Annual report 2010 - plazacenters

Financial statements
Notes to the consolidated financial statements
continued
Note 34 – Operating leases
The Company is a lessee of a number of plots of land and paid a total rent of EUR 0.1 million in the year ended December 31, 2010
(EUR 0.1 million for year ended December 31, 2009) under operating leases in Poland. The leases typically run for a period of 99 years.
The leases in Poland which are held under perpetual usufruct are governed by the law of management over real estate. Lease payments
regarding perpetual use of land can be changed according to a new valuation of the plot. None of the leases includes contingent rentals.
Non-cancellable operating lease rentals are payable as follows:
For the year ended For the year ended
December 31, December 31,
2010 2009
€’000 €’000
Less than one year 28 126
Between one and five years 146 446
More than five years 532 895
706 1,467
Note 35 – Financial instruments
Financial risk management
Overview
The Group has exposure to the following risks from its use of financial instruments:
• Credit risk.
• Liquidity risk.
• Market risk.
• Operational risk.
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for
measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these
consolidated financial statements.
The Board of Directors has established a continuous process for identifying and managing the risks faced by the Company, and confirms
that it is responsible to take appropriate actions to address any weaknesses identified.
The Group’s risk management policies are established to identify and analyze 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 Company’s Audit Committee oversees how management monitors 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.
a. Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s financial instruments held in banks and from receivables and other
financial institutions.
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are
performed on all customers requiring credit over a certain amount. The Group requires collateral in the form of a bank guarantee
or deposit equal to three months of rent from tenants of shopping centers.
Cash and deposits, structured deposits and available for sale financial assets.
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Plaza Centers N.V. Annual report 2010