[4] Basis of consolidation

KION Holding 1 GmbH's equity investments include subsidiaries, joint ventures, associates and financial investments.

In addition to KION Holding 1 GmbH, the consolidated financial statements of the KION Group include all material subsidiaries in which KION Holding 1 GmbH holds a majority of the voting rights, either directly or indirectly, or in which it exercises control i.e. has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. Subsidiaries acquired in the course of the financial year are consolidated from the date at which control is transferred, i.e. the date from which it is possible to determine their financial and operating policies such that benefit 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. Joint control differs from significant influence insofar as it is governed by a contractual agreement.

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 Holding 1 GmbH holds between 20 per cent and 50 per cent of the voting rights.

All other equity interests over which KION Holding 1 GmbH is unable to exercise control or significant influence, or that are not jointly controlled by KION Holding 1 GmbH are classified as financial investments and are not consolidated.

The following table shows the number of equity investments broken down by category:

A total of 17 German and 76 foreign subsidiaries were fully consolidated in addition to KION Holding 1 GmbH as at 31 December 2011. KION Finance S.A., Luxembourg, has been included in the KION Group’s consolidated financial statements for the first time since April 2011 as required by IAS 27 in conjunction with SIC-12 (‘Consolidation - special-purpose entities’). In addition, Eisenwerk Weilbach GmbH, Wiesbaden, Germany, has been included in the consolidation for the first time since December 2011 because it had become more financially significant.

IBERCARRETILLAS, S.A., El Prat de Llobregat, Spain, was deconsolidated in April 2011 when it merged with STILL, S.A., Barcelona, Spain.

Eleven joint ventures and associates were accounted for under the equity method as at 31 December 2011 (31 December 2010: twelve). In each case, valuation was based on the lastest available annual financial statements.

70 (2010: 68) subsidiaries with minimal business volume or no business operations were not included in the consolidation. The unconsolidated subsidiaries and the associates not accounted for using the equity method are not material to the financial position and financial performance of the KION Group, both individually and in the aggregate.

Due to certain circumstances, the following fully consolidated companies are exempt from the requirement to prepare annual financial statements and management reports in accordance with sections 264 (3) and 264b HGB on account of their inclusion in the consolidated financial statements:

A detailed overview of all the direct and indirect shareholdings of KION Holding 1 GmbH is presented in the list of shareholdings in the annex to these notes.