Financial instruments (continued):

The fair value of financial assets and liabilities are determined as follows:

 The carrying amounts of trade and other receivables, investment tax credits receivable and trade payables and accrued liabilities approximate fair market value due to the short-term maturity of these instruments.

During the year ended December 31, 2017, there were no transfers between level 1, level 2 and level 3 classified assets and liabilities. The fair values of the Company’s financial instruments are considered to approximate the carrying amounts.

The following tables provide the disclosures of the fair value and the level in the hierarchy:

As at December 31, 2017 Level 1 Level 2 Level 3

Financial assets classified as loans and receivables:

Cash and cash equivalents $ 158,398 $ – $ –

Trade and other receivables – 31,783 –

Financial liabilities at amortized cost:

Trade payables and accrued liabilities $ – $ 11,176 $ –

As at December 31, 2016 Level 1 Level 2 Level 3

Financial assets classified as loans and receivables:

Cash and cash equivalents $ 127,910 $ – $ –

Trade and other receivables – 23,820 –

Investment tax credits receivable – 1,583 –

Financial liabilities at amortized cost:

Trade payables and accrued liabilities $ – $ 10,495 $ –

Kinaxis Inc.

Notes to Consolidated Financial Statements For the years ended December 31, 2017 and 2016

(Expressed in thousands of U.S. dollars, except share and per share amounts)

15. Financial instruments (continued):

Financial risk management:

(a) Credit risk:

Credit risk is the risk of an unexpected loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company’s credit risk is primarily attributable to its trade and other receivables.

The maximum exposure to credit risk for trade receivables by geographic region was as follows:

2017 2016

United States $ 23,790 $ 17,969

Asia 2,520 903

Europe 1,335 88

Canada – 1,164

$ 27,645 $ 20,124

The aging of the net trade receivables at December 31 was as follows:

2017 2016

Current $ 23,158 $ 11,806

Past due:

0 – 30 days 2,609 5,746

31 – 60 days 13 1,603

Greater than 60 days 1,865 969

$ 27,645 $ 20,124

The nature of the Company’s subscription based business results in payments being received in advance of the majority of the services being delivered; as a result, the Company’s credit risk exposure is low. At December 31, 2017, three customers individually accounted for greater than 10% of total trade receivables (December 31, 2016 – two customers). For the year ended December 31, 2017, no customers individually accounted for more than 10% of revenue (2016 – one customer accounted for 12.3%).

The Company establishes an allowance for doubtful accounts based on amounts which are past due, historical trends, and any available information indicating that a customer could be experiencing liquidity or going concern problems. Amounts considered uncollectible are written off. During the year ended December 31, 2017, the Company did not write off any trade receivables that were deemed not collectible (2016 – none). As at December 31, 2017, the Company has recorded an allowance for doubtful accounts of $491 (2016 – $238).

Kinaxis Inc.

Notes to Consolidated Financial Statements For the years ended December 31, 2017 and 2016

(Expressed in thousands of U.S. dollars, except share and per share amounts)

15. Financial instruments (continued):

(a) Credit risk (continued):

The Company invests its excess cash in short-term investments with the objective of maintaining safety of principal and providing adequate liquidity to meet all current payment obligations and future planned capital expenditures with the secondary objective of maximizing the overall yield of the investment. The Company manages its credit risk on investments by dealing only with major Canadian banks and investing only in instruments that management believes have high credit ratings. Given these high credit ratings, the Company does not expect any counterparties to these investments to fail to meet their obligations.

The Company’s exposure to credit risk is limited to the carrying amount of financial assets.

(b) Liquidity risk:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.

The Company’s approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet liabilities when due. The Company also manages liquidity risk by continuously monitoring actual and budgeted expenses. Furthermore, the Board of Directors reviews and approves the Company’s operating and capital budgets, as well as any material transactions out of the ordinary course of business, including acquisitions or other major investments or divestitures.

At December 31, 2017, the Company had cash and cash equivalents totaling $158,398 (2016 – $127,910). Further, the Company has a credit facility as disclosed in note 7.

The following are the remaining contractual maturities of financial liabilities:

Contractual cash flows

More

Carrying 3 months 3 to 12 1 to 5 than 5

December 31, 2017 amount Total or less months years years

Trade payables and

accrued liabilities $ 11,176 $ 11,176 $ 11,176 $ – $ – $ –

Contractual cash flows

More

Carrying 3 months 3 to 12 1 to 5 than 5

December 31, 2016 amount Total or less months years years

Trade payables and

accrued liabilities $ 10,495 $ 10,495 $ 10,495 $ – $ – $ –

Kinaxis Inc.

Notes to Consolidated Financial Statements For the years ended December 31, 2017 and 2016

(Expressed in thousands of U.S. dollars, except share and per share amounts)

15. Financial instruments (continued):

(c) Market risk:

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Company’s income or the value of its holdings of financial instruments.

Currency risk

A portion of the Company’s revenues and operating costs are realized in currencies other than its functional currency, such as the Canadian dollar, Japanese Yen, Euro, Great British Pound, and Korean Won. As a result, the Company is exposed to currency risk on these transactions. Additional earnings volatility arises from the translation of monetary assets and liabilities denominated in foreign currencies at the rate of exchange on each date of the Consolidated Statements of Financial Position; the impact of which is reported as a foreign exchange gain or loss. The Company is also subject to currency risk on its income tax expense due to foreign exchange impacts resulting from translating financial results to local currency for Canadian tax reporting purposes.

The Company’s objective in managing its currency risk is to minimize its exposure to currencies other than its functional currency. The Company does so by matching foreign denominated assets with foreign denominated liabilities.

The Company is mainly exposed to fluctuations between the U.S. dollar and the Canadian dollar. For the year ending December 31, 2017, if the Canadian dollar had strengthened 5%

against the U.S. dollar with all other variables held constant, pre-tax income for the year would have been $1,764 lower (2016 – $1,652 lower). Conversely, if the Canadian dollar had weakened 5% against the U.S. dollar with all other variables held constant, there would be an equal, and opposite impact, on pre-tax income.

The summary quantitative data about the Company’s exposure to currency risk is as follows:

December 31, 2017

In thousands of local currency USD CAD JPY EUR GBP KRW

Trade receivables 26,547 – 49,250 551 – –

Other receivables 2,350 747 44,104 107 2 5,181

Trade payables (1,774) (713) (96,992) (34) (27) (24,742)

Accrued liabilities (2,934) (2,701) (9,159) (261) – (18,913) 24,189 (2,667) (12,797) 363 (25) (38,474)

Kinaxis Inc.

Notes to Consolidated Financial Statements For the years ended December 31, 2017 and 2016

(Expressed in thousands of U.S. dollars, except share and per share amounts)

15. Financial instruments (continued):

(c) Market risk (continued):

December 31, 2016

In thousands of local currency USD CAD JPY EUR HKD KRW

Trade receivables 20,035 – – 84 – –

Other receivables 2,547 1,348 7,591 1 – 62,897

Trade payables (1,413) (214) (42,164) (40) (146) (252,648)

Accrued liabilities (4,594) (4,313) (14,426) (186) (265) (62,800) 16,575 (3,179) (48,999) (141) (411) (252,551)

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company believes that interest rate risk is low as the majority of investments are made in fixed rate instruments. As of December 31, 2017, the Company has not drawn on the revolving demand facility.