Download File - TCL Group
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED 31ST DECEMBER, 2010<br />
(Expressed in Thousands of Trinidad and Tobago Dollars, except where otherwise stated)<br />
(Continued)<br />
22. Financial risk management (continued)<br />
Credit risk (continued)<br />
Credit risk related to cash and cash equivalents<br />
Credit risks from balances with banks and financial institutions are managed in accordance with <strong>Group</strong> policy.<br />
Investments of surplus funds are made only with approved counterparties and within limits assigned to each<br />
counterparty. Counterparty limits are reviewed by the Company’s Board of Directors on an annual basis, and may<br />
be updated throughout the year subject to approval of the Company’s Finance Committee. The limits are set to<br />
minimize the concentration of risks and therefore mitigate financial loss through potential counterparty failure.<br />
Foreign currency risk<br />
Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange<br />
rates. Such exposure arises from sales or purchases by an operating unit in currencies other than the unit’s functional<br />
currency. Management monitors its exposure to foreign currency fluctuations and employs appropriate strategies<br />
to mitigate any potential losses.<br />
The following table demonstrates the sensitivity to a reasonably possible change in the US dollar and Euro exchange<br />
rate, with all other variables held constant, of the <strong>Group</strong>’s profit before tax and the <strong>Group</strong>’s equity:<br />
Change in foreign Effect on profit Effect on<br />
exchange rate before tax equity<br />
$ $<br />
2010<br />
US Dollar ± 0.90% ± 2 ± 2<br />
Euro<br />
There were no material transactions or balances in Euro currency for the year ended 31 December 2010.<br />
2009<br />
US Dollar ± 0.99% ± 27 ± 20<br />
Euro ± 0.48% ± 41 ± 30<br />
39<br />
BUILD TO LAST FOR GENERATIONS