Annual report 2010 - plazacenters

More documents

Recommendations

Info

Financial statements Notes to the consolidated financial statements continued Note 4 – Determination of fair values A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. Investment properties in the US At each reporting date, the fair values of the investment properties are remeasured by EDT Retail Management Limited, which is the responsible entity of EDT by reference to independent valuation reports or through appropriate valuation techniques adopted by the responsible entity. Fair value is determined assuming a long-term investment period. Specific circumstances of the owner are not taken into account. The factors taken into account in assessing internal valuations may include: • Assuming a willing buyer and a willing seller, without duress and an appropriate time to market the property to maximize price; • Information obtained from valuers, sales and leasing agents, market research reports, vendors and potential purchasers; • Capitalization rates used to value the asset, market rental levels and lease expiries; • Changes in interest rates; • Asset replacement values; • Discounted cash flow models; • Available sales evidence; and • Comparisons to valuation professionals performing valuation assignments across the market. The approach adopted for valuing the investment property portfolio at December 31, 2010 was consistent with that adopted in previous reporting periods and was as follows: • If the most recent independent valuation was more than three years old, a new external valuation was obtained; and • Internal valuations were performed by EDT Retail Management Limited on all other properties primarily using net operating income and a capitalization rate as assessed by using market research reports and the valuations that were undertaken by the external valuers where appropriate. If this internal valuation significantly differed from the current book value of the property, an external valuation was also obtained for this property. Application of the policy has resulted in 17 investment properties being independently valued at December 31, 2010. All properties have been independently valued within the last 18 months. The global market for many types of real estate remains affected, albeit to a lessening extent, by the volatility in global financial markets. Initial indications of capital market stabilization have contributed to an increased number of transactions, however, a general weakening of market fundamentals still exists causing the volume of real estate transactions to remain beneath historic levels. Fair value of investment property is the price at which the property could be exchanged between knowledgeable, willing parties in an arm’s-length transaction. A “willing seller” is neither a forced seller nor one prepared to sell at a price not considered reasonable in the current market. The best evidence of fair value is given by current prices in an active market for similar property in the same location and condition. 86 Plaza Centers N.V. Annual report 2010
O Br Mg Fs Ai The current lack of comparable market evidence relating to pricing assumptions and market drivers means that there is less certainty regarding valuations and the assumptions applied to valuation inputs. The period of time needed to negotiate a sale in this environment may also be significantly prolonged. The fair value of investment property has been adjusted to reflect market conditions at the end of the reporting period. While this represents the best estimates of fair value as at the balance sheet date, the current market uncertainty means that if investment property is sold in future the price achieved may be higher or lower than the most recent valuation, or higher or lower than the fair value recorded in the financial statements. Available-for-sale financial assets The fair value of held-to-maturity investments and available-for-sale financial assets is determined by reference to their quoted closing bid price at the reporting date. The fair value of held-to-maturity investments is determined for disclosure purposes only. Fair value which is determined for disclosure purposes is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. Non-derivative financial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. Structured deposit B at fair value through profit or loss (refer to note 11) The fair value of structured deposit B is based on broker quote. This quote is tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of the contract and using market interest rates for a similar instrument at the measurement date. The test is being done by using yield analysis for structured model. Forward transactions The fair value of forwards transaction is based on bank quotes received. Those quotes are tested by an external, independent valuation company, having appropriate recognized qualifications and recent experience in the field of the financial instruments being valued, which estimated the fair value by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate. Swap transactions Fair values of the swaps may be determined in whole or in part using valuation techniques based on assumptions that are not supported by prices from current market transactions or observable market data, where current prices or observable market data are not available. Factors such as bid-offer spread, credit profile collateral requirements and model uncertainty are taken into account, as appropriate, when fair values are calculated using valuation techniques. Valuation techniques incorporate assumptions that other market participants would use in their valuations, including assumptions about interest rate yield curves, and exchange rates. Long-term debentures at fair value through profit or loss The fair value of long-term debentures is principally determined with reference to an active market price quotation, as the debentures are traded in the Tel Aviv Stock Exchange (“TASE”) using the valuation technique. The quoted market prices of debentures Series B was 0.679 as opposed to 0.852 using the valuation technique. Share-based payments transactions The fair value of employee share options is measured using a binomial lattice model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information and the tendency of volatility to revert to its mean and other factors indicating that expected future volatility might defer from past volatility), weighted average expected life of the instruments (based on historical experience and general option holder behavior), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value. Plaza Centers N.V. Annual report 201087
Page 1 and 2:
Plaza Centers Annual report 2010 Su
Page 3 and 4:
Overview Who we are O Br Mg Fs Ai W
Page 5 and 6:
O Br Mg Fs Ai Operational highlight
Page 7 and 8:
Overview Our s trategy O Br Mg Fs A
Page 9 and 10:
O Br Mg Fs Ai Koregaon Park Plaza (
Page 11 and 12:
O Br Mg Fs Ai • As a result of th
Page 13 and 14:
O Br Mg Fs Ai Plaza expects to comp
Page 15 and 16:
Overview Our portfolio at a glance
Page 17 and 18:
O Br Mg Fs Ai Suwałki Plaza: opera
Page 19 and 20:
O Br Mg Fs Ai Belgrade Plaza Serbia
Page 21 and 22:
O Br Mg Fs Ai Koregaon Park Plaza:
Page 23 and 24:
Overview Current devel opments cont
Page 25 and 26:
O Br Mg Fs Ai Timisoara Plaza Roman
Page 27 and 28:
Overview Current de velopments cont
Page 29 and 30:
O Br Mg Fs Ai Liberec Plaza Czech R
Page 31 and 32:
O Br Mg Fs Ai Bulgaria Sofia Plaza
Page 33 and 34:
O Br Mg Fs Ai I am pleased to repor
Page 35 and 36:
O Br Mg Fs Ai The combination of Pl
Page 37 and 38: O Br Mg Fs Ai Over the course of th
Page 39 and 40: O Br Mg Fs Ai Plaza’s effective o
Page 41 and 42: O Br Mg Fs Ai In addition, Plaza ha
Page 43 and 44: O Br Mg Fs Ai Among our first actio
Page 45 and 46: O Br Mg Fs Ai increased rental reve
Page 47 and 48: Management and governance Managemen
Page 49 and 50: O Br Mg Fs Ai Uzi Eli (35), LLB, At
Page 51 and 52: O Br Mg Fs Ai Substantial sharehold
Page 53 and 54: Management and governance Corporate
Page 55 and 56: O Br Mg Fs Ai • Best Practice Pro
Page 57 and 58: O Br Mg Fs Ai Among other matters,
Page 59 and 60: Management and governance Risk mana
Page 61 and 62: O Br Mg Fs Ai • Real estate valua
Page 63 and 64: O Br Mg Fs Ai II) Four components o
Page 65 and 66: O Br Mg Fs Ai c) The Audit Committe
Page 67 and 68: O Br Mg Fs Ai Service arrangements
Page 69 and 70: Financial statements Independent au
Page 71 and 72: Financial statements Consolidated i
Page 73 and 74: Financial statements Consolidated s
Page 75 and 76: O Br Mg Fs Ai For the For the year
Page 77 and 78: O Br Mg Fs Ai Estimates and underly
Page 79 and 80: O Br Mg Fs Ai Note 3 - Summary of s
Page 81 and 82: O Br Mg Fs Ai Financial assets and
Page 83 and 84: O Br Mg Fs Ai f. Normal operating c
Page 85 and 86: O Br Mg Fs Ai i) Rental income The
Page 87: O Br Mg Fs Ai 2. Share-based paymen
Page 91 and 92: O Br Mg Fs Ai Note 7 - Available-fo
Page 93 and 94: O Br Mg Fs Ai Below is a summary ta
Page 95 and 96: O Br Mg Fs Ai Major additions/dispo
Page 97 and 98: O Br Mg Fs Ai Note 16 - Derivatives
Page 99 and 100: O Br Mg Fs Ai December 31, December
Page 101 and 102: O Br Mg Fs Ai Note 21 - Other liabi
Page 103 and 104: O Br Mg Fs Ai As of December 31, 20
Page 105 and 106: O Br Mg Fs Ai Contractual life Gran
Page 107 and 108: O Br Mg Fs Ai Note 28 - Revenues Fo
Page 109 and 110: O Br Mg Fs Ai Note 32 - Net finance
Page 111 and 112: O Br Mg Fs Ai b. Under the particip
Page 113 and 114: O Br Mg Fs Ai The Group limits its
Page 115 and 116: O Br Mg Fs Ai Liquidity risk The fo
Page 117 and 118: O Br Mg Fs Ai Interest rate risk Pr
Page 119 and 120: O Br Mg Fs Ai Note 36 - Contingent
Page 121 and 122: O Br Mg Fs Ai Certain loan agreeme
Page 123 and 124: O Br Mg Fs Ai The net proceeds of t
Page 125 and 126: O Br Mg Fs Ai Additional transactio
Page 127 and 128: O Br Mg Fs Ai Note 39 - Operating s
Page 129 and 130: O Br Mg Fs Ai Note 41 - Critical ac
Page 131 and 132: O Br Mg Fs Ai therefore fail to imp
Page 133 and 134: O Br Mg Fs Ai Cyprus - Russia Activ
Page 135 and 136: O Br Mg Fs Ai The Dutch Antilles Ac
Page 137 and 138: O Br Mg Fs Ai United States Activit
Page 139 and 140:
Additional information Advisors O B
show all

Annual report 2010 - plazacenters

Create successful ePaper yourself

Delete template?

Save as template?