Basis of presentation
General information on the Company
KION GROUP AG, whose registered office is at Abraham-Lincoln-Strasse 21, 65189 Wiesbaden, is entered in the commercial register at the Wiesbaden local court under reference HRB 27060.
The condensed consolidated interim financial statements and the interim group management report were prepared by the Executive Board of KION GROUP AG on 25 July 2017.
Basis of preparation
The condensed consolidated interim financial statements of the KION Group for the six months ended 30 June 2017 have been prepared in line with International Accounting Standard (IAS) 34 ‘Interim Financial Reporting’ and other International Financial Reporting Standards (IFRSs) 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 for interim financial statements. A condensed scope of interim reporting has been prepared in accordance with IAS 34.
All of the IFRSs and the related interpretations (IFRICs / SICs) of the IFRS Interpretations Committee (IFRS IC) that had been issued by the reporting date and that were required to be applied for financial years commencing on or after 1 January 2017 have been applied in preparing these condensed consolidated interim financial statements. These condensed consolidated interim financial statements do not contain all the information and disclosures required of a set of consolidated annual financial statements and should therefore be read in conjunction with the consolidated financial statements prepared for the year ended 31 December 2016.
The reporting currency is the euro. All amounts are disclosed in millions of euros (€ million) unless stated otherwise. The addition of the totals presented may result in minor rounding differences. The percentages shown are calculated on the basis of the respective amounts, rounded to the nearest thousand euros.
Financial reporting standards released but not yet adopted
In general, newly published standards and interpretations are to be applied by the entities included in the KION Group only from the date on which they must be adopted for the first time. An exception is IFRS 16 ‘Leases’, which because of its interactions with IFRS 15 ‘Revenue from Contracts with Customers’ is expected to be adopted early, on 1 January 2018.
Based on an analysis of the implications of the first-time adoption of IFRS 15, it is currently expected that the vast majority of today’s new business and service business contracts as well as construction contracts will continue to satisfy the requirements for revenue recognition at a point in time or over time. Further analysis of the first-time adoption of IFRS 16 indicates that procurement leases previously recognised as operating leases must in future be recognised as a right of use asset plus a corresponding lease liability and will therefore result in a slight rise in total assets. Moreover, the assets and liabilities recognised in the statement of financial position are predicted to increase significantly as a result of applying IFRS 16 and IFRS 15 particularly in the area of indirect end customer financing. A not insignificant proportion of these sales transactions is expected to be recognised as leases. The implications of the first-time adoption of IFRS 9 ‘Financial Instruments’, especially in relation to the subsequent measurement of financial assets, are currently still being analysed.
The effects of the first-time adoption of the other published but not yet applied standards and interpretations on the presentation of the financial position and financial performance of the KION Group are expected to be insignificant.
Basis of consolidation
A total of 24 German (31 December 2016: 25) and 116 foreign (31 December 2016: 114) subsidiaries were fully consolidated in addition to KION GROUP AG as at 30 June 2017.
In addition, nine joint ventures and associates were consolidated and accounted for using the equity method as at 30 June 2017, which was the same number as at 31 December 2016.
57 (31 December 2016: 60) subsidiaries with minimal business volumes or no business operations and other equity investments were not included in the consolidation.
The purchase price allocation for the acquisition of Dematic should continue to be regarded as provisional as at 30 June 2017 because some individual aspects, particularly in relation to deferred taxes, have not yet been fully evaluated. The reported purchase price should additionally be viewed as provisional subject to contractual verification by KION.
In the reporting period, there were no material changes in connection with the ongoing purchase price allocation.
The accounting policies applied in these condensed consolidated interim financial statements are fundamentally the same as those used for the year ended 31 December 2016. These condensed consolidated interim financial statements are based on the interim financial statements of the parent company and its consolidated subsidiaries prepared in accordance with the standard accounting policies applicable throughout the KION Group.
Assumptions and estimates
The preparation of these condensed IFRS consolidated interim financial statements requires the use of assumptions and estimates for certain line items that affect recognition and measurement in the statement of financial position and the income statement. The actual amounts realised may differ from estimates. Assumptions and estimates are applied in particular:
- In assessing the need for and the amount of impairment losses on intangible assets, property, plant and equipment, and inventories;
- In determining the useful life of non-current assets;
- In classifying leases;
- In recognising and measuring defined benefit pension obligations and other provisions;
- In recognising and measuring current and deferred taxes;
- In recognising and measuring assets acquired and liabilities assumed in connection with business combinations; and
- In evaluating the stage of completion in the case of long-term construction contracts.
The estimates may be affected, for example, by deteriorating global economic conditions, by changes to exchange rates or interest rates and by commodity prices. Production errors, the loss of key customers and changes in financing can also impact on the Company’s performance going forward. Changes are recognised in profit or loss when they become known and assumptions are adjusted accordingly.