Report of the managing board
Introduction
In the economic field 1977 was not a very favourable year for the
Netherlands. All measures to stimulate the economy which the
Den Uyl administration had taken in previous years proved unable
to bring about a revival in economic activities. The expected
recovery in world trade did not come to anything either. Most
countries continued to struggle with the problems of economic
stagnation and inflation, without any solutions being found.
As far as the fight against inflation is concerned, visible results
were scored in this country during the past year. In 1977 the rate
of inflation dropped to a level of 6.5 If the efforts made to
keep wages and prices under control in 1978 are successful,
there are sufficient indications to expect a further fall in inflation.
In our immediate surroundings only Switzerland, Germany and
Austria can at the moment boast a lower rate of inflation. If
inflation could be forced back further, this would strengthen our
international competitive position considerably.
It is thanks to our strong balance of payments position that the
unrest in the foreign exchange market has passed by the guilder
almost unnoticed. Confidence in our national currency remained
unshaken in 1977. As a result there was a great demand for
guilder investments from abroad.
To FGH 1977 was a good year. The course of affairs in the
various corporate sectors was wholly satisfactory. In the finance
business and the real estate sector the upward trend of the
previous years could be continued.
The net worth, the corner-stone of every credit institution, grew
from f 75 million in 1972 to a level of f 253 million in the
previous year. This increase included the voluntary payment in
full of shares during the period mentioned as well as the proceeds
of the 1977 share issue, totalling f 47,5 million. Otherwise, to an
amount of f 50 million the growth in net worth is, on the one
hand, the result of the strongly increased business results during
that period in the finance business, and, on the other hand, of
an increase of 39 million to be accounted for from the growth
of the results of the real estate business, and as regards an
amount of M1,5 million from the increase of the replacement
reserve as a result of book profits obtained on the sale of the
major part of our old real estate holdings. Given the endeavour to
maintain our business volume, these book profits lack the
character of spendable income and are therefore not accounted
for in the operating results, nor can they be taken into account in
determining the policies regarding distribution of profits and
allocations to reserves.
Considering our position as a credit institution we should, also
in the future, see to a further strengthening of our capital
position by internal financing.
In addition, our dividend policy will be aimed at the promotion
of the interests of our shareholders.
The policy pursued by us has enabled us to finance the expansion
of our mortgage portfolio during the past years without applying
to the capital market for the increase of our net worth. On the
basis of the net worth available the rapid growth of the finance
sector during the past year could also have been financed well
within the standards indicated by our Articles of Association.
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