Financial Instruments

12 Months Ended

Dec. 31, 2019

Disclosure of detailed information about financial instruments [text block] [Abstract]

Disclosure of detailed information about financial instruments [text block]

Note 19 - Financial Instruments

A. Liquidity risk

Below are the contractual repayment dates of financial liabilities, including estimated interest payments:

The Company:

	December 31, 2019
	Carrying		Contractual		First half		Second half				2022-
	amount		cash flow		2020		2020		2021		2024
	NIS		NIS		NIS		NIS		NIS		NIS
Non-derivative financial liabilities
Other payables		14		14		14		-		-		-
Debentures		1,861		2,419		32		39		78		2,270
Total		1,875		2,433		46		39		78		2,270

Consolidated:

	December 31, 2019
	Carrying		Contractual		First half		Second half				2022-		2025
	amount		cash flow		2020		2020		2021		2024		and later
	NIS		NIS		NIS		NIS		NIS		NIS		NIS
Non-derivative financial liabilities
Trade and other payables		1,270		1,270		1,209		61		-		-		-
Bank loans		3,386		3,942		316		204		448		1,341		1,633
Debentures		8,033		9,426		114		694		811		5,331		2,476
Total		12,689		14,638		1,639		959		1,259		6,672		4,109
Financial liabilities for derivative instruments		122		122		4		53		29		34		2
Forward contracts on the Israeli CPI		12,811		14,760		1,643		1,012		1,288		6,706		4,111

B. Linkage and foreign currency risks

	December 31, 2018
							Foreign
				Israeli			currency linked
	Unlinked			CPI-linked			(mainly US$)
	NIS			NIS			NIS
Current assets
Cash and cash equivalents		1,058			-			46
Trade receivables		1,732			22			19
Other receivables		92			136			-
Investments including derivatives		1,613			56			110
Total current assets		4,495			214			175
Non-current assets
Trade and other receivables		365			105			-
Investments including derivatives		49			-			41
Total non-current assets		414			105			41
Total assets		4,909			319			216
Current liabilities
Debentures, loans and borrowings		3,365			632			-
Trade and other payables		1,382			53			166
Total current liabilities		4,747			685			166
Non-current liabilities
Debentures and bank loans		6,879			2,758			-
Other liabilities including derivatives		-			95			5
Total non-current liabilities		6,879			2,853			5
Total liabilities		11,626			3,538			171
Total exposure in the statement of financial position		(6,717	)		(3,219	)		45
Forward transactions		(1,520	)		1,350			170

	December 31, 2019
							Foreign
				Israeli			currency linked
	Unlinked			CPI-linked			(mainly US$)
	NIS			NIS			NIS
Current assets
Cash and cash equivalents		788			-			26
Restricted cash		39			-			-
Trade receivables		1,648			20			21
Other receivables		44			236			-
Assets held for sale		-			-			-
Investments including derivatives		1,200			-			41
Total current assets		3,719			256			88
Non-current assets
Trade and other receivables		304			173			-
Investments including derivatives		45			-			-
Total non-current assets		349			173			-
Total assets		4,068			429			88
Current liabilities
Debentures, loans and borrowings		486			521			-
Current maturities of liabilities for leases		21			395			-
Trade and other payables		1,102			65			159
Employee benefits		651			-			3
Provisions		33			92			-
Total current liabilities		2,293			1,073			162
Non-current liabilities
Debentures and bank loans		7,681			2,731			-
Liability for leases		6			962			1
Employee benefits		307			-			49
Other liabilities including derivatives		-			66			-
Deferred tax liabilities		-			-			-
Provisions		49			-			-
Total non-current liabilities		8,043			3,759			50
Total liabilities		10,336			4,832			212
Total exposure in the statement of financial position		(6,268	)		(4,403	)		(124	)
Forward transactions		(1,745	)		1,555			190

Information regarding the Israeli CPI and significant exchange rates:

	Year ended December 31								December 31
	2017			2018		2019			2017		2018		2019
	Rate of change								Reporting date spot rate
	%			%		%			NIS		NIS		NIS
1 US dollar		(9.8	)		8.1		(7.79	)		3.467		3.748		3.456
1 euro		2.7			3.32		(9.62	)		4.153		4.291		3.878
Israeli CPI in Points		0.4			0.9		0.7			140.00		141.26		142.10

A change of 1% of the CPI as at December 31, 2019 would have no effect on total equity and net income. This analysis assumes that all other variables, in particular interest rates, remain constant. In addition, A change of 10% in the US$ exchange rate as at December 31, 2019 would have immaterial effect on total equity and net income.

C. Interest rate risk

1. Profile

At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

	December 31
	2018			2019
	NIS			NIS
Fixed rate instruments
Financial assets		2,739			2,284
Financial liabilities		(12,547	)		(11,312	)
		(9,808	)		(9,028	)
Variable rate instruments
Financial assets		59			-
Financial liabilities		(1,086	)		(107	)
		(1,027	)		(107	)

2. Fair value sensitivity analysis for fixed rate financial liabilities and derivatives

The Group’s assets and liabilities at fixed interest are not measured at fair value through profit or loss. Accordingly, a change in interest rates at the reporting date will not affect profit or loss.

3. Sensitivity analysis of cash flow for instruments at variable interest

An increase/decrease of 1% in the interest rates at the reporting date would not have a material effect on profit and on capital.

D. Cash flow hedge accounting

Cash flow hedges for CPI-linked liabilities

The Bezeq Group entered into several forward contracts, as described in the table below, to reduce exposure to changes in the CPI for CPI-linked debentures. These transactions hedge specific cash flows of some of the debentures and are recognized as cash flow hedge accounting. The expiry date of these transactions complies with the repayment schedule of the relevant debentures. The fair value of the forward contracts is based on available market information (tier 2 in the fair value hierarchy)

		Number of	Nominal					Capital
Hedge item	Repayment date	Transactions	Value		Fair value			reserve
			NIS		NIS			NIS
December 31, 2018:
Debentures (Series 6)	December 2019 - December 2022	6		1,350		(138	)		(12	)
				1,350		(138	)		(12	)
December 31, 2019:
Debentures (Series 6)	December 2020 - December 2022	4		1,005		(112	)		(10	)
Debentures (Series 10)	December 2022 - December 2025	4		300		(5	)		(2	)
Debentures (Series 12)	June 2026 - June 2030	5		250		(1	)		(1	)
		13		1,555		(118	)		(13	)

DBS has forward transactions to reduce exposure to changes in the US$ exchange rate. As at December 31, 2019, the net fair value of these transactions is a liability of NIS 4 (as at December 31, 2018, an asset of NIS 3).

E. Fair value

(1) Financial instruments measured at fair value for disclosure purposes only

The table below shows the difference between the carrying amount and the fair value of groups of financial instruments. The carrying amount of other financial assets and liabilities does not differ significantly from their fair value. The fair value of debentures issued to the public is based on their quoted closing price at the reporting date (Level 1).

The fair value of loans and non-marketable debentures is based on the present value of future principal and interest cash flows, discounted at the market rate of interest suitable for similar liabilities plus the required adjustments for risk premium and non-marketability at the reporting date (Level 2).

	December 31, 2018				December 31, 2019
									Fair value
									weighted
									average
	Carrying		Fair		Carrying		Fair		discount
	amount		value		amount		value		rate
	NIS		NIS		NIS		NIS		%
Secured loans from banks and others
Unlinked		4,235		4,324		3,401		3,561		2.39
Debentures
Issued to the public (CPI linked)		3,464		3,602		2,508		2,647		0.05
Issued to the public (Unlinked)		4,681		4,405		4,071		4,160		1.00
Issued to institutional investors (CPI linked)		8		8		762		855		1.24
Issued to institutional investors (unlinked)		202		211		607		646		2.69
		12,590		12,550		11,349		11,869

(2) Financial instruments measured at fair value

The table below analyses financial instruments carried at fair value, by valuation method.

	December 31, 2018
	Level 1		Level 2			Level 3		Total
	NIS		NIS			NIS		NIS
Financial assets held for trading
Monetary funds and ETFs		18		-			-		18
Marketable securities		376		-			-		376
Forward contracts		-		(135	)		-		(135	)
		394		(135	)		-		259

	December 31, 2019
	Level 1		Level 2			Level 3		Total
	NIS		NIS			NIS		NIS
Financial assets held for trading
Monetary funds and ETFs		312		-			-		312
Marketable securities		46		-			-		46
Forward contracts		-		(122	)		-		(122	)
		358		(122	)		-		236

a. The fair value of investments in financial funds, ETFs and marketable securities is determined by reference to their average quoted selling price at the reporting date (Level 1).

b. The fair value of forward contracts on the CPI or foreign currency is based on discounting the difference between the price in the forward contact and the price of the present forward contact for the balance of the contract term until redemption, at an appropriate interest rate (Level 2). The estimate is made under the assumption that a market participant takes into account the credit risks of the parties when pricing such contracts.

F. Offset of financial assets and liabilities

The Group has agreements with various communication companies to supply and receive communication services. In accordance with the agreements, each party has the right to offset the amounts due by each party. The table below presents the carrying amount of the offset balances as stated in the statement of financial position:

	December 31,
	2018			2019
	NIS			NIS
Trade and other receivables, gross		94			90
Offset amounts		(83	)		(81	)
Trade and other receivables presented in the statement of financial position		11			9
Trade payables, gross		121			100
Offset amounts		(83	)		(81	)
Trade and other payables presented in the statement of financial position		38			19