[33] 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 amounting to €38,087 thousand (31 December 2009: losses of €48,201 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 remaining terms to maturity. The carrying amounts of these financial instruments approximate their fair values.

The fair value of derivative financial instruments is determined using appropriate valuation methods on the basis of 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. The fair value of options is calculated using recognised mathematical techniques. In the KION Group, all derivative financial instruments are classified as level 2 measurement as defined by IFRS 7.

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.