short 24210000 joint ventures long 23220000 joint ventures short 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 Ctrl.

0,00

0,00

0,00

0,00

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Only when the partner unit informs in which profit center the corresponding posting was effected 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 confirming 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 venture both companies have to be classified the receivables and payables under the position “subsidiary”.

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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 ActiveExcel-Tool. After receiving all financial statements the financial department-group accounting has to occur 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 informed. 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 Period 12 ACTUAL company 10th of August

- 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 Period 12 ACTUAL profit center 10th of August

- 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, investments, type of costs and other division information.

Semi-annual and quarterly financial statement of accounts Version 100 ACTUAL company Period 3, 6 and 9 31st of October, 31st of January and 30th of April

- Profit and loss statement up to net income of the year at company level

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- Balance sheet at company level - Complete movement-schedule information for fixed assets, equity and accruals

Version 200 ACTUAL profit center Period 3, 6 and 9

31st of October, 31st of January and 30th of April

- 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 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), Period 12 (3. midterm-year) - 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 - 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

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Period 3 (1. Act. Forecast), Period 6 (2. Act. Forecast), Period 9 (3. Act. Forecast, Period 12 (4. Act. Forecast) - Profit and loss statement up to statement of operating result at profit center level - 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 2. Actual Forecast (Version 300, Periode 6). After correcting the figures according 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 3. Actual Forecast (Version 300, Periode 9). After correcting the figures according 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 contact 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.

Deadline for external invoices Beginning of intercompany balance (receivables / liabilities) Fixed assets valuation local GAAP (per profit center) Fixed assets valuation IFRS (per profit center) Accruals valuation local GAAP (per profit center) Accruals valuation IFRS (per profit center) Internal service charges Ending of intercompany balance (receivables / liabilities) Receivables valuation local GAAP (per profit center) Receivables valuation IFRS (per profit center)

Day of following month 8. 9. 10. 12. 10. 12. 13. 15. 15. 16.

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Liabilities valuation local GAAP (per profit center) Liabilities valuation IFRS (je Profit Center) Cost accounting Inventory valuation local GAAP (per profit center) Inventory valuation IFRS per profit center (incl. agricultural live-stock) Balance sheet, profit and loss account according to IFRS Sales and cost of sales local GAAP (per profit center) Sales and cost of sales IFRS (per profit center) Selling and administration expenses local GAAP (per profit center) Selling and administration expenses IFRS (per profit center) P&L cost of sales method, devision and segment report local GAAP P&L cost of sales method, devision and segment report IFRS Data entry DET on company and profit center level Check company and profit center (V100/V200) in Active Excel Annex IFRS in DET Analysis and annotation Data transfer / confirmation data are delivered/saved on central server

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 contain the audit of the statements by the auditors.

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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, accounts payable, revenue and expenditure must take place immediately after the closing date for entries. Auditing and attestation of the financial statements by certified accountants. The selection 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

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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 SUPPLEMENTARY 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 actual 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 respective interpretations. Should an IAS standard be unavailable for the accounting issue, the following 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 management. 1.6.3.2 Continuation of business While compiling the financial statement, the management must estimate the company’s ability to continue business operations. 1.6.3.3 Concept of allocating revenue and expenses to applicable accounting periods

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A company must draw up its financial statement, with the exception of the cash flow statement, 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 demanded 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 regarding 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 statement 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 determined throughout the group and must be applied by all subsidiaries and associate companies. 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

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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 ventures. 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 following example helps to make the postings and the approach clear.

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On the previous values (previous period) a quota of returns will be determined, e.g. 10 percent. Consequently the following postings arise: 1. posting: 2. posting: sales a/c debit 100; accruals a/c credit 100 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:

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

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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 following 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.

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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 consolidate all national and foreign subsidiaries. IAS 27.13 regulates exceptions for exclusion from the consolidated financial statement. The general principle of essentiality (analog. framework 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 economic 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 (proportional consolidation). 1.7.1.3 Associated company An associated company is a company on which the shareholder can exert significant influence and which neither presents subsidiaries nor a joint venture of the shareholder. Significant influence is assumed with 20 % and more of the voting rights and represents participation 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.

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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 towards affiliated companies as well as the proportionate expenditure and revenue, charged up against proportional intra-group expenditure and revenue are entered in the consolidated financial 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 subsidiaries and joint ventures“. The Equity-Method is an accounting method, by means of which the shares in an associated company is first posted with the acquisition costs and subsequently adjusted in accordance 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 company. 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 company is entered in the balance sheet at acquisition costs or current market value. 1.7.2 Included companies KWS-group
Num Company ber 1000 KWS SAAT AG 1102 KWS LOCHOW GMBH short- Holding company name KWS x KWL KWS SAAT AG Type Consolidation

Holding Full consolidation Subsidi- Full consolidation ary Subsidi- Full consolidation ary Subsidi- Full consolidation ary Subsidi- Full consolidation ary Subsidi- Full consolidation ary Subsidi- Full consolidation ary

1104 KWS KLOSTERGUT WBH KWS SAAT AG WIEBRECHTSHAIUSEN GMBH 1105 PLANTA ANGEWANDPLT KWS SAAT AG TE PFLANZENGENETIK UND BIOTECHNOLOGIE GMBH 1108 KWS SAATFINANZ SFZ KWS SAAT AG GMBH 1111 RAGIS KARTOFFELRAG KWS SAAT AG ZUCHT & HANDELSGESELLSCHAFT MBH, Klein Wanzleben 1115 EURO-HYBRID GMBH EHY KWS SAAT AG

KWS GROUP Date: Oct. 9, 2009 Status: Sept. 30, 2009
1116 KWS INTERSAAT GMBH 1117 KWS MAIS GMBH 1118 AGROMAIS SAATZUCHT GMBH 1119 DELITZSCH PFLANZENZUCHT GMBH 1204 RAZES HYBRIDES S.A.R.L. 1205 KWS FRANCE S.A.R.L.. 1206 KWS MAIS FRANCE S.A.R.L. 1209 KWS UK LTD. 1211 KWS ITALIA S.P.A. 1212 KWS SEME D.O.O. 1213 KWS SJEME D.O.O. 1215 KWS BENELUX B.V. 1216 KWS SEMINTE S.R.L. 1221 KWS AUSTRIA SAAT GMBH 1225 KWS LOCHOWPOLSKA SP.Z O.O. 1226 KWS POLSKA SP.Z O.O. 1233 SEMENA AG 1234 KWS SCANDINAVIA A/S 1235 KWS SEMENA S.R.O. 1236 KWS SEMILLAS IBERICA S.L. 1237 KWS TÜRK TARIM TICARET A.S. 1238 KWS MAGYARORSZÁG KFT. 1242 KWS OSIVA S.R.O. 1243 KWS SEMENA BULGARIA E.O.O.D. 1252 KWS UKRAINE LTD. 1253 KWS RUS LTD. 1301 KWS SEEDS INC. 1302 BETASEED INC.

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ITS KMA AMA DEL

KWS SAAT AG KWS SAAT AG KWS MAIS GMBH

KWS INTERSAAT GMBH RH-F KWS FRANCE S.A.R.L. KW-F KWS SAAT AG KM-F KWS MAIS GMBH KW-UK KWS LOCHOW GMBH KW-I KWS SAAT AG KW-YU KWS SAAT AG KW-HR KWS MAIS GMBH KW-NL KWS MAIS GMBH KW-RO KWS MAIS GmbH KW-A KWS MAIS GMBH KWL- KWS LOCHOW PL GMBH KW-PL KWS SAAT AG SMA KWS SAAT AG

KW-DK KWS INTERSAAT GMBH KW-SK KWS MAIS GMBH KW-E KWS INTERSAAT GMBH KW-TR KWS INTERSAAT GMBH KW-H KWS MAIS GMBH KW-CZ KWS MAIS GMBH KW-BG KWS MAIS GMBH

KW-UA EURO-HYBRID Full consolidation GMBH ; KWS SAATFINANZ GMBH KW- KWS SAAT AG Subsidi- Full consolidation RUS ary KW-U INTERSAAT GMBH ; Subsidi- Full consolidation KWS SAAT AG ary BTS KWS SEEDS INC. Subsidi- Full consolidation ary

Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation Full consolidation

KWS GROUP Date: Oct. 9, 2009 Status: Sept. 30, 2009
1303 GREAT LAKES HYBRIDS INC. 1304 Van Rijn-KWS B.V.

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GLH

KWS SEEDS INC.

1305 BETASEED FRANCE S.A.R.L. 1306 ACH SEEDS INC. 1350 KWS ARGENTINA S.A. 1411 SEMILLAS KWS CHILE LTDA. 2202 SOCIETE DE MARTINVAL S.A. 2280 KWS R&D RUS LTD.

vR-KW RAGIS KARTOFFELZUCHT & HANDELSGESELLSCHAFT MBH BTS-F BETASEED INC. ACH BETASEED INC.

Subsidi- Full consolidation ary Subsidi- Quota consolidation ary Subsidiary Subsidiary Subsidiary Subsidiary Joint Venture Subsidiary Full consolidation Full consolidation Full consolidation Full consolidation Quota consolidation Full consolidation

KW-RA KWS MAIS GMBH

KW- KWS SAAT AG RCH MOM KWS LOCHOW GMBH KW- KWS RUS LTD. RDRUS 2501 AGRELIANT GENETICS AGR-U GREAT LAKES HYLLC. BRIDS INC. 2510 AGRELIANT GENETICS AGR-C KWS SAAT AG INC.

Joint Quota consolidation Venture Joint Quota consolidation Venture

1.8

List of abbreviations meaning paragraph deduction for depreciation (depreciation) Acquistion costs Acquistion or manufacturing costs general administrative costs for example movement type respectively i.e. deciton profit and loss transfer agreement exclusive European Community Income Tax Act EURO if appropriate financial year profit and loss statement profit and loss statement position trade balance German Commercial Code manufacturing costs as a rule

abbreviation Abs. AfA Acq. costs AMC AVK bspw. BWA bzw. d.h. dt EAV Excl. EG EStG € ggf. GJ GuV GuV-Pos.: HaBi HGB HK i.d.R.

KWS GROUP Date: Oct. 9, 2009 Status: Sept. 30, 2009 IAS IFRS i.V.m. incl. KTBL LW o.ä. o.g. RW SBA SI sog. TBG TBG-Nr. T€ TLW u.U. UKV usw. vgl. VJ VK z.B. z.Zt.

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International Accounting Standards International Financial Reporting Standards in connection with Including Kuratorium for Technic und Building in Agricultur national currency or the like above-mentioned residual value other operating expenditure sub item so-called subsidiary and associate company number of the subsidiary and associate company (according to the list KWS SCOPE OF CONSOLIDATION) thousand Euro (1000 €) thousand national currency (1000 LW) owing to circumstances cost of sales accounting and so forth compare to previous year distribution costs e.g. at present

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2

KWS GROUP REGULATIONS

ACCOUNTING

AND

CONSOLIDATION

INTRODUCTION The following specifications per position concern the general itemisation, accounting, valuation 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 order 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)

KWS GROUP Date: Oct. 9, 2009 Status: Sept. 30, 2009 13000000

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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 subsidiaries 13222000 Receivables from finance leasing with joint ventures 13223000 Receivables from finance leasing with associated companies 13224000 Receivables from finance leasing with third parties 13230000 Receivables from finance activities and other assets 13231000 Receivables from finance activities with subsidiaries 13232000 Receivables from finance activities with joint ventures 13233000 Receivables from other receivables and other assets with associated companies 13234000 Receivables from other receivables and other assets 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 14000000 CHECKS, CASH BALANCE, BANK BALANCE Checks, cash balance, bank balance

DEFERRED TAX ASSETS

KWS GROUP Date: Oct. 9, 2009 Status: Sept. 30, 2009 15000000 16000000

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PREPAID EXPENSES 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 assets) / 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

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Minority net income / net loss for the year Minority accumulated profit of the current year before first consolidation 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 (current 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 instruments (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 companies 23340000 Long-term liabilities from finance leasing with third parties 23400000 Other long-term liabilities 23410000 Other long-term liabilities with subsidiaries

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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 liabilities) 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 26000000 DEFERRED TAX LIABILITIES DEFERRED INCOME

THE INDIVIDUAL POSITIONS OF THE PROFIT AND LOSS ACCOUNT AFTER COST OF SALES FORMAT 34000000 Operating result IFRS

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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 Research and development expenses 34230000 Research and development Saat AG 34210000 Research and development expenses 34220000 Income from research and development Administration expenses 34310000 Administration expenses 34320000 Other administration income

34200000

34300000

Other operating income and expenses 34411000 Other miscellaneous income 34420000 Other operating expenses 34421000 Other miscellaneous expenses 34422000 Write-offs and valuation allowances 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

34400000

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34512300 34520000 35000000

Packaging nominal Write down and/or destruction of stocks

35200000

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.) 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 38000000 Income before taxes Extraordinary result 38100000 Extraordinary income 38200000 Extraordinary expenses Interest of minority shareholder Net income

39000000 39999999

2.1

Fixed assets

The fixed assets are subdivided into intangible assets

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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 according 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 parties 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 future 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.

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Compliance with the conditions requires the existence of detailed budgetary accounts and informative 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 manufacturing 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 issues may not be entered on the assets side. The financial statement must contain, for each group of intangible assets, the information required 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 preconditions exist. Entry on the assets side is always necessary if it is very likely the development 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 cumulatively fulfilled regarding the development project and the product (type) to be developed. 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 General accounting, valuation and supplementary regulations:

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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 exchange 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 depreciated 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 included 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 inX 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

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IAS 16 must be applied to balance sheet entry and valuation of tangible assets. General accounting, valuation and supplementary regulations: Tangible assets comprise are assets owned by a company for purposes of manufacture or supply 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 acquire future economical benefits connected with this asset; and if the acquisition or manufacturing 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 dar. tenements office and production buildings massive construction warehouses massive construction warehouses lightweight construction garage greenhouses Other buildings dar. outside facilities roads, paths, sides other structural works Operating facilities dar. power facilities other electrical systems other technical systems Machines and apparatus dar. production machines agricultural machines fork-lift trucks Laboratory and research dar. greenhouse equipment laboratory furniture laboratory apparatus Vehicles 15 to 50 years 50 years 40 years 40 years 15 to 20 years 40 years 17 to 20 years 7 to 25 years 15 to 20 years 25 years 7 to 20 years 5 to 15 years 10 years 10 years 8 years 5 to 15 years 10 years 10 years 8 years 5 to12 years 10 years 12 to 13 years 5 to 13 years 5 to 10 years

KWS GROUP Date: Oct. 9, 2009 Status: Sept. 30, 2009 dar. haulers and tumbrils heavy goods vehicle passenger car other vehicles

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8 to 10 years 8 years 3 to 8 years 8 years 3 to 7 years 5 to 8 years 3 to 5 years 5 to 15 years 12 to 13 years 10 years 10 yaers 8 years 5 years 8 years 5 to 10 years 10 years 10 years 10 years 10 years 8 years 3 to 5 years 8 years according contract

EDP systems dar. EDP systems PC Plant and equipment dar. office fittings workshop fittings tenements fittings telecommunications media devices other equipment Intangible assets dar. breeding material varieties protection / licence other rights / film trade-mark fodder beet host system software office/PC software other software seeling rights

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, licensed 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. Benchmark method to be applied in the KWS Group: 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 inspections/maintenance without a concrete requirement of maintenance and repair have to be capitalized as a replacement purchase according to IAS 16.14.

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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 generally 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 capitalization is ceased when substantially all the activities necessary to prepare the qualifying 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 cancelled. 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 periods have to be explained in the annex. The information according to IAS 16.73 and 74 must be provided in the financial statement.

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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 usage 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 estimated 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 diminution 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 nonmonetary benefits must either be presented in the balance sheet as accrual items on the liabilities side or set off on determination of the book value of the property asset. Benchmark method to be applied in the KWS Group: 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 beginning 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, provided 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 relationship 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 depreciable 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-andleaseback-Transactions. Component Approach

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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 General accounting, valuation and supplementary regulations: This position comprises the company’s entire real estate, inclusive of the buildings and company buildings on foreign (e.g leased) premises. This position also comprises facilities that serve the use of the building (e.g. elevators, heating, 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 General accounting, valuation and supplementary regulations: 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

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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 machines) 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 General accounting, valuation and supplementary regulations: This position contains other equipment and facilities, which do not directly serve actual production, 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 processing 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

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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 lowcost 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 General accounting, valuation and supplementary regulations: 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 separately. 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 inX X X X

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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.

2.1.3 Biological assets 2.1.3.1 Livestock Livestock is entered in the balance sheet according to IAS 41. General accounting, valuation and supplementary regulations: 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 attributable current market value must be allocated in the equity capital, not affecting income, in accordance with IFRS 1. KWS regulations: none

2.1.3.2 Living plants Living plants are entered in the balance sheet according to IAS 41. General accounting, valuation and supplementary regulations: 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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X Profit Center X X X

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Country Region Partner 1) Movement schedule inX 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

2.1.4 Financial assets In the financial assets increases in value by rise of the stock exchange course are to be represented 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 income) 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. General accounting, valuation and supplementary regulations: 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 entered 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 headquarters via e-mail.

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2.1.4.2 Shares in joint ventures General accounting, valuation and supplementary regulations: A joint venture is a contractual agreement, in which two or more parties conduct a commercial 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 diminution 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 headquarters 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. General accounting, valuation and supplementary regulations: 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 acquisition 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 financial 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-

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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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) X X X Movement schedule inX 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

2.1.4.4 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 contractually duration of four years and more the finance receivable will be allocated to the financial 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 expenses. Write-ups on loans, also for subsidiaries, have to be shown among other operating income. Depreciations as well as write-ups on loans have in no case to be shown in the financial result. Data entry:

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Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) X X X Movement schedule inX 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

2.1.4.5 Other financial assets General accounting, valuation and supplementary regulations: 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 appropriate accounting method. In case neither the equity method nor proportional consolidation is appropriate, the company must balance these financial investments according to IAS 39, financial 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 determinable 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 indicated 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 financial assets. The composition of other financial assets have to be explained in the annex.

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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 income 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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) Movement schedule inX 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

2.1.4.6 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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X

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Profit Center Country Region Partner 1) Movement schedule inX 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

2.2

Current assets

In general General accounting, valuation and supplementary regulations: 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.

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Stocks are entered in the balance sheet according to IAS 2 and IAS 41. General accounting, valuation and supplementary regulations: 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 attributable 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 General accounting, valuation and supplementary regulations: 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:

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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: 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 information 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 2.2.1.2 Work in process General accounting, valuation and supplementary regulations: 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:

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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 transactions) 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: + = + = ./. = Data entry: purchase price/reproducers’ settlement price ancillary acquisition costs acquisition costs production costs manufacturing costs individual value adjustments (devaluation) balance sheet entry

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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 information 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

2.2.1.2.1 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 cultivation 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 support fees in France) are not to be used in the IFRS statement. Worksteps of seed multiplication: 1. 2. 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. 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 invoicing to the seed multiplier, the cuttings have to be capitalized with acquisition and manufacturing costs. Realization of necessary worksteps (for the multiplication on the part of KWS without 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 similar costs are also to be included. Consulting fees and checkups of the cultivation by KWS are not a part of multiplication costs and must not be capitalized as work in process. These expenses have to be shown in the company’s results for the period. The certified/commercial seed (natural form) produced by the seed multiplier has to be capitalized according to the delivered quality as work in process.

3.

4. 5.

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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 enterprise. If the seed will multiplicate on own or leased agricultural land it is your own responsibility 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 distribution 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 consolidated balancing of accounts according to IAS/IFRS IAS 41.12 requires the evaluation of field stock at the ascribable current value. IAS 41.8 defines the ascribable current value as the amount at which contracting, expert contracting partners 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 utilization 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) standard 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 possibilities 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 performance 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

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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 accounts 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 individual 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 expected for the marketing of individual fruits. 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. Direct costing free performance (contribution margin I) This value results from the subtraction of direct costs from market performance including the associated premium. 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 establishment in order to determine the costs of job execution. Furthermore, the cultivation method is established.

3.

4.

5.

6.

Modified contribution margin (contribution margin II) This is obtained by subtracting the job execution costs from the direct costing free performance. 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

7.

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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 assessment 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. 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 specifications from IAS 41.8.

9.

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

General accounting, valuation and supplementary regulations: A biological asset is livestock or a living plant. Agricultural products are the fruits of the company’s biological assets.

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Biological assets and agricultural products must be valuated at their attributable current market value. The attributable current market value is based on the present location and condition, minus the estimated sales costs. The sales costs do not include transport and other necessary 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 inventories is not applied. Position content: seed propagation sugar beets seed propagation sweet corn seed propagation cereals 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 information 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

2.2.1.4 Finished goods and services General accounting, valuation and supplementary regulations: 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).

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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 services 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)

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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 solicited 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 planning 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 estimation 5000 units will still be produced during calendar year 2001. Production during the following years is not planned. The budget forecast for the mid-term period provides sales figures as follows: 2001/2002 2002/2003 2003/2004 2004/2005 Sales: Sales: Sales: Sales: 5.000 units 3.000 units 1.500 units 1.000 units

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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: 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) X X X X Movement schedule information 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

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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). General accounting, valuation and supplementary regulations: The dominant classification criterion is conform with the “debtor’s party” and the term for accounts receivable (residual term up to 1 year and exceeding 1 year). The actually expected payment receipt, even if this will exceed the contractually agreed payment 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 completely (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 expenditure 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 recoverability according to IAS 39.59. If an impairment is existing, the present value of the expected 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. Uncalled 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:

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financial investments to be held up to the final maturity (see other financial assets) credits (see loans) and receivables issued by companies financial assets available for sale (see securities) 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 balance 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 property 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 offset. 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 receivables must be checked for fixed terms. It must be checked whether a fixed term is specified 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

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The revenues corresponding to the receivables stated here must be accounted for as sales revenue in the profit and loss statement. General accounting, valuation and supplementary regulations: All of the company’s asset values from sales and services must be accounted for here. Fulfilment and performance of the sales and services in accordance with the contract is precondition for display. The receivables displayed for here must be accounted for as sales revenue 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 following 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 Subitem Subitem Subitem Subitem Subitem Subitem 400 410 420 450 460 470 480 Opening balance trade receivables (gross as per July, 1) Addition of trade receivables (correspond to the sales incl. VAT) Disposal of trade receivables (e.g. payment receipts, bad debt write-off) Opening balance valuation allowances (gross as per July,1) Addition of valuation allowances (match to pos. 34422000) Disclosure in the notes under pos. 51124082 Disposal (consumption) of valuation allowances (e.g. bad debt writeoff) 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). Therefor the following subitems are available: Subitem Subitem Subitem Subitem Subitem Subitem 411 412 413 414 415 416 Not depreciated and not overdue Not depreciated and overdue (0-60 days) Not depreciated and overdue (61-120 days) Not depreciated and overdue (121-180 days) Not depreciated and overdue (more than 180 days) 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.

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The following validations regarding valuation allowances on trade receivables with third parties 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: 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) X X X X Movement schedule information Term X X X X 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

2.2.2.2 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 KWSgroup 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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version

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Company X X X Profit Center Country Region Partner 1) X X X Movement schedule information Term X X X 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

2.2.2.3 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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) X X X Movement schedule information Term X X X 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 Receivables from tax refund claims Data entry: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center

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Country Region Partner 1) Movement schedule information Term X X X 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

General accounting, valuation and supplementary regulations: 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 finance 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 13234200 13234300 13234400 13234500 thereof derivatives thereof prepayments thereof creditors with a debit balance thereof loans to third paties 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 Subitem Subitem Subitem Subitem Subitem 411 412 413 414 415 416 Not depreciated and not overdue Not depreciated and overdue (0-60 days) Not depreciated and overdue (61-120 days) Not depreciated and overdue (121-180 days) Not depreciated and overdue (more than 180 days) 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

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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 connection with IAS 39. 2.2.3.1 Securities IAS 39 regulates the accounting of all original (e.g. loans, securities, receivables and liabilities) and derivative (e.g. forward contracts, options, swaps, futures and forwards) financial instruments. 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 General accounting, valuation and supplementary regulations: 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.

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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 securities, 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 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. 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 (underlying 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).

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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 underlying 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 income 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. uncompleted 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 interests for a variable interest-bearing bond) are considered as well as accrued transactions (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 underlying 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 underlying transaction (ineffective part), IAS 39.102 (b)

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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 mentioned 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. General accounting, valuation and supplementary regulations: 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

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Data entry: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) Movement schedule information 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

2.3

Deferred tax assets

Balance sheet entry of deferred taxes on the assets side takes place according to IAS 12. General accounting, valuation and supplementary regulations: Deferred tax claims are the profits tax amounts, which are rebateable in future accounting periods 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 calculation 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.

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Deferred tax assets on temporal differences must be entered, provided their realisation is sufficiently 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 realised. 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 current 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 deffered 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 following 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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X

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Profit Center Country Region Partner 1) Movement schedule inX 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

2.4

Prepaid expenses

Prepaid expenses are entered in the balance sheet according to IAS 1.25 to 26 General accounting, valuation and supplementary regulations: 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 return service in the subsequent financial year, e.g. advance payment of contributions, rent, insurance 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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3)

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Version Company X X X Profit Center Country Region Partner 1) Movement schedule information 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

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2.5

Equity

In general General accounting, valuation and supplementary regulations: 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 depreciated 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)

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Subscribed capital

Capital reserve

Revenue reserves

Accumulated profit

Other comprehensive income

Equity

status 01. Juliy X -1 repurchase of own shares issue of own shares payment of dividends annual surplus X alterations in revenue reserves alterations resulting from currency conversion alterations not affecting net profit IAS 39 other alterations Status 30. June X 0 0 0 0 0 check:

0 0 0 0 0 0 0 0 0 0 0

2.5.1 Subscribed / share capital General accounting, valuation and supplementary regulations: The subscribed capital corresponds to the amount to which the shareholders’ liability is limited, 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.) regarding 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 outstanding capital contributions deposited capital called outstanding capital contributions called capital 500 250 150 400 T€ T€ 250 T€ T€ T€

Called outstanding capital contributions (in the example 150 T€) must be accounted for as receivables on the assets side. Display takes place under the balance sheet item accounts receiv-

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able from other receivables and other property assets, subdivided into subsidiaries, joint ventures 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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) Movement schedule inX 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 2.5.2 Reserves General accounting, valuation and supplementary regulations: 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) General accounting, valuation and supplementary regulations: 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 specified: the amount attained in excess of the nominal value on issue of shares (issue–agio);

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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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) Movement schedule inX 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

2.5.2.2 Revenue reserves General accounting, valuation and supplementary regulations: 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 reserves. 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 equity. KWS regulations: none Data entry: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version

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Company X X X Profit Center Country Region Partner 1) Movement schedule inX 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

2.5.2.2.1 Legal reserves General accounting, valuation and supplementary regulations: 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 General accounting, valuation and supplementary regulations: 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.

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2.5.2.2.4 Other revenue reserves General accounting, valuation and supplementary regulations: 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 presentation 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 General accounting, valuation and supplementary regulations: 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 appropriation (dividends and allocation to reserves) takes place on the basis of these accumulated 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 appropriate, specified in the annex. Data entry: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) Movement schedule information 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

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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

2.5.3.1 Unappropriated retained earnings brought forward/cumulative losses brought forward The accumulated profit / accumulated loss of the previous year has to be indicated as unappropriated 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, reserve 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).

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2.5.4 Currency conversion rate differences General accounting, valuation and supplementary regulations: An annual financial statement compiled in foreign currency must be converted into the reporting 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 subsidiaries inform only in local currencies. KWS regulations: Formation of the item “changes resulting from currency conversion” must be specified in the annex. Data entry: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) Movement schedule inX 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

2.5.5 Other comprehensive income (OCI) Applicable standard is IAS 39. General accounting, valuation and supplementary regulations:

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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 income) 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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) Movement schedule inX X X formation

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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

2.6

Minority shareholder

Applicable standard: IAS 27.26 General accounting, valuation and supplementary regulations: 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 minority 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 General accounting, valuation and supplementary regulations: 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.

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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 realisation 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 particularly 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 Applicable standards: IAS 1 and IAS 39 General accounting, valuation and supplementary regulations: 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 periods, financial liabilities 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 shown in the balance sheet with their attributable current 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 independent business associates.

2.7.1.1 Long-term interest-bearing loans Applicable standards: IAS 1, IAS 32 and IAS 39 General accounting, valuation and supplementary regulations: 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:

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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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) X X X Movement schedule information 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 2.7.1.2 Long-term trade payables General accounting, valuation and supplementary regulations: 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 external 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 subsequent 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.

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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: 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) X X X X Movement schedule information 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

2.7.1.3 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 performance 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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version

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Company X X X Profit Center Country Region Partner 1) X X X Movement schedule information 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

2.7.1.4 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 indicated separately. Data entry: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) X X X Movement schedule information 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

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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 periods of tax audit have to be indicated, for which the company is taxpayer and for which no assessment 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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) Movement schedule inX 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

2.7.1.5.2 Provisions for pension and similar obligations (long-term provisions II) Applicable standard: IAS 19 General accounting, valuation and supplementary regulations: The IAS differentiate between contribution-oriented and provision-oriented old-age pension schemes. With contribution-oriented pension schemes, the company commits itself to payment 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-

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Method, a cash entitlement procedure. Beside the demographic assumptions, the discount factor, salary and pension development, increase in expenditure for costs of illness and anticipated 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 government bond issues must be applied. Entry of actuarial profit and loss takes place on the basis 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 actuarial 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 deducting 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 insurer. The remaining difference have to be shown in the balance sheet and have to be explained 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 reclassified 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 defined benefit plans. Due to these fact the following notes have to be done in the year-end annex 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).

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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 separate entity (a fund) and will have no legal or constructive obligation to pay further contributions 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 employee service in the current and prior periods. Plan assets Plan assets comprise assets held by a long-term employee benefit fund and qualifying insurance 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 administering 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 between the previous actuarial assumptions and what has actually occurred) and the effects of changes in actuarial assumptions. Experience adjustments

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Adjustments, which are arisen out of the difference between prior actuarial assumptions beyond 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 employee 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 existing 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 salaries 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: 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 inX 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

Example: Defined Benefit Obligation

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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 calculation, 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 increment 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 included in the equation. 3. Interest Cost The interest cost corresponds to the annual interest rate of the calculated DBO at the beginning 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 company 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 reporting 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.

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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.

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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:

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Information for the notes

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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 compulsorily 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: 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 inX 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

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2.7.1.5.4 Other long-term provisions (long-term provisions II) Applicable standard: IAS 37 General accounting, valuation and supplementary regulations: 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 probable, 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 obligation towards a third party has legally originated or was economically caused (nature of liabiltiy), 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. Longterm 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

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Provisions movement schedule in TLC Status Addition 01.07.XX-1 Tax Reorganisation Others

Reversal

Interest increase/ Interest decrease

Transfer postings

Consumption

Status 30.06.XX

0

0

0

0

0

0

0

with long-term provisions, addition at actual cash value only 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 percentage 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

Column addition: Column reversal:

Data entry: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version

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Company X Profit Center X X X Country Region Partner 1) Movement schedule inX 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

2.7.2 Short-term borrowed capital Applicable standards: IAS 1 and IAS 39 General accounting, valuation and supplementary regulations: Short-term in terms of the IAS basically means a maximum residual term of one year. Financial liabilities are assessed according to their acquisition costs on initial recordation. Possible transaction costs must be included hereby. In subsequent accounting periods, financial liabilities 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 liabilities between experts, persons willing to conclude contracts and independent business associates. 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 accordance 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.

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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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) X X X Movement schedule information 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

2.7.2.2 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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X Profit Center X X X Country Region

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Partner 1) X X X X Movement schedule information 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

2.7.2.3 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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) X X X Movement schedule information 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

2.7.2.4 Short-term tax liabilities Taxes already assessed have to be indicated among the position short-term tax liabilities. Data entry: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X

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Profit Center Country Region Partner 1) Movement schedule information 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

2.7.2.5 Other short-term liabilities Among other short-term liabilities substantial single items (amounts above 100T€) have to be indicated separately. Data entry: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) Movement schedule information 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 2.7.2.6 Short-term provisions Note: The distribution in long-term provisions I and long-term provisions II was made because 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)

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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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) Movement schedule inX 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 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 reclassified 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 related 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

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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: 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 inX 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

2.8

Deferred tax liabilities

Applicable standard: IAS 12 General accounting, valuation and supplementary regulations: 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 differences) 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-

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nounced on the balance sheet key date must be applied. Deferred taxes must be recorded affecting 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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) Movement schedule inX 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

2.9

Deferred income

Applicable standards: IAS 1.25 and IAS 1.26 General accounting, valuation and supplementary regulations: 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 determinable on the calendar. Accrued items (proceeds/payment prior to the balance sheet key date) must be recorded as miscellaneous receivables and other asset values.

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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 advance 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: Additional information/ Version 100 2) Version 200 3) Version 300 3) Version 400 3) Version Company X X X Profit Center Country Region Partner 1) Movement schedule information 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

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THE INDIVIDUAL POSITIONS OF THE PROFIT AND LOSS STATEMENT ACCORDING 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).

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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 34112000 34110000 34120000 34100000 34200000 34300000 34400000 34500000 34000000 35000000 33000000 36000000 37000000 32000000 38000000 31000000 Sales ./. Cost of sales = Contribution margin 1 ./. Selling expenses = Contribution margin 2 ./. Research & Development expenses ./. Administration expenses +/./. Other operating income and expenses ./. Alternative valuation of goods / devaluation and annihilation of stocks = Operating result IFRS +/./. Financial result = Result from ordinary activities ./. Taxes +/./. Income and expenses from profit and loss transfer agreements = Result after taxes +/./. Extraordinary result = Net income

2.11.1 Sales Proceeds from the sale of typical products within the framework of ordinary business operations 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.

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(for finished and unfinished products, by-products, invoiced packaging and freight costs, waste products if applicable) (cash discounts, rebates, credits) (similar, sales-dependent taxes, if applicable)

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 Version 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 Company Profit Centre Country Region Partner Version 100 X X X
is derived from the country

Version 200 (6+12)

Version 200 (3+9) X X 1) X

Version 300 X X
is derived from the country

Version 400 X X
is derived from the country

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 entered here by company and/or profit centre, with country or region and partner.

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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 affiliated 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 centre, 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 performed 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.

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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 Total 25 75

Allocation of the tech-fee in profit center (100%) Germany North America ./. 25 ZR-ZR 50 25 ZR-FE 50 50 Total

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, manufacture/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-

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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 materials, 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 individual items: - Input of goods, certified/commercial seeds (34112110) - Dressing/coating, certified/commercial seeds (34112120) - Packaging material, certified/commercial seeds (34112130) Data entry: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X X X
is derived from the country

Version 200 (6+12)

Version 200 (3+9) X

Version 300 X X
is derived from the country

Version 400 X X
is derived from the country

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: Supplementary info / Version Company Profit Centre Version 100 X X X X X Version 200 (6+12) Version 200 (3+9) Version 300 Version 400

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X
is derived from the country

X
is derived from the country

X
is derived from the country

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: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X X X
is derived from the country

Version 200 (6+12)

Version 200 (3+9) X

Version 300 X X
is derived from the country

Version 400 X X
is derived from the country

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):

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Manufacturing: Incoming goods, drying, cleaning, treatment, pilling, enhancement with active agents, packaging, storage, outgoing goods. Support of manufacture: Planning department, quality control, repairs/maintenance, production engineering, purchasing of means of production. Propagation/production support: Coordination of production, seed propagation

Production management Data entry: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X X X MA only X X X Version 200 (6+12) Version 200 (3+9) Version 300 Version 400

X MA only X MA only

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 example proceeds from leasing production machines. Data entry: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X X X MA only X X X X Version 200 (6+12) Version 200 (3+9) Version 300 Version 400

X

X

X MA only X MA only X X

2.11.2.6 Other cost of sales (34112500)

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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: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X X X
is derived from the country

Version 200 (6+12)

Version 200 (3+9) X

Version 300 X X
is derived from the country

Version 400 X X
is derived from the country

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 below:

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 different 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 offices, Agroservice.

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Marketing support: Marketing, logistics, warehouses for finished goods Product management / coordination

Data entry: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X X X
is derived from the country

Version 200 (6+12)

Version 200 (3+9) X

Version 300 X X
is derived from the country

Version 400 X X
is derived from the country

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 KWSGroup. Data entry: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X X X
is derived from the country

Version 200 (6+12)

Version 200 (3+9) X

Version 300 X X
is derived from the country

Version 400 X X
is derived from the country

X

X

X

X

X

2.11.5 Contribution margin 2 (34100000) Contribution margin 2 is determined by calculating the difference between contribution margin 1 and marketing costs.

2.11.6 Research & Development (34200000)

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The item research & development is divided into the following items: “research & development 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 exploitation. Development costs are only eligible for capitalisation, if certain precisely identified requirements are fulfilled (IAS 38.45). Capitalisation is necessary in all cases, where development 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 addition 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 capitalisation. 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 (examples): 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: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X X X X X Version 200 (6+12) Version 200 (3+9) Version 300 Version 400

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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: Supplementary info / Version Company Profit Centre Country Region 1) Partner Version 100 X X X X X X X X X X X Version 200 (6+12) Version 200 (3+9) Version 300 Version 400

X

X

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 administration income” as below:

2.11.7.1 Administration expenses (34310000) All activities in connection with the direction /management of the company as well as commercial 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

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General operational services: car pool, workshop, management of properties/buildings/domestic facilities, energy, operational safety, health and safety at work, waste disposal

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Version 100 X

Version 200 (6+12) X X

Version 200 (3+9) X

Version 300 X X

Version 400 X X

1) Administration expenses are only entered by regions for the profit centres FE-MA and FEÖF.

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 administration services for AgroMais GmbH). Data entry: Supplementary info / Version Company Profit Centre Country Region 1) Partner Version 100 X X X X X X X X X X X Version 200 (6+12) Version 200 (3+9) Version 300 Version 400

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.

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2.11.8.1 Other miscellaneous income (34411000) This item serves as summary item for income (e.g. within functions) which are not shown under 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 interest 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 associated 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 financial statements. The company showing the expenditure has to identify in the corresponding 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.

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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 recorded here. Joint ventures are treated as fully consolidated companies in this context. Goodwill is an adjustment item of capital consolidation to be entered under the assets side. It has to be capitalised under intangible assets.

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1) Other miscellaneous expenses are only entered by regions for the profit centres MA, FEMA, 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 receivable bearing no or low interest. - Bad debt losses Data entry: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X X X
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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.

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The item “Deviation, cost of materials, STANDARD from ACTUAL ” is only relevant for companies applying standard rates of manufacturing costs in their ACTUAL statement - 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 reconciliation between actual expenses of financial accounting (the item “Cost of materials against ACTUAL") 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 34511200 34511300 Data entry: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X X X
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2.11.9.1.2 Reverse cost of materials against STANDARD (34512000)

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Standard costs recorded under manufacturing costs are recorded here as “contra item” against actual values. 34512100 34512200 34512300 Data entry: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X X X
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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: Supplementary info / Version Company Profit Centre Country Region 1) Partner Version 100 X X X X X X X X Version 200 (6+12) Version 200 (3+9) Version 300 Version 400

1) Depreciation and destruction of stocks is only entered by regions for the profit centres MA and ÖF.

2.12 Operating result IFRS

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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

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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: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

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2.13.1.2 Income from associated companies (35120000) Dividends and shares in the profit of associated companies have to be recorded here in particular. 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. Income has to be shown as gross income, i.e. including creditable taxes on income. 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.

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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. 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. Data entry: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

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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.

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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 writeup (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 agreement. The indicated income has to be explained in the Notes. Data entry: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

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2.13.1.6 Write-down on subsidiaries and joint ventures (35160000) Applicable standard: IAS 39 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 agreement with the Group management.

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Depreciations are to be shown separately for each company and have to be explained in the Notes. Data entry: Supplementary info / Version Company Profit Centre Country Region Partner

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2.13.1.7 Write-down on participations of financial assets (35170000) Applicable standard: IAS 39 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 agreement with the Group management. Write-down are to be shown separately for each participation and have to be explained in the Notes. Data entry: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

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 during the financial year have to be recorded here.

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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 ventures 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: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

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 capitalised under intangible assets. Data entry: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

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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: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

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 associated 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 expenditure 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.

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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: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

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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

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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: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

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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: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

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.

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Income from the periodic appreciation (write-up) of unaccrued interest on discounted longterm 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: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

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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: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

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 depreciation 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 performed (IAS 39.114). Write-ups for the individual securities have to be explained in the notes.

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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 undertaken 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

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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 correspondence 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: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

2.15.1.2 Deferred taxes (36200000) Applicable standard: IAS 12 The recording of deferred tax assets/liabilities which were set off against each other with effect 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.

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The item “deferred taxes” has to be explained and presented to a sufficient extent in the Notes. Data entry: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

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: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

2.17 Net income (31000000) Applicable standard: IAS 8 The net income is composed of the items result after taxes, extraordinary result and the interest 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 appropriation of yields.

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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) Applicable standard: IAS 27 This is the share of the minority shareholders in the annual result (annual surplus/annual deficit). 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 incorporated into the result of the minorities as well. Data entry: Supplementary info / Version Company Profit Centre Country Region Partner Version 100 X Version 200 (6+12) Version 200 (3+9) Version 300 X Version 400 X

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 reporting period. The cash flow statement is crated only for the consolidated financial statement. 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).

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Contingent Liabilities If the possibility of an outflow at fulfillment is not improbable und not show so far in the financial 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 support 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 resulting 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

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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 successeffectively 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 products 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. - In the income statement charged expenditure from adjustments of value Expenditures for adjustments of value on accounts receivable, which were charged successeffectively 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 accounts receivable already valueadjusted as increase in equity capital.

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- Direct in equity capital charged expenditure from adjustments of value Expenditures for adjustments of value on accounts receivable, which were charged successneutrally 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 divide into trade accounts receivable, accounts receivable from finance lease and accounts receivable 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 expected, is the liability reserve success-effectively to release (IAS 37.59). The income resulting 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

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Adjustments of value on accounts receivable must be reversed success-effectively, if the factual 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 inflow 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 ecological 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 position. - 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 specified 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

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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, supervisory 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 position. - Other miscellaneous operating expenditures Other operational expenditures, not assigned to one of the upper, are shown under this position. 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 enterprise, 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

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- 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 • Current assets inclusive deferred balances exclusive liquid founds • Reserves • Liabilities inclusive deferred balances 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 interest claims against third-party. Irregular depreciation on fixed assets Under this position are to be given only the irregular depreciations of the financial assets. Irregular depreciations of other positions of the fixed assets are shown in the profit center appendix. Extraordinary positions Extraordinary income Extraordinary incomes are to be presented in conformance with the structure given in the appendix. 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 section 2.17.1 and 2.17.1.1.

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Average number of employees (51136100) The total number of employees average for all companies which are included in the consolidated financial statement is to be indicated. For this purpose you have to calculate the employees 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 establishments 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 period. 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)

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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 defined benefit plans. Due to these fact the following notes have to be done in the year-end annex 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.

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51171000 51172000 51173000

Personnel expenses Depreciation 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 positions of the fixed assets to show in conformance with the structure in the appendix. Investments 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 conformance 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 depreciation). 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 reserves. - 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 reserves. - 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

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- 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 already 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.

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

• •

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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 midterm). Version 300, periods 3, 6, 9 (if necessary also 12). Version 200, only period 12 (year end closing).

(Layout „ZINFMA01“) Discription Position Assignments PC, Country Company, Division Function Comment/Explanations

52000000 Division-Additional Information 52400000 Costs of agroservice Corn - all cost groups (1.000 NC)

X

X (Sel- Agroservice = Sales ling) driven performance trials (expenses of this activity has to be taken from a separate Cost center)

52100000 Current Assets 52120000 Corn: Certified seed 52121000 Inventory value (1.000 national currency) 52122000 Quantitative inventory (U/50 TK) 52130000 Corn: Basic seed X X 0 0 0 0 Net value of certified corn seed inventory after devaluation Total certified seed stock converted to U/50TK

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52131000 Inventory value (1.000 national currency) 52132000 Quantitative inventory (1.000 MVK) 52230000 Corn: Sales information certified seed 52231000 Sales volume 52231100 Regular/normal sales (1.000 U/50TK) 52231110 Konventional Hybrids 52231120 GMO-Hybrids 52231200 Wholesale/extraordinary sales (1.000 U/50TK) Total volume all varie52231210 ties Discription Position

X

0

0

X

0

0

Net value of basic/foundation corn seed inventory after devaluation MVK = 1000 living Kernels

Regular certified corn Seed sales (direct sales) X X X X 0 0 Wholesale and sales with low prices in order to avoid destroyment X X Assignments PC, Country Company, Division Function Sales volume based on a production agreement with third party and intragroup X X 0 0 Comment/Explanations

52231300 Production for other companies (1.000 U/50TK) 52231310 Total volume all varieties 52232000 Sales (1.000 national currency) 52232100 Regular/normal sales 52232110 Sales Konventional Hybrids 52232120 Sales GMO-Hybrids 52232130 Share of Sales Tech Fee

X X X

X X X

0 0 0

Sales value konv. Hybrids Sales value GMO Hybrids without "Tech Fee" Sales value "Tech Fee", (including evtl. from wholesale/extrord. Sales)

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52232200 Wholesale/extraordinary sales 52232210 Total sales all varieties 52232300 Production for other companies 52232310 Total sales all varieties 52233000 Gross margin-after Royalties (1.000 national currency) 52233100 Regular/normal sales 52233110 Seed / Germplasm

X

X

0

Value of the a.m. volume

X

X

0

Value of the a.m. volume

X

X

0

52233120 Net Technology Service ee

X

X

0

Gross margin after royalties without deviation standard-actual (without Tech Fee) Gross margin out of "Sales Tech Fee" (including evtl. from wholesale/extrord. Sales)

Discription Position

Assignments PC, Country Company, Division Function

Comment/Explanations

52233200 Wholesale/extraordinary sales 52233210 Total sales all varieties X X 0 Gross margin of the a. m. sales without deviation standard-actual (without NTSF) Gross margin without deviation stand.-actual

52233300 Production for other companies 52233310 Total sales all varieties 52234000 Royalties Germplasm (1.000 national currency) 52234100 Royalties to KWS 52234200 Royalties to Third Party 52240000 Corn: Basic seed

X

X

0

X X

X X

0 0

Royalties for germplasm Royalties for germplasm

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52241000 Sales volume (1.000 MVK)

X

X

0

Only Sales volume (value = separate P&Lposition)

Rape Seed (Layout „ZINFRA01“) Discription Position Assignments Comment/Explanations PC, Country FuncCompation ny, Division X 0 0 X X 0 0 0 0 Net value of certified rape seed inventory after devaluation Total seed stock volume converted to 1000 U

52160000 Rape seed : Certified seed (Hybrids+konv.) 52161000 Inventory value rape seed (1.000 national currency) 52162000 Quantitative inventory rape seed (1.000 U)

Discription Position

Assignments PC, Country Company, Division X 0 X 0 Function 0 0

Comment/Explanations

52170000 Rape seed : Basic seed 52151000 Inventory value rape seed (1.000 national currency) 52270000 Rape Seed: Sales information certified seed 52271100 Sales Volume Rape "open pollinated" (1.000 U/2Mio Kernels) 52271200 Sales Volume Rape Hybrids (1.000 U/1,5Mio Kernels) 52272100 Sales Rape "open pollinated" (1.000 national currency)

Net value of rape basic seed inventory after devaluation

X

X

0

Number of Units "open olinated" Number of Units "Hybrids" Sales value of the a.m. Volume

X X

X X

0 0

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52272200 Sales Rape Hybrids (1.000 national currency) 52273100 COS Rape "open pollinated" without Royalty (1.000 nat. currency) 52273200 COS Rape Hybrids without Royalty (1.000 national currency) 52274100 Royalty "open pollinated" (1.000 national currency) 52274200 Royalty Rape Hybrids (1.000 national currency)

X X

X X

0 0

Sales value of the a.m. Volume Total COGS without royalties (and without deviation standardactual) Total COGS without royalties (and without deviation standardactual) Royalty expenses (Group and Third Party) Royalty expenses (Group and Third Party)

X

X

0

X X

X X

0 0

Other Oil/Fieldseed crops: Sunflower, Soja … (Layout „ZINFOF02“) Discription Position Assignments PC, Country Company, Division Function Comment/Explanations

52140000 Other Oil- and fieldseed: Certified seed 52143000 Inventory value sunflowers (1.000 national currency) 52144000 Quantitative inventory sunflowers (1.000U/150TK) 52145000 Inventory value soybeans (1.000 national currency) 52146000 Quantitative inventory soybeans (1000 U) 52147000 Inventory value other crops (1.000 national currency) X X X X X 0 0 0 0 0 0 0 0 0 0 Net value of certified sunflower seed inventory after devaluation Total seed stock volume converted to 1000 U/150 TK Net value of certified soybean seed inventory after devaluation Total seed stock volume converted to 1000 U Net value of certified seed inventory other ÖFcrops after devaluation

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52150000 Other Oil- and fieldseed: Basic seed 52151000 Inventory value (1.000 national currency) 52250000 Oil- and fieldseed: Certified seed 52250001 Sunflowers 52250600 Sales volume sunflowers (1.000 U/150 TK) 52250700 Sales sunflowers (1.000 national currency) 52250800 COS sunflowers without royalties (1.000 national currency) 52250900 Royalties sunflowers (1.000 national currency)

X X

0 0

0 0 Net inventory value of total basic seed ÖFcrops (Rape separate position 52151000)

X X X X

X X X X

0 0 0 0 COS without royalties (and without deviation standard-actual) Royalty expenses (Group and Third Party)

Discription Position

Assignments PC, Company, Division Country Function

Comment/Explanations

52250002 Soybeans Sales volume soybeans - konv. Varieties 52251110 (1.000 U) Sales volume soybeans - GMO-Varieties 52251120 (1.000 U) Sales Soja konv. Varieties (1.000 national 52251210 currency) Sales Soja GMOVarieties (1.000 na52251220 tional currency) Share of Sales Tech Fee Soja (1.000 na52251230 tional currency)

X X X X X

X X X X X

0 0 0 0 0 Sales value konv. Varieties Sales value GMO Varieties without "Tech Fee" Sales value "Tech Fee",

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52251310 52251320 52251330 52250003 52251600 52251700

Gross margin Soybean-after Royalties (1.000 national currency) Net Technology Sevice Fee Soybean (1.000 national currency) Royalties Soybean Germplasm (1.000 national currency) Other crops oil and fieldseed Sales other crops oiland fieldseeds (1.000 national currency) COS other crops oiland fieldseeds (1.000 national currency)

X X X

X X X

X X X

Gross margin after royalties without deviation standard-actual (without Tech Fee) Gross margin out of "Sales Tech Fee" Royalty expenses

X X

X X

0 0

Total Sales number Total COS number without deviation standard-actual

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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 ending on 30.06.2005. For this purpose, the company must at least publicise comparative information 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 statement, apply the same accounting and valuation principles that are also applied for the current 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 already 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 differently 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 statement 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.

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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 exceptions must be exclusively applied to the issues described and may not be analogously transferred to similar issues. 3.2.1 Consolidation / mergers On initial application of the IFRS, a company may waiver retroactive adaptation of consolidation measures in connection with mergers and may incorporate the goodwills that have originated in former years into the IFRS opening balance sheet in accordance with local accounting 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 adaptations that are described in detail in IFRS 1. The voting right to waiver retroactive adaptation 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 basis 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

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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 financial 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 liabilities 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 adjusted in his local financial statements prior to the 01.01.2001. This regulation particularly relates to transactions in which receivables were disposed of (securitisation). Appraisal of such transactions differing from the local accounting regulations could have lead to disproportionately 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 adjusted 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 regualtions. A hedging-relationship that does not fulfil the preconditions for a hedging relationship 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.

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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 considered 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 comparison 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 valuation 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 financial 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 contain 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.

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4

QUARTERLY FINANCIAL REPORTING

Applicable standard is IAS 34. The basis for quarterly reporting has to be IAS 34 (Interim Financial Reporting). The minimum components of an interim financial report in accordance with IAS 34.8 are the following: - 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 transactions 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 relation 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.

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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 o Debit entry: expense o Credit entry: provision (increased consumption)

-

-

or:

Example: Expenses for shareholders´ meeting (total amount 100 T€) Quarter carry forward I II III invoice IV invoice reversal of provision (previous year) -25 -25 -25 65 -25 10 5 Description Entry (T€) Balance (T€) -80 -105 -130

-90

-100

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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 reporting period. The cash flow statement is crated only for the consolidated financial statement. 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 financial 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. - In the income statement charged expenditure from adjustments of value Expenditures for adjustments of value on supplies, which were represented successeffectively 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 products are shown separately. Other operating expenditure and income Other operating income

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- 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 expected, is the liability reserve success-effectively to release (IAS 37.59). The income resulting 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 factual 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 inflow 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 ecological 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 position. - Other miscelleanous operational incomes Other operational incomes, not assigned to one of the upper, are shown under this position.

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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 specified 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, supervisory 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 position. - Other miscelleanous operational expenditures Other operational expenditures, not assigned to one of the upper, are shown under this position.

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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 enterprise, 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 • Current assets inclusive deferred balances exclusive liquid founds • Reserves • Liabilities inclusive deferred balances Other positions Furthermore are to specify obligations to purchase of tangible assets, in the financial statement not included bad debts and the employee number at the report time (number of employees 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).

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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 Calculated local tax rate Tax expenses for the period + Tax expenses related to other periods (affecting payment) ./. Tax income related to other periods (affecting payment) Total tax expenses to date (affecting P&L in the DET) 1,000 30% 300 100 50 350

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 authority. The tax income which has to be shown in the DET corresponds to the local tax income 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 fiscal 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 Calculated local tax rate Tax income for the period ./. Tax expenses related to other periods (affecting payment) + Tax income related to other periods (affecting payment) Total tax income to date (affecting P&L in the DET) -1,000 30% 300 100 50 250

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

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5

CASH FLOW STATEMENT

Applicable standard is IAS 7. 5.1 Duty to compile

Each company must draw up a cash flow statement according to IAS 7 and present it as an integral 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.

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6
6.1

FORMS
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 departmentgroup accounting. The following position plan (group chart of accounts) is to be applied bindigly.

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6.1.2 Profit and loss account

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6.1.3 Annex 6.1.3.1 Annex on company level

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6.1.3.2 Annex on profit center level

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