[4] Basis of consolidation

KION Holding 1 GmbH's equity investments include subsidiaries, joint ventures, associates and financial investments.

In addition to KION Holding 1 GmbH, the consolidated financial statements of the KION Group include those entities in which KION Holding 1 GmbH holds a majority of the voting rights, either directly or indirectly, or in which it exercises control i.e. has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. Subsidiaries acquired in the course of the financial year are consolidated from the date at which control is transferred, i.e. the date from which it is possible to determine their financial and operating policies such that benefit is obtained. Companies sold in the course of the financial year are deconsolidated from the date on which control is lost.

A joint venture is an equity interest in which the entity is jointly managed by companies in the KION Group and one or more partners. Joint control differs from significant influence insofar as it is governed by a contractual agreement.

Associates are entities in which companies in the KION Group are able to exercise significant influence, either directly or indirectly, over the financial and operating policies of the entity concerned. Significant influence is assumed when KION Holding 1 GmbH holds between 20 per cent and 50 per cent of the voting rights.

All other equity interests over which KION Holding 1 GmbH is unable to exercise control or significant influence, or that are not jointly controlled by KION Holding 1 GmbH are classified as financial investments and are not consolidated.

The following table shows the shareholdings of KION Holding 1 GmbH:

As at 31 December 2010, a total of 16 German and 72 foreign subsidiaries were consolidated in addition to KION Holding 1 GmbH. URBAN-TRANSPORTE GMBH, Unterschleissheim, Germany, has been included in the consolidation since January 2010 because it had become more financially significant. A difference of €4,256 thousand was recognised in retained earnings as a result of the company being consolidated for the first time. It employed 81 people at the time it was first consolidated. In 2010, the company generated a profit before tax of €631 thousand and revenue of €82,586 thousand, of which €9,430 thousand was attributable to external customers. The remaining acquisitions are of minor financial importance to the KION Group.

As at 31 December 2010, twelve associates and joint ventures were accounted for using the equity method (2009: eleven). In each case, valuation was based on the latest available annual financial statements.

68 (2009: 64) subsidiaries with no business operations or minimal business volumes were not included in the consolidation. The unconsolidated subsidiaries and the associated companies not accounted for using the equity method (see the list of shareholdings in the annex to these notes) are of minor importance to the financial position and financial performance of the KION Group, both individually and as a whole.

Due to certain circumstances, the following fully consolidated companies are exempt from the requirement to prepare annual financial statements and management reports in accordance with sections 264 (3) and 264b HGB on account of their inclusion in the consolidated financial statements:

A detailed overview of all the direct and indirect shareholdings of KION Holding 1 GmbH is presented in the list of shareholdings in the annex to these notes.