The consolidated financial statements are prepared on the separate financial statements of the parent and the consolidated subsidiaries, which are prepared in accordance with uniform KION Group accounting policies.
In 2012 the long-term leasing business was separated from the short-term rentals and 'sale with risk' business as part of the changes in the management structure and the separation of the financial services business. To achieve consistency of presentation with segment reporting, this separation required reclassifications in the KION Group's consolidated statement of financial position. Industrial trucks used in short-term rentals and 'sale with risk' business were reclassified from 'leased assets' to 'rental assets', while industrial trucks used in long-term leasing business continue to be reported as 'leased assets'.
In addition, procurement leasing was also separated from 'leased assets' and are reclassified to other property, plant and equipment as it is no longer considered to be part of leased assets under the new structure.
In connection with this reclassification, the corresponding liabilities are reported as other financial liabilities and no longer as lease liabilities. The resulting reclassifications as at 1 January 2011 and 31 December 2011 are as follows:
Assets and Liabilities | |||
€ thousand |
01/01/2011 |
reclassifications |
01/01/2011 |
|
|
|
|
Assets |
|
|
|
Leased assets |
501,164 |
-345,039 |
156,125 |
Rental assets |
0 |
321,188 |
321,188 |
Other property, plant and equipment |
566,492 |
23,851 |
590,343 |
|
|
|
|
Liabilities |
|
|
|
Non-current lease liabilities |
411,097 |
-132,283 |
278,814 |
Other non-current financial liabilities |
127,870 |
132,283 |
260,153 |
Current lease liabilities |
250,552 |
-80,623 |
169,929 |
Other current financial liabilities |
391,242 |
80,623 |
471,865 |
|
|
|
|
€ thousand |
31/12/2011 |
reclassifications |
31/12/2011 |
|
|
|
|
Assets |
|
|
|
Leased assets |
539,731 |
-372,377 |
167,354 |
Rental assets |
0 |
356,682 |
356,682 |
Other property, plant and equipment |
538,121 |
15,695 |
553,816 |
|
|
|
|
Liabilities |
|
|
|
Non-current lease liabilities |
471,131 |
-171,070 |
300,061 |
Other non-current financial liabilities |
132,719 |
171,070 |
303,789 |
Current lease liabilities |
230,381 |
-83,653 |
146,728 |
Other current financial liabilities |
420,435 |
83,653 |
504,088 |
Revenue recognition
Revenue is the fair value received for the sale of products and services and lease income (excluding VAT) after deduction of trade discounts and rebates. In accordance with IAS 18, revenue is recognised when it is sufficiently probable that a future economic benefit will flow to the company and that it can be reliably measured. Additional criteria also apply, depending on each individual transaction, such as:
Sale of goods
With the exception of items classified as 'sale with risk', revenue from the sale of goods is recognised when the KION Group delivers goods to a customer, the goods are accepted by the customer and the flow of benefits to the Group is considered to be probable. If a customer is expected to accept goods but has yet to do so, the corresponding revenue is only recognised when the goods are accepted. Appropriate provisions are recognised for risks relating to the sale of goods. In the case of revenue from agreements classified as 'sale with risk', the revenue is recognised pro rata over the term of the agreement if the risks and rewards remain substantially with the KION Group. The term 'sale with risk' and the corresponding revenue recognition are discussed in the following section and under 'Rental assets' below.
Rendering of services
Revenue from the rendering of services is recognised in the year in which the services are rendered. For services provided over several periods, revenue is recognised in accordance with the proportion of the total services rendered in each period (stage of completion). Revenue from long-term service agreements is therefore recognised on the basis of the average term of the service agreements and in line with the progressive cost trends (constant margin).
Revenue from financial service transactions is recognised in the amount of the sales value of the leased asset if classified as a finance lease and in the amount of the lease payments if classified as an operating lease. As part of the financial services provided by the Group, industrial trucks are also sold to finance partners who then enter into leases directly with the end customer (sale with risk). If significant risks and rewards remain with the KION Group as a result of an agreed residual value guarantee that accounts for more than 10 per cent of the asset's value or as a result of an agreed default guarantee, the proceeds from the sale are deferred and recognised as revenue on a straight-line basis over the term until the residual value guarantee or the default guarantee expires.
Interest income and royalties
Interest income is recognised pro rata temporis in accordance with the effective interest method. Income from royalties is deferred in accordance with the substance of the relevant agreements and recognised pro rata temporis.
Regarding the deferral of lease income, please refer to the accounting policies for leases.