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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST DECEMBER, 2010
(Expressed in Thousands of Trinidad and Tobago Dollars, except where otherwise stated)
(Continued)
22. Financial risk management (continued)
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relate
primarily to bank advances and other borrowings. The Group manages its interest rate risk by having a balanced
portfolio of fixed and variable rate loans and borrowings.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with other variables
held constant of the Group’s profit before tax and equity (through the impact on floating rate borrowings):
Increase/decrease in Effect on profit Effect on
basis points before tax equity
2010 Banker’s acceptances ±50 ± 62 ± 47
There were no banker’s acceptances as at 31 December 2009.
Liquidity risk
Liquidity risk is the risk that the Group will be unable to meet its payment obligations when they fall due under
normal and stress circumstances. The Group monitors its liquidity risk by considering the maturity of both its
financial investments and financial assets and projected cash flows from operations. Where possible the Group
utilizes surplus internal funds to a large extent to finance its operations and ongoing projects. However, the Group
also utilizes available credit facilities such as loans, overdrafts and other financing options where required.
The table below summarises the maturity profile of the Group’s financial liabilities at 31 December based on
contractual undiscounted payments:
Year ended 31st December, 2010 On demand 1 year 1 to 5 years > 5 years Total
$ $ $ $ $
Bank overdrafts & advances 18,148 – – – 18,148
Borrowings – 3,262 5,697 – 8,959
Payables and accruals – 29,104 – – 29,104
18,148 32,366 5,697 – 56,211
Year ended 31st December, 2009 On demand 1 year 1 to 5 years > 5 years Total
$ $ $ $ $
Bank overdrafts & advances 3,259 – – – 3,259
Borrowings – 4,505 7,882 1,044 13,431
Payables and accruals – 46,974 – – 46,974
3,259 51,479 7,882 1,044 63,664
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BUILD TO LAST FOR GENERATIONS