K+S AG — Interim / Quarterly Report 2013

Aug 13, 2013

HALF-YEARLY FINANCIAL REPORT OF THE K+S GROUP Jan uary to June + Good sales volumes of Potash and Magnesium Products continue + Salt business still significantly above last year + Revenues of the first half year increase by 4 % to € 2,154.8 million (H1/12: € 2,077.1 million) + Operating earnings EBIT I reach € 440.5 million (H1/12: € 466.4 million) H1 2013

• • Adjusted earnings per share from continued operations at € 1.55 (H1/12: € 1.61)
• • Legacy Project advanced according to plan
• • Outlook: Due to the latest developments on the potash market and following the principle of prudence, we do no longer adhere to our outlook for the year 2013

KEY DATA BUSINESS DEVELOPMENT

Key Figures (IFRS) 1

		Q2/13	Q2/122	%	H1/13	H1/122	%
Revenues	€ million	874.5	996.5	(12.2)	2,154.8	2,077.1	+ 3.7
Earnings before interest, taxes, depreciation and amortisation (EBITDA)	€ million	227.0	274.7	(17.4)	563.3	577.8	(2.5)
EBITDA margin	%	26.0	27.6	—	26.1	27.8	—
Operating earnings (EBIT I)	€ million	162.6	218.7	(25.7)	440.5	466.4	(5.6)
EBIT margin	%	18.6	21.9	—	20.4	22.5	—
Result after operating hedges (EBIT II)	€ million	157.1	201.0	(21.8)	431.2	473.9	(9.0)
Earnings before income taxes	€ million	139.6	176.9	(21.1)	395.8	434.7	(8.9)
Earnings before income taxes, adjusted3	€ million	145.1	194.6	(25.4)	405.1	427.2	(5.2)
Group earnings from continued operations	€ million	102.0	127.9	(20.3)	289.5	314.2	(7.9)
Group earnings from continued operations, adjusted3	€ million	105.9	140.5	(24.6)	296.1	308.8	(4.1)
Group earnings after taxes 4	€ million	102.0	137.4	(25.8)	289.5	348.8	(17.0)
Group earnings after taxes, adjusted3,4	€ million	105.9	150.1	(29.4)	296.1	342.7	(13.6)
Return on Capital Employed (LTM)5	%	—	—	—	18.7	22.8	—
Gross cash flow	€ million	137.7	212.2	(35.1)	414.7	476.7	(13.0)
Net indebtedness as of 30 June	€ million	—	—	—	791.1	813.1	(2.7)
Capital expenditure6	€ million	191.3	77.7	>100	302.1	118.9	>100
Depreciation and amortisation6	€ million	64.4	56.0	+ 15.0	122.8	111.4	+ 10.2
Working capital as of 30 June	€ million	—	—	—	836.2	1,067.2	(21.6)

		Q2/13	Q2/122	%	H1/13	H1/122	%
Earnings per share from continued operations, adjusted3	€	0.56	0.73	(23.3)	1.55	1.61	(3.7)
Earnings per share, adjusted3,4	€	0.56	0.78	(28.2)	1.55	1.79	(13.4)
Gross cash flow per share	€	0.72	1.11	(35.1)	2.17	2.49	(13.0)
Book value per share as of 30 June	€	—	—	—	17.86	16.62	+ 7.5
Total number of shares as of 30 June	million	—	—	—	191.40	191.40	—
Outstanding shares as of 30 June7	million	—	—	—	191.40	191.40	—
Average number of shares 8	million	191.40	191.40	—	191.40	191.40	—
Employees as of 30 June9	number	—	—	—	14,255	14,325	(0.5)
Average number of employees 9	number	14,285	14,316	(0.2)	14,305	14,321	(0.1)
Personnel expenses 10	€ million	250.2	248.9	+ 0.5	490.0	493.3	(0.7)
Closing price as of 30 June	XETRA, €	—	—	—	28.41	36.00	(21.1)
Market capitalisation as of 30 June	€ billion	—	—	—	5.4	6.9	(21.1)
Enterprise value as of 30 June	€ billion	—	—	—	6.2	7.7	(19.2)

Key Figures (IFRS) 1 (continued)

Content

Financial Calendar

2013/2014

Quarterly Financial Report, 30 September 2013	14 November 2013
Report on business in 2013	13 March 2014
Annual General Meeting, Kassel	14 May 2014
Quarterly Financial Report, 31 March 2014	14 May 2014
Dividend payment	15 May 2014
Half-yearly Financial Report, 30 June 2014	14 August 2014

← Footnotes Key Figures (IFRS)

• 1 Unless stated otherwise, information refers to the continued operations of the K+S Group. The income statement and the cash flow statement were adjusted in accordance with IFRS following the divestment of the nitrogen business. The balance sheet and therefore the key figures of working capital, net indebtedness and book value per share as of 30 June 2012 were not adjusted and also include the discontinued operations of the nitrogen business.
• 2 The figures of the previous year were adjusted due to the change of IAS 19. Further information can be found in the Notes on page 32.
• 3 The adjusted key figures only include the result from operating forecast hedges of the respective reporting period reported in EBIT I, which eliminates effects from changes in the market value of the hedges as well as effects from the exchange rate hedging of future capital expenditure in Canadian dollar (Legacy Project). Related effects on deferred and cash taxes are also eliminated; tax rate for Q2/13: 28.5 % (Q2/12: 28.5 %).
• 4 Earnings from continued and discontinued operations.
• 5 Return on capital employed of the last twelve months as of 30 June.
• 6 Capital expenditure in or depreciation on property, plant and equipment, intangible assets and investment properties as well as depreciation on financial assets.
• 7 Total number of shares less the number of own shares held by K+S as of the balance sheet date.
• 8 Total number of shares less the average number of own shares held by K+S.
• 9 FTE: Full-time equivalents; part-time positions are weighted in accordance with their respective share of working hours.
• 10 Personnel expenses also include expenditures connected with partial and early retirement.

← Key Data Business Development U2

1 M ANAGEMENT REPORT

1.1 Group Structure and Business Operations	3
1.2 Corporate Strategy and Enterprise
Management	3
1.3 Overview of Course of Business	3
1.4 Earnings, Financial and Asset Position	7
1.5 Segments of the K+S Group	13
1.6 Employees	18
1.7 Research and Development	19
1.8 Risk Report	19
1.9 Opportunity Report	19
1.10 Subsequent Events	20
1.11 Forecast Report	20
1.12 Guarantee of the Legal Representatives
of K+S Aktiengesellschaft	24

2 financial section

2.1 Income Statement	26
2.2 Cash Flow Statement	28
2.3 Balance Sheet	30
2.4 Statement of Changes in Equity	31
2.5 Notes	32
2.6 Summary by Quarter	40

M ANAGEMENT REPORT

1

1.1 Group Structure and Business Operations 3 1.2 Corporate Strategy and Enterprise Management 3 1.3 Overview of Course of Business 3 1.4 Earnings, Financial and Asset Position 7 1.5 Segments of the K+S Group 13 1.6 Employees 18 1.7 Research and Development 19

	1.8 Risk Report	19
	1.9 Opportunity Report	19
	1.10 Subsequent Events	20
	1.11 Forecast Report	20
	1.12 Guarantee of the Legal Representatives
	of K+S Aktiengesellschaft	24

1.1 Group Structure and Business Operations

For a comprehensive description of our Group structure and business operations, including our products and services, please see the relevant passages in our Financial Report 2012 on page 57.

Changes in the scope of consolidation are presented in the Notes of this Half-yearly Financial Report on page 34. The Group structure and business operations described in the Financial Report 2012 remain unchanged.

1.2 Corporate Strategy and Enterprise Management

There were no changes in the strategy of the Company and its enterprise management in the first quarter. For a detailed description of the corporate strategy and enterprise management, please see the relevant passages in our Financial Report 2012 on page 66.

1.3 Overview of course of business

Macroeconomic environment

The global economy also expanded in a very measured manner during the course of the second quarter of 2013 too, although a degree of stabilisation was discernible. / tab: 1.3.1

In Europe, the economy continued to experience a light recession in the second quarter as a result of the sovereign debt crisis, but the pace of the slowdown slackened compared with the end of 2012. While capital expenditure decreased moderately once again, private consumption stabilised.

The US economy did not present a uniform picture in the second quarter. In particular, private household demand was weak and labour market data was not entirely convincing. On the other hand, the property sector continued to recover, as investment mainly increased in residential property construction. In addition, positive reports on the condition of the US banking system provided further stimuli.

The economies of the emerging market countries grew at a slower pace, with continued weak demand from the industrialised countries having an impact in particular.

There was a further easing of monetary policy in the industrialised countries during the course of the second quarter of 2013. The European Central Bank (ECB) cut its key interest rate once again to 0.50 % at the present time. The Federal Reserve Bank (FED) kept its key interest rate at the record low of 0 to 0.25 % but indicated that it might conduct a gradual shift in the direction of a tighter monetary policy.

The price of Brent crude oil remained more or less stable over the course of the quarter and was about US\$ 102 per barrel at the end of June (31 December 2012: US\$ 111; 30 June 2012: US\$ 123). The reason for the decline was the continued high output of crude oil on the part of OPEC since the start of the year, and at US\$ 103, the average price for the second quarter of 2013 was below the level of US\$ 109 for the same quarter a year ago.

Agricultural prices came under increasing pressure in the second quarter. This was caused by the weak economic momentum in the emerging market countries as well as the expectation of higher harvests on the part of the American agricultural agency, the USDA. Only the price of soy beans saw a rise of about 11 % in the second quarter of 2013. / FIG: 1.3.1

Percentage change in Gross Domestic Product					TAB: 1.3.1
	2013e	2012	2011	2010	2009
in %; real
Germany	+ 0.2	+ 0.7	+ 3.0	+ 3.7	(4.7)
European Union (EU-28)	(0.2)	(0.3)	+ 1.6	+ 1.9	(4.2)
World	+ 2.8	+ 3.0	+ 3.9	+ 5.1	(0.8)

Source: Deka Bank

The US dollar weakened somewhat against the euro over the course of the quarter under review, and as of 30 June, the euro exchange rate was 1.30 USD/EUR (31 December 2012: 1.32 USD/EUR; 30 June 2012: 1.27 USD/ EUR). The strengthening of the euro was largely attributable to the easing of the European sovereign debt crisis. It was also bolstered by the European Central Bank's (ECB) retention of its current course on monetary policy. The announcement made by the United States that it might limit the money supply also caused the US dollar to weaken against the euro. In terms of the average for the quarter, the US dollar was, at 1.31 USD/EUR, slightly below the level for the same quarter of the previous year (Q2/12: 1.28 USD/EUR). In addition to the USD/EUR currency relationship, a relative comparison of the currencies of our competitors (Canadian dollar, Russian rouble) in relation to the US dollar in each case is of importance for us. A strong US dollar normally has a positive impact on the earnings capacity of most of the world's potash producers in their respective local currency; this is due to the fact that the bulk of worldwide potash output lies outside the US dollar zone while almost all sales, with the exception of the European market, are invoiced in US dollars.

Figure 1.3.2 shows how the US dollar declined slightly against the euro over the course of the second quarter. The US dollar appreciated against the currencies of our competitors from Canada and Russia. / FIG: 1.3.2

Impact on K+S

The changes in the macroeconomic environment had the following main effects on the course of business for K+S in the second quarter:

Euro for US\$ Rouble for US\$ CAN\$ for US\$ Source: Bloomberg

• The energy costs of the K+S Group are particularly affected by the costs of procuring gas. With the aim of creating greater flexibility and lowering purchasing costs, the gas supply contracts of the Potash and Magnesium products business unit, which were pre-

Index: 31 December 2012

viously largely linked to the oil price, were renegotiated last year, so that future price opportunities on the gas spot markets can be exploited for part of the volumes obtained. Gas procurement now comprises a relative balance in relation to procurement on the

gas spot market, longer-term contracts for which fixed gas prices have been agreed and agreements tied to the oil price, which are reflected in our cost accounting with a delay now of only three to four months. Consequently, energy procurement can be more diversified and we can take advantage of opportunities arising on the energy markets. Against this background, it was possible for the Potash and Magnesium Products business unit to achieve a slight saving on energy costs in the second quarter.

• Foreign currency hedging system: As a result of the hedging instruments used for the Potash and Magnesium Products business unit, the exchange rate in the second quarter was on average 1.28 USD/EUR incl. hedging costs and thus more favourable than the average spot rate (1.31 USD/EUR) as well as the rate for the same period a year ago (Q2/12 exchange rate incl. hedging costs: 1.31 USD/EUR).

Industry-specific framework conditions

The conditions on important markets and the competitive positions of the individual business units described in the section 'Group Structure and Business Operations' of the Financial Report 2012 on page 57 essentially remained unchanged.

Potash and Magnesium Products business unit

The conclusion of contracts by North American and Russian producers with Chinese and Indian customers at the beginning of the year caused demand to rise significantly again – in time with the start of the spring season in Europe and North America as well as in South America and South East Asia. Against this backdrop, the international prices for potassium chloride too stabilised over the course of the first quarter. In the second quarter too, demand remained on a good level, while prices remained stable overall compared with the preceding quarter.

Salt business unit

De-icing salt – Western Europe

On the Western European de-icing salt market, continued wintry weather at the start of the year resulted in above-average sales volumes, which were significantly above the level of the same period a year ago. Early stocking-up demand for the 2013/14 winter season was therefore good. Overall, prices were on the high level of a year ago, although some slight pressure was noticeable in some regions of Western Europe.

De-icing salt – North America

Although market conditions in the de-icing salt regions of the United States and in Canada normalised during the first quarter, North American tender price levels for the coming winter season came under pressure because as a result of the winter 2012/13 being generally mild, users still had relatively high stocks.

Industrial salt

While demand for industrial salt largely remained stable in South America, demand in some regions of Europe rose slightly as a result of positive economic trends. Whereas a slight price decrease had to be recorded in North America, the industrial salt prices in Europe could be increased slightly.

Food grade salt

Demand for food grade salt in both Europe and in South and North America remained good. While the prices in Europe remained somewhat stable, a slight price reduction had to be recorded on the North American market.

Salt for chemical use

While the market for salt for chemical use in Europe continued to display relative weakness in the second quarter, demand on the North and South American markets remained more or less stable.

K+S on the capital market

Course of the K+S share price in the second quarter

• • Starting from a level of about € 36 at the start of the second quarter, the price of the K+S share fell significantly until the end of June 2013. In April, the share price was initially adversely affected by the announcement of a higher capital expenditure budget related to the Legacy Project in Canada.
• • On 14 May, the Company reported good figures for the first quarter, the temporary rise in the share price was short-lived nevertheless. The share declined in value in the weeks that followed despite a positive stock

market environment and closed at € 32.51 at the end of May, down a good 7 % on the closing price for 2012.

• • In June, the share price was additionally weighed down by the negative sentiment on the commodity and agricultural markets. Moreover, some analysts cut their estimates with respect to anticipated potash prices.
• • On 30 June, the K+S share closed at € 28.41. It was thus about 19 % below the closing price for 2012. DAX, MSCI World and Stoxx 600 rose over the same period by 5 %, 7 % and 2 % respectively.

/ FIG: 1.3.3, 1.3.4 /TAB: 1.3.2

/ You can find the current share price and further information about the stock at www.k-plus-s.com/en/ ks-aktie.

While the share price of salt producer Compass rose by 13 %, our competitors in the fertilizer sector also experienced a significant drop in value. The prices of Mosaic, Potashcorp and Uralkali fell by about 5 %, 6 % and 13 % respectively since the start of the year. / FIG: 1.3.5

In the last of the research surveys (29 July 2013) that we regularly carry out, 6 banks gave us a "buy/accumulate" recommendation, 2 a "hold/neutral" recommendation and 6 a "reduce/sell" recommendation. The average target price was about € 30.

Shareholder structure

On 31 May 2013, Prudential plc. informed us that it had fallen below the threshold of 3 % of the voting rights in K+S Aktiengesellschaft and held 2.99 % at that point in time. During the second quarter of 2013, there were no

other significant changes in the shareholder structure, which was as follows as of 30 June:

• • Meritus Trust Company Limited via EuroChem Group SE: 9.88 % (notification of 12 July 2011)
• • Blackrock: 5.08 % (notifications of 11 May 2012)

Under the free float definition applied by Deutsche Börse AG, the free float remains unchanged at about 90 %.

K+S Bonds

As a result of the continued high provision of liquidity by the ECB and the other major central banks, the bond prices of obligors with good credit ratings remained on a high level on the capital market while yields were correspondingly low. The bond which will mature in September 2014 (issue volume: € 750 million; interest coupon: 5.0 % p.a.) was quoted at 105.3 % on 30 June 2013 with a yield of 0.7 % p.a. (31 December 2012: 107.1 % and 0.8 % p.a. respectively). The 10-year bond which was issued in June 2012 (issue volume: € 500 million; interest coupon: 3.0 % p.a.) was quoted at 101.4 % on 30 June 2013 with a yield of 2.8 % p.a. (31 December 2012: 104.8 % and 2.4 % p.a. respectively). The cash inflow from this issue is to be used to repay the corporate bond due in 2014.

1.4 Earnings, Financial and Asset Position

Development of orders

Most of the business of the K+S Group is not covered by longer-term agreements concerning fixed volumes and prices.

In the Potash and Magnesium Products business unit, the proportion of the backlog of orders in relation to revenues is low, i.e. less than 10 %. This is customary in

C apital Market Key Data							TAB: 1.3.2
		Q2/13	Q2/12	%	H1/13	H1/12	%
Closing price as of 30 June	XETRA, €	—	—	—	28.41	36.00	(21.1)
Highest price	XETRA, €	36.12	39.98	(9.7)	37.53	40.60	(7.6)
Lowest price	XETRA, €	28.19	30.40	(7.3)	28.19	30.40	(7.3)
Average price	XETRA, €	32.44	34.72	(6.6)	33.57	36.38	(7.7)
Performance year to date	%	(21.7)	(8.2)	—	(19.1)	+ 0.7	—
Market capitalisation as of 30 June	€ billion	—	—	—	5.4	6.9	(21.1)
Enterprise value as of 30 June	€ billion	—	—	—	6.2	7.7	(19.2)

Source: Bloomberg

the industry. The business is largely characterised by long-term customer relationships as well as revolving framework agreements with non-binding indicative volumes and prices.

In the Salt business unit, de-icing salt contracts for the public sector in Europe, the United States and in Canada are issued by means of public invitations to tender. These take place every second and third quarter for the upcoming winter, but also, to a certain extent, for the following winter seasons. The contracts include both price and maximum volume agreements. However, as the actual volumes depend on the winter weather conditions and are therefore uncertain in advance, they cannot be classified as a backlog of orders as such. This also applies to agreements with minimum purchasing obligations on the part of our customers, since they can normally be shifted to the following winter in the event of weak demand in a given season.

For the above-mentioned reasons, the disclosure of the backlog of orders of the K+S Group and its business units is of no relevance for assessing the short- and medium-term earnings capacity.

Revenues and Earnings Position

Revenues increased by 4% in the first half of the year

While at € 874.5 million revenues for the quarter under review were down € 122.0 million or 12 % on the robust

V ariance analysis		TAB: 1.4.1
in %	Q2/13	H1/13
Change in revenues	(12.2)	+ 3.7
volume/structure	(5.7)	+ 8.6
prices/price-related	(5.4)	(4.1)
exchange rates	(1.2)	(0.8)
consolidation	+ 0.1	—

Detailed information on average prices and sales volumes can be found in tables 1.5.3 and 1.5.6.

figure for the same period a year ago. Against the backdrop of high sales volumes in the first quarter for both business units, revenues of the K+S Group nevertheless rose by 4 % to € 2,154.8 million in the first half of the year. Compared with the exceptionally high sales volumes for the same quarter a year ago, sales volumes for the Potash and Magnesium Products business unit normalised in the second quarter, with prices significantly lower than a year ago. Revenues in the Salt business unit were more or less constant as an in part higher price level could almost offset negative currency effects. / TAb: 1.4.1 / FIG: 1.4.1

In the first six months of the year, a good 54 % of revenues were generated by the Potash and Magnesium Products business unit, followed by Salt (42 %) and Complementary Activities (4 %). In Europe, we generated a revenue share of approximately 44 %, followed by North America (29 %), South America (16 %) and Asia (10 %). / FIG: 1.4.2

Development of selected cost types

Total costs (revenues minus EBIT) declined by about 8 % for the quarter under review largely as a result of volume factors. Because of the high proportion of fixed costs customary in the mining industry, they fell somewhat disproportionately in relation to revenues. The most important cost types developed as follows: Personnel expenses amounted to € 250.2 million in the second quarter or about 30 % of revenues and thus remained on the level of the same quarter a year ago (for an explanation, see page 19). Freight costs, about 20 % measured in terms of revenues, fell slightly as a result of volume factors, while energy costs (as a proportion of revenues: just under 10 %) remained constant.

In the context of our strategy, particular attention is continuously accorded to the development of ways of improving cost efficiency in all areas of the Company.

EBITDA reaches € 563.3 million (H1/12: € 577.8 million)

For the first half of the year, EBITDA reached € 563.3 million, which corresponds to a decrease of about 3 % (H1/12: € 577.8 million). During the second quarter of 2013, earnings before interest, taxes, depreciation and amortisation (EBITDA) declined by about 17 % to € 227.0 million (Q2/12: € 274.7 million).

First half year operating earnings EBIT I at € 440.5 million

For the first six months of 2013, the K+S Group achieved operating earnings of € 440.5 million, which represents a decrease of about 6 % on the figure reported a year ago (H1/12: € 466.4 million). At € 122.8 million, the depreciation and amortisation taken into account in the first half of the year was 10 % above the figure for the same period a year ago (H1/12: € 111.4 million). At € 162.6 million, operating earnings EBIT I for the quarter under review remained down significantly, by € 56.1 million or 26 %, on the high figure for the same quarter a year ago (Q2/12: € 218.7 million). In the Potash and Magnesium Products business unit, lower prices as well as lower sales volumes resulted in declining earnings. The decrease in earnings in the Salt business unit is particularly attributable to an expense related to the planned sale of a cargo and supply ship in connection with transferring to a more attractively priced external

R evenues by Region January – June 2013			FIG: 1.4.2
5 4 1	in %	H1/13	H1/12
3	1 Europe	44.1	40.0
	– of which Germany	15.5	13.8
	2 North America	29.0	25.7
	3 South America	15.5	18.8
2	4 Asia	9.5	13.1
	5 Africa, Oceania	1.9	2.4

enterprise (€ 3.2 million). At € 64.4 million, the depreciation and amortisation taken into account in EBIT I was up on the figure for the same period a year ago (Q2/12: € 56.0 million) as a result of higher capital expenditure on the package of measures for water protection. The upcoming sale of the above-mentioned ship led to an increase in depreciation and amortisation in the Salt business unit.

The result from operating forecast hedges included in EBIT I corresponds – due to the elimination of all fluctuations in the market value during the term – to the value of the hedges at the time of realisation (difference between the spot rate and hedged rate) less the premiums paid or plus the premiums received in the case of option transactions. The changes in the market value of the operating forecast hedges still outstanding are, however, only taken into consideration in the result after operating hedges (EBIT II).

Result after operating hedges (EBIT II)

For the first six month 2013, a result after operating hedges EBIT II of € 431.2 million was achieved representing a decrease of 9 % on the figure of a year ago (H1/12: € 473.9 million). The earnings effects resulting from the operating forecast hedges included in this figure amounted to € (9.3) million (H1/12: € +7.5 million). EBIT II for the quarter under review amounted to € 157.1 million after having been € 201.0 million in the same quarter of the previous year ((21.8)%). EBIT II for the second quarter was adversely affected by earnings effects resulting from operating forecast hedges in the amount of € 5.5 million; the figure a year ago had been € (17.7) million.

Under IFRS, changes in the market value from hedging transactions have to be reported in the income statement. EBIT II includes all earnings arising from operating hedging transactions, i.e. both valuation effects as at the reporting date and earnings from realised operating hedging derivatives. Effects on earnings from the hedging of underlying transactions relating to financing whose effects do not influence EBIT are shown in the financial result.

Financial result improves

The financial result for the first half of the year amounted to € (35.4) million, compared to € (39.2) million a year ago. The second quarter financial result was € (17.5) million, compared with € (24.1) million for the same period a year ago, with the improvement attributable to lower interest expenses and to the positive impact of higher interest income. In addition to the interest expenses for pension provisions (Q2/13: € (1.5) million), the financial result also includes the interest expenses for other non-current provisions, mainly provisions for mining obligations (Q2/13: € (6.9) million); both are non-cash.

/ Further details regarding the financial result can be found in the Notes on page 36.

(Adjusted) earnings before income taxes

For the half year under review, earnings before income taxes were € 395.8 million (H1/12: € 434.7 million) and adjusted earnings before income taxes came to € 405.1 million (H1/12: € 427.2 million). In the quarter under review, earnings before income taxes totaled € 139.6 million (Q2/12: € 176.9 million). If the earnings are adjusted for the effects of operating forecast hedges that were not already recorded in operating earnings EBIT I (€ (5.5) million), this results in adjusted earnings before income taxes of € 145.1 million; a figure that is down € 49.5 million or 25 % on that posted a year ago.

(Adjusted) Group earnings from continued operations

For the first six months, Group earnings after taxes from continued operations amounted to € 289.5 million (H1/12: € 314.2 million). The tax expense for the first six months was € 106.1 million, including deferred, i.e. non-cash tax income of € 24.7 million (income tax expense H1/12: € 120.2 million, of which € 23.3 million was deferred tax income). Compared with the same period a year ago, adjusted Group earnings from continued operations for the half year under review fell by € 12.7 million or 4 % to € 296.1 million. In the second quarter, Group earnings after taxes from continued operations reached € 102.0 million (Q2/12: € 127.9 million). In the quarter under review, a tax expense totalling € 37.6 million was incurred, including deferred, i.e. non-cash tax income in the amount of € 16.1 million (Q2/12: tax expense of € 48.9 million, of which € 12.5 million was deferred tax income). Adjusted Group earnings from continued operations for the quarter under review fell by € 34.6 million or 25 % to € 105.9 million (Q2/12: € 140.5 million).

/ Further details regarding income taxes can be found in the Notes on page 36.

Adjusted earnings per share from continued operations

In the first half of 2013, adjusted earnings per share from continued operations reached € 1.55, a decrease of 4 % on the figure of € 1.61 a year ago. In the quarter under review, adjusted earnings per share from continued operations reached € 0.56 and were thus about 23 % below the figure for the same period last year of € 0.73. This was computed on the basis of 191.40 million nopar value shares, being the average number of shares outstanding (Q2/12: 191.40 million no-par value shares).

At the end of June, the total number of shares outstanding of the K+S Group amounted to 191.40 million nopar value shares. We held no shares of our own as of 30 June 2013.

The average domestic Group tax rate was 28.5 % in the second quarter (Q2/12: 28.5 %), and the adjusted Group tax ratio from continued operations amounted to 26.7 %

for the 2013 quarter under review, compared with 27.8 % for the same quarter a year ago.

Undiluted, adjusted earnings per share are computed by dividing adjusted Group earnings after taxes and minority interests by the weighted average number of shares outstanding. As none of the conditions resulting in the dilution of earnings per share exist in the case of K+S at the present time, undiluted earnings per share correspond to diluted earnings per share.

Adjusted Group earnings and adjusted earnings per share

Adjusted Group earnings for the first six months came to € 296.1 million (H1/12: € 342.7 million, with the discontinued operations of K+S Nitrogen accounting for € 33.9 million). Adjusted Group earnings (including discontinued operations) in the second quarter reached € 105.9 million (Q2/12: € 150.1 million). In the same quarter a year ago, € 9.6 million was still attributable to the discontinued operations of the nitrogen business.

Adjusted earnings per share, including discontinued operations, for the first six months reached € 1.55, compared with € 1.79 for the same period a year ago, with € 0.18 attributable to discontinued operations at this time. Adjusted earnings per share (including discontinued operations) in the quarter under review reached € 0.56 (Q2/12: € 0.78). In the same quarter a year ago, they had still included € 0.05 from the discontinued operations of the nitrogen business.

Financial position

Second quarter capital expenditure up substantially

In the second quarter of 2013, the capital expenditure incurred by the K+S Group came to € 191.3 million, i.e. more than twice as much as in the same quarter a year ago (Q2/12: € 77.7 million). The majority of the capital expenditure was accounted for by the Potash and Magnesium Products business unit. In this business unit, the increase is mainly attributable to the planned capital expenditure related to the package of measures for water protection in the Hesse-Thuringia potash district and to the Legacy Project, mainly infrastructure, water supply, drilling and engineering works in the latter case. The volume of capital expenditure in the Salt business unit declined slightly, with the optimisation of the mining process at the rock salt site in Fairport, USA, the expansion of the brine field at Frisia in Harlingen, the Netherlands, and measures for the development of a lower-lying mining level at the rock salt site in Weeks Island, USA, being among the most important projects in the quarter under review. A good one third of the capital expenditure is accounted for by measures relating to replacement and ensuring production. This share of about € 72 million exceeded the depreciation of € 64.4 million. In the first six months, a total of € 302.1 million (H1/12: € 118.9 million) was invested, of which a good third was used for measures relating to replacement and ensuring production. In the first half of the year, this share of about € 109 million was thus less than the depreciation of € 122.8 million. / FIG: 1.4.3

Cash flow from operating activities benefits from significantly fewer funds being tied up in working capital

Gross cash flow reached € 414.7 million in the first half of the year and was down € 62.0 million or about 13 % on the figure posted a year ago (H1/12: € 476.7 million) due to higher income tax payments. The higher payments in the first half of 2013 included a back payment for 2012, which also had benefited from a tax refund for 2011. / TAb: 1.4.2

Cash flow from operating activities (without the outfinancing of pension obligations) in the first half of the year could be increased by € 218.4 million or 65 % to € 554.1 million. This was attributable to a significantly lower tying up of funds in working capital. In the Potash and Magnesium Products business unit, receivables fell as a result of price and volume factors, especially in

C ash flow Overview 1		TAB: 1.4.2
	H1/13	H1/12
in € million
Gross cash flow	414.7	476.7
Cash flow from operating activities 2	554.1	335.7
Cash flow for investing activities 3	(273.6)	(129.3)
– of which acquisitions/divestments	—	(4.2)
Free cash flow2,3	280.5	206.4
Free cash flow before acquisitions/divestments 2,3	280.5	210.6
Cash flow from/for financing activities	(270.4)	247.3
Operational change in cash and cash equivalents 2,3	+ 6.8	+ 458.4

1 Information refers to the continued operations of the K+S Group.

2 Without out-financing of pension obligations in the amount of € (10.0) million in H1/13 (H1/12: € (6.9) million).

3 Without purchases/disposals of securities and other financial investments in the amount of € 63.1 million net in H1/13 (H1/12: € (204.0) million).

1 Capital expenditure in property, plant and equipment, intangible and financial assets of the continued operations. 2 Further information regarding future capital expenditures can be found on page 19.

E quity and Liabilities						FIG: 1.4.4
in %	20	40	60	80		100
30.06.2013			52.5		38.5	9.0
31.12.2012			51.5		38.7	9.8
30.06.20121			47.0		37.1	15.9

Equity Non-current debt Current debt

1 Information as of 30 June 2012 has not been adjusted and also includes the discontinued operations of the nitrogen business.

				FIG: 1.4.5
20	40	60	80	100
		64.3		35.7
				37.1
		54.4		45.6
			62.9

Non-current assets Current assets

1 Information as of 30 June 2012 has not been adjusted and also includes the discontinued operations of the nitrogen business.

the case of the overseas business. In the Salt business unit, there was a significantly higher reduction in inventories due to in part above-average wintry weather in the first quarter. Additionally, a lower reduction in liabilities compared with the same period a year ago had a somewhat positive impact.

Cash flow for investing activities (without investments in securities) in the first half year amounted to € (273.6) million and was therefore significantly below the level for the same period a year ago (H1/12: € (129.3) million) due to higher capital expenditure, especially in connection with the package of measures for water protection as well as the Legacy Project. Free cash flow (excluding the out-financing of pension obligations and investments in securities) reached € 280.5 million (H1/12: € 206.4 million). Adjusted for acquisitions/divestitures, the free cash flow (without the out-financing of pension obligations and without investments in securities) could be increased by € 69.9 million to € 280.5 million compared with the same period a year ago (H1/12: € 210.6 million).

Cash flow for/from financing activities for the first six months amounted to € (270.4) million, compared with € 247.3 million for the same period a year ago, which had benefited from the issuance of a bond for about € 500 million. As of 30 June 2013, net cash and cash equivalents amounted to € 405.6 million (30 June 2012: € 644.7 million; 31 December 2012: € 345.0 million). It should be noted that during the period under review, € 180.9 million was invested in securities and other financial investments, while there was a cash inflow of € 244.0 million from the divestment of matured securities and from financial investments. These relate to investments mainly made in time deposits and money market instruments with terms of more than three months and which continue to remain available as cash reserves but cannot be regarded as net cash and cash equivalents in accordance with IFRS.

As of the reporting date, net indebtedness (including provisions for pensions and mining obligations) declined further to € 791.1 million compared to the figure as of 30 June 2012 (€ 813.1 million).

/ Further information on this can be found in the Notes on page 38.

Very solid financing structure

The financing structure of the K+S Group continues to be very solid: As of 30 June 2013, the equity ratio remained on a high level, amounting to about 53 % of the balance sheet total. The share of non-current debt, including non-current provisions, amounted to 39 %, while the share of current debt remained somewhat stable at 9 %. / FIG: 1.4.4

/ Further details regarding the main changes in individual balance sheet items can be found in the Notes on page 37.

As of 30 June 2013, the K+S Group's debt consisted chiefly of financial liabilities (41 %), provisions (38 %) and trade payables (7 %). As of 30 June 2013, financial liabilities amounted to € 1,266.4 million; of this, only € 0.9 million had to be classified as current. The main provisions of the K+S Group as of 30 June 2013 concern provisions for mining obligations (€ 713.2 million, € +6.6 million compared with 31 December 2012) as well as for pensions and similar obligations (€ 113.9 million, € (46.2) million).

Off-balance sheet financing instruments/Off-balance sheet assets

Off-balance sheet financing instruments in the sense of factoring transactions, asset-backed securities, sale and lease back transactions or contingent liabilities to special purpose entities not consolidated only exist to a negligible extent. We primarily use operating leases, for example for vehicles, storage capacity and IT accessories. Due to the chosen contractual structures, these items are not to be carried under fixed assets.

Asset position

As of 30 June 2013, the balance sheet total of the K+S Group amounted to € 6,517.0 million, which represents a decrease of around 1 % on the end of 2012. The ratio of non-current to current assets was 65:35. The proceeds from the bond issued in June 2012 were invested temporarily in securities and other financial investments with terms of more than twelve months. Cash and cash equivalents, current and non-current securities and other financial investments remained on about the same level as a year ago since the start of the year at € 1,283.4 million (31 December 2012: € 1,286.3 million). / Further details concerning the main changes in individual balance sheet items can be found in the Notes on page 37.

Including cash and cash equivalents (€ 411.9 million), the non-current and current securities and other financial investments (€ 871.5 million), the provisions for mining obligations and pensions (€ 713.2 million and € 113.9 million respectively) and the financial liabilities (€ 1,266.4 million), and after taking into account claims for reimbursement in connection with a bond at Morton Salt (€ 19.0 million), this means that the net indebtedness of the K+S Group was € 791.1 million as of 30 June 2013 (31 December 2012: € 827.3 million), which represents a decrease of € 22.0 million on the figure posted a year ago (30 June 2012: € 813.1 million). / FIG: 1.4.5

1.5 Segments of the K+S GROUP

Potash and Magnesium Products Business Unit

/ A description of the market environment in the Potash and Magnesium Products business unit can be found on page 5 in the 'Industry-specific framework conditions' section.

Revenues

In the first six months, business unit revenues fell by about 6 % to € 1,173.8 million, while the sales volumes, at 3.80 million tonnes (H1/12: 3.74 million tonnes), however, were even slightly above the level of a year ago. Revenues for the second quarter were € 548.3 million and down € 121.2 million or 18.1 % on the high figure posted a year ago (Q2/12: € 669.5 million), with the decrease due to both price and volume factors. Additionally, exchange rate effects in the overseas business had a slightly negative impact on the development of revenues. Also in the case of our most important product in terms of volumes, potassium chloride, revenues for the quarter under review fell by € 125.7 million or 32.2 % to € 265.2 million, which was mainly due to a significant decline in prices as well as lower sales volumes compared with the very robust corresponding period a year ago. In the case of fertilizer specialities, revenues could be increased to

V ariance analysis		TAB: 1.5.1
	Q2/13	H1/13
in %
Change in revenues	(18.1)	(6.2)
volume/structure	(8.3)	+ 2.6
prices/price-related	(8.7)	(8.1)
exchange rates	(1.1)	(0.7)
consolidation	—	—
Potassium chloride	(32.2)	(11.7)
Fertilizer specialities	+ 4.7	—
Industrial products	(6.9)	+ 0.1

Potash and Magnesium Products Business Unit TAB: 1.5.2
	Q2/13	Q2/12	%	H1/13	H1/12	%
in € million
Revenues	548.3	669.5	(18.1)	1,173.8	1,251.4	(6.2)
Earnings before interest, taxes, depreciation and amortisation (EBITDA)	209.8	263.0	(20.2)	445.8	493.6	(9.7)
Operating earnings (EBIT I)	182.0	240.0	(24.2)	391.2	447.7	(12.6)
Capital expenditure	173.2	54.1	>100	258.5	78.0	>100
Employees as of 30 June (number)	—	—	—	8,258	8,209	+ 0.6

Development of earnings

The EBITDA generated by the Potash and Magnesium Products business unit for the first half of the year was € 445.8 million (H1/12: € 493.6 million), which corresponds to a decrease of just under 10 %. At € 209.8 million, EBITDA for the second quarter of 2013 was down € 53.2 million or 20.2 % on the figure posted a year ago (Q2/12: € 263.0 million).

D evelopment of revenues, sales volumes and average prices by region 1 TAB: 1.5.3
		Q1/12	Q2/12	H1/12	Q3/12	Q4/12	2012	Q1/13	Q2/13	H1/13
Revenues	€ million	581.9	669.5	1,251.4	560.5	478.7	2,290.6	625.5	548.3	1,173.8
Europe	€ million	318.7	273.0	591.7	268.4	258.6	1,118.7	354.4	276.3	630.7
Overseas	US\$ million	345.0	508.1	853.1	365.2	285.4	1,503.7	358.0	355.3	713.3
Sales volumes	t eff. million	1.78	1.96	3.74	1.69	1.52	6.95	2.03	1.77	3.80
Europe	t eff. million	0.98	0.85	1.83	0.85	0.84	3.52	1.11	0.89	2.00
Overseas	t eff. million	0.80	1.11	1.91	0.84	0.68	3.43	0.92	0.88	1.80
Average prices	€/t eff.	327.4	340.8	334.4	332.3	314.2	329.4	308.0	309.4	308.6
Europe	€/t eff.	326.1	319.5	323.0	315.7	308.4	317.8	318.8	311.7	315.7
Overseas	US\$/t eff.	431.1	457.7	446.6	436.5	415.4	437.9	389.5	401.0	395.2

1 Revenues include prices both inclusive and exclusive of freight costs and, in the case of overseas revenues, are based on the respective USD/EUR spot rates. For most of these revenues, hedging transactions have been concluded. The price information is also affected by the respective product mix and is therefore to be understood as providing a rough indication only.

At € 391.2 million, operating earnings EBIT I for the first six months were down 12.6 % on the same period a year ago (H1/12: € 447.7 million); this figure includes depreciation and amortisation of € 54.6 million (H1/12: € 45.9 million). Operating earnings EBIT I for the second quarter reached € 182.0 million and were down 24.2 % on the figure for the same quarter a year ago (€ 240.0 million). The reasons for this was a lower price level compared with the strong quarter a year ago, slightly lower sales volumes as well as slightly negative currency effects. Depreciation and amortisation amounted to € 27.8 million, compared with € 23.0 million for the same quarter a year ago.

Salt Business Unit

/ A description of the market environment in the Salt business unit can be found on page 5 in the 'Industry-specific framework conditions' section.

Revenues

For the first half of the year, total Salt business unit revenues increased significantly by 21 % to € 899.7 million (H1/12: € 746.2 million). At € 285.2 million, second quarter revenues were on the same level as a year ago (Q2/12: € 287.7 million), with positive price effects almost offsetting currency-related decreases in revenues.

Second quarter revenues for the de-icing salt business rose by 37% to € 40.4 million, especially as a result of the good early stocking-up business in Europe (Q2/12: € 29.6 million). Revenues for food grade salt fell by 7% to € 79.8 million (Q2/12 € 86.0 million), with the decrease being particularly attributable to the structural reclassification of products from the food grade salt product group to the industrial salt product group. Compared with the same quarter a year ago, industrial salt revenues remained stable at € 128.5 million (Q2/12: € 128.4 million). The aforementioned reclassification effect had a positive impact and could offset volume-related decreases. Revenues of € 24.8 million were achieved with salt for chemical use and were therefore down € 6.5 million on the high figure for the same quarter a year ago (Q2/12: € 31.3 million) due to volume factors above all. In the case of Other, revenues fell by 6% to € 11.7 million (Q2/12: € 12.4 million). The crystallised salt sales volume for the first six months rose by about 30% to 11.87 million tonnes against the background of a below-average sales volume for de-icing salt for the same period a year ago (H1/12: 9.16 million tonnes). Sales volumes of crystallised salt for the second quarter totalled 2.96 million tonnes and were thus on almost the same level as a year ago (Q2/12: 2.98 million tonnes). / TAb: 1.5.4, 1.5.5, 1.5.6 / FIG: 1.5.3, 1.5.4

Development of earnings

The EBITDA generated by the Salt business unit for the first six months reached € 118.8 million and was therefore significantly above the figure for the same period a year ago (H1/12: € 92.0 million). Compared with a year ago, EBITDA for the quarter under review increased by € 0.8 million or about 5 % to € 18.6 million.

V ariance analysis		TAB: 1.5.4
	Q2/13	H1/13
in %
Change in revenues	(0.9)	+ 20.6
volume/structure	(0.8)	+ 19.8
prices/price-related	+ 1.3	+ 1.9
exchange rates	(1.5)	(1.2)
consolidation	+ 0.1	+ 0.1
Food grade salt	(7.2)	(4.3)
Industrial salt	+ 0.1	+ 2.7
Salt for chemical use	(20.8)	(6.5)
De-icing salt	+ 36.5	+ 68.8
Other	(5.6)	(14.6)

Following a successful half year in the Salt business unit,
operating earnings EBIT I for the first six months rose to
€ 59.6 million, compared with € 33.7 million a year ago,
including the negative effect of depreciation and amor
tisation of € 59.2 million (H1/12: € 58.3 million). Operat
ing earnings EBIT I for the quarter under review fell by
€ 1.9 million to € (13.5) million. The decrease in earnings
is particularly attributable to an expense related to the
planned sale of a cargo and supply ship in connection
with transferring to a more attractively priced exter
nal enterprise (€ 3.2 million) as well as to catching-up
effects related to maintenance activities. On the one
hand, there were positive effects resulting from signif
icantly higher revenues in the European de-icing salt
business compared with the same quarter a year ago
due to volume factors while de-icing salt sales volumes
were lower in North America on the other hand. Operat-

S alt Business Unit						TAB: 1.5.5
	Q2/13	Q2/12	%	H1/13	H1/12	%
in € million
Revenues	285.2	287.7	(0.9)	899.7	746.2	+ 20.6
Earnings before interest, taxes, depreciation and amortisation (EBITDA)	18.6	17.8	+ 4.5	118.8	92.0	+ 29.1
Operating earnings (EBIT I)	(13.5)	(11.6)	(16.4)	59.6	33.7	+ 76.9
Capital expenditure	15.8	19.6	(19.4)	26.7	33.4	(20.1)
Employees as of 30 June (number)	—	—	—	5,028	5,172	(2.8)

R evenues by Region January – June 2013			FIG: 1.5.4
5		H1/13	H1/12
4	in %
3 1	1 Europe	26.6	21.4
	– of which Germany	13.1	8.5
	2 North America	64.8	67.7
	3 South America	7.0	9.4
2	4 Asia	1.2	1.4
	5 Africa, Oceania	0.4	0.1

D evelopment of revenues, sales volumes and average prices 1 TAB: 1.5.6
		Q1/12	Q2/12	H1/12	Q3/12	Q4/12	2012	Q1/13	Q2/13	H1/13
De-icing salt
Revenues	€ million	207.3	29.6	236.9	57.4	161.7	456.0	359.4	40.4	399.8
Sales volumes	t million	4.02	0.60	4.62	1.11	2.60	8.33	6.53	0.77	7.30
Average prices	€/t	51.5	49.6	51.3	51.7	62.2	54.7	55.1	52.1	54.7
Industrial salt, salt for chemical use and food grade salt
Revenues	€ million	228.1	245.7	473.8	245.8	239.6	959.2	236.5	233.2	469.7
Sales volumes	t million	2.16	2.38	4.54	2.23	2.46	9.23	2.38	2.19	4.57
Average prices	€/t	105.8	103.2	104.4	110.0	97.5	104.0	99.5	106.5	102.8
Other
Revenues	€ million	23.1	12.4	35.5	15.3	18.8	69.6	18.6	11.7	30.3
Salt business unit
Revenues	€ million	458.5	287.7	746.2	318.5	420.1	1,484.8	614.5	285.2	899.7

tural factors. As a result of contractual changes for certain business transactions resulting in their treatment as internal revenues, the revenues generated by K+S Transport GmbH fell by € 0.6 million to € 3.6 million.

Development of earnings

The EBITDA generated by the Complementary Activities for the first six months remained almost unchanged at € 16.6 million (H1/12: € 16.7 million). At € 8.0 million, EBITDA for the second quarter of 2013 was about the same as a year ago when it amounted to € 8.2 million.

At € 13.0 million, operating earnings EBIT I for the first six months were down slightly (H1/12: € 13.5 million); this figure includes depreciation and amortisation of € 3.6 million (H1/12: € 3.2 million). At € 6.2 million, operating earnings EBIT I for the second quarter were moderately below

1 Revenues include prices both inclusive and exclusive freight costs. The price information is also affected by changes of the exchange rates and the respective product mix and is therefore to be understood as providing a rough indication only.

ing earnings EBIT I include depreciation and amortisation of € 32.1 million (Q2/12: € 29.4 million).

Complementary Activities

Revenues

For the first six months, the Complementary Activities achieved revenues involving third parties of € 80.1 million (H1/12: € 77.2 million), while total revenues came to € 98.5 million (H1/12: € 95.0 million). In the second quarter, revenues generated by Complementary Activities involving third parties amounted to € 40.4 million (Q2/12: € 38.1 million). Including intersegment revenues, total revenues amounted to € 49.0 million, compared with € 47.5 million for the same quarter a year ago. / TAb: 1.5.7, 1.5.8 / FIG: 1.5.5, 1.5.6

It proved possible to increase the revenues of the animal hygiene products segment for the second quarter by € 1.4 million or about 18 % to € 9.1 million, especially as a result of volume factors. The revenues of the trading business for the period under review increased by € 1.0 million to € 4.6 million. The waste management and recycling segment increased its revenues by € 0.5 million to € 23.1 million due to volume, price and struc-

V ariance analysis		TAB: 1.5.7
	Q2/13	H1/13
in %
Change in revenues	+ 6.0	+ 3.8
volume/structure	+ 3.4	+ 1.1
prices/price-related	+ 2.6	+ 2.7
exchange rates	—	—
consolidation	—	—
Waste Management and Recycling	+ 2.2	+ 2.0
K+S Transport GmbH	(14.3)	(16.0)
Animal hygiene products	+ 18.2	+ 9.8
CFK Trading	+ 27.8	+ 21.3

C omplementary Activities TAB: 1.5.8
	Q2/13	Q2/12	%	H1/13	H1/12	%
in € million
Revenues	40.4	38.1	+ 6.0	80.1	77.2	+ 3.8
Earnings before interest, taxes, depreciation and amortisation (EBITDA)	8.0	8.2	(2.4)	16.6	16.7	(0.6)
Operating earnings (EBIT I)	6.2	6.6	(6.1)	13.0	13.5	(3.7)
Capital expenditure	0.5	1.4	(64.3)	0.8	2.0	(60.0)
Employees as of 30 June (number)	—	—	—	293	288	+ 1.7

the figure of the same period a year ago (Q2/12: € 6.6 million). Operating earnings EBIT I include depreciation and amortisation of € 1.8 million (Q2/12: € 1.6 million). While the CFK (trading) and animal hygiene products segments were able to achieve higher contributions to earnings as a result of volume factors, the waste management and recycling segment as well as K+S Transport GmbH posted earnings decreases.

Revenues by Region January – June 2013 FIG: 1.5.6 H1/13 H1/12 in % 1 Germany 82.8 82.0 2 Rest of Europe 16.8 17.7 3 Asia 0.4 0.3 2 1 3

1.6 Employees

Number of employees stable

As of 30 June 2013, the K+S Group employed a total of 14,255 people. Compared with 30 June 2012 (14,325 employees), the number thus remained almost stable. While there was an increase in the number of employees in the Potash and Magnesium Products business unit in order to maintain the volume of crude salt extracted, for intensified activities in the area of environmental protection as well as for the Legacy Project and in K+S Aktiengesellschaft, there were fewer employees in the Salt business unit. The average number of people employed over the quarter was 14,285 (Q2/12: 14,316). As a result of the greater internationalisation of the K+S Group since 2006, just under a third of employees are now located outside Germany and more than a quarter outside Europe. On 30 June 2013, the number of trainees in Germany was 460 and was thus on about the level of a year ago (30 June 2012: 462). / FIG: 1.6.1

Personnel expenses

In the second quarter, personnel expenses for continued operations amounted to € 250.2 million and were thus on the level of the same quarter a year ago (Q2/12: € 248.9 million). At € 490.0 million, personnel expenses related to continued operations for the first six months were also more or less stable (H1/12: € 493.3 million).

1.7 Research and development

Research costs for continued operations came to € 3.3 million for the quarter under review and were thus significantly down on the level for the same quarter a year ago (Q2/12: € 5.6 million). Capitalised developmentrelated capital expenditure amounted to € 1.8 million in the second quarter (Q2/12: € 0.0 million). The decrease in research costs and the increase in capitalised development-related capital expenditure are largely attributable to the planned reduction in the scope of research related to the Legacy Project and to the capitalisation of a part of the outlays incurred in this regard. In the first six months of 2013, research costs decreased to € 6.7 million (H1/12: € 13.7 million) and capitalised development-related capital expenditure increased to € 2.2 million compared with a year ago (H1/12: € 0.0 million). The R&D projects planned for 2013 and described in the Financial Report 2012 on page 134 are either being carried out as scheduled or are being continued. As of 30 June 2013, there were 85 employees working in the area of research and development at the K+S Group, which means that their number was higher than a year ago as intended (30 June 2012: 81).

For a comprehensive description of the research and development activities, please see the relevant passages in our Financial Report 2012 on pages 81 and 134.

1.8 Risk Report

For a comprehensive presentation of the risk and opportunity management system as well as possible risks, please refer to the corresponding passages in our Financial Report 2012 on page 113. The risks described there remain largely unchanged as of 30 June 2013. On 22 April 2013, K+S reported on the changed parameters for our Legacy Investment Project in Canada. An appropriate description can be found under 'Subsequent Events' on page 19 of the Q1/13 Quarterly Financial Report. The risks to which the K+S Group is exposed, both in isolation or in conjunction with other risks, are limited and do not, according to current estimates, jeopardise the continued existence of the Company.

1.9 Opportunity report

For a comprehensive presentation of possible opportunities, please refer to the relevant passages in our Financial Report 2012 on page 143. There is no offsetting of opportunities and risks or their positive and negative changes.

1.10 Subsequent events

On 1 July 2013, K+S Aktiengesellschaft renewed early and increased an existing credit line, set to run until 2015, on attractive terms. The existing credit line in the amount of € 800 million, which was unused, will be replaced by a new credit line in the amount of € 1 billion with a term of five years until 2018 and with two extension options of one year in each case. In this way, the Company will ensure liquidity that can also be used for financing the Legacy Project in addition to serving general corporate purposes. The financing of the construction of the new potash plant in Canada by 2016 with available cash, future cash flows and, if necessary, further borrowings will remain unchanged.

On 11 July 2013, K+S Potash Canada, a fully owned subsidiary of K+S Aktiengesellschaft, and the Canadian railway company Canadian Pacific (CP) signed an exclusive volume-based contract on the long-term transportation of potash products. The contract covers deliveries from the Legacy site in the south of the province of Saskatchewan to a western Canadian port destination and via CP's extensive network to other Canadian and US destinations. It represents a further step towards realising the project, which is progressing well along the relevant investment path.

On 11 July 2013, the Administrative Court of Kassel, in conducting summary proceedings in response to a request from a fishing association, arrived at the provisional assessment that for reasons due to nature protection law, the discharge of saline wastewater into the Werra by the Neuhof plant via a new, separate discharging point cannot be permitted until a decision is made in the principal proceedings. The summary decision has no consequences for operations at the K+S plants of Neuhof-Ellers and Werra as the discharge of saline wastewater by both plants is secured by an existing permit.

On 30 July 2013, Russian competitor Uralkali announced its exit from the BPC sales organisation operated jointly with Belarusian Belaruskali. The company plans to market its products through its own organisation in the future. This announcement and further statements on the part of Uralkali as well as speculation concerning future trends in the price of potash caused considerable irritation on the capital market and substantial declines in the share prices of all potash suppliers. The prices being reported for potash fertilizers are incomprehensible to us and, from our point of view, in no way correspond to the current supply and demand situation. The positive medium- and long-term trends in the potash fertilizer business remain valid. Our broad product portfolio makes us more resilient to an environment that is potentially getting more and more competitive.

Apart from this, no events of material importance with respect to the macroeconomic environment and industry situation for the K+S Group requiring disclosure have occurred.

1.11 Forecast report

Future Group direction

business policy

We do not intend to introduce any fundamental change in our business policy over the coming years. We want to expand our market positions in our business units, especially by increasing sales of speciality products, enhance our efficiency through the exploitation of synergies, press ahead with the expansion of new potash capacities with the Legacy Project in Canada as well as grow both organically and externally in the Potash and Magnesium Products as well as Salt business units. We will continuously monitor the competitive environment, include findings in our business policy and prepare for potential changes.

Future sales markets

/ A presentation of the future sales markets can be found in the Financial Report 2012 on pages 132 and 137.

Future macroeconomic situation

The following discussion about the future macroeconomic situation is essentially based on forecasts of the Kiel Institute for the World Economy (Kiel Discussion Papers: Global Economy in Summer 2013, July 2013) and those of Deka Bank (Makro Research, Volkswirtschaft Prognosen, July 2013).

In the middle of 2013, the global economy continued to develop at a very moderate pace. Despite improved economic data from the United States and the easing of the sovereign debt crisis in Europe, the outlook for the industrialised countries in particular is one of only modest economic growth. In the emerging market countries too, output is only expected to pick up gradually. Against this backdrop, Deka Bank expects global GDP growth of 2.8 % for 2013. / TAb: 1.11.1

For the European Union, the Kiel Institute for the World Economy forecasts a gradual easing with respect to the sovereign debt crisis. In countries such as Greece, Spain, Portugal and Italy, there have hitherto been only few signs indicating that a recovery might be in sight, even though the first economic adjustment processes are discernible. There continues to be a central forecast risk with respect to the influence of the crisis on the development of the global economy as well as a high degree of uncertainty surrounding political strategies. No fundamental improvement can be expected in the mood of European companies and consumers in the second half of the year too, given the uncertain sales outlook on the domestic market as well as, in part, high unemployment. There continues to be a risk that further eurozone countries will run into payment difficulties. In such case, a recession would be conceivable that could also depress the global economy. For Europe as a whole, in 2013, Deka Bank expects a slight GDP decrease of 0.2 % (previously: stable).

In 2013, the growth rate in the United States should, according to the estimates made by Deka Bank, be 1.7 % (previously: 2.4 %). The economy should slightly accelerate in the course of the year. In this respect, an improvement in purchasing power due to the moderate decrease in crude oil prices and the expansion of employment should have a supporting effect. Additionally, the US property market is recovering at a significant pace. A change of paradigm with respect to the current expansionary financial policy could produce a headwind.

The latest withdrawal of capital by foreign investors has caused a slight deterioration in the economic environment of the emerging market countries. In addition, the experts at Deka Bank do not expect the industrialised states to provide any significant stimuli. For this reason, GDP in the emerging market countries should grow more modestly than expected in the second half of the year.

The Kiel Institute for the World Economy expects the central banks to continue their expansionary course on monetary policy and to keep key interest rates low for 2013. This is despite the fact that the FED, the US central bank, has announced the possibility of a gradual shift in the direction of a tighter monetary policy. The USD/EUR exchange rate underlying our corporate planning is on average about 1.31 USD/EUR for 2013. For the Canadian dollar, an exchange rate of 1.35 CAD/EUR is assumed. As for the oil price, a level of US\$ 107 per barrel is assumed for 2013.

The effects on the course of business of the K+S Group described on page 4 should therefore also persist under the macroeconomic conditions forecast.

Regardless of the impact of the described macroeconomic situation, the prosperity of the emerging market countries will tend to increase further. This should result in higher dietary expectations on the part of their populations. Moreover, the world's population continues to grow. Demand for agricultural products should therefore continue to grow independently of the economic situation to a large extent. In the case of salt products, the impact of the general economic situation on demand is of minor importance, since business in the

Percentage change in Gross Domestic Product
	2013e	2012	2011	2010	2009
in %; real
Germany	+ 0.2	+ 0.7	+ 3.0	+ 3.7	(4.7)
European Union (EU-28)	(0.2)	(0.3)	+ 1.6	+ 1.9	(4.2)
World	+ 2.8	+ 3.0	+ 3.9	+ 5.1	(0.8)

Source: Deka Bank

de-icing salt sector is dependent on the weather and business with the other salts is largely independent of economic conditions.

Future industry situation

Potash and Magnesium Products business unit

The announcement made by Russian Uralkali that it would exit the BPC sales organisation operated jointly with Belarusian Belaruskali and related statements on the part of Uralkali concerning the expansion of output, needs a comprehensive assessment. We will investigate and continuously analyse potential changes on the future industry situation.

Salt business unit

Regarding the European de-icing salt business, we assume, as usual, multi-year average sales volumes for de-icing salt over the remaining months of the year. If the de-icing salt business for the first two quarters is taken into account, sales volumes are expected to be significantly higher, especially after demand in 2012 was below average because of the exceptionally mild weather conditions at the start of the year. In North America too, demand for de-icing salt should once again increase accordingly following the mild weather that characterised the first and fourth quarters of 2012 and assuming multi-year average sales volumes for the remaining months of 2013. In the food grade salt segment, demand in both Europe and North America should largely remain stable in 2013. South American sales volumes for food grade salt should continue to grow in line with population trends there, but following the normalisation of the salt harvests situation in Brazil, stronger competition can be observed there. While chemical industry demand for salt for chemical use should rise slightly in North America, we expect sales volumes to remain stable in South America and to be slightly lower in Europe. Salt consumption in Asia is continuing to grow at an appreciable rate. After SPL could make a series of deliveries to the chemical industry in China in 2011 and 2012, the region should continue to gain in importance for us in the future. The consumption of industrial salts should remain stable in all regions.

Future earnings, financial and asset position

As a result of the announcement made by Russian Uralkali that it would exit the BPC sales organisation operated jointly with Belarusian Belaruskali and related statements on the part of Uralkali concerning the expansion of output, significant uncertainty about the future volume- and price development in the market for potash fertilizer has occurred.

Against this background and following the principle of prudence, we no longer stick to our outlook for 2013 to slightly increase the operating earnings EBIT I compared to 2012 (€ 804.1 million). It is probable that the expected increase in earnings of the Salt business unit will not be sufficient to compensate for the decrease in earnings of the Potash and Magnesium Products business unit.

Also, the prospects stated in the financial report 2012 of a further slight increase in earnings for 2014 are potentially no longer achievable.

We will continuously monitor the competitive environment, include findings in our planning and prepare for potential changes.

Planned capital expenditure

The anticipated volume of capital expenditure for 2013 remains unchanged at about € 820 million, with outlays connected with the Legacy Project accounting for about CAD 500 million (about € 375 million) of this figure. The Legacy Project is proceeding according to schedule and is on budget. However, there may be shifts in this regard when the budgeted total expenditure is allocated to individual years. However, there may be shifts in this regard when the budgeted total expenditure is allocated to individual years. The remaining increase in the volume of capital expenditure compared with the previous year (2012: € 465.5 million) can be attributed to the implementation of the package of measures on water protection in the Hesse-Thuringia potash district (about € 140 million) and the completion of construction work on the saline water

C apital expenditure by unit	1	TAB: 1.11.2
in € million	2013e	2012
Potash and Magnesium Products business unit	655	332.9
Salt business unit	125	111.3
Complementary Activities	5	6.3
Reconciliation	35	15.0
K+S Group	~820	465.5

pipeline from the Neuhof site to the Werra plant (about € 30 million). In the Salt business unit, the volume of capital expenditure will rise mainly due to measures connected with the development of a lower-lying mining level at the rock salt site in Weeks Island, USA, the optimisation of the mining process at the rock salt site

1 Capital expenditure in property, plant and equipment, intangible and financial assets

of the continued operations.

in Fairport, USA, and the expansion of the brine field at Frisia in Harlingen, the Netherlands. In addition, the most important projects include the further expansion of sifting capacity at SPL. / TAb: 1.11.2 / FIG: 1.11.1

Measures relating to replacement and ensuring production will account for just under half of the volume of capital expenditure. Depreciation and amortisation is expected to total between € 240 million and € 250 million in 2013.

Expected financing structure

With net indebtedness of € 791.1 million (including pension provisions and provisions for mining obligations of € 827.1 million in total) and a level of indebtedness of only 23.1 %, the K+S Group has a strong financial base. In view of the upcoming capital expenditure for the expansion of our potash capacities in Canada (Legacy Project), the solid capital structure provides a good starting point for the further development of the K+S Group. Our currently very low level of net indebtedness should rise significantly year on year. This assumption takes into consideration the expected capital expenditure budget and the dividend paid in May 2013.

Future dividend policy

We pursue a basically earnings-based dividend policy. Accordingly, a dividend payout ratio of between 40 % and 50 % of adjusted Group earnings after taxes (including discontinued operations) forms the basis for the amounts specified in future dividend recommendations made by the Board of Executive Directors and the Supervisory Board.

C apital Exp enditure 1									FIG: 1.11.1
in € million	100	200	300	400	500	600	700	800	900
2013e2									~820
2012					465.5
2011			293.1
2010			188.6
2009		177.6

1 Capital expenditure in property, plant and equipment, intangible and financial assets of the continued operations. The years 2009 and 2010 still include the discontinued operations (2009: COMPO and K+S Nitrogen; 2010: K+S Nitrogen).

2 In 2013, CAD 500 million (about € 375 million) should be accounted for by the Legacy Project; the allocation of the budgeted total expenditure to the individual years may, however, still result in shifts.

Future number of employees, future personnel expenses

K+S increasingly has to compete for qualified employees. We want to continue bringing younger people in particular into the Company in order to respond to demographic change. However, we would also like to gain older and experienced employees for our Company.

K+S regards vocational training as an important investment into the future and continues to strive for a training ratio of about 6 % for its German companies. A special emphasis will also continue to be placed on advanced education. In the years to come, we also want to recruit as many of our future specialist and managerial personnel as possible from within our own ranks.

As of the end of 2013, we expect the number of employees to be slightly higher than at the end of the previous year (31 December 2012: 14,362). The average number of employees should also increase slightly this year to reach about 14,500 (2012: 14,336). This is mainly due to an increase in the number of personnel for the implementation of the Legacy Project, for intensified activities in the area of environmental protection and for maintaining the extraction of the requisite volumes of crude salt mined in the Potash and Magnesium Products business unit.

Future Research and Development

In the future too, we will continue to consistently pursue our research and development goals as laid out in our Financial Report 2012 on page 81. The total of research expenses and capitalised development-related capital expenditure should, with the operational launch of the first cavern of the Legacy Project, decline again (2012: € 33.6 million). The number of people employed in research should further increase over the course of the year in order to meet the coming challenges in the area of environmental and process analysis in particular as

R esearch Key Figures 1		TAB: 1.11.3
	2013e	2012
in € million
Research costs	17.7	19.4
Capitalised development-related capital expenditure	9.1	14.2
Employees as of 31 Dec. (number)	92	87

1 Information refers to the continued operations of the K+S Group.

well as to further drive the gaining of knowledge in the field of solution mining. / TAb: 1.11.3

Future products and services

/ A presentation of the future products and services can be found in the Financial Report 2012 on page 134.

1.12 Guarantee of the Legal Representatives of K+S Aktiengesellschaft

To the best of our knowledge and in accordance with the applicable accounting principles for interim reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the interim Group management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group.

Kassel, 6 August 2013 K+S Aktiengesellschaft The Board of Executive Directors

Forward-looking statements

This report contains facts and forecasts that relate to the future development of the K+S Group and its companies. The forecasts are estimates that we have made on the basis of all the information available to us at this moment in time. Should the assumptions underlying these forecasts prove not to be correct or should certain risks – such as those referred to in the Risk Report – materialise, actual developments and events may deviate from current expectations. The Company assumes no obligation to update the statements contained in the Management Report, save for the making of such disclosures as are required by the provisions of statute.

FINANCIAL SECTION

2

2.1 Income Statement	26
2.2 Cash Flow Statement	28
2.3 Balance Sheet	30
2.4 Statement of Changes in Equity	31
2.5 Notes	32
2.6 Summary by Quarter	40

Income statement 1,2	TAB: 2.1.1	Income statement (continued) 1,2	TAB: 2.1.1

	Q2/13	Q2/12	H1/13		H1/12 LTM3/13	12M/12
in € million
Revenues	874.5	996.5	2,154.8	2,077.1	4,013.0	3,935.3
Cost of sales	465.1	537.6	1,180.5	1,113.4	2,225.8	2,158.7
Gross profit	409.4	458.9	974.3	963.7	1,787.2	1,776.6
Selling expenses	188.6	182.1	423.8	375.7	782.3	734.2
General and administrative expenses	50.3	48.3	100.7	93.2	204.3	196.8
Research and development costs	3.3	5.6	6.7	13.7	12.4	19.4
Other operating income	18.0	43.1	48.7	73.8	132.8	157.9
Other operating expenses	26.8	41.5	58.2	75.9	134.4	152.1
Income from investments, net	0.6	3.4	3.0	3.4	4.8	5.2
Result from operating forecast hedges	(1.9)	(26.9)	(5.4)	(8.5)	8.0	4.9
Result after operating hedges (EBIT II) 4	157.1	201.0	431.2	473.9	799.4	842.1
Interest income	5.7	4.5	11.6	8.0	24.4	20.8
Interest expenses	(23.3)	(27.3)	(47.3)	(47.7)	(105.2)	(105.6)
Other financial result	0.1	(1.3)	0.3	0.5	5.7	5.9
Financial result	(17.5)	(24.1)	(35.4)	(39.2)	(75.1)	(78.9)
Earnings before income taxes	139.6	176.9	395.8	434.7	724.3	763.2
Taxes on income	37.6	48.9	106.1	120.2	183.3	197.4
– of which deferred taxes	(16.1)	(12.5)	(24.7)	(23.3)	(35.0)	(33.6)
Earnings after taxes from continued operations	102.0	128.0	289.7	314.5	541.0	565.8
Earnings after taxes from discontinued operations	—	9.5	—	34.6	65.4	100.0
Net income	102.0	137.5	289.7	349.1	606.4	665.8
Minority interests in earnings	—	0.1	0.2	0.3	0.4	0.5
Group earnings after taxes and minority interests	102.0	137.4	289.5	348.8	606.0	665.3
– thereof continued operations	102.0	127.9	289.5	314.2	540.6	565.3
– thereof discontinued operations	—	9.5	—	34.6	65.4	100.0

	Q2/13	Q2/12	H1/13		H1/12 LTM3/13	12M/12
in € million
Earnings per share in € (undiluted ^= diluted)	0.53	0.72	1.51	1.82	3.16	3.47
– thereof continued operations	0.53	0.67	1.51	1.64	2.82	2.95
– thereof discontinued operations	—	0.05	—	0.18	0.34	0.52
Average number of shares in million	191.40	191.40	191.40	191.40	191.40	191.40
Operating earnings (EBIT I) 4	162.6	218.7	440.5	466.4	778.2	804.1
Earnings before income taxes from continued operations, adjusted5	145.1	194.6	405.1	427.2	703.1	725.2
Group earnings from continued operations, adjusted5	105.9	140.5	296.1	308.8	525.4	538.1
Earnings per share from continued operations in €, adjusted5	0.56	0.73	1.55	1.61	2.75	2.81
Group earnings after taxes, adjusted5,6	105.9	150.1	296.1	342.7	590.8	637.4
Earnings per share in €, adjusted5,6	0.56	0.78	1.55	1.79	3.09	3.33

1 The income statement of 2012 was adjusted according to IFRS following the divestment of the nitrogen business.

Detailed information on the discontinued operations can be found in the Notes on page 34.

2 The figures of the previous year were adjusted due to the change of IAS 19. Further information can be found in the Notes on page 32. 3 LTM = last twelve months (Q3/12 + Q4/12 + Q1/13 + Q2/13).

4 Management of the K+S Group is handled, amongst others, on the basis of operating earnings (EBIT I). Reconciliation of EBIT II to operating earnings (EBIT I) is recorded in table 2.1.3.

5 The adjusted key figures only include the result from operating forecast hedges of the respective reporting period reported in EBIT I, which eliminates effects from changes in the market value of the hedges as well as effects from the exchange rate hedging of future capital expenditure in Canadian dollar (Legacy Project). Related effects on deferred and cash taxes are also eliminated; tax rate for Q2/13: 28.5 % (Q2/12: 28. 5 %).

6 Earnings from continued and discontinued operations.

S tatement of comprehensive income	1					TAB: 2.1.2
	Q2/13	Q2/12	H1/13		H1/12 LTM2/13	12M/12
in € million
Net income	102.0	137.5	289.7	349.1	606.4	665.8
Financial assets available for sale	(0.4)	—	—	—	3.0	3.0
Difference resulting from foreign currency translation	(83.2)	123.2	(23.5)	64.5	(116.8)	(28.8)
Items that may be reclassified subsequently to profit or loss	(83.6)	123.2	(23.5)	64.5	(113.8)	(25.8)
Actuarial gains/losses	22.5	(30.1)	28.2	(17.0)	12.9	(32.3)
Items that will not be reclassified to profit or loss	22.5	(30.1)	28.2	(17.0)	12.9	(32.3)
Other earnings after taxes	(61.1)	93.1	4.7	47.5	(100.9)	(58.1)
Comprehensive income of the period	40.9	230.6	294.4	396.6	505.5	607.7
Minority interests in comprehensive income	—	0.1	0.2	0.3	0.4	0.5
Group comprehensive income after taxes and minority interests	40.9	230.5	294.2	396.3	505.1	607.2

1,4
-----

TΔR·

	Q2/13	Q2/12	H1/13		H1/12 LTM2/13	12M/12
in € million
Result after operating hedges (EBIT II)3	157.1	201.0	431.2	473.9	799.4	842.1
Income (−)/expenses (+) from market value changes of operating forecast hedges still outstanding	1.8	26.0	4.5	11.0	(16.0)	(9.5)
Neutralising of market value changes of realised operating forecast hedges, recognised in earlier periods	2.7	(8.3)	4.5	(18.5)	(5.5)	(28.5)
Realised income (−)/expenses (+) of currency hedging for capital expenditure in Canada	1.0	—	0.3	—	0.3	—
Operating earnings (EBIT I)3	162.6	218.7	440.5	466.4	778.2	804.1

1 The figures of the previous year were adjusted due to the change of IAS 19. Further information can be found in the Notes on page 32. 2 LTM = last twelve months (Q3/12 + Q4/12 + Q1/13 + Q2/13).

3 Management of the K+S Group is handled, amongst others, on the basis of operating earnings (EBIT I). Reconciliation of EBIT II to operating earnings (EBIT I) is recorded in table 2.1.3.

4 Information on operating earnings refers to continued operations.

Cash Flow Statement 1,2 TAB: 2.2.1 Q2/13 Q2/12 H1/13 H1/12 LTM3/13 12M/12 in € million Result after operating hedges (EBIT II) 157.1 201.0 431.2 473.9 799.4 842.1 Income (−)/expenses (+) from market value changes of operating forecast hedges still outstanding 1.8 26.0 4.5 11.0 (16.0) (9.5) Neutralisation of market value changes of realised operating forecast hedges, recognised in earlier periods 2.7 (8.3) 4.5 (18.5) (5.5) (28.5) Realised income (−)/expenses (+) of currency hedging for capital expenditure in Canada 1.0 — 0.3 — 0.3 — Operating earnings (EBIT I) 162.6 218.7 440.5 466.4 778.2 804.1 Depreciation (+)/write-ups (−) on intangible assets, property, plant and equipment and financial assets 64.3 56.0 122.7 111.4 240.3 229.0 Increase (+)/decrease (−) in non-current provisions (without interest rate effects) (16.9) (13.3) (7.9) (8.3) 3.8 3.4 Interests and dividends received and similar income 8.1 4.0 14.1 6.6 29.1 21.6 Gains (+)/losses(−) from the realisation of financial assets and liabilities (1.2) 1.9 1.3 2.3 (1.7) (0.7) Interest paid (−) (16.0) (2.1) (16.8) (3.3) (56.5) (43.0) Income taxes paid (−) (63.9) (52.3) (136.6) (95.6) (243.1) (202.1) Other non-cash expenses (+)/income (−) 0.7 (0.7) (2.6) (2.8) 0.9 0.7 Gross cash flow from continued operations 137.7 212.2 414.7 476.7 751.0 813.0 Gross cash flow from discontinued operations — 12.6 — 40.7 (10.8) 29.9 Gross cash flow 137.7 224.8 414.7 517.4 740.2 842.9 Gain (−)/loss (+) on the disposal of fixed assets and securities (0.4) (1.7) (2.1) (0.5) (3.6) (2.0) Increase (−)/decrease (+) in inventories (64.3) (8.0) 89.0 5.1 41.1 (42.8)

Cash Flow Statement 1,2 TAB: 2.2.1 Q2/13 Q2/12 H1/13 H1/12 LTM3/13 12M/12 in € million Increase (−)/decrease (+) in receivables and other assets from operating activities 215.7 73.7 139.7 (53.0) 106.0 (86.7) – of which premium volume for derivatives (4.8) 3.3 0.6 12.4 14.0 25.8 Increase (+)/decrease (−) in liabilities from operating activities 8.6 12.2 (52.1) (122.4) (12.8) (83.1) – of which premium volume for derivatives 1.5 (2.0) (1.1) (7.0) (7.9) (13.8) Increase (+)/decrease (−) in current provisions (63.0) (90.5) (35.1) (51.3) (12.1) (28.3) Out-financing of plan assets (4.2) (3.2) (10.0) (6.9) (46.5) (43.4) Cash flow from operating activities 230.1 207.3 544.1 288.4 812.3 556.6 – thereof continued operations 230.1 145.4 544.1 328.8 822.5 607.2 – thereof discontinued operations — 61.9 — (40.4) (10.2) (50.6) Proceeds from disposals of fixed assets 1.5 3.2 4.7 5.7 20.3 21.3 Disbursements for intangible assets (3.0) (2.1) (3.8) (4.1) (24.1) (24.4) Disbursements for property, plant and equipment (164.4) (75.5) (274.4) (126.4) (547.0) (399.0) Disbursements for financial assets (0.1) — (0.1) — (1.3) (1.2) Proceeds from the disposal of consolidated companies — — — — 75.0 75.0 Disbursements for the acquisition of consolidated companies — — — (4.2) — (4.2) Proceeds from the disposal of securities and other financial investments 183.0 124.6 244.0 174.6 381.7 312.3 Disbursements for the purchase of securities and other financial investments (48.3) (269.6) (180.9) (378.6) (673.1) (870.8) Cash flow for investing activities (31.3) (219.4) (210.5) (333.0) (768.5) (891.0) – thereof continued operations (31.3) (219.9) (210.5) (333.3) (843.8) (966.6) – thereof discontinued operations — 0.5 — 0.3 75.3 75.6 Free cash flow 198.8 (12.1) 333.6 (44.6) 43.8 (334.4) – thereof continued operations 198.8 (74.5) 333.6 (4.5) (21.3) (359.4) – thereof discontinued operations — 62.4 — (40.1) 65.1 25.0 (continued)

C ash Flow Statement 1,2	(continued)					TAB: 2.2.1	C ash Flow Statement 1,2	(continued)					TAB: 2.2.1
	Q2/13	Q2/12	H1/13		H1/12 LTM3/13	12M/12		Q2/13	Q2/12	H1/13		H1/12 LTM3/13	12M/12
in € million							in € million
Dividends paid	(268.0)	(248.8)	(268.0)	(248.8)			Net cash and cash equivalents
Disbursements for the acquisition of non-controlling interests	—	—	—	—			as of 1 January Net cash and cash equivalents	—	—	345.0	437.3
Payments from other allocations to equity	4.1	5.1	4.1	5.1			as of 30 June – thereof cash on hand and	—	—	405.6	644.7
Purchase of own shares	(5.1)	(6.5)	(5.1)	(6.5)			balances with banks	—	—	411.9	643.2
Sale of own shares	—	—	—	—			– thereof cash invested with affiliated companies	—	—	0.3	21.7
Increase (+)/decrease (−) in liabilities from finance lease	(0.5)	(0.6)	(0.9)	(0.9)			– thereof account overdrafts	—	—	—	(2.2)
Taking out (+)/repayment of (−) loans	(0.3)	(1.9)	(0.5)	1.3			– thereof cash received from affiliated companies	—	—	(6.6)	(137.8)
Incoming payments (+)/ repayments (−) from the issuing of bonds	—	497.1	—	497.1			– thereof net cash and cash equivalents from
Cash flow from/for financing activities	(269.8)	244.4	(270.4)	247.3			discontinued operations 1 The cash flow statement was adjusted according to IFRS following the divestment of the nitrogen business.	—	—	—	119.8
– thereof continued operations	(269.8)	244.4	(270.4)	247.3			Detailed information on the discontinued operations can be found in the Notes on page 34. 2 The figures of the previous year were adjusted due to the change of IAS 19. Further information can be found
– thereof discontinued operations	—	—	—	—			in the Notes on page 32. 3 LTM = last twelve months (Q3/12 + Q4/12 + Q1/13 + Q2/13).
Change in cash and cash equivalents affecting cash flow	(71.0)	232.3	63.2	202.7
– thereof continued operations	(71.0)	169.9	63.2	242.8			Explanations to the cash flow statement can be found on page 11.
– thereof discontinued operations	—	62.4	—	(40.1)
Change in cash and cash equivalents resulting from exchange rates	(7.7)	9.2	(3.3)	4.7
Change in cash and cash equivalents resulting from consolidation	—	—	0.7	—
Change in cash and cash equivalents	(78.7)	241.5	60.6	207.4

(continued)

	Q2/13	Q2/12	H1/13		H1/12 LTM3/13	12M/12
in € million
Net cash and cash equivalents as of 1 January	—	—	345.0	437.3
Net cash and cash equivalents as of 30 June	—	—	405.6	644.7
– thereof cash on hand and balances with banks	—	—	411.9	643.2
– thereof cash invested with affiliated companies	—	—	0.3	21.7
– thereof account overdrafts	—	—	—	(2.2)
– thereof cash received from affiliated companies	—	—	(6.6)	(137.8)
– thereof net cash and cash equivalents from discontinued operations	—	—	—	119.8

Explanations to the cash flow statement can be found on page 11.

Balance Sheet – Assets 1 TAB: 2.3.1

Balance Sheet – equity and liabilities 1 TAB: 2.3.1

	30.6.2013	30.6.20122	31.12.20122
in € million
Intangible assets	990.0	1,032.9	1,000.8
– of which goodwill from acquisitions	640.5	668.9	642.3
Property, plant and equipment	2,686.6	2,292.9	2,527.4
Investment properties	7.6	7.7	7.6
Financial assets	14.5	16.0	15.9
Receivables and other assets	46.2	50.8	48.1
– of which derivative financial instruments	2.2	—	2.5
Securities and other financial investments	376.5	218.1	499.5
Deferred taxes	68.4	66.4	49.1
Reimbursement claims of income taxes	0.1	0.2	0.1
Non-current assets	4,189.9	3,685.0	4,148.5
Inventories	599.8	658.7	687.9
Accounts receivable – trade	612.8	727.3	770.3
Other receivables and assets	173.9	188.5	166.3
– of which derivative financial instruments	15.9	10.8	26.2
Reimbursement claims of income taxes	33.7	22.2	36.8
Securities and other financial investments	495.0	360.6	435.0
Cash on hand and balances with banks	411.9	643.2	351.8
Assets classified as held for sale	—	488.8	—
Current assets	2,327.1	3,089.3	2,448.1
ASSETS	6,517.0	6,774.3	6,596.6

1 Information refers to the continued operations of the K+S Group. Due to the divestment of the nitrogen business, these are in accordance with IFRS disclosed as "discontinued operations". The balance sheet as of 30 June 2012 was not adjusted and also includes the discontinued operations of the nitrogen business.

2 The figures of the previous year were adjusted due to the change of IAS 19. Further information can be found in the Notes on page 32.

30.6.2013	30.6.20122	31.12.20122
191.4	191.4	191.4
645.9	646.0	647.2
2,577.3	2,340.3	2,551.7
3.8	3.4	3.6
3,418.4	3,181.1	3,393.9
1,265.5	1,265.3	1,264.9
16.5	16.0	17.8
0.3	1.3	—
113.9	165.5	160.1
713.2	617.8	706.6
122.6	128.0	131.2
277.1	320.3	274.7
2,508.8	2,512.9	2,555.3
0.9	6.3	0.9
216.0	205.8	289.2
92.3	241.0	70.6
7.8	26.7	4.3
42.3	52.8	50.1
238.3	204.8	236.6
—	369.6	—
589.8	1,080.3	647.4
6,517.0	6,774.3	6,596.6

Statement of changes in equity 1,2 TAB: 2.4.1

	Subscribed capital	Additional paid-in capital	Accumulated profit /revenue reserves	Differences from foreign currency translation	Financial assets available for sale	Changes in equity without recognition in profit or loss regarding actuarial gains/losses	Total K+S AG shareholders' equity	Minority interests	Equity
in € million
Balances as of 1 January 2013	191.4	647.2	2,461.1	172.3	2.9	(84.6)	3,390.3	3.6	3,393.9
Net income	—	—	289.5	—	—	—	289.5	0.2	289.7
Other comprehensive income (after taxes)	—	—	—	(23.5)	—	28.2	4.7	—	4.7
Comprehensive income of the period	—	—	289.5	(23.5)	—	28.2	294.2	0.2	294.4
Dividend for the previous year	—	—	(268.0)	—	—	—	(268.0)	—	(268.0)
Issuance of shares to employees	—	(1.3)	—	—	—	—	(1.3)	—	(1.3)
Other changes in equity	—	—	(0.6)	—	—	—	(0.6)	—	(0.6)
Balances as of 30 June 2013	191.4	645.9	2,482.0	148.8	2.9	(56.4)	3,414.6	3.8	3,418.4
Balances as of 1 January 2012	191.4	648.1	2,044.4	201.1	—	(52.3)	3,032.7	3.1	3,035.8
Net income	—	—	348.8	—	—	—	348.8	0.3	349.1
Other comprehensive income (after taxes)	—	—	—	64.5	—	(17.0)	47.5	—	47.5
Comprehensive income of the period	—	—	348.8	64.5	—	(17.0)	396.3	0.3	396.6
Dividend for the previous year	—	—	(248.8)	—	—	—	(248.8)	—	(248.8)
Issuance of shares to employees	—	(2.1)	—	—	—	—	(2.1)	—	(2.1)
Other changes in equity	—	—	(0.4)	—	—	—	(0.4)	—	(0.4)
Balances as of 30 June 2012	191.4	646.0	2,144.0	265.6	—	(69.3)	3,177.7	3.4	3,181.1

1 Information refers to the continued operations of the K+S Group. Due to the divestment of the nitrogen business, these are in accordance with IFRS disclosed as "discontinued operations".

The balance sheet as of 30 June 2012 was not adjusted and also includes the discontinued operations of the nitrogen business.

2 The figures of the previous year were adjusted due to the change of IAS 19. Further information can be found in the Notes on page 32.

2.5 NOTES

Explanatory Notes

The interim report of 30 June 2013 is prepared in accordance with the International Financial Reporting Standards (IFRS) as well as the interpretations of the International Financial Reporting Interpretations Committee (IFRIC), insofar as those have been recognised by the European Union. The report is prepared as abridged financial statements with selected explanatory notes as stipulated by IAS 34. Apart from the exceptions described below, the accounting and valuation principles used for this interim report correspond to those used for the consolidated financial statements 2012.

IAS 19 "Employee Benefits", which was approved by the IASB in June 2011 and endorsed by the EU in June 2012, is to be applied for the first time to financial years beginning on or after 1 January 2013. The changes are to be implemented with retroactive effect to the beginning of the comparative period, i.e. as of 1 January 2012. This essentially means the following for K+S:

• • Abolition of the corridor method: As a result, actuarial gains and losses are to be recorded in other earnings (equity) and have a direct impact on the consolidated balance sheet. It is no longer necessary to amortise actuarial gains and losses with recognition in profit or loss when the corridor is exceeded. The income statement will thus in future remain free of effects from actuarial gains and losses. The abolition of the corridor method as of 1 January 2012 resulted in a decrease in equity of € 52.3 million, a reduction in other noncurrent assets and an increase in provisions for pensions and similar obligations by a total of € 70.0 million as well as an increase in deferred tax assets and a decrease of deferred tax liabilities by a total of € 17.7 million.
• • Computing planned interest on plan assets: This is no longer based on the anticipated yield but corresponds to the discount rate applied to determine the defined benefit obligation.
• • Revised definition of termination benefits: Under the revised definition, step-up contributions for partial retirement obligations are now treated as other non-current employee benefits which are to be accrued on a pro-rata basis over the period of vesting. After stepup contributions were recognised as liabilities in the full amount of their present value, a provision in the amount of € 4.7 million was reversed as of 1 January 2012 which will again be recognised in profit or loss in subsequent periods. Conversely, as of 1 January 2012, equity rose by € 3.5 million (after taxes).

Taking into account tax effects, the following changes occurred with respect to the reporting periods in question:

C hanges IAS 19 – Balance Sheet						TAB: 2.5.1
	30.6.2012 (old)	30.6.2012 (change)	30.6.2012 (new)	31.12.2012 (old)	31.12.2012 (change)	31.12.2012 (new)
in € million
Receivables and other assets	71.7	(20.9)	50.8	91.3	(43.2)	48.1
Deferred taxes	65.8	0.6	66.4	48.3	0.8	49.1
Non-current assets	3,705.3	(20.3)	3,685.0	4,190.9	(42.4)	4,148.5
Assets classified as held for sale	488.7	0.1	488.8	—	—	—
Current assets	3,089.2	0.1	3,089.3	2,448.1	—	2,448.1
ASSETS	6,794.5	(20.2)	6,774.3	6,639.0	(42.4)	6,596.6
Equity	3,248.4	(67.3)	3,181.1	3,477.3	(83.4)	3,393.9
Provisions for pensions and similar obligations	94.1	71.4	165.5	88.8	71.3	160.1
Other provisions	130.5	(2.5)	128.0	131.5	(0.3)	131.2
Deferred taxes	342.6	(22.3)	320.3	304.7	(30.0)	274.7
Non-current debt	2,466.3	46.6	2,512.9	2,514.3	41.0	2,555.3
Liabilities directly associated with assets classified as held for sale	369.1	0.5	369.6	—	—	—
Current debt	1,079.8	0.5	1,080.3	647.4	—	647.4
EQUITY AND LIABILITIES	6,794.5	(20.2)	6,774.3	6,639.0	(42.4)	6,596.6

C hanges IAS 19 – Income statement and statement of comprehensive income TAB: 2.5.2
	H1/12 (old)	H1/12 (change)	H1/12 (new)	2012 (old)	2012 (change)	2012 (new)
in € million
Other operating expenses	(73.7)	(2.2)	(75.9)	(147.7)	(4.4)	(152.1)
Result after operating hedges (EBIT II)	476.1	(2.2)	473.9	846.5	(4.4)	842.1
Interest income	8.1	(0.1)	8.0	21.2	(0.4)	20.8
Interest expenses	(47.9)	0.2	(47.7)	(106.7)	1.1	(105.6)
Earnings before income taxes	436.8	(2.1)	434.7	766.9	(3.7)	763.2
Taxes on income	(120.8)	0.6	(120.2)	(198.4)	1.0	(197.4)
Earnings after taxes from continued operations	316.0	(1.5)	314.5	568.5	(2.7)	565.8
Earnings after taxes from discontinued operations	34.6	—	34.6	99.6	0.4	100.0
Net income	350.6	(1.5)	349.1	668.1	(2.3)	665.8
Operating earnings (EBIT I)	468.6	(2.2)	466.4	808.5	(4.4)	804.1
Other earnings after taxes	64.5	(17.0)	47.5	(25.8)	(32.3)	(58.1)
Comprehensive income of the period	415.1	(18.5)	396.6	642.3	(34.6)	607.7

In the cash flow statement, the changes in the base values for EBIT II and for EBIT I (H1/2012: € (2.2) million; 2012: € (4.4) million) are neutralised by countervailing changes in the item "Increase/decrease in non-current provisions". The other items in the cash flow statement remain unchanged.

As a result of the changes in IAS 19, undiluted and diluted earnings per share fell by € 0.01 for the first half of 2012 and by € 0.02 for 2012 as a whole.

If the old version of IAS 19 had continued to be applied in 2013, this would have resulted in the following changes for the first half of 2013:

• • Increase in net income of € 1.2 million
• • Increase in other non-current assets and decrease in provisions for pensions and similar obligations by a total of € 78.5 million
• • Increase in cumulative other earnings of € 56.4 million
• • Decrease in deferred tax assets and increase in deferred tax liabilities by a total of € 20.9 million
• • Increase in the undiluted and diluted earnings per share of € 0.01

In May 2011, IFRS 13 was approved by the IASB and endorsed by the EU in December 2012. IFRS 13 "Fair Value Measurement" is to be applied prospectively for the first time for financial years starting on or after 1 January 2013. The application of the standard will involve additional disclosure obligations of information on financial instruments during the course of the year which until now only had to be reported in the annual financial statements.

With the changes to IAS 1 "Presentation of Financial Statements", the elements of other earnings in the statement of comprehensive income are shown separately. Items which may subsequently be reclassified in profit or loss, and items which will not be reclassified in profit or loss, must be recorded separately. The standard, which was approved by the IASB in June 2012, is to be applied for the first time for financial years beginning on or after 1 July 2012.

Foreign currency assets and liabilities are translated at the exchange rates prevailing on the balance sheet date. Income and expenses are translated applying the average exchange rates for the quarter.

Changes in the legal Group and organisational structure

In the second quarter, there were no changes in the composition and responsibilities of the Board of Executive Directors and the Supervisory Board as described in the Financial Report 2012.

Auditor's review

The interim financial statements and the interim management report were not reviewed by the auditor (Section 37w, Para. 5, Sent. 1 of the German Securities Trading Act).

Changes in the scope of consolidation

In the second quarter, no material changes occurred in the scope of consolidation.

Discontinued operations

The strategy of the K+S Group provides for growth in the Potash and Magnesium Products and Salt business units in particular and for focussing management resources and financial means on this correspondingly.

Against this background, in the past year, K+S sold the business activities of K+S Nitrogen to EuroChem (detailed information can be found on page 168 of the K+S Group Financial Report 2012).

All previous year's figures for the income and expenses of K+S Nitrogen, classified as a discontinued operation, were reclassified and disclosed in a separate item "Earnings after taxes from a discontinued operation".

The previous year's cash flows from discontinued operations are shown separately in the cash flow statement in accordance with IFRS 5.

The composition of the earnings after taxes from discontinued operations is as presented in the following table:

discontinued operations		TAB: 2.5.3
	H1/13	H1/12
in € million
Revenues	—	657.8
Other income and expenses	—	(610.0)
EBIT II	—	47.8
Financial result	—	0.1
Earnings before taxes	—	47.9
Taxes on income	—	13.3
Earnings after income taxes for the period	—	34.6

Acquisition SMO

esco – European Salt Company GmbH & Co. KG, a 100 % subsidiary of K+S Aktiengesellschaft, acquired through its subsidiary esco International GmbH 100 % of the voting rights in the Czech salt processing company Solné MlÝny a.s. (SMO), as of 3 January 2012.

SMO is a major supplier of salt products in the Czech Republic and is also active in other neighbouring European markets. The purchase price is € 4.4 million.

Comprehensive information regarding the acquisition of SMO can be found in the Financial Report 2012 on page 173.

The fair values of assets acquired and liabilities assumed from SMO, recognised at the time of acquisition (3 January 2012), are presented in the following table:

Fair values as of the date of acquisition SMO TAB: 2.5.4

	Fair values as of the date of acquisition
in € million
Non-current assets	6.1
Inventories	1.9
Other current assets and cash on hand and balances with banks	1.9
ASSETS	9.9
Non-current debt	0.8
Bank loans and overdrafts	1.2
Other current debt	1.2
EQUITY AND LIABILITIES	3.2
Net assets	6.7
Bargain purchase	2.3
Purchase price	4.4

From the comparison of the cost of the acquisition and the revalued proportional net assets results a bargain purchase of € 2.3 million, which was reversed through profit or loss as other operating income in 2012.

Seasonal factors

There are seasonal differences over the course of the year that affect the sales volumes of fertilizers and salt products. In the case of fertilizers, we generally attain our highest sales volumes in the first half of the year because of the spring fertilization in Europe. Sales volumes of salt products – especially of de-icing salt – largely depend on the respective wintry weather during the first and fourth quarters. In the aggregate, both these effects mean that revenues and particularly earnings are generally strongest during the first half of the year.

Important key figures (ltm1)		TAB: 2.5.5
	LTM 20131	2012
in € million
Revenues	4,013.0	3,935.3
EBITDA	1,018.8	1,033.3
EBIT I	778.2	804.1
Group earnings from continued operations, adjusted	525.4	538.1

1 LTM = last twelve months (Q3/12 + Q4/12 + Q1/13 + Q2/13).

Information concerning material events since the end of the interim reporting period

You will find such information in our Subsequent Events section on page 20.

Foreign currency hedging

Exchange rate fluctuations can lead to the value of the service performed not matching the value of the consideration, because income and expenditure arise at different times in different currencies (transaction risks). Exchange rate fluctuations, especially in relation to the US dollar, play a particular role for the Potash and Magnesium Products business unit, in relation to the levels of its proceeds and receivables. Furthermore, currency effects arise at subsidiaries whose functional currency is not the euro (translation risks): On the one hand, the earnings of these companies determined in a foreign currency are translated into euros at average rates and recognised in profit or loss, and on the other hand, their net assets are translated into euros at spot rates. This can result in currency-related fluctuations in the equity of the K+S Group. Translation effects from the conversion of US dollars mainly appear in the Salt business unit.

Within the framework of transaction hedging, options and futures are utilised to hedge the worst case, but at the same time the opportunity is created for part of the hedging transactions to participate in a more favourable exchange rate development. Translation risks are not hedged.

F oreign Currency Hedging P otash and Magnesium Products business unit TAB: 2.5.6
	Q1/12	Q2/12	Q3/12	Q4/12	2012	Q1/13	Q2/13	2013e
USD/EUR exchange
rate after premiums	1.34	1.31	1.30	1.35	1.32	1.31	1.28	1.29
Average USD/EUR spot rate	1.31	1.28	1.25	1.30	1.28	1.32	1.31	—

For the construction of the new potash plant in Canada (Legacy Project), during the primary investment phase, payments will be made in the Canadian dollar (CAD) and the US dollar (USD). The Canadian dollar investment is partly aided by a natural hedge arising from surpluses in the salt business in Canada. Futures or options should also be used to hedge the remaining CAD net position. The US dollar investments are included in the USD net position of the Potash and Magnesium Products business unit; during the investment phase, this leads to a reduction of the total US dollar volume requiring hedging. In the subsequent operating phase, the hedge volume will increase given the anticipated additional USD revenues.

Other operating Income/Expenses

The following significant items are included in other operating income and expenses:

O ther operating income/expenses
	Q2/13	Q2/12	H1/13	H1/12
in € million
Gains/losses on foreign exchange rates	(2.8)	5.3	(1.5)	3.8
Change in provisions	9.8	3.3	11.6	5.0
Other	(15.8)	(7.0)	(19.6)	(10.9)
Other operating income/expenses	(8.8)	1.6	(9.5)	(2.1)

Financial Result

The financial result includes the following significant items:

Fi nancial result				TAB: 2.5.8
	Q2/13	Q2/12	H1/13	H1/12
in € million
Interest income	5.7	4.5	11.6	8.0
Interest expenses	(23.3)	(27.3)	(47.3)	(47.7)
– of which interest expenses for pension provisions	(1.5)	(1.5)	(2.9)	(3.1)
– of which interest expenses for provisions for mining obligations	(6.9)	(13.0)	(13.9)	(19.3)
Interest income, net	(17.6)	(22.8)	(35.7)	(39.7)
Income from the realisation of financial assets/liabilities	(0.2)	1.9	1.6	2.3
Income from the valuation of financial assets/liabilities	0.3	(3.2)	(1.3)	(1.8)
Other financial result	0.1	(1.3)	0.3	0.5
Financial result	(17.5)	(24.1)	(35.4)	(39.2)

Discount factors for provisions

The actuarial measurement of pension provisions is performed by applying the projected unit credit method in accordance with IAS 19. The average weighted discount factor for pensions and similar obligations as of 30 June 2013 amounted to 4.2 % (30.6.2012: 4.3 %; 31.12.2012: 3.8 %). The average weighted discount factor for mining obligations was the same as at 31 December 2012 and amounted to 4.3 % (30.6.2012: 4.5 %).

Taxes on income

The following key items are included in taxes on income:

T axes on income				TAB: 2.5.9
	Q2/13	Q2/12	H1/13	H1/12
in € million
Corporate income tax	26.2	30.7	64.5	66.0
Trade tax on income	22.0	24.6	53.7	52.7
Foreign taxes on income	5.5	6.1	12.6	24.8
Deferred taxes	(16.1)	(12.5)	(24.7)	(23.3)
Taxes on income	37.6	48.9	106.1	120.2

Non-cash deferred taxes result from tax loss carryforwards as well as from other temporary tax-related measurement differences.

Financial instruments

The following table shows the carrying amounts and fair values of Group financial instruments:

Book values and fair values of financial instruments					TAB: 2.5.10
	Measurement		30.6.2013		31.12.2012
	category under IAS 39	Carrying amount	Fair value	Carrying amount	Fair value
in € million
Investments in affiliated companies and equity interests	Available for sale	13.5	13.5	14.9	14.9
Loans	Loans and receivables	1.0	1.0	1.0	1.0
Financial assets		14.5	14.5	15.9	15.9
Accounts receivable – trade	Loans and receivables	612.8	612.8	770.3	770.3
Remaining receivables and non-derivative financial assets	Loans and receivables	103.9	103.9	102.0	102.0
Derivatives	Held for trade	18.1	18.1	28.7	28.7
Other assets	not IFRS 7	98.1	98.1	83.7	83.7
Other receivables and assets		220.1	220.1	214.4	214.4
Securities and other financial investments	Loans and receivables	661.6	662.1	715.1	716.2
Securities and other financial investments	Available for sale	209.9	209.9	219.4	219.4
Cash on hand and balances with banks	Loans and receivables	411.9	411.9	351.8	351.8
Financial liabilities	Financial liabilities at amortised cost	1,266.4	1,318.8	1,265.8	1,348.1
Accounts payable – trade	Financial liabilities at amortised cost	216.0	216.0	289.2	289.2
Other non-derivative financial liabilities	Financial liabilities at amortised cost	66.7	66.7	58.5	58.5
Derivatives	Held for trade	8.1	8.1	4.3	4.3
Liabilities from finance leases	IFRS 7	3.9	3.9	4.5	4.5
Other liabilities	not IFRS 7	30.1	30.1	21.1	21.1
Remaining and other liabilities		108.8	108.8	88.4	88.4

The fair values of the financial instruments were mainly determined on the basis of the market information available on the balance sheet date and are to be allocated to one of the three levels of the fair value hierarchy in accordance with IFRS 13.

Level 1 financial instruments are calculated on the basis of prices quoted on active markets for identical assets and liabilities. In Level 2, financial instruments are calculated on the basis of input factors which are derivable from observable market data or on the basis of market prices for similar instruments. Level 3 financial instruments are calculated on the basis of input factors which are not derivable from observable market data. As of 30 June 2013, financial assets held for trading amounting to € 18.1 million and financial liabilities held for trading amounting to € 8.1 million are to be allocated to Level 2 of the fair value hierarchy. Securities and other financial investments belonging to the "available for sale" category are based on level 1 valuations. There are no level 3 financial instruments in the fair value hierarchy.

Material changes in individual balance sheet items

Compared with the 2012 consolidated financial statements, the balance sheet total as of 30 June 2013 fell by € 79.6 million. On the asset side, non-current assets increased by € 41.4 million and current assets decreased by € 121.0 million.

The increase in non-current assets is mainly due to an increase in property, plant and equipment (€ 159.2 million), while the decrease in securities and other financial investments (€ 123.0 million) had the opposite effect. The changes in current assets are attributable to increases in securities and other financial investments (€ 60.0 million) as well as in cash on hand and balances with banks (€ 60.1 million). By contrast, there was a decrease in inventories (€ 88.1 million) as well as in trade receivables (€ 157.5 million).

On the equity and liabilities side, equity rose by € 24.5 million. This is primarily due to the positive net income for the first half of 2013. Non-current debt decreased by € 46.5 million – mainly as a result of adjustments in the area of provisions. Current debt fell by € 57.6 million. This was mainly due to a reduction in trade payables (€ 73.2 million). The increase in other liabilities (€ 21.7 million), however, had an opposite effect.

Material changes in equity

Equity is influenced by transactions with and without recognition in profit or loss as well as through capital transactions with shareholders. Compared with the annual financial statements for 2012, accumulated profit and other reserves increased by € 25.6 million. The increase is mainly due to the positive net income for the first six months of financial year 2013 (after taxes and minority interests), which could more than make up for the dividend payment made in May. Furthermore, changes in equity without recognition in profit or loss resulting from the foreign currency translation of subsidiaries in functional currencies (primarily US dollar) had to be taken into account. Differences arising from foreign currency translation are recorded in a separate currency translation reserve; this reserve decreased by € 23.5 million as of 30 June 2013 because of exchange rate fluctuations. In addition, actuarial gains (after taxes) totalling € 28.2 million served to increase equity. These mainly resulted from the raising of foreign discount rates for pensions and similar obligations.

N et indebtedness		TAB: 2.5.11
	H1/13	H1/12
in € million
Net indebtedness as of 1 January	(827.3)	(660.9)
Cash on hand and balances with banks as of 30 June	411.9	643.2
Non-current securities and other financial investments as of 30 June	376.5	218.1
Current securities and other financial investments as of 30 June	495.0	360.6
Bank loans and overdrafts	(1,266.4)	(1,271.6)
Net financial liabilities as of 30 June	17.0	(49.7)
Provisions for pensions and similar obligations	(113.9)	(165.5)
Provisions for mining obligations	(713.2)	(617.8)
Reimbursement claim bond Morton Salt	19.0	19.9
Net indebtedness as of 30 June	(791.1)	(813.1)

Contingent liabilities

There have been no significant changes in contingent liabilities in comparison with the annual financial statements 2012 and they can be classified as immaterial overall.

Related parties

Within the K+S Group, deliveries are made and services rendered on customary market terms. Besides transactions between K+S Group companies, business relations are maintained with non-consolidated subsidiaries as well as companies over which the K+S Group can exercise a significant influence (associated companies). Such relationships do not have a material influence on the consolidated financial statements of the K+S Group. In the K+S Group, related persons are mainly the Board of Executive Directors and the Supervisory Board. The remuneration received by this group of persons is disclosed annually in the Remuneration Report. There were no other material transactions with related parties.

T otal Revenues Q2 1			TAB: 2.5.12
	Third-party revenues	Intersegment revenues	Total revenues
in € million
Potash and Magnesium Products business unit	548.3	19.4	567.7
Salt business unit	285.2	1.6	286.8
Complementary Activities	40.4	8.6	49.0
Reconciliation	0.6	(29.6)	(29.0)
K+S Group Q2/13	874.5	—	874.5
Potash and Magnesium Products business unit	669.5	13.7	683.2
Salt business unit	287.7	1.3	289.0
Complementary Activities	38.1	9.4	47.5
Reconciliation	1.2	(24.4)	(23.2)
K+S Group Q2/12	996.5	—	996.5

1 Information refers to the continued operations of the K+S Group.

39 2.5 NOTES

T otal Revenues H1 1			TAB: 2.5.13
	Third-party revenues	Intersegment revenues	Total revenues
in € million
Potash and Magnesium Products business unit	1,173.8	39.0	1,212.8
Salt business unit	899.7	3.0	902.7
Complementary Activities	80.1	18.4	98.5
Reconciliation	1.2	(60.4)	(59.2)
K+S Group H1/13	2,154.8	—	2,154.8
Potash and Magnesium Products business unit	1,251.4	29.6	1,281.0
Salt business unit	746.2	2.5	748.7
Complementary Activities	77.2	17.8	95.0
Reconciliation	2.3	(49.9)	(47.6)
K+S Group H1/12	2,077.1	—	2,077.1

1 Information refers to the continued operations of the K+S Group.

40 2.6 Summary by Quarter

2.6 Summary by Quarter 1,2

Revenues & operating earnings (IFRS) TAB: 2.6.1

	Q1/12	Q2/12	H1/12	Q3/12	Q4/12	2012	Q1/13	Q2/13	H1/13
in € million
Potash and Magnesium Products business unit	581.9	669.5	1,251.4	560.5	478.7	2,290.6	625.5	548.3	1,173.8
Salt business unit	458.5	287.7	746.2	318.5	420.1	1,484.8	614.5	285.2	899.7
Complementary Activities	39.1	38.1	77.2	36.4	40.1	153.7	39.7	40.4	80.1
Reconciliation	1.1	1.2	2.3	1.2	2.7	6.2	0.6	0.6	1.2
K+S Group revenues	1,080.6	996.5	2,077.1	916.6	941.6	3,935.3	1,280.3	874.5	2,154.8
Potash and Magnesium Products business unit	207.7	240.0	447.7	158.1	165.1	770.9	209.2	182.0	391.2
Salt business unit	45.3	(11.6)	33.7	4.9	23.0	61.6	73.1	(13.5)	59.6
Complementary Activities	6.9	6.6	13.5	6.0	1.5	21.0	6.8	6.2	13.0
Reconciliation	(12.2)	(16.3)	(28.5)	(13.3)	(7.6)	(49.4)	(11.2)	(12.1)	(23.3)
K+S Group EBIT I	247.7	218.7	466.4	155.7	182.0	804.1	277.9	162.6	440.5

Income statement (IFRS) TAB: 2.6.2

	Q1/12	Q2/12	H1/12	Q3/12	Q4/12	2012	Q1/13	Q2/13	H1/13
in € million
Revenues	1,080.6	996.5	2,077.1	916.6	941.6	3,935.3	1,280.3	874.5	2,154.8
Cost of sales	575.8	537.6	1,113.4	521.0	524.3	2,158.7	715.4	465.1	1,180.5
Gross profit	504.8	458.9	963.7	395.6	417.3	1,776.6	564.9	409.4	974.3
Selling expenses	193.6	182.1	375.7	167.8	190.7	734.2	235.2	188.6	423.8
General and administrative expenses	44.9	48.3	93.2	47.5	56.1	196.8	50.4	50.3	100.7
Research and development costs	8.1	5.6	13.7	3.5	2.2	19.4	3.4	3.3	6.7
Other operating income/expenses	(3.7)	1.6	(2.1)	(12.3)	20.2	5.8	(0.7)	(8.8)	(9.5)
Income from investments, net	—	3.4	3.4	0.7	1.1	5.2	2.4	0.6	3.0
Result from operating forecast hedges	18.4	(26.9)	(8.5)	11.9	1.5	4.9	(3.5)	(1.9)	(5.4)
Result after operating hedges (EBIT II)	272.9	201.0	473.9	177.1	191.1	842.1	274.1	157.1	431.2
Financial result	(15.1)	(24.1)	(39.2)	(21.7)	(18.0)	(78.9)	(17.9)	(17.5)	(35.4)
Earnings before income taxes	257.8	176.9	434.7	155.4	173.1	763.2	256.2	139.6	395.8
Taxes on income	71.3	48.9	120.2	41.8	35.4	197.4	68.5	37.6	106.1
– of which deferred taxes	(10.8)	(12.5)	(23.3)	(7.7)	(2.6)	(33.6)	(8.6)	(16.1)	(24.7)
Earnings after taxes from continued operations	186.5	128.0	314.5	113.6	137.7	565.8	187.7	102.0	289.7
Earnings after taxes from discontinued operations	25.1	9.5	34.6	66.4	(1.0)	100.0	—	—	—
Net income	211.6	137.5	349.1	180.0	136.7	665.8	187.7	102.0	289.7

Income statement (IFRS) TAB: 2.6.2 (continued)

	Q1/12	Q2/12	H1/12	Q3/12	Q4/12	2012	Q1/13	Q2/13	H1/13
in € million
Net income	211.6	137.5	349.1	180.0	136.7	665.8	187.7	102.0	289.7
Minority interests in earnings	0.2	0.1	0.3	0.2	—	0.5	0.2	—	0.2
Group earnings after taxes and minority interests	211.4	137.4	348.8	179.8	136.7	665.3	187.5	102.0	289.5
Operating earnings from continued operations (EBIT I)	247.7	218.7	466.4	155.7	182.0	804.1	277.9	162.6	440.5
Earnings before income taxes from con tinued operations, adjusted3	232.6	194.6	427.2	134.0	164.0	725.2	260.0	145.1	405.1
Group earnings from continued operations, adjusted3	168.3	140.5	308.8	98.1	131.2	538.1	190.2	105.9	296.1
Group earnings after taxes, adjusted3,4	192.6	150.1	342.7	164.5	130.2	637.4	190.2	105.9	296.1

Other key data (IFRS) TAB: 2.6.3

		Q1/12	Q2/12	H1/12	Q3/12	Q4/12	2012	Q1/13	Q2/13	H1/13
Capital expenditure5	€ million	41.2	77.7	118.9	102.5	244.1	465.5	110.8	191.3	302.1
Depreciation and amortisation5	€ million	55.4	56.0	111.4	57.1	60.7	229.2	58.4	64.4	122.8
Gross cash flow	€ million	264.5	212.2	476.7	148.4	187.9	813.0	277.0	137.7	414.7
Working capital	€ million	1,047.3	—	1,067.3	1,097.1	—	1,025.7	982.6	—	836.2
Net indebtedness	€ million	630.0	—	813.1	750.2	—	827.3	618.8	—	791.1
Earnings per share from continued operations, adjusted3	€	0.88	0.73	1.61	0.52	0.68	2.81	0.99	0.56	1.55
Earnings per share, adjusted3,4	€	1.01	0.78	1.79	0.86	0.68	3.33	0.99	0.56	1.55
Gross cash flow per share	€	1.38	1.11	2.49	0.78	1.13	4.40	1.45	0.72	2.17
Book value per share	€	16.73	—	16.62	17.32	—	17.73	19.05	—	17.86
Number of shares outstanding6	million	191.40	—	191.40	191.40	—	191.40	191.40	—	191.40
Average number of shares 7	million	191.40	191.40	191.40	191.40	191.40	191.40	191.40	191.40	191.40
Closing price	XETRA, €	39.23	—	36.00	38.27	—	35.00	36.29	—	28.41
Employees as of the reporting date	number	14,323	—	14,325	14,352	—	14,362	14,300	—	14,255

1 Unless stated otherwise, information refers to the continued operations of the K+S Group. The income statement and the cash flow statement were adjusted according to IFRS following the divestment of the nitrogen business.

The balance sheet and therefore the key figures of working capital, net indebtedness and the book value per share as of 30 June 2012 were not adjusted and also include the discontinued operations of the nitrogen business.

2 The figures of the previous year were adjusted due to the change of IAS 19. Further information can be found in the Notes on page 32.

3 The adjusted key figures only include the result from operating forecast hedges of the respective reporting period reported in EBIT I, which eliminates effects from changes in the market value of the hedges as well as effects from

the exchange rate hedging of future capital expenditure in Canadian dollar (Legacy Project). Related effects on deferred and cash taxes are also eliminated; tax rate for Q2/13: 28.5 % (Q2/12: 28.5 %).

4 Earnings from continued and discontinued operations.

5 Capital expenditure in or depreciation on property, plant and equipment, intangible assets and investment properties as well as depreciation on financial assets.

6 Total number of shares less the number of own shares held by K+S as of the balance sheet date.

7 Total number of shares less the average number of own shares held by K+S.

Providing Solutions: An explanation of the title can be found in the cover of the Financial Report 2012.

10:00 PM/Q3 2013

K+S Aktiengesellschaft

Bertha-von-Suttner-Strasse 7 34131 Kassel, Germany phone: +49 (0)561/9301-0 fax: +49 (0)561/9301-1753 Internet: www.k-plus-s.com

Investor Relations

phone: +49 (0)561/9301-1100 fax: +49 (0)561/9301-2425 e-Mail: investor-relations@k-plus-s.com

Communications

phone: +49 (0)561/9301-1722 fax: +49 (0)561/9301-1666 e-Mail: pr@k-plus-s.com

This report was published on 13 August 2013.