Explanatory notes
Friesch-Groningsche Hypotheekbank
and affiliated banks
General
Premises and inventory are valued at acquisition costs less depreciation in
proportion to the length of use.
Participations are accounted for in accordance with the equity method.
The results of these participations are therefore recorded in the
consolidated profit and loss account.
Receivables from mortgage financing are valued at par value less
writeoffs of uncollectable items. In addition, in order to cover the general
risks involved in loan activities, a provision such as is referred to under
article 329 of volume 2 of the 'Burgerlijk Wetboek' (civil code) was set up,
which is listed under 'Payables and accrued expenses.'
Liabilities resulting from debt financing are recorded at face value.
Securities are valued at the lower of purchase or market price.
The other assets and liabilities are recorded at face value.
In calculating the results, the interest received and paid as well as the
other gains and expenses are accounted for in the year to which they
apply.
Amounts expressed in foreign currencies are translated into Dutch
guilders at the closing rate. Foreign currency value differences with regard
to the participations are attributed directly to the shareholders' equity.
In a few cases, long-term loans in foreign currencies are attracted in the
expectation that by the time these mature, advantageous interest
differences will outweigh any disadvantageous exchange rate differences.
In the case of such a loan, an amount is added to the provision for
exchange rate differences equal to the difference between the interest and
placement costs of these loans compared with similar domestic loans,
minus any coverage costs.
Exchange rate differences and eventual coverage costs regarding these
loans are recorded under this provision.
Other foreign currency value differences are accounted for in the result.
Incidental gains (loan origination fees etc.) and charges (commissions
paid, etc.) connected with mortgage and debt financing are accounted for
in the profit and loss account of the year in which the cash is received or
paid, with the exception of the higher placement costs of loans raised
abroad, the costs of which, pro rata to the term of maturity, are accounted
for in the result.
Corporate tax included in the profit and loss account is calculated over the
balance of this account after allowing for tax-free profit items. In
calculating corporate tax the addition to the provision for general
contingencies has been treated as a tax deductible item.
The principles of valuation and accounting for the annual account of the
Friesch-Groningsche Hypotheekbank N.V. are the same as those applied in
the consolidated annual account. In the explanatory notes below, only the
figures of the consolidated annual account are shown.
A list of names and places of registration of participations has been
deposited with the register of companies in Amsterdam.
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