AGL Energy Limited Annual Report 2012 133 The following table details the cross currency swap contracts outstanding at the end of the reporting period: The following table details the sensitivity to a 10% increase or decrease in the Australian dollar against the relevant foreign currencies.  A sensitivity of 10% has been used as this is considered reasonable given the current level of exchange rates and the volatility observed  both on a historical basis and market expectations for future movements. The sensitivity analysis includes only outstanding foreign currency denominated financial instruments and adjusts their translation at the  end of the reporting period for a 10% change in foreign currency rates. At the end of the reporting period, if the Australian dollar had been 10% higher or lower and all other variables were held constant, the  consolidated entity’s profit after tax and other comprehensive income would have been affected as follows: The movement in other comprehensive income is due to an increase/decrease in the fair value of forward foreign exchange contracts  designated as cash flow hedges. The consolidated entity is exposed to energy price risk associated with the purchase and/or sale of electricity, gas and environmental products. The consolidated entity manages energy risk through an established risk management framework consisting of policies to place appropriate  risk limits on overall energy market exposures and transaction limits for approved energy commodities, requirements for delegations of  authority on trading, regular reporting of exposures and segregation of duties. It is the policy of the consolidated entity to actively manage the electricity price exposure arising from both forecast electricity generation  and retail customer electricity load. The consolidated entity’s risk management policy for electricity price risk is to hedge forecast future  transactions for up to five years into the future.  Exposures to fluctuations in the wholesale market electricity prices are managed through the use of various types of derivative  financial instruments. (g) Energy price risk management Profit after tax  Increase/(decrease) Other comprehensive income  Increase/(decrease) 2012  $m  2011  $m  2012  $m  2011  $m  US dollar +10% –  –  (3.8) (6.0) US dollar –10% –  –  4.6  7.4  Euro +10% –  –  (1.9) (25.8) Euro –10% –  –  2.3  31.5 Hedging reserve 2012  $m  2011  $m  Balance at beginning of financial year (56.8) (0.5) Loss in fair value of cash flow hedges 3.5  (88.3) Reclassified to finance costs 6.6  3.3  Transferred to plant and equipment 40.3  4.6  Income tax on items taken directly to or transferred from equity (15.1) 24.1  Balance at end of financial year (21.5) (56.8) Cash flow ineffectiveness recognised immediately in profit or loss – – The following table details the movements in the hedging reserve from forward foreign exchange contracts and cross currency swap  contracts: Foreign currency sensitivity Average interest rate Average exchange rate Contract value Fair value Outstanding contracts 2012 % 2011 % 2012  2011 2012  $m 2011  $m 2012  $m 2011  $m Buy US dollars 5 years or more 7.67  7.67  0.888  0.888  337.8  337.8  (20.4) (85.9)