| 3. | Changes in material accounting policies |
| a. | Application of new and revised International Financial Reporting Standards
(“IFRSs” or “IAS”) that are mandatorily effective for the current year |
In the current year, the Group has
applied a number of new and amended IFRS and interpretations issued by the International Accounting Standards Board (“IASB”)
that are mandatorily effective for an accounting period that begins on or after January 1, 2024. The conclusions related to their adoption
are described as follows:
New and amended IFRS Standards
that are effective for the current year
The Group adopted the following amendments
in the current year:
| ● | Amendments to IAS 1, – Classification of Liabilities
as Current or Non-current and Non-current liabilities with covenants. As a result of the amendments, the Group had no impacts on the
adoption of this amendment since the Group’s accounting policy is to classify its liabilities according to the contractual maturities
at the end of the reporting period, without considering the future refinancing plans that it defines in its liquidity financial risk
management strategy. The amendment to IAS 1 had an impact on the Company’s disclosures related to non-current liabilities with
covenants. See note 16. |
| ● | Amendments to IFRS 16 – Lease Liability in Sale and
Leaseback. The Group did not have an impact on the adoption of this amendment since it has not entered into sale and leaseback transactions. |
| ● | Amendments to IAS 7 and IFRS 7, – Supplier Finance Arrangements.
The Group is subject to financing agreements with suppliers that relate to the Group’s operating activities, the terms of which
are similar in nature to accounts payable to suppliers (see note 15). The amendment impacted the Company’s disclosures related
to supplier financing arrangements. See note 15. |
| ● | Agenda Decision on Segment Reporting – In July 2024,
the IASB published its decision on segment reporting, which clarifies certain segment disclosure requirements. The Company adopted this
decision and expanded its segment reporting; see note 26. |
New and revised IFRS Standards
in issue but not yet effective
As of the date of issuance of these
financial statements, the Group has not applied the following new and revised IFRS, nor improvements issued by the IASB that have been
published but are not yet effective.
| ● | IFRS 18 Presentation and Disclosure in Financial Statements
(effective for annual periods beginning on or after 1 January 2027) |
IFRS 18 will replace IAS 1 Presentation
of financial statements, introducing new requirements that will help to achieve comparability of the financial performance of similar
entities and provide more relevant information and transparency to users. Even though IFRS 18 will not impact the recognition or measurement
of items in the financial statements, its impacts on presentation and disclosure are expected to be pervasive, in particular those related
to the statement of financial position, statement of profit or loss and the disclosure of performance measures defined by Management within
the financial statements.
Management is currently assessing the
detailed implications of applying the new standard on the Group’s consolidated financial statements. From the high-level preliminary
assessment performed, the following potential impacts have been identified:
| ● | Although the adoption of IFRS 18 will have no impact on the
Group’s net profit, the Group expects that grouping items of income and expenses in the statement of profit or loss into the new
categories will impact how operating profit is calculated and reported. From the high-level impact assessment that the Group has performed,
the following items might potentially impact operating profit: |
| o | IFRS 18 has specific requirements regarding the category in
which gains or losses on derivatives are recognized, which is the same category as the risk-related income and expenses used for managing
derivatives. Although the Group currently recognizes these financial derivatives gains or losses in financial costs, there could be a
change in where these gains or losses are recognized, and the Group is currently evaluating the need for a change. |
| ● | The line items presented on the primary financial statements
might change as a result of the application of the concept of ‘useful structured summary’ and the enhanced principles on
aggregation and disaggregation. In addition, since goodwill will be required to be separately presented in the statement of financial
position, the Group will disaggregate goodwill and other intangible assets and present them separately in the statement of financial
position. |
| ● | The Group does not expect there to be a significant change
in the information that is currently disclosed in the notes because the requirement to disclose material information remains unchanged;
however, the way in which the information is grouped might change as a result of the aggregation/disaggregation principles. In addition,
there will be significant new disclosures required for: |
| o | Management-defined performance measures; |
| o | a break-down of the nature of expenses for line items presented
by function in the operating category of the statement of profit or loss – this break-down is only required for certain nature
expenses; and |
| o | for the first annual period of application of IFRS 18, a reconciliation
for each line item in the statement of profit or loss between the restated amounts presented by applying IFRS 18 and the amounts previously
presented applying IAS 1. |
| ● | From a cash flow statement perspective, IFRS 18 introduces
changes to the starting point of cash flow and the way interest received, and interest paid are presented. |
The Group will apply the new standard
from its mandatory effective date of 1 January 2027. Retrospective application is required, and so the comparative information for the
financial year ending 31 December 2026 will be restated in accordance with IFRS 18.
In addition, the Group does not see
potential impacts from its adoption, of the following standards and amendments considering that some are not of significant applicability
and others are totally not applicable to the balances and transactions carried out by the Group.
| ● | Amendments to IAS 21 – Absence of Convertibility (1).
The Group does not foresee any impact from this amendment because it has not entered into transactions with currencies that are considered
non-exchangeable so far. |
| ● | Amendments to IFRS 9 and IFRS 7 – Classification and
Measurement of Financial Instruments (2). The Group does not expect these amendments to have an impact on the measurement
and classification of its financial instruments. |
| ● | Annual Amendments to International Financial Reporting Standards
– Volume 11 (2). The Group does not foresee any impacts from the annual amendments considering that the main purpose
of these amendments is to increase the clarity of the affected standards. |
| ● | IFRS 19 – Disclosures by Subsidiaries without Public
Accountability (3). The Group is in the process of analyzing the new requirements and the benefits of reduced disclosures
when adopting IFRS 19. The Group will evaluate the possible impacts on entities that could adopt this new standard to determine whether
it will choose to apply IFRS 19. |
|