Information on financial instruments

The carrying amounts and fair values of financial assets and liabilities in accordance with IFRS 7 are shown in > TABLE 25.

Whereas lease liabilities arising from sale and leaseback transactions stood at €734.7 million (31 December 2014: €707.7 million), lease receivables amounted to €510.5 million (31 December 2014: €490.6 million) and leased assets amounted to €239.6 million (31 December 2014: €230.5 million). Both items resulting from long-term leases with end customers and are funded using sale and leaseback transactions.

The finance lease obligations reported in other liabilities comprise liabilities arising from the sale and leaseback financing of industrial trucks of €355.3 million (31 December 2014: €339.1 million). These are mainly 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.

The unconsolidated subsidiaries and other investments that are shown in > TABLE 25 are carried at 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

Level 1 comprises long-term securities for which the fair value is calculated using prices quoted in an active market.

All currency forwards are classified as Level 2. The fair value of the currency forwards is calculated by the system using the discounting method based on forward rates on the reporting date. The default risk for the Group and for the counterparty is taken into account on the basis of gross figures.

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 shares in Linde Hydraulics. The Black-Scholes model and probability-weighted scenario analysis are used to calculate the fair value of the put option and the two call options. The measurement is based on the following significant, unobservable input parameters as at 31 March 2015. An unchanged amount of €64.1 million has been recognised as the fair value of the shares in Linde Hydraulics, both for the put option and for the two call options (31 December 2014: €64.1 million). A base exercise price of €77.4 million (31 December 2014: €77.4 million) and a term to maturity of 0.24 – 2.24 years (31 December 2014: 0.49 – 2.49 years) have been assumed for the put option. For the measurement of call option 1, a base exercise price of €77.4 million (31 December 2014: €77.4 million) and a term to maturity of 2.74 years (31 December 2014: 2.99 years) were used, while a base exercise price of €38.7 million (31 December 2014: €38.7 million) and a term to maturity of 0.24 – 2.74 years (31 December 2014: 0.49 – 2.99 years) were used for call option 2. At 31 March 2015, 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

As at 31 March 2015, the net value calculated for the options on the shares in Linde Hydraulics came to €32.1 million (31 December 2014: €31.7 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 €5.2 million (31 December 2014: by €5.3 million) to €37.4 million (31 December 2014: €37.1 million) and led to a gain of €5.2 million (31 December 2014: gain of €5.3 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 €5.5 million (31 December 2014: by €5.6 million) to €26.6 million (31 December 2014: €26.2 million) and led to an expense of €5.5 million (31 December 2014: €5.6 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 2015.