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As a general rule, the computation of basic earnings per share is based on the profit

distributable to Ordinary shareholders. The profit is divided by the weighted average number of Ordinary shares in issue during the course of the period.

t. Dividend distribution

The distribution of dividends to the Company's shareholders is recognized as a liability in the statement of financial position in the period during which the Company's board of directors approved the distribution of thereof.

u. Reclassifications

Certain comparative figures which are presented only in the statement of financial position were reclassified. These reclassified amounts are not material to the company's financial statements.

v. Details of the provisions of new standards and of amendments to existing standards, which came into effect and are mandatory for reporting periods starting January 1, 2014

IAS 32 - The amendment to IAS 32 "Offsetting Financial Assets and Financial Liabilities" (hereinafter – the amendment to IAS 32)

The amendment to IAS 32 does not change the current model in IAS 32 "Financial Instruments: Presentation" for offsetting financial assets and financial liabilities (hereinafter - offsetting), but clarifies that an entity can offset a financial asset and financial liability in the statement of financial position only when the entity currently has a legally enforceable right of set-off (i.e., not conditioned on any future event). In addition, the right to set-off must be legally enforceable for all counterparties in the normal course of business, default, insolvency or bankruptcy. The amendment to IAS 32 also clarifies the criteria for gross settlement mechanisms.

The amendment to IAS 32 was implemented for the first time retrospectively. The first-time adoption of this amendment did not have a material effect on the Company's financial statements.

w. Details of the provisions of new standards and of amendments and

interpretations to existing standards that are not yet effective and have not been early adopted by the Company

1) Amendment to IFRS 9 – " Financial Instruments" (hereafter – "IFRS 9" or "the standard")

IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortized cost, fair value through OCI and fair value through P&L. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI not recycling.

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):

There is now a new expected credit losses model that replaces the incurred loss impairment model used in IAS 39.

For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss.

IFRS 9 was applied retrospectively for annual reporting periods beginning on or after January 1, 2018. Early adoption is permitted. The Company is yet to assess IFRS 9's full impact.

2) Amendment to IAS 1 – "Presentation of Financial Statements" (hereafter – "amendment to IAS 1")

The amendment to IAS one deals with the following issues: materiality and the impact thereof on the disclosures provided in the financial statements, presentation of subtotals, order of presentation of the notes to the financial statements and disclosure of accounting policies.

The said amendment shall be effective for annual reporting periods beginning on January 1, 2016 or thereafter. Early adoption is permitted.

3) Amendment to IFRS 8 – "Operating Segments" ("IFRS 8")

IFRS 8 was amended to require disclosure of the judgments made by management in aggregating operating segments. It is also amended to require a reconciliation of total reportable segment assets to the entity’s assets only when segment assets are reported. The said amendment shall be applied on a prospective basis for annual reporting periods beginning on July 1, 2014 or thereafter.

x. New directives which were issued by the Supervisor that are not yet effective and have not been early adopted by the Company

1) In January 2015 a new Insurance Circular was published - "Actuarial Assessment in General Insurance" - which is designed to enhance the quality of assessment of the reserves for an insurer's liability due to general insurance contracts (hereafter – "insurance reserves), which are an important element in the assessment of an insurer's liability, and to regulate the attachment of the professional opinion of an appointed actuary (hereafter – "the actuary") on these provisions to the financial statements. The circular establishes the scope of the actuarial assessment which the actuary is required to perform, the actuarial report he/she is required to prepare and the statement he/she is required to sign, which must be attached to the financial statements.

This circular is to be applied as from the financial statements as of December 31, 2015. 2) In January 2015 the Supervisor published a position paper on "Best Practice for

Calculation of Insurance Reserves in General Insurance for Financial Reporting" (hereafter – "the position paper"). The Supervisor's position paper includes, inter alia, explanations of the principles of professionalism, consistency and caution which have not been previously defined in circular 2015-1-1 on Actuarial Valuation in General Insurance. The principle of caution will require the actuary to verify that the valuations made in the liability sectors aim for a probability estimate of 75% at the very least. The Supervisor's position paper also refers to the issue of the discount rate applied to liabilities for best estimate purposes.

This position paper is to be applied as from the financial statements as of December 31, 2015.

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):

3) In January 2015 a circular was published – "Calculation of Reserves in General Insurance – Update"; in accordance with the this circular, commencing in the financial statements as of December 31, 2015, the reserve in respect of the excess of income over expenses shall not be calculated for the liability insurance sectors and the compulsory vehicle insurance sector. It should be indicted that as of December 31, 2014, the balance of the said

provision (retained amount) is NIS 93.0 million (December 31, 2013 – NIS 87.6 million); see also note 14a2).

Regardless of the above provisions regarding the dates on which the new provisions of the Supervisor should be applied, insurance companies may adopt the above circulars as from the 2014 financial statements, provided that those companies shall apply the actuarial assessment circular, the position paper and the calculation of reserves circular on the same date.

The Company shall apply the new provisions of the supervisor commencing the financial statements as of December 31, 2015. The Company is yet to assess the effect of the application of the Supervisor's provisions on its financial statements.

NOTE 3 - SIGNIFICANT ACCOUNTING ESTIMATES AND AREAS OF DISCRETION