Financial statements N otes to the consolidated financial statements continued G. New and amended standards and interpretations adopted by the Group In financial year 2021, the following amendments to standards and interpretations became effective: Interest Rate Benchmark Reform - phase 2 The amendments Interest Rate Benchmark Reform – phase 2 (amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) issued by the IASB were effective from 1 January 2021. The amendments provide relief on certain existing requirements in IFRS Standards, relating to modifications of financial instruments and lease contracts or hedging relationships triggered by a replacement of a benchmark interest rate in a contract with a new alternative benchmark rate, as a result of Interest Rate Benchmark Reform. There has been no material impact to the Group’s financial statements as a result of the application of these amendments. Covid-19 Related Rent Concessions beyond 30 June 2021 The amendment to IFRS 16, Covid-19-Related Rent Concessions beyond 30 June 2021 issued by the IASB was effective from 1 April 2021. It provides an extension to the period under which practical relief to lessees could be applied in accounting for rent concessions occurring as a direct consequence of covid-19, as introduced in the original amendment, Covid-19-Related Concessions (amendment to IFRS 16). There has been no material impact to the Group’s financial statements as a result of the application of this amendment. IFRIC Agenda Decision on Accounting Treatment for Configuration and Customisation Costs in a Cloud Computing Arrangement In April 2021, an IFRIC agenda decision was issued in relation to the accounting treatment for configuration and customisation costs in a cloud computing arrangement. This guidance clarified that in order for an intangible asset to be capitalised in relation to customisation and configuration costs in a software-as-a-service (SaaS) arrangement, it is necessary for there to be control of the underlying software asset or for there to be a separate intangible asset which meets the definition in IAS 38 Intangible Assets. There has been no material impact to the Group’s financial statements as a result of the application of this interpretation. H. New and amended standards and interpretations not yet adopted Certain new and amended accounting standards and interpretations have been published that are not mandatory for 31 December 2021 reporting periods and have not been early adopted by the Group. None of these are expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions. 3. Significant accounting policies A. Basis of consolidation Business combinations The Group accounts for business combinations using the acquisition method when control is transferred to the S4Capital Group. To be considered a business, an acquisition has to include an input and a substantive process that together significantly contribute to the ability to create outputs. The consideration transferred in the acquisition is measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in the profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts, to the extent that they exceed the settlement amounts, are recognised in the profit or loss. Any deferred consideration payable is measured at fair value at the acquisition date. If an obligation to pay deferred consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured, and settlement is accounted for within equity. Otherwise, other deferred consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the deferred consideration are recognised in profit or loss. Any contingent consideration payable is measured at fair value at the acquisition date. Some contingent consideration arrangements might be tied to continued employment of the acquiree’s employees. These arrangements are generally recognised as employee compensation expense in the post-combination period. 116 S4Capital Annual Report and Accounts 2021