financial report and operating income
therefore, want to hear their opinion on the report by holding an in
quiry. The Staff Council fully co-operated in determining plan and
contents of our first social report.
With effect from the year under review we have made a change in the
lay-out of the annual accounts, which in our opinion resulted in an
improved presentation of the Group's net worth and the Groups
result.
To this end the participations, which used to be included at pur
chase price on the consolidated balance sheet of FGH, are now valued
at intrinsic value, as this value appears from the combined balance
sheet of the real estate companies and other diversifications. With
effect from the current financial year securities are valued at purchase
price or lower market value, whereas in previous years they were
valued at market value, while changes in market value were reflected
in the 'reserve for differences in market value'.
The increase in reserves which is the result of this modified method
of valuation represents the capital growth of the real estate business
as a result of profits retained in the past and of the addition to the
replacement reserve of book profits made on the sale of the old real
estate holdings.
In agreement with this revised method of valuation the consolidated
profit and loss account also shows the results obtained by participa
tions and the profits retained in these participations.
We think the method outlined above is preferable to the inclusion
of participations in the consolidated annual accounts, because in this
way we maintain an insight into the individual results of the finance
business and the real estate companies and other diversifications.
We consider this desirable in view of the difference in character of
these corporate divisions.
The gross result of the Group amounted to 750,590,000 (compared
with 44,021,000 in the previous financial year) and is composed as
follows:
1976
1975
FGH and affiliated banks
Real estate companies and other
diversifications
7 39,513,000 731,746,000
11,077,000 12,275,000
7 50,590,000 7 44,021,000
