[4] Basis of consolidation

KION GROUP AG’s equity investments include subsidiaries, joint ventures, associates and financial investments.

In addition to KION GROUP AG, the consolidated financial statements of the KION Group include, using the acquisition method, all material subsidiaries over which KION GROUP AG exercises control. KION GROUP AG controls a subsidiary if it has decision-making power over the main activities of the entity and can use this power to affect the amount of the variable returns to which it is exposed as a result of the equity investment. Subsidiaries acquired in the course of the financial year are consolidated from the date on which control 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 on the basis of a contractual agreement, and these parties have rights to the net assets of the joint venture.

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 GROUP AG holds between 20 per cent and 50 per cent of the voting rights.

Equity interests over which KION GROUP companies are unable to exercise control or a significant influence, or that are not jointly controlled by them, are classified as financial investments.

The number of equity investments broken down by category is shown in > TABLE 045.

A total of 24 German (2016: 25) and 114 foreign (2016: 114) subsidiaries were fully consolidated in addition to KION GROUP AG as at 31 December 2017.

In connection with the integration of Egemin and Retrotech into Dematic, a total of five subsidiaries were merged into other subsidiaries and were therefore no longer included in the basis of consolidation. KION Supply Chain Solutions Czech, s.r.o., Český Krumlov, Czech Republic, was founded in January 2017 and will start manufacturing modules for Dematic’s automated conveyor systems from early 2018.

As had been the case a year earlier, nine joint ventures and associates were accounted for under the equity method as at 31 December 2017. In each case, the last available annual financial statements were used as the basis for measurement.

Equity investments in 56 (2016: 60) companies with minimal business volumes or no business operations were generally recognised at amortised cost. This includes the start-up Comnovo GmbH, which was acquired by Linde Material Handling GmbH in July 2017. The financial investment in Balyo SA is measured at fair value due to Balyo’s IPO in 2017.

These non-consolidated subsidiaries and other equity investments (joint ventures and associates that are not accounted for using the equity method, plus financial investments) are of minor importance to the presentation of the financial position and financial performance of the KION Group, both individually and as a whole.

Where other requirements are met, the fully consolidated companies listed in > TABLE 046 are exempt from the obligation to disclose annual financial statements and to prepare notes to the financial statements and management reports in accordance with sections 264 (3) and 264b HGB on account of their inclusion in the consolidated financial statements. In the case of STILL Financial Services GmbH, it has been decided solely not to disclose the annual financial statements.

A detailed overview of all the direct and indirect shareholdings of KION GROUP AG is shown in the list of shareholdings (note [47]).