[36] Information on financial instruments

The KION Group uses both primary and derivative financial instruments. The following section summarises the relevance of these financial instruments for the KION Group.

The following table shows the measurement categories defined by IAS 39. In line with IFRS 7, the table shows the carrying amounts and fair values of financial assets and liabilities:

The change in valuation allowances for lease receivables and trade receivables was as follows:

The net gains and losses on financial instruments by IAS 39 category are as follows:

The above gains and losses do not include losses arising on hedging transactions deferred in the period amounting to €19,861 thousand (2011: €18,464 thousand) because these losses relate to a documented hedge.

Fair value measurement

The majority of the funding, loans, investments, other non-derivative receivables and liabilities, trade receivables and trade payables held by the Group have short-term maturities. The carrying amounts of these financial instruments approximate their fair values.

The fair value of the corporate bond that has been issued is determined using publicly listed market prices. The calculation is based on the offer price applicable on the reporting date.

The fair value of receivables and liabilities from finance leases corresponds to the present value of the net lease payments, taking into account the current market interest rate for similar leases.

The fair value of derivative financial instruments is determined using appropriate valuation methods on the basis of the observable market information at the reporting date. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of currency forwards is calculated on the basis of the forward rates at the reporting date. All interest-rate swaps and currency forwards are therefore classified as level 2 measurements.

The fair value of the put and call options for the remaining shares of Linde Hydraulics was determined using the Black-Scholes model. The main input variables for the model were the options' exercise price, which may be modified by individual, specific, contractually agreed factors if necessary, and the fair value of the remaining shares in Linde Hydraulics. As at 31 December 2012 the fair value of the put option was €19,740 thousand and the fair value of the call options was €16,520 thousand. The exercise price of the put option is €77,429 thousand. The exercise price of the two call options totals €116,143 thousand. The options are classified as level 3 measurements.

As at 31 December 2012 the net value calculated for the options on the remaining shares in Linde Hydraulics was €3,220 thousand. If the fair value of the shares had been 10 per cent lower on the reporting date, the net value for the options would have increased by €8,310 thousand to a total of €11,530 thousand and resulted in an additional gain of €8,310 thousand. An increase of 10 per cent in the fair value of the shares in Linde Hydraulics would have decreased the net value for the options by €9,010 thousand to a total of €5,790 thousand and would have resulted in an expense of €9,010 thousand.

In order to eliminate default risk to the greatest possible extent, the KION Group only enters into derivatives with counterparties holding a good credit rating.

With the exception of derivative financial instruments and available-for-sale assets, all financial assets and liabilities are measured at amortised cost.

The fair value of available-for-sale assets is determined on the basis of data in an active market and is classified as level 1.

The following table shows the assignment of the fair values to the individual classification levels.