[4] Basis of consolidation

KION Holding 1 GmbH's equity investments include subsidiaries, joint ventures, associates and financial investments.

In addition to KION Holding 1 GmbH, the consolidated financial statements of the KION Group include all material subsidiaries in which KION Holding 1 GmbH holds a majority of the voting rights, either directly or indirectly, and which it exercises control i.e. has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. Subsidiaries acquired in the course of the financial year are consolidated from the date at which control is transferred, i.e. the date from which it is possible to govern their financial and operating policies so as to obtain benefits. Companies sold in the course of the financial year are deconsolidated from the date on which control is lost.

A joint venture is an equity interest in which the entity is jointly managed by companies in the KION Group and one or more partners. Joint control differs from significant influence insofar as it is governed by a contractual agreement.

Associates are entities in which companies in the KION Group are able to exercise significant influence, either directly or indirectly, over the financial and operating policies of the entity concerned. Significant influence is generally presumed to exist when KION Holding 1 GmbH holds between 20 per cent and 50 per cent of the voting rights.

All other equity interests over which KION Holding 1 GmbH is unable to exercise control or a significant influence, or that are not jointly controlled by KION Holding 1 GmbH are classified as financial investments and are not consolidated.

The following table shows the number of equity investments broken down by category:

A total of 19 German and 79 foreign subsidiaries were consolidated in addition to KION Holding 1 GmbH as at 31 December 2012. Following the separation of financial services operations into separate entities, six financial services companies were consolidated as part of the KION Group for the first time in January 2012 because they had become more financially significant (additions, consolidated subsidiaries). Previously, these companies had been reported at cost and are therefore reported as disposals of investments recorded at cost. In addition, a new company, KION South Asia Pte. Ltd., Singapore, Singapore, was founded in July 2012. Information about other acquisitions can be found in note [5] while information about disposals are provided in notes [6] and [13].

Ten joint ventures and associates were accounted for under the equity method as at 31 December 2012 (31 December 2011: eleven). In each case, measurement under the equity method was performed on the basis of the last available annual financial statements. The addition relates to the non-controlling interest held in Linde Hydraulics GmbH & Co. KG.

39 (2011: 70) companies with minimal business volumes or no business operations were not included in the consolidation. The unconsolidated subsidiaries and the associates not accounted for using the equity method are not material to the financial position and financial performance of the KION Group, both individually and as a whole.

Where other requirements are met, the following consolidated companies are exempt from the requirement to prepare annual financial statements and management reports in accordance with sections 264 (3) and 264b HGB due to their inclusion in the consolidated financial statements:

A detailed overview of all the direct and indirect shareholdings of KION Holding 1 GmbH is shown in the list of shareholdings in the annex to these notes.