[2] Basis of preparation

The consolidated financial statements of the KION Group for the financial year ended 31 December 2010 were prepared in accordance with section 315a of the German Commercial Code (HGB) which requires the application of International Financial Reporting Standards (IFRSs) and the associated interpretations (IFRICs) of the International Accounting Standards Board (IASB) as adopted by the European Union in accordance with Regulation (EC) No. 1606/2002 of the European Parliament and of the Council on the application of international accounting standards. All of the IFRSs and IFRICs that were issued as at the reporting date and that were required to be applied in the 2010 financial year were applied in preparing the consolidated financial statements.

Financial reporting standards to be adopted for the first time in the financial year under review:

The following financial reporting standards and interpretations were adopted for the first time in 2010:

  • Revised version of IFRS 1, 'First-time Adoption of International Financial Reporting Standards';
  • Amendments to IFRS 1, 'First-time Adoption of International Financial Reporting Standards’, amendments relating to additional exemptions for first-time adopters;
  • Amendments to IFRS 2, 'Share-based Payment', amendments relating to the accounting treatment of cash-settled, share-based payment transactions in a group;
  • IFRS 3R, 'Business Combinations';
  • IFRS 5 (2008 improvements), 'Non-current Assets Held for Sale and Discontinued Operations';
  • IAS 27R, 'Consolidated and Separate Financial Statements'
  • IAS 39, 'Financial Instruments: Recognition and Measurement’, amendments relating to qualifying hedged items;
  • IFRIC 12, 'Service Concession Arrangements'
  • IFRIC 15, 'Agreements for the Construction of Real Estate'
  • IFRIC 16, 'Hedges of a Net Investment in a Foreign Operation'
  • IFRIC 17, 'Distributions of Non-cash Assets to Owners'
  • IFRIC 18, 'Transfers of Assets from Customers'
  • Improvements to IFRSs in 2009.

The first-time adoption of these standards and interpretations had no significant effect on the presentation of the financial position and financial performance of the KION Group.

Financial reporting standards released but not yet adopted

In its consolidated financial statements for the year ended 31 December 2010, the KION Group has not applied the following standards and interpretations, which have been issued by the IASB, but are not yet required to be adopted in 2010:

  • Amendments to IFRS 1, 'First-time Adoption of International Financial Reporting Standards', amendments related to the limited exemption from comparative IFRS 7 disclosures for first-time adopters,
  • Amendments to IFRS 1, 'First-time Adoption of International Financial Reporting Standards', amendments relating to fixed transition dates and severe hyperinflation;
  • Amendments to IFRS 7, 'Financial Instruments: Disclosures', disclosures relating to transfer of financial assets;
  • IFRS 9, 'Financial Instruments'
  • Amendments to IAS 12 'Income Taxes': Limited amendment to IAS 12 relating to the recovery of underlying assets;
  • Revised version of IAS 24, 'Related Party Disclosures'
  • Amendments to IAS 32, 'Financial Instruments: Presentation', classification of rights issues (rights, options or warrants);
  • Amendments to IFRIC 14 'The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction', prepayments of a minimum funding requirement;
  • IFRIC 19, 'Extinguishing Financial Liabilities with Equity Instruments'
  • Improvements to IFRSs in 2010.

These standards and interpretations will only be applied by the companies included in the KION Group from the date at which they must be adopted for the first time. Their effects on the financial position and financial performance of the KION Group are expected to be insignificant.

The various amendments issued in May 2010 as part of the annual improvement project mainly related to terminological and editorial aspects. They are not expected to have any significant effect on the presentation of the financial position and financial performance.

In order to improve the clarity of presentation, certain items are aggregated on the face of the statement of financial position and income statement. The items concerned are disclosed and explained separately in the notes. In accordance with IAS 1.60, assets and liabilities are broken down into current and non-current items. Liabilities from outstanding supplier invoices are reported in trade payables, while other accruals are reported in other financial liabilities. The consolidated income statement is prepared in accordance with the cost of sales (function-of-expense) method.

The reporting currency is the euro. All amounts are disclosed in thousands of euros (€ thousand) unless stated otherwise. The addition of the totals presented may result in rounding differences of +/- €1 thousand. The separate financial statements included in the consolidation were prepared on the same reporting date as the annual financial statements of KION Holding 1 GmbH. Some prior-year figures have been reclassified to conform to the current year presentation.

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