Note 19 – Financial instruments
| A. | Risk management policy |
The actions of the Group expose it to various financial risks, such as a market risk (including a currency risk, fair value risk regarding interest rate and price risk), credit risk, liquidity risk and cash flow risk for the interest rate. The comprehensive risk-management policy of the Group focuses on actions to limit the potential negative impacts on financial performance of the Group to a minimum. The Group does not typically use derivative financial instruments in order to hedge exposures. Risk management is performed by the Group’s Chief Executive Officer in accordance with the policy approved by the board of directors.
| B. | Credit risk |
The Group does not have a significant concentration of credit risks.
The cash of the Group are deposited in Israeli and U.S. banking corporations. In the estimation of the Group’s management, the credit risk for these financial instruments is low.
| C. | Classification of financial instruments |
The following is a classification of the financial assets and financial liabilities of the Group for groups of financial instruments in accordance with IAS 39:
| December 31, | |||||||||
| 2016 | 2017 | ||||||||
| Thousand NIS | Thousand NIS | ||||||||
| Financial assets | |||||||||
| Cash | 47,599 | 21,159 | |||||||
| Restricted deposits | 925 | 1,570 | |||||||
| Trade receivables | 149 | 325 | |||||||
| Other receivables | 1,408 | 827 | |||||||
| 50,081 | 23,881 | ||||||||
| Financial liabilities | |||||||||
| Financial liabilities measured at amortized cost | 10,290 | 10,372 | |||||||
| D. | Currency risk |
A currency risk is the risk of fluctuations in a financial instrument, as a result of changes in the exchange rate of the foreign currency.
The following is the classification and linkage terms of the financial instruments of the Group (in thousand NIS):
| NIS | Linked to the US dollar | Linked to the EURO and Other | Total | ||||||||||||||
| December 31, 2017 | |||||||||||||||||
| Cash | 823 | 20,332 | 4 | 21,159 | |||||||||||||
| Restricted deposits | 1,501 | 69 | - | 1,570 | |||||||||||||
| Trade receivables | - | 71 | 254 | 325 | |||||||||||||
| Other receivables | 827 | - | - | 827 | |||||||||||||
| 3,151 | 20,472 | 258 | 23,881 | ||||||||||||||
| Financial liabilities at amortized cost | 5,766 | 4,606 | -- | 10,372 | |||||||||||||
| Total net financial assets (liabilities) | (2,615 | ) | 15,866 | 258 | 13,509 | ||||||||||||
| December 31, 2016 | |||||||||||||||||
| Cash | 3,501 | 44,065 | 33 | 47,599 | |||||||||||||
| Restricted deposits | 925 | - | - | 925 | |||||||||||||
| Trade receivables | - | 149 | 149 | ||||||||||||||
| Other receivables | 1,408 | - | - | 1,408 | |||||||||||||
| 5,834 | 44,214 | 33 | 50,081 | ||||||||||||||
| Financial liabilities at amortized cost | 6,651 | 3,586 | 53 | 10,290 | |||||||||||||
| Total net financial assets (liabilities) | (817 | ) | 40,628 | (20 | ) | 39,791 | |||||||||||
The following is a sensitivity analysis of changes in the exchange rate of the dollar as of the reporting date:
| Profit (loss) from the change | |||||
| thousand NIS | |||||
| Increase at a rate of 5% | (793 | ) | |||
| Increase at a rate of 10% | (1,586 | ) | |||
| Decrease at a rate of 5% | 793 | ||||
| Decrease at a rate of 10% | 1,586 | ||||
| E. | Fair value of financial instruments |
The fair value of the financial instruments of the Group is similar or equal to their book value.
| F. | Liquidity risk |
The table below presents the repayment dates of the Group’s financial liabilities based on the contractual terms in undiscounted amounts:
| First year | More than a year or undetermined | Total | |||||||||||
| December 31, 2017 | |||||||||||||
| Trade payables | 1,775 | - | 1,775 | ||||||||||
| Other payables | 5,738 | 98 | 5,836 | ||||||||||
| Liability in respect of government grants | - | 2,886 | 2,886 | ||||||||||
| 7,513 | 2,984 | 10,497 | |||||||||||
| December 31, 2016 | |||||||||||||
| Trade payables | 2,612 | - | 2,612 | ||||||||||
| Other payables | 4,856 | 98 | 4,954 | ||||||||||
| Liability in respect of government grants | - | 2,420 | 2,420 | ||||||||||
| 7,468 | 2,518 | 9,986 | |||||||||||