Growthpoint Interactive Annual Report 2018

3.3 Derivative financial instruments Accounting policies Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument. The Group takes out certain derivative contracts as part of its financial risk management, however, it has elected not to designate these to qualify for hedge accounting under AASB 139. Interest rate and cross currency swaps Changes in fair value of such derivative instruments that do not qualify for hedge accounting are recognised immediately in the Consolidated Statement of Profit or Loss and Other Comprehensive Income. Determination of fair value The fair value of interest rate and cross currency swaps are based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a substitute instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Group and counterparty when appropriate. Derivative financial instruments Derivative financial instruments can be analysed as follows: 2018 2017 $’000 $’000 Interest rate swap contracts – carried at fair value through profit and loss: Total non-current derivative financial instrument assets - 121 Total non-current derivative financial instrument liabilities (6,892) (6,440) (6,892) (6,319) Growthpoint Properties Australia 2018 Annual Report 77 Financial Report Portfolio Review Financial Management Business Overview Governance Additional Information