Basis of preparation
The consolidated financial statements of the KION Group for the financial year ended 31 December 2016 have been prepared in accordance with section 315a of the German Commercial Code (HGB) in conjunction with the International Financial Reporting Standards (IFRSs) of the International Accounting Standards Board (IASB) applicable as at the reporting date as well as the associated interpretations (IFRICs) of the IFRS Interpretations Committee (IFRS IC) as adopted by the European Union in accordance with Regulation (EC) No. 1606/2002 of the European Parliament and of the Council concerning the application of international accounting standards. All of the IFRSs and IFRICs that had been enacted by the reporting date and that were required to be applied in the 2016 financial year have been applied in preparing the consolidated financial statements.
In order to improve the clarity of presentation, certain items are aggregated in the statement of financial position and the income statement. The items concerned are disclosed and explained separately in the notes. Assets and liabilities are broken down into current and non-current items in accordance with IAS 1.60. The consolidated income statement is prepared in accordance with the cost of sales (function-of-expense) method.
The consolidated financial statements are prepared in euros, which is the Group’s functional currency and reporting currency. All amounts are disclosed in millions of euros (€ million) unless stated otherwise. The addition of the totals presented may result in minor rounding differences. The percentages shown are calculated on the basis of the respective amounts, rounded to the nearest thousand euros. The separate financial statements of the subsidiaries included in the consolidation were prepared as at the same reporting date as the annual financial statements of KION GROUP AG.
Financial reporting standards to be adopted for the first time in the current financial year
The following financial reporting standards were adopted for the first time in 2016:
- Amendments to IFRS 10 ‘Consolidated Financial Statements’, IFRS 12 ‘Disclosure of Interests in Other Entities’ and IAS 28 ‘Investments in Associates and Joint Ventures’, clarification relating to application of the exception to the consolidation obligation for investment entities
- Amendments to IFRS 11 ‘Joint Arrangements’: clarification relating to the acquisition of interests in joint operations
- Amendments to IAS 1 ‘Presentation of Financial Statements’: amendments in connection with the disclosure initiative
- Amendments to IAS 16 ‘Property, Plant and Equipment’ and IAS 38 ‘Intangible Assets’: clarification relating to revenue-based depreciation and amortisation
- Amendments to IAS 16 ‘Property, Plant and Equipment’ and IAS 41 ‘Agriculture’: amendments relating to the financial reporting for bearer plants
- Amendments to IAS 19 ‘Employee Benefits’: defined benefit plans: employee contributions
- Amendments to IAS 27 ‘Separate Financial Statements’: amendments relating to the application of the equity method for subsidiaries, joint ventures and associates in separate financial statements
- Annual Improvements to IFRSs (2010 – 2012)
- Annual Improvements to IFRSs (2012 – 2014).
The first-time adoption of these amendments to standards has had no significant effect on presentation of the financial performance, financial position or notes to the financial statements of the KION Group.
Financial reporting standards released but not yet adopted
In its consolidated financial statements for the year ended 31 December 2016, the KION Group has not applied the following standards and interpretations, which have been issued by the IASB but were not yet required to be adopted in 2016:
- Amendments to IFRS 2 ‘Share-based Payment’: amendments relating to the classification and measurement of share-based payment transactions
- Amendments to IFRS 4 ‘Insurance Contracts’: exempting provisions relating to the adoption of IFRS 9 ‘Financial Instruments’ before the effective date of the new version of IFRS 4
- IFRS 9 ‘Financial Instruments’
- IFRS 15 ‘Revenue from Contracts with Customers’
- Clarifications to IFRS 15 ‘Revenue from Contracts with Customers’: amendments relating to the identification of performance obligations, classification as principal or agent, revenue from licenses and transition relief
- IFRS 16 ‘Leases’
- Amendments to IAS 7 ‘Statement of Cash Flows’: amendments in connection with the disclosure initiative
- Amendments to IAS 12 ‘Income Taxes’: amendments relating to the recognition of deferred tax assets for unrealised losses on available-for-sale financial assets
- Amendments to IAS 40 ‘Investment Property’: clarification in relation to transfers of property to, or from, investment property
- IFRIC 22 ‘Foreign Currency Transactions and Advance Consideration’
- Annual Improvements to IFRSs (2014 – 2016).
These standards and interpretations are expected to be applied by the entities included in the KION Group only from the date on which they must be adopted for the first time. Initial information from an analysis of the impact from the first-time adoption of IFRS 15 ‘Revenue from Contracts with Customers’ and IFRS 16 ‘Leases’ indicates that there is likely to be a clear impact on financial position, especially as a consequence of the greater recognition of indirect end customer finance and purchase leases in the statement of financial position. Effects will arise both from the application of the control principle in IFRS 15 and from the application of the right-of-use approach specified by IFRS 16. The implications for financial position and financial performance from the first-time application of IFRS 15 ‘Revenue from Contracts with Customers’ in respect of revenue from construction contracts and of IFRS 9 ‘Financial Instruments’, especially in relation to the subsequent measurement of financial assets, are currently still being analysed. The effects of the first-time adoption of the other standards and interpretations on the presentation of the financial position and financial performance of the KION Group are expected to be insignificant.