In line with IFRS 7, the following table shows the carrying amounts and fair values of financial assets and liabilities:
Whereas lease liabilities stood at €632.7 million (31 December 2013: €617.1 million), lease receivables arising from sale and leaseback transactions amounted to €440.1 million (31 December 2013: €431.4 million) and leased assets under sale and leaseback transactions totalled €204.3 million (31 December 2013: €201.2 million).
The finance lease obligations reported in other liabilities comprise liabilities arising from the sale and leaseback financing of industrial trucks of €324.5 million (31 December 2013: €327.5 million). These are allocated to the Financial Services segment and result from the intra-group financing provided by the Financial Services segment for the short-term rental business of the Linde Material Handling and STILL brand segments.
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Carrying amounts and fair values broken down by class |
>>TABLE 25 |
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31/03/2014 |
31/12/2013 |
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in € million |
Carrying amount |
Fair value |
Carrying amount |
Fair value |
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Financial assets |
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Investments in non-consolidated subsidiaries / Other investments |
11.4 |
11.4 |
11.9 |
11.9 |
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Loans receivable |
0.7 |
0.7 |
0.8 |
0.8 |
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Financial receivables |
11.7 |
11.7 |
11.6 |
11.6 |
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Available-for-sale investments |
0.8 |
0.8 |
0.8 |
0.8 |
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Lease receivables* |
483.8 |
483.3 |
479.6 |
478.4 |
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Trade receivables |
596.1 |
596.1 |
558.7 |
558.7 |
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Other receivables |
61.7 |
61.7 |
55.0 |
55.0 |
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thereof non-derivative receivables |
44.7 |
44.7 |
35.7 |
35.7 |
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thereof derivative receivables |
17.0 |
17.0 |
19.4 |
19.4 |
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Cash and cash equivalents |
131.4 |
131.4 |
219.3 |
219.3 |
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Financial liabilities |
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Liabilities to banks |
192.3 |
192.6 |
233.7 |
234.1 |
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Corporate bond |
959.1 |
1,039.1 |
958.3 |
1,040.8 |
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Other financial liabilities |
6.8 |
6.8 |
6.6 |
6.6 |
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Lease liabilities* |
632.7 |
633.7 |
617.1 |
619.2 |
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Trade payables |
570.9 |
570.9 |
550.5 |
550.5 |
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Other liabilities |
553.1 |
553.7 |
554.4 |
555.5 |
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thereof non-derivative liabilities |
165.8 |
165.8 |
162.4 |
162.4 |
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thereof liabilities from finance leases* |
358.8 |
359.3 |
363.0 |
364.1 |
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thereof derivative liabilities |
28.5 |
28.5 |
29.1 |
29.1 |
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The investments in unconsolidated subsidiaries that are shown in >> TABLE 25 are carried at amortised cost less impairment losses, as observable fair values are not available and reliable results cannot be obtained using other permitted measurement techniques. At present there is no intention to sell these financial instruments.
Fair value measurement and assignment to classification levels
The following tables show the assignment of fair values to the individual classification levels as defined by IFRS 13 for financial instruments measured at fair value. >> TABLES 26–27
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Financial instruments measured at fair value |
>>TABLE 26 |
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Fair Value Hierarchy |
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in € million |
Level 1 |
Level 2 |
Level 3 |
31/03/2014 |
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Financial assets |
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17.8 |
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thereof available-for-sale |
0.8 |
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0.8 |
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thereof derivative instruments |
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2.0 |
14.9 |
17.0 |
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Financial liabilities |
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28.5 |
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thereof derivative instruments |
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2.7 |
25.8 |
28.5 |
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Financial instruments measured at fair value |
>>TABLE 27 |
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Fair Value Hierarchy |
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in € million |
Level 1 |
Level 2 |
Level 3 |
31/12/2013 |
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Financial assets |
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20.2 |
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thereof available-for-sale |
0.8 |
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0.8 |
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thereof derivative instruments |
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3.6 |
15.7 |
19.4 |
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Financial liabilities |
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29.1 |
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thereof derivative instruments |
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1.9 |
27.2 |
29.1 |
Level 1 comprises available-for-sale assets for which the fair value is calculated using prices quoted in an active market.
All interest-rate swaps and currency forwards are classified as Level 2. The fair value of derivative financial instruments is determined using appropriate valuation methods on the basis of the observable market information at the reporting date. The default risk for the Group and for the counterparty is taken into account on the basis of gross figures. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. Both contractually agreed payments and forward interest rates are used to estimate the future cash flows, which are then discounted on the basis of a yield curve that is observable in the market. There were no longer any material interest-rate hedging instruments as at 31 March 2014. The fair value of currency forwards is calculated by the system using the discounting method based on forward rates on the reporting date.
The financial assets and liabilities allocated to Level 3 relate to a put option held by Linde Material Handling GmbH, Aschaffenburg, and two call options held by Weichai Power on the remaining shares in Linde Hydraulics. The Black-Scholes model is used to calculate the fair value of the put option and the two call options. At 31 March 2014, the material changes in fair value and the impact on the income statement for the first three months of the year were as follows: >> TABLE 28
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Development of financial assets / liabilities classified as level 3 |
>>TABLE 28 |
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in € million |
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Value as at 1/1/2014 |
–11.5 |
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Gains recognised in net financial expenses |
0.6 |
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Value as at 31/03/2014 |
–10.9 |
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Gains of the period relating to financial assets / liabilities held as at 31/03/2014 |
0.6 |
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Change in unrealised gains for the period relating to financial assets / liabilities held as at 31/03/2014 |
0.6 |
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Significant unobservable inputs of level 3 |
>>TABLE 29 |
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Financial assets / liabilities |
Input |
Value as at 31/03/2014 |
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Put-Option |
Initial exercise price (in € million) |
77.4 |
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Fair value of the remaining shares in Linde Hydraulics (in € million) |
116.1 |
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Residual time (in years) |
1.24–3.24 |
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Call-Option 1 |
Initial exercise price (in € million) |
77.4 |
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Fair value of the remaining shares in Linde Hydraulics (in € million) |
116.1 |
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Residual time (in years) |
3.74 |
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Call-Option 2 |
Initial exercise price (in € million) |
38.7 |
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Fair value of the remaining shares in Linde Hydraulics (in € million) |
116.1 |
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Residual time (in years) |
1.24–3.74 |
The fair values are measured using a probability-weighted scenario analysis, which is based on the significant unobservable input parameters in >> TABLE 29.
As at 31 March 2014, the net value calculated for the options on the remaining shares in Linde Hydraulics came to minus €10.9 million (31 December 2013: minus €11.5 million). If the fair value of the shares had been 10.0 per cent lower on the reporting date, the net value arising from the options would have increased by €9.3 million (31 December 2013: €9.4 million) to minus €1.6 million (31 December 2013: minus €2.1 million) and led to a gain of €9.3 million (31 December 2013: lower expense of €9.4 million). A 10.0 per cent rise in the fair value of the shares in Linde Hydraulics would have reduced the net value arising from the options by €9.3 million (31 December 2013: €9.4 million) to minus €20.2 million (31 December 2013: minus €20.9 million) and led to an additional expense of €9.3 million (31 December 2013: €9.4 million).
In order to eliminate default risk to the greatest possible extent, the KION Group only ever enters into derivatives with investment-grade counterparties.
If events or changes in circumstances make it necessary to reclassify financial instruments as a different level, they are reclassified at the end of a reporting period. No financial instruments were transferred between Levels 1, 2 or 3 in the first three months of 2014.