[2] Basis of preparation

The consolidated financial statements of the KION Group for the financial year ended 31 December 2013 have been prepared in accordance with section 315a of the German Commercial Code (HGB) in conjunction with the International Financial Reporting Standards (IFRSs) of the International Accounting Standards Board (IASB) applicable as at the reporting date as well as the associated interpretations (IFRICs) of the IFRS Interpretations Committee (IFRS IC) as adopted by the European Union in accordance with Regulation (EC) No. 1606/2002 of the European Parliament and of the Council concerning the application of international accounting standards. All of the IFRSs and IFRICs that had been enacted by the reporting date and that were required to be applied in the 2013 financial year have been applied in preparing the consolidated financial statements. In addition, the changes to the disclosure requirements pursuant to IAS 36 ‘Impairment of Assets’ for non-financial assets, which must be adopted for financial years commencing on or after 1 January 2014, were adopted in advance.

In order to improve the clarity of presentation, certain items are aggregated on the face of the statement of financial position and the income statement. The items concerned are disclosed and explained separately in the notes. Assets and liabilities are broken down into current and non-current items in accordance with IAS 1.60. The consolidated income statement is prepared in accordance with the cost of sales (function-of-expense) method.

The consolidated financial statements are prepared in euros, which is the Group’s functional currency and reporting currency. All amounts are disclosed in millions of euros (€ million) unless stated otherwise (disclosed in thousands of euros in the 2012 report). The addition of the totals presented may result in rounding differences of +/–€0.1 million. The percentages shown are calculated on the basis of the respective amounts, rounded to the nearest thousand euros. The separate financial statements included in the consolidation were prepared as at the same reporting date as the annual financial statements of KION GROUP AG.

Financial reporting standards to be adopted for the first time in the current financial year

The following financial reporting standards were adopted for the first time in 2013:

  • Amendments to IFRS 1 ‘First-time Adoption of International Financial Reporting Standards’: amendments relating to fixed transition dates and severe hyperinflation
  • Amendments to IFRS 1 ‘First-time Adoption of International Financial Reporting Standards’: amendments relating to government loans with a below-market rate of interest
  • Amendments to IFRS 7 ‘Financial Instruments: Disclosures’: offsetting of financial assets and financial liabilities
  • IFRS 13 ‘Fair Value Measurement’: The publication of IFRS 13 ‘Fair Value Measurement’ introduces a separate standard containing general rules on the measurement of fair value. The KION Group applied these rules for the first time in the 2013 financial year. The main impact of this is enhanced disclosures in the notes to the financial statements.
  • Amendments to IAS 1 ‘Presentation of Financial Statements’: amendments relating to the presentation of items of other comprehensive income. The amended IAS 1 results in a revised presentation of the statement of comprehensive income. Following the amendment to the standard, the items of other comprehensive income and loss must be split into items that will never be reclassified to profit or loss and items that might be reclassified to profit or loss in future periods.
  • Amendments to IAS 12 ‘Income Taxes’: limited amendment to IAS 12 relating to the recovery of underlying assets
  • Amendments to IAS 19 ‘Employee Benefits’: elimination of the use of the ‘corridor’ approach and amendments relating to the presentation of items of pension expense. The effects of the amendments to IAS 19 are described in note [7] ‘Accounting policies’.
  • Amendments to IAS 36 ‘Impairment of Assets’: clarification of recoverable amount disclosures required for non-financial assets
  • IFRIC 20 ‘Stripping Costs in the Production Phase of a Surface Mine’
  • Annual Improvements to IFRSs (2009-2011).

The first-time adoption of these standards and interpretations has had no significant effect on the presentation of the financial performance, financial position or notes to the financial statements of the KION Group.

Financial reporting standards released but not yet adopted

In its consolidated financial statements for the year ended 31 December 2013 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 2013:

  • Amendments to IFRS 7 ‘Financial Instruments: Disclosures’: disclosures about the transition to IFRS 9 ‘Financial Instruments’
  • IFRS 9 ‘Financial Instruments’
  • Amendments to IFRS 9 ‘Financial Instruments’: mandatory effective date
  • Hedge Accounting and Amendments to IFRS 9, IFRS 7 and IAS 39
  • IFRS 10 ‘Consolidated Financial Statements’
  • Amendments to IFRS 10 ‘Consolidated Financial Statements’, IFRS 12 ‘Disclosure of Interests in Other Entities’ and IAS 27 ‘Separate Financial Statements’: amendments relating to the consolidation of investment entities
  • IFRS 11 ‘Joint Arrangements’
  • IFRS 12 ‘Disclosure of Interests in Other Entities’
  • Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12)
  • Amendments to IAS 19 ‘Employee Benefits’: defined benefit plans: employee contributions
  • IAS 27R ‘Separate Financial Statements’
  • IAS 28R ‘Investments in Associates and Joint Ventures’
  • Amendments to IAS 32 ‘Financial Instruments: Presentation’: offsetting of financial assets and financial liabilities
  • Amendments to IAS 39 ‘Financial Instruments: Recognition and Measurement’: amendments relating to the novation of derivatives and continuation of hedge accounting
  • IFRIC 21 ‘Levies’
  • Annual Improvements to IFRSs (2010–2012)
  • Annual Improvements to IFRSs (2011–2013).

These standards and interpretations will only be applied by the companies included in the KION Group from the date on which they must be adopted for the first time.

We do not currently expect the first-time adoption of IFRS 10 ‘Consolidated Financial Statements’, IFRS 11 ‘Joint Arrangements’ and IFRS 12 ‘Disclosure of Interests in Other Entities’ to have any material effect on the presentation of the financial position or financial performance of the KION Group. The first-time adoption of IFRS 12 is likely to result in enhanced disclosures in the notes to the financial statements. The effects of the first-time adoption of the other standards and interpretations on the presentation of the financial position and financial performance of the KION Group are expected to be insignificant.