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Report & Accounts - 2012

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NOTES CONTINUED d) Cash flow hedges The following table indicates the periods in which the cash flows associated with cash flow hedging instruments are expected to occur: 20122011 Carrying Expected 1 year Carrying Expected 1 year amount cash flows or less amount cash flows or less $000 $000$000$000 $000 $000 Forward exchange contracts: 371 Assets Liabilities (109) 371371- (109) 262 (109) 262 (526) 262 - - (526) (526) (526) (526) (526) The following table indicates the periods in which the cash flows associated with cash flow hedging instruments are expected to affect profit or loss: 20122011 Carrying Expected 1 year Carrying Expected 1 year amount cash flows or less amount cash flows or less $000 $000$000$000 $000 $000 Forward exchange contracts: 371 Assets Liabilities (109) 371371- (109) 262 (109) 262 (526) 262 (526) - - (526) (526) (526) (526) e) Market risk Financial risk management Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments The Group's financial risk management objective is to control the exposure to foreign exchange fluctuations especially in sterling and to a lesser extent the euro and Australian Dollar, against the US Dollar. Sterling: The Group has entered into forward currency contracts to buy £10,240,000 (2011: £8,350,000) at an average exchange rate of US$1.588/£1 (2011: US$1.614/£1). These contracts mature at various dates throughout 2013 to match budgeted sterling expenditure. The fair value of these hedges, based on the mark to market valuations of the contracts at the balance sheet date, using prices on that date to purchase the same forward contracts, was an asset of $371,000 (2011: Liability of $521,000) with a corresponding entry in reserves. Euro: The Group entered into forward currency contracts to sell €1,425,000 (2011: €262,000) at an average exchange rate of US$1.295/€1 (2011: US$1.402/€1). The fair value of these hedges, based on the mark to market valuations of the contracts at the balance sheet date, using prices on that date to purchase the same forward contracts, was a liability of $34,000 (2011: Asset of $28,000) with a corresponding entry in reserves. 62 ITF FINANCIAL STATEMENTS

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