Annual Report 2020

China Merchants China Direct Investments Limited Annual Report 2020 93 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2020 2. APPLICATION OF AMENDMENTS TO HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”) (CONTINUED) Amendments to HKFRSs that are mandatorily effective for the current year (continued) Impacts on application of Amendments to HKFRS 3 Definition of a Business The Group has applied the Amendments to HKFRS 3 for the first time in the current year. The amendments clarify that while businesses usually have outputs, outputs are not required for an integrated set of activities and assets to qualify as a business. To be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The amendments remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs. The amendments also introduce additional guidance that helps to determine whether a substantive process has been acquired. In addition, the amendments introduce an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business. Under the optional concentration test, the acquired set of activities and assets is not a business if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar assets. The gross assets under assessment exclude cash and cash equivalents, deferred tax assets, and goodwill resulting from the effects of deferred tax liabilities. The election on whether to apply the optional concentration test is available on transaction-by-transaction basis. The amendments had no impact on the consolidated financial statements but may impact future periods should the Group make any acquisition. Amendments to HKFRSs in issue but not yet effective The Group has not early applied the following amendments to HKFRSs that have been issued but are not yet effective that are relevant to the business operation of the Group: Amendments to HKFRS 3 Reference to the conceptual framwork 1 Amendments to HKFRS 10 and HKAS 28 Sale or contribution of assets between an investor and its associate or joint venture 2 Amendments to HKAS 1 Classification of liabilities as current or non-current and related amendments to Hong Kong Interpretation 5 (2020) 3 Amendments to HKFRSs Annual improvements to HKFRSs 2018 - 2020 1 1 Effective for annual periods beginning on or after 1 January 2022. 2 Effective for annual periods beginning on or after a date to be determined. 3 Effective for annual periods beginning on or after 1 January 2023. The management anticipates that the application of all amendments to HKFRSs will have no material impact on the consolidated financial statements in the foreseeable future.