124 Consolidated  Notes to the  Financial  Statements Note 52 – Financial instruments (continued) (f) Foreign currency risk management Forward foreign exchange contracts – cash fl ow hedges The sensitivity to a 50 basis point increase or decrease in interest rates is considered reasonable, given the market forecasts available at the  reporting date and under the current economic environment in which the consolidated entity operates. The movements in profit after tax are mainly attributable to an increase/decrease in interest expense from floating rate borrowings and an  increase/decrease in interest income from cash and cash equivalents. The movement in other comprehensive income is due to an increase/ decrease in the fair value of interest rate swaps designated as cash flow hedges. The consolidated entity undertakes certain transactions denominated in foreign currencies; consequently, exposures to exchange rate  fluctuations arise. Foreign currency risk arises primarily from overseas term borrowings and firm commitments for the purchase of plant and  equipment which are denominated in foreign currencies. Exchange rate exposures are managed within approved policy parameters utilising  forward foreign exchange contracts and cross currency swap contracts. The consolidated entity’s Corporate Treasury policy requires the hedging of foreign currency risk using forward foreign exchange contracts.  The Corporate Treasury’s policy is to hedge currency exposures of anticipated cash flows in excess of $0.5 million and to not enter into  forward foreign exchange contracts until a firm commitment is in place. The consolidated entity has entered into contracts to purchase plant and equipment denominated in United States dollars and Euros.  The consolidated entity has entered into forward foreign exchange contracts to hedge the exchange rate risk arising from these anticipated  future purchases, which are designated as cash flow hedges. These anticipated purchases are expected to occur at various dates between one month and two years from the reporting date. The  contracts are timed to mature when payments for the purchases are scheduled to be made. When necessary, forward foreign exchange  contracts are rolled over at maturity. The gain or loss from remeasuring the hedging instruments at fair value is recognised in other comprehensive income, to the extent that the  hedge is effective. The gain or loss relating to the ineffective portion of the hedge is recognised immediately in profit or loss as part of other  income or other expenses. When the anticipated purchase occurs, amounts previously recognised in other comprehensive income and  accumulated in equity in the hedging reserve are transferred and included in the initial measurement of the cost of plant and equipment. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately to profit or  loss. During the year, no hedges were de-designated and all underlying forecast transactions remain highly probable to occur as per  original forecast. The following table details the forward foreign exchange contracts outstanding at the end of the reporting period: Average exchange rate  Foreign currency  Contract value  Fair value 2011 2010 2011 2010 2011 2010 2011 2010 Outstanding contracts FCm FCm $m $m $m $m Cash fl ow hedges Buy US dollars Less than 6 months  1.034 0.741 21.0 1.6 20.4 2.2 (0.3) (0.2) 6 to 12 months  0.874 0.636 51.2 0.1 58.5 0.2 (8.6) (0.1) 1 to 2 years  0.960 – 28.9 – 30.1 – (1.3) – Buy Euro Less than 6 months  0.654 0.661 153.0 1.8 234.0 2.7 (23.8) (0.1) 6 to 12 months  0.643 0.493 147.9 0.3 230.0 0.6 (24.0) (0.1) 1 to 2 years  0.635 – 4.0 – 6.4 – (0.7) – Buy British pounds Less than 6 months  – 0.415 – 0.2 – 0.5 – (0.1) 6 to 12 months  – 0.412 – 0.2 – 0.5 – (0.1) (58.7) (0.7)