3. New and amended standards and interpretations

The Group has applied the following standards, interpretations and amendments that took effect as from January 1, 2020.

  • Amendments to IFRS 3 - Definition of a Business”, issued in October 2018, is intended to assist companies in determining whether an integrated set of activities and assets is a business. More specifically, the amendments clarify that a business, considered as an integrated 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. Accordingly, the amendments clarify that a business cannot exist without including the inputs and substantive processes necessary to produce outputs. The definition of “output”, as modified by these amendments, focuses on the goods and services delivered to customers, on investment income and other revenue and excludes returns in the form of lower costs or other economic benefits.
  • Amendments to IAS 1 and IAS 8 - Definition of Material”, issued in October 2018, to align the definition of “material” between the accounting standards and the Conceptual Framework for Financial Reporting and clarify a number of aspects. The definition of material is as follows: “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.” More specifically, the amendments clarify that:
    • “obscuring information” regards situations for which the effect for users of financial statements is similar to the omission or misstatement of information whose materiality is assessed in the context of the financial statements taken as a whole;
    • "primary users of financial statements”, to whom general purpose financial statements are directed, are “existing and potential investors, lenders and other creditors” who must rely on general purpose financial statements for much of the financial information they need; and
    • “materiality” depends on the nature or magnitude of information, or both. An entity assesses whether information, either individually or in combination with other information, is material in the context of its financial statements taken as a whole. A misstatement of information is material if it could reasonably be expected to influence decisions of made by the primary users of the financial statements.
  • Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest Rate Benchmark Reform”, issued in September 2019. The amendments: (i) provide for temporary exceptions that enable hedging relationships to continue during the period of uncertainty until alterative risk-free rates are established with the interbank offered rates (IBORs) reform; and (ii) require additional disclosures on hedging relationships directly affected by the uncertainty. In this regard, note that the reform will impact fair value measurement, the effects of hedge accounting and net financial income and expense when the alternative rates are defined.
  • Amendments to References to the Conceptual Framework in IFRS Standards”, issued in March 2018. The document sets out the amendments to affected standards in order to update references to the revised Conceptual Framework. These amendments accompany the latest version of the Revised Conceptual Framework for Financial Reporting, issued in March 2018 and in effect as from January 1, 2020, which includes some new concepts, provides updated definitions and recognition criteria and clarifies some important concepts. The main amendments include:
    • an increase in the importance of management’s stewardship of economic resources for financial reporting purposes;
    • the restoration of prudence as an element supporting neutrality;
    • the definition of reporting entity, which may be a legal entity or a portion of that entity;
    • the revision of the definitions of assets and liabilities;
    • elimination of the probability threshold in recognition and the addition of guidelines for derecognition;
    • the addition of guidelines on various measurement bases; and
    • the affirmation that profit or loss is the primary indicator of performance and that, in principle, income and expense included in other comprehensive income shall be reclassified to profit or loss when doing so results in the income statement providing more relevant information or a more faithful representation.

The application of these amendments did not have a material impact on these consolidated financial statements.