Annual Report 2019

China Merchants China Direct Investments Limited Annual Report 2019 81 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2019 2. APPLICATION OF AMENDMENTS AND INTERPRETATION TO HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”) (CONTINUED) Amendments to HKFRSs in issue but not yet effective (continued) In addition to the above amendments to HKFRSs, a revised Conceptual framework for financial reporting was issued in 2018. Its consequential amendments, the Amendments to references to the conceptual framework in HKFRS standards , will be effective for annual periods beginning on or after 1 January 2020. Except for the amendments to HKFRSs mentioned below, the management anticipates that the application of all other amendments to HKFRSs will have no material impact on the consolidated financial statements in the foreseeable future. Amendments to HKFRS 3 Definition of a Business The amendments: ‧ add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The election on whether to apply the optional concentration test is available on transaction-by-transaction basis; ‧ clarify that 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; and ‧ narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs. The amendments are applied prospectively to all business combinations and asset acquisitions for which the acquisition date is on or after the first annual reporting period beginning on or after 1 January 2020, with early application permitted. The optional concentration test and the amended definition of a business are not expected to have a significant impact to the Group.