TOTAL CAPITAL CANADA LTD. - Total.com

TOTAL CAPITAL CANADA LTD.
Notes to the Financial Statements, page 11
For the three months ended March 31, 2012 and 2011
(Thousands of Canadian dollars)
7. Finance income and finance expenses (continued)
(b) Finance expenses (continued)
The following table summarizes the foreign exchange gains and losses:
Three Months Ended Three Months Ended
March 31, March 31,
2012 2011
Loss on translation of foreign currency denominated debt 89,011 248,311
Gain on foreign exchange contracts (62,633) (110,844)
8. Financial risk management and financial instruments overview
26,378 137,467
The Company has exposure to the following risks from its use of financial instruments
● credit risk
● liquidity risk
● market risk
The following disclosure presents information about the Company’s exposure to each of the
above risks, the Company’s objectives, policies and processes for measuring and managing risk,
and the management of capital.
(a) Risk management framework
The Board of Directors has overall responsibility for the establishment and oversight of the
Company’s risk management framework. The risk management policies are established to
identify and analyze the risks faced by the Company, to set appropriate risk limits and
controls, and to monitor risks and adherence to limits. Risk management policies and
systems are reviewed regularly to reflect changes in market conditions and the Company’s
activities.
(b) Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a
financial instrument fails to meet its contractual obligations, and arises principally from the
Company’s related party loans and the forward foreign exchange and interest rate swap
contracts.