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## 9. FINANCIAL INSTRUMENTS (CONTINUED): 

Risks (continued): 

(b) Currency risk (continued): 

## Notes to CoNsolidated FiNaNCial statemeNts 

(In thousands of dollars except as noted and per share amounts) 

 Based on the above gross exposure at year-end, and assuming that all other variables remain constant, in particular the price of raw sugar and natural gas, a 5-cent increase in the Canadian dollar would result in an increase in net earnings of $0.8 million, (September 29, 2012 - increase of $1.3 million) while a 5-cent decrease would have an equal but opposite effect on net earnings. 

 Management believes that the impact on the gross exposure is not representative as it needs to be adjusted for the following transactions, which are not recorded on the consolidated statement of financial position as at year end but were committed during the fiscal year, and will be accounted for as the physical transactions occur: 

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 The net exposure is due mainly to the Company’s policy not to hedge its foreign exchange exposure on natural gas futures contracts with maturities exceeding 12 months. The impact of a 5-cent increase in the Canadian dollar would result in an increase of net earnings by $0.6 million in 2013 (September 29, 2012 - increase of $0.2 million) while a decrease would have an equal but opposite effect on net earnings. 

 Raw sugar futures sales contracts represent, in large part, futures contracts entered into when sugar is priced by a raw sugar supplier. As both the raw sugar futures sales contracts and the sugar purchases priced not received are in U.S. dollars, there is no need to economically hedge the currency, hence the reason for the adjustment for sugar purchases priced not received. 

 Included in other is the Taber sales formula for refined sugar is based on the raw sugar value which trades in U.S. dollars.As all beet sugar is paid in Canadian dollars, the raw sugar value within the Taber sales contracts is in U.S. dollars and therefore needs to be economically hedged for currency exposure. 

