TPCC Annual Report 2008.indd - HeidelbergCement

Tanzania Portland Cement Company Ltd, Annual Report 2008
The basic and diluted earnings per share are the same as there are no convertible instruments.
58
2008 2007
Profit attributable to ordinary equity holders (TZS’ 1000) 34,962,320 30,111,586
Numbers of shares 179,923,100 179,923,100
Basic earning per share (TZS) 194.32 167.36
Diluted earning per share (TZS) 194.32 167.36
38. Financial risk management objectives and policies
The Company’s principal financial instruments comprise treasury loans and trade payables. The main purpose of these
financial instruments is to raise finance for the Company’s operations. The Company has various financial assets such as
trade receivables and cash and short-term deposits, which arise directly from its operations.
The main risks arising from the Company’s financial instruments are cash flow interest rate risk, liquidity risk, foreign cur-
rency risk and credit risk. The board reviews and agrees policies for managing each of these risks which are summarised
below.
Treasury risk management: The Company operates a treasury function to provide competitive funding costs, invest and
monitor financial risk. The Company does not use derivative financial instruments for speculative purposes.
Liquidity risk: The Company does not face any liquidity risk as it has sufficient funds to cover its working capital needs
for the foreseeable future.
Foreign currency risk: Foreign currency risk is managed at an operational level and monitored by the Finance Division.
Exposure to losses from foreign liabilities is managed through prompt payment of outstanding liabilities and forward
purchase of foreign currencies.
The following table demonstrates the sensitivity to possible changes in the exchange rate between the Tanzanian Shilling
and foreign currencies (mainly US dollar), with all other variables held constant, of the Company’s profit before tax (due
to changes in the fair value of monetary assets and liabilities).
Net effect based on balance sheet as
at 31 December 2008
Increase/decrease in the value of
TZS vs. other currencies
Effect on profit before tax TZS’000
+10% +3,800,000
-10% -3,800,000
Interest rate risk: The Company has adopted a non- speculative approach to the management of interest rate risk.
Credit risk management: Potential concentration of credit risk consists principally of short term cash and trade debtors.
The Company deposits short term cash surpluses only with banks of high credit standing. Trade debtors are presented