[2] Basis of preparation

The consolidated financial statements of the KION Group for the financial year ended 31 December 2018 have been prepared in accordance with section 315e 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 2018 financial year have been applied in preparing the consolidated financial statements. Furthermore, IFRS 16 ‘Leases’, which is required to be applied for financial years commencing on or after 1 January 2019, was adopted early with effect from 1 January 2018 because of its interactions with IFRS 15 ‘Revenue from Contracts with Customers’.

In order to improve the clarity of presentation, certain items are aggregated in 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 presentation currency. All amounts are disclosed in millions of euros (€ million) unless stated otherwise. Due to rounding effects, addition of the individual amounts shown may result in minor rounding differences to the totals. The percentages shown are calculated on the basis of the respective amounts, rounded to the nearest thousand euros. All of the separate financial statements of the subsidiaries 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 2018:

  • Amendments to IFRS 2 ‘Share-based Payment’: amendments relating to the classification and measurement of share-based payment transactions
  • Amendments to IFRS 4 ‘Insurance Contracts’: exempting provisions relating to the adoption of IFRS 9 ‘Financial Instruments’ before the effective date of the new version of IFRS 4
  • IFRS 9 ‘Financial Instruments’
  • IFRS 15 ‘Revenue from Contracts with Customers’ and the clarifications to IFRS 15 ‘Revenue from Contracts with Customers’: amendments relating to the identification of performance obligations, classification as principal or agent, revenue from licences and transition relief
  • IFRS 16 ‘Leases’
  • Amendments to IAS 40 ‘Investment Property’: clarification in relation to transfers of property to, or from, investment property
  • IFRIC 22 ‘Foreign Currency Transactions and Advance Consideration’
  • Amendments to IAS 28 ‘Investments in Associates and Joint Ventures’: amendments in connection with the annual improvements to IFRSs (2014 – 2016).

The initial application of IFRS 9 ‘Financial Instruments’, IFRS 15 ‘Revenue from Contracts with Customers’ and IFRS 16 ‘Leases’ resulted in changes to the presentation of the financial performance and financial position and the notes to the financial statements of the KION Group. These changes are described in detail in note [6]. The initial application of the other standards and interpretations has had no significant effects.

Financial reporting standards released but not yet adopted

In its consolidated financial statements for the year ended 31 December 2018, the KION Group has not applied the following standards and interpretations, which have been issued by the IASB but were not yet required to be adopted in 2018:

  • Amendments to IFRS 3 ‘Business Combinations’: amendments relating to the definition of a business in order to distinguish it from a group of assets when applying IFRS 3
  • Amendments to IFRS 9 ‘Financial Instruments’: amendments relating to the classification of particular prepayable financial assets
  • IFRS 17 ‘Insurance Contracts’
  • Amendments to IAS 1 ‘Presentation of Financial Statements’ and IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’: clarification of the definition of materiality
  • Amendments to IAS 19 ‘Employee Benefits’: amendments in connection with the remeasurement of net defined benefit liabilities resulting from plan amendments, curtailments or settlements
  • Amendments to IAS 28 ‘Investments in Associates and Joint Ventures’: clarification relating to the accounting treatment of long-term interests that form part of the net investment in an entity accounted for under the equity method
  • IFRIC 23 ‘Uncertainty over Income Tax Treatments’
  • Amendments to the Conceptual Framework: amendments to how the Conceptual Framework is referenced in IFRSs
  • Annual Improvements to IFRSs (2015 – 2017).

These standards and interpretations are expected 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. The effects of the initial application of these financial reporting standards on the presentation of the financial position and financial performance of the KION Group are expected to be insignificant.