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Financial instruments by category | 12 Months Ended
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Jun. 30, 2021
14. Financial instruments by category | 14. Financial instruments by category The following note presents the financial assets and financial liabilities by category and a reconciliation to the corresponding line in the Consolidated Statements of Financial Position, as appropriate. Since the line items “Trade and other receivables” and “Trade and other payables” contain both financial instruments and non-financial assets or liabilities (such as prepayments, trade receivables, trade payables in-kind and tax receivables and payables), the reconciliation is shown in the columns headed “Non-financial assets” and “Non-financial liabilities”. Financial assets and liabilities measured at fair value are assigned based on their different levels in the fair value hierarchy. IFRS 9 defines the fair value of a financial instrument as the amount for which an asset could be exchanged, or a financial liability settled, between knowledgeable, willing parties in an arm’s length transaction. All financial instruments recognized at fair value are allocated to one of the valuation hierarchy levels of IFRS 7. This valuation hierarchy provides for three levels. In the case of Level 1, valuation is based on quoted prices (unadjusted) in active markets for identical assets and liabilities that the Company can refer to at the date of valuation. In the case of Level 2, fair value is determined by using valuation methods based on inputs directly or indirectly observable in the market. If the financial instrument concerned has a fixed contract period, the inputs used for valuation must be observable for the whole of this period. In the case of Level 3, the Group uses valuation techniques not based on inputs observable in the market. This is only permissible insofar as no market data is available. The inputs used reflect the Group’s assumptions regarding the factors which market players would consider in their pricing. The Group’s Finance Division has a team in place in charge of estimating the valuation of financial assets required to be reported in the Consolidated Financial Statements, including the fair value of Level-3 instruments. The team directly reports to the Chief Financial Officer (“CFO”). The CFO and the valuation team discuss the valuation methods and results upon the acquisition of an asset and, as of the end of each reporting period. According to the Group’s policy, transfers among the several categories of valuation are recognized when occurred, or when there are changes in the prevailing circumstances requiring the transfer. Financial assets and financial liabilities as of June 30, 2021 are as follows:
|  | Financial assets at amortized cost |  |  | Financial assets at fair value through profit or loss |  |  | Subtotal financial assets |  |  | Non- financial assets |  |  | Total |
|  |  |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  |  |  |  |  |  |  |  |
June 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets as per Statements of Financial Position |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) |  |  | 7,231 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7,231 |  |  |  | 4,942 |  |  |  | 12,173 |
Investments in financial assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Public companies’ securities |  |  | - |  |  |  | 976 |  |  |  | - |  |  |  | - |  |  |  | 976 |  |  |  | - |  |  |  | 976 |
- Bonds |  |  | - |  |  |  | 2,711 |  |  |  | - |  |  |  | - |  |  |  | 2,711 |  |  |  | - |  |  |  | 2,711 |
- Others |  |  | 10 |  |  |  | 639 |  |  |  | - |  |  |  | 48 |  |  |  | 697 |  |  |  | - |  |  |  | 697 |
Cash and cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Cash at bank and on hand |  |  | 1,128 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,128 |  |  |  | - |  |  |  | 1,128 |
- Short-term investments |  |  | - |  |  |  | 803 |  |  |  | - |  |  |  | - |  |  |  | 803 |  |  |  | - |  |  |  | 803 |
Total assets |  |  | 8,369 |  |  |  | 5,129 |  |  |  | - |  |  |  | 48 |  |  |  | 13,546 |  |  |  | 4,942 |  |  |  | 18,488 |
|  | Financial liabilities at amortized cost |  |  | Financial liabilities at fair value through profit or loss |  |  | Subtotal financial liabilities |  |  | Non- financial liabilities |  |  | Total |
|  |  |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  |  |  |  |  |  |  |  |
June 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Liabilities as per Statements of Financial Position |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade and other payables |  |  | 2,884 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,884 |  |  |  | 3,606 |  |  |  | 6,490 |
Borrowings (excluding finance leases) |  |  | 62,133 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 62,133 |  |  |  | - |  |  |  | 62,133 |
Derivative financial instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Swaps |  |  | - |  |  |  | - |  |  |  | 57 |  |  |  | - |  |  |  | 57 |  |  |  | - |  |  |  | 57 |
Total liabilities |  |  | 65,017 |  |  |  | - |  |  |  | 57 |  |  |  | - |  |  |  | 65,074 |  |  |  | 3,606 |  |  |  | 68,680 |
Financial assets and financial liabilities as of June 30, 2020 were as follows:
|  | Financial assets at amortized cost |  |  | Financial assets at fair value through profit or loss |  |  | Subtotal financial assets |  |  | Non- financial assets |  |  | Total |
|  |  |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  |  |  |  |  |  |  |  |
June 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets as per Statements of Financial Position |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) |  |  | 74,133 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 74,133 |  |  |  | 22,004 |  |  |  | 96,137 |
Investments in financial assets: |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
- Public companies’ securities |  |  | - |  |  |  | 862 |  |  |  | 345 |  |  |  | - |  |  |  | 1,207 |  |  |  | - |  |  |  | 1,207 |
- Private companies’ securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4,369 |  |  |  | 4,369 |  |  |  | - |  |  |  | 4,369 |
- Deposits |  |  | 1,437 |  |  |  | 92 |  |  |  | - |  |  |  | - |  |  |  | 1,529 |  |  |  | - |  |  |  | 1,529 |
- Bonds |  |  | - |  |  |  | 13,868 |  |  |  | 2,169 |  |  |  | - |  |  |  | 16,037 |  |  |  | - |  |  |  | 16,037 |
- Investments in financial assets with quotation |  |  | - |  |  |  | 9,760 |  |  |  | 1,217 |  |  |  | 348 |  |  |  | 11,325 |  |  |  | - |  |  |  | 11,325 |
Derivative financial instruments |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
- Foreign-currency future contracts |  |  | - |  |  |  | - |  |  |  | 194 |  |  |  | - |  |  |  | 194 |  |  |  | - |  |  |  | 194 |
- Others |  |  | 93 |  |  |  | - |  |  |  | 30 |  |  |  | 213 |  |  |  | 336 |  |  |  | - |  |  |  | 336 |
Restricted assets (i) |  |  | 12,136 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 12,136 |  |  |  | - |  |  |  | 12,136 |
Financial assets available for sale: |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
- Clal |  |  | - |  |  |  | 5,072 |  |  |  | - |  |  |  | - |  |  |  | 5,072 |  |  |  | - |  |  |  | 5,072 |
Cash and cash equivalents: |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
- Cash at bank and on hand |  |  | 37,059 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 37,059 |  |  |  | - |  |  |  | 37,059 |
- Short term investments |  |  | 94,064 |  |  |  | 4,596 |  |  |  | - |  |  |  | - |  |  |  | 98,660 |  |  |  | - |  |  |  | 98,660 |
Total assets |  |  | 218,922 |  |  |  | 34,250 |  |  |  | 3,955 |  |  |  | 4,930 |  |  |  | 262,057 |  |  |  | 22,004 |  |  |  | 284,061 |
|  | Financial liabilities at amortized cost |  |  | Financial liabilities at fair value through profit or loss |  |  | Subtotal financial liabilities |  |  | Non- financial liabilities |  |  | Total |
|  |  |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  |  |  |  |  |  |  |  |
June 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Liabilities as per Statements of Financial Position |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade and other payables |  |  | 37,529 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 37,529 |  |  |  | 10,296 |  |  |  | 47,825 |
Borrowings (excluding finance leases) |  |  | 564,991 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 564,991 |  |  |  | - |  |  |  | 564,991 |
Derivative financial instruments: |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Foreign-currency future contracts |  |  | - |  |  |  | - |  |  |  | 207 |  |  |  | - |  |  |  | 207 |  |  |  | - |  |  |  | 207 |
- Others |  |  | - |  |  |  | - |  |  |  | 1,436 |  |  |  | 30 |  |  |  | 1,466 |  |  |  | - |  |  |  | 1,466 |
- Forwards |  |  | - |  |  |  | - |  |  |  | 92 |  |  |  | - |  |  |  | 92 |  |  |  | - |  |  |  | 92 |
Total liabilities |  |  | 602,520 |  |  |  | - |  |  |  | 1,735 |  |  |  | 30 |  |  |  | 604,285 |  |  |  | 10,296 |  |  |  | 614,581 |
(i) | The fair value of financial assets and liabilities at their amortized cost does not differ significantly from their book value, except for borrowings (Note 20).
Liabilities carried at amortized cost also include liabilities under finance leases where the Group is the lessee, and which therefore have to be measured in accordance with IAS 17 “Leases”. The categories disclosed are determined by reference to IFRS 9. Finance leases are excluded from the scope of IFRS 7 “Financial Instruments Disclosures”. Therefore, finance leases have been shown separately. The following are details of the book value of financial instruments recognized, which were offset in the statements of financial position:
|  | As of June 30, 2021 |  |  | As of June 30, 2020 |
|  | Gross amounts recognized |  |  | Gross amounts offset |  |  | Net amount presented |  |  | Gross amounts recognized |  |  | Gross amounts offset |  |  | Net amount presented |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade and other receivables (excluding the allowance for doubtful accounts and other receivables) |  |  | 9,282 |  |  |  | (2,051 | ) |  |  | 7,231 |  |  |  | 77,448 |  |  |  | (3,315 | ) |  |  | 74,133 |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trade and other payables |  |  | 4,935 |  |  |  | (2,051 | ) |  |  | 2,884 |  |  |  | 40,844 |  |  |  | (3,315 | ) |  |  | 37,529 |
Income, expense, gains and losses on financial instruments can be assigned to the following categories:
|  | Financial assets / liabilities at amortized cost |  |  | Financial assets / liabilities at fair value through profit or loss |  |  | Total |
June 30, 2021 |  |  |  |  |  |  |  |  |
Interest income (i) |  |  | 360 |  |  |  | - |  |  |  | 360 |
Interest expense (i) |  |  | (6,409 | ) |  |  | - |  |  |  | (6,409 | )
Interest expense on lease liabilities (i) |  |  | (97 | ) |  |  | - |  |  |  | (97 | )
Foreign exchange gains, net (i) |  |  | 7,020 |  |  |  | - |  |  |  | 7,020 |
Dividend income (i) |  |  | 1 |  |  |  | - |  |  |  | 1 |
Loss from repurchase of negotiable obligations (i) |  |  | (95 | ) |  |  | - |  |  |  | (95 | )
Fair value gain on financial assets at fair value through profit or loss (i) |  |  | - |  |  |  | 5,318 |  |  |  | 5,318 |
Interest generated by operating credits |  |  | 97 |  |  |  | - |  |  |  | 97 |
Gain on derivative financial instruments, net (i) |  |  | - |  |  |  | (452 | ) |  |  | (452 | )
Other finance costs (i) |  |  | (866 | ) |  |  | - |  |  |  | (866 | )
Total financial instruments |  |  | 11 |  |  |  | 4,866 |  |  |  | 4,877 |
|  | Financial assets / liabilities at amortized cost |  |  | Financial assets / liabilities at fair value through profit or loss |  |  | Total |
June 30, 2020 |  |  |  |  |  |  |  |  |
Interest income (i) |  |  | 299 |  |  |  | - |  |  |  | 299 |
Interest expense (i) |  |  | (8,607 | ) |  |  | - |  |  |  | (8,607 | )
Interest expense on lease liabilities (i) |  |  | (81 | ) |  |  | - |  |  |  | (81 | )
Foreign exchange gains, net (i) |  |  | (9,383 | ) |  |  | - |  |  |  | (9,383 | )
Dividend income |  |  | 21 |  |  |  | - |  |  |  | 21 |
Gain from repurchase of negotiable obligations (i) |  |  | 139 |  |  |  | - |  |  |  | 139 |
Fair value gain on financial assets at fair value through profit or loss (i) |  |  | - |  |  |  | 505 |  |  |  | 505 |
Interest generated by operating credits |  |  | 254 |  |  |  | - |  |  |  | 254 |
Gain on derivative financial instruments, net (i) |  |  | - |  |  |  | (549 | ) |  |  | (549 | )
Other finance costs (i) |  |  | (563 | ) |  |  | - |  |  |  | (563 | )
Total financial instruments |  |  | (17,921 | ) |  |  | (44 | ) |  |  | (17,965 | )
|  | Financial assets / liabilities at amortized cost |  |  | Financial assets / liabilities at fair value through profit or loss |  |  | Total |
June 30, 2019 |  |  |  |  |  |  |  |  |
Interest income (i) |  |  | 260 |  |  |  | - |  |  |  | 260 |
Interest expense (i) |  |  | (6,667 | ) |  |  | - |  |  |  | (6,667 | )
Foreign exchange gains, net (i) |  |  | 1,507 |  |  |  | - |  |  |  | 1,507 |
Dividend income |  |  | 21 |  |  |  | - |  |  |  | 21 |
Fair value gain on financial assets at fair value through profit or loss (i) |  |  | - |  |  |  | 1,026 |  |  |  | 1,026 |
Interest generated by operating credits |  |  | 369 |  |  |  | - |  |  |  | 369 |
Gain on derivative financial instruments, net (i) |  |  | - |  |  |  | 837 |  |  |  | 837 |
Other finance costs (i) |  |  | (520 | ) |  |  | - |  |  |  | (520 | )
Total financial instruments |  |  | (5,030 | ) |  |  | 1,863 |  |  |  | (3,167 | )
(i) | Included within “Financial results, net“ in the Consolidated Statements of Income and Other Comprehensive Income.
The following table presents the changes in Level 3 financial instruments as of June 30, 2021 and 2020:
|  | Derivative financial instruments - Forwards |  |  | Investments in financial assets - Private companies’ securities |  |  | nvestments in financial assets - Others |  |  | Derivative financial instruments |  |  | Total |
Balances at June 30, 2019 |  |  | (104 | ) |  |  | 3,920 |  |  |  | 2,202 |  |  |  | 204 |  |  |  | 6,222 |
Additions and acquisitions |  |  | - |  |  |  | 53 |  |  |  | - |  |  |  | - |  |  |  | 53 |
Transfer between levels |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 527 |  |  |  | 527 |
Currency translation adjustment |  |  | (10 | ) |  |  | 714 |  |  |  | 158 |  |  |  | 368 |  |  |  | 1,230 |
Write off |  |  | - |  |  |  | - |  |  |  | (1,467 | ) |  |  | (916 | ) |  |  | (2,383 | )
Gain / (loss) for the year (i) |  |  | 84 |  |  |  | (318 | ) |  |  | (545 | ) |  |  | 30 |  |  |  | (749 | )
Balances at June 30, 2020 |  |  | (30 | ) |  |  | 4,369 |  |  |  | 348 |  |  |  | 213 |  |  |  | 4,900 |
Currency translation adjustment |  |  | - |  |  |  | - |  |  |  | (4 | ) |  |  | - |  |  |  | (4 | )
Deconsolidation |  |  | 30 |  |  |  | (4,369 | ) |  |  | (305 | ) |  |  | (213 | ) |  |  | (4,857 | )
Gain for the year (i) |  |  | - |  |  |  | - |  |  |  | 9 |  |  |  | - |  |  |  | 9 |
Balances at June 30, 2021 |  |  | - |  |  |  | - |  |  |  | 48 |  |  |  | - |  |  |  | 48 |
(i) | Included within “Financial results, net” in the Consolidated Statements of Income and Other Comprehensive Income.
During the fiscal year ended June 30, 2020, derivative financial instruments were transferred from level 1 to level 3. During the fiscal year ended June 30, 2021, there were no transfers between levels of hierarchy of the fair value. When there are no quoted prices available in an active market, fair values (especially derivative instruments) are based on recognized valuation methods. The Group uses a range of valuation models for the measurement of Level 2 and Level 3 instruments, details of which may be obtained from the following table.
Description |  | Pricing model / method |  | Parameters |  | Fair value hierarchy |  | Range
Promissory note |  | Theoretical price |  | Price of the underlying (Market price) and volatility of the share (historical) and market interest rate (Libor Curve). |  | Level 3 |  | Price of the underlying 3 to 4. Volatility of the share 57% to 77%. Market interest rate 0.75% to 1.25%
Investments in financial assets - Other private companies’ securities (*) |  | Cash flow / NAV - Theoretical price |  | Projected revenue discounted at the discount rate The value is calculated in accordance with shares in the equity funds on the basis of their Financial Statements, based on fair value or investments assessments. |  | Level 3 |  | 1 - 3.5
Derivative financial instruments Forwards |  | Theoretical price |  | Underlying asset price and volatility |  | Level 2 and 3 |  | -
(*) | An increase in the discount rate would decrease the value of investments in private companies, while an increase in projected revenues would increase their value.
As of June 30, 2021, there are no changes in economic or business circumstances that affect the fair value of the Group’s financial assets and liabilities.

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