[2] Basis of preparation

The consolidated financial statements of the KION Group for the financial year ended December 31, 2024 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 their interpretations that had been enacted by the reporting date and that were required to be applied in the 2024 financial year have been applied in preparing the consolidated financial statements.

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. The consolidated income statement is prepared in accordance with the cost of sales (function-of-expense) method.

The consolidated financial statements were 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. The comparative figures for the prior year were determined on the same basis.

Financial reporting standards to be adopted for the first time in the current financial year

The following financial reporting standards were required to be applied for the first time in 2024:

• Amendments to IAS 1 ‘Presentation of Financial Statements’: The amendments clarify that liabilities must be classified as non-current if, on the reporting date, the reporting entity has the right to defer settlement of the liabilities by at least twelve months. The probability of this right being exercised has no influence on classification.
• Amendments to IAS 1 ‘Presentation of Financial Statements’: The amendments provide additional guidance stating that only covenants with which the entity is required to comply on or before the reporting date affect the classification of liabilities as current or non-current.
• Amendments to IAS 7 ‘Statement of Cash Flows’ and IFRS 7 ‘Financial Instruments: Disclosures’: The amendments introduce new disclosures that enable an assessment of how supplier finance arrangements affect liabilities, cash flows, and liquidity risk.
• Amendments to IFRS 16 ‘Leases’: The amendments contain rules on how a seller-lessee subsequently measures sale and leaseback transactions containing variable payments that do not depend on an index or a rate, such as an interest rate.

The initial application of these standards and interpretations has had no significant effect on the presentation of the financial position and financial performance of the KION Group. However, the presentation of prior-year non-current and current financial liabilities in the statement of financial position was adjusted as a result of the retrospective application of ‘Classification of Liabilities as Current or Non-current’ (Amendments to IAS 1). In accordance with the transitional provisions, the current liabilities to banks included in financial liabilities were reduced by €21.0 million as at December 31, 2023 and the non-current liabilities to banks were increased by the same amount. As at January 1, 2023, a corresponding reclassification of €114.6 million would have been made.

Financial reporting standards released but not yet adopted

The standards and interpretations that had been issued by the IASB by December 31, 2024 but were not yet required to be adopted in 2024 are expected to be applied by the subsidiaries in the basis of consolidation, and by KION GROUP AG, only from the time when they are required to be applied. Based on current assessments, the initial application of these financial reporting standards and interpretations will have no significant effect on the presentation of the financial position and financial performance of the KION Group.

This does not apply to the initial application of IFRS 18 ‘Presentation and Disclosure in Financial Statements’, as the KION Group is currently analyzing the impact of applying it for the first time. IFRS 18 is required to be applied for annual periods beginning on or after January 1, 2027. It will replace the existing standard IAS 1 ‘Presentation of Financial Statements’ and introduces new requirements, such as in relation to the presentation of the income statement and statement of cash flows, along with additional disclosures in the notes to the financial statements. The new standard will not affect the recognition and measurement rules.