Growthpoint Interactive Half Year Report 2019

Financial Management Financial Report Additional Information Portfolio Review Business Overview Notes to the Financial Statements (cont.) 3.2 Derivative financial instruments Determination of fair value The fair value of interest rate and cross currency swaps is 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 entity and counterparty when appropriate. Derivative financial instruments Derivative financial instruments can be analysed as follows: 31-Dec-18 30-Jun-18 $’000 $’000 Interest rate swap contracts – carried at fair value through profit and loss: Total non-current derivative financial instrument assets 731 – Total non-current derivative financial instrument liabilities (2,299) (6,892) (1,568) (6,892) Instruments used by the Group The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to fluctuations in interest and currency rates in accordance with the Group’s financial risk management policies. The gain or loss from re-measuring the interest rate and cross currency swaps at fair value is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income immediately. Interest rate swap contracts – carried at fair value through profit and loss Interest rate swaps in effect at 31 December 2018 covered 23% (30 June 2018: 27%) of the loan principal outstanding. With total fixed interest rate debt of $984 million outstanding, the total fixed interest rate coverage of outstanding principle is 69% (30 June 2018: 82%). The average fixed interest rate of swaps at 31 December 2018 was 2.30% per annum (30 June 2018: 2.30% per annum) and the variable interest rate (excluding bank margin) is 1.96% per annum (30 June 2018: 1.97% per annum) at balance date. See table below for further details of interest rate swaps in effect at 31 December 2018: Counterparty Amount of Swap Swap Expiry Fixed Rate Term to Maturity $’000 % p.a. Years Interest rate swaps NAB 25,000 Jun-2020 2.36% 1.5 CBA 75,000 Nov-2021 2.20% 2.9 CBA 25,000 Jun-2020 2.36% 1.5 Westpac 50,000 Jun-2021 2.48% 2.5 ANZ 50,000 Dec-2020 2.42% 2.0 ANZ 50,000 Jun-2021 2.33% 2.5 Westpac 50,000 May-2021 2.10% 2.4 Total / Weighted average 325,000 2.30% 2.3 The interest rate swap contracts require settlement of net interest receivable or payable each 30 days. The settlement dates generally coincide with the dates on which interest is payable on the underlying debt. The interest rate swap contracts are settled on a net basis. Growthpoint Properties Australia | 2019 Half Year Report 39