Growthpoint Interactive Annual Report 2018

Fair value hierarchy The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows: t t Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. t t Level 2 : inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). t t Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). The fair value of investment properties has been categorised as Level 3 in the fair value hierarchy based on the significant unobservable inputs into the valuation techniques used. Level 1 Level 2 Level 3 Total $’000 $’000 $’000 $’000 30 June 2018 Derivative financial assets - - - - Derivative financial liabilities - 6,892 - 6,892 - 6,892 - 6,892 30 June 2017 Derivative financial assets - (121) - (121) Derivative financial liabilities - 6,440 - 6,440 - 6,319 - 6,319 3.4 Financial risk management Overview The Group has exposure to the following risks from their use of financial instruments: t t credit risk; t t liquidity risk; and t t market risk (including interest rate risk). This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital as well as relevant quantitative disclosure on risks. Risk management framework The Board has overall responsibility for the establishment and oversight of the risk management framework. The Board has established an Audit, Risk and Compliance Committee, which is responsible for developing and monitoring risk management policies and making appropriate recommendations to the Board. The Committee reports regularly to the Board on its activities. In addition, the Managing Director provides a regular report to the Board in relation to risks facing the Group. Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The Audit, Risk and Compliance Committee oversees how management monitor compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. 46 Refer to page 46 of the Group’s 2018 Sustainability Report for more details. 3.3 Derivative financial instruments (continued) Derivative financial instruments (continued) Growthpoint Properties Australia 2018 Annual Report 79 Financial Report Portfolio Review Financial Management Business Overview Governance Additional Information