Explanatory notes i Friesch-Groningsche Hypotheekbank and affiliated banks General The consolidated profit and loss account for 1981 includes the results of FGH Finance nv (Curasao) and FGH Realty Credit Corporation (USA). Participations are valued at their intrinsic worth. In accordance with this, the profit and loss account shows the results of these participations. Recoveries from the mortgage business are valued at face amounts less write-offs of uncollectable items set against the reserve provision for general contingencies. To cover the general risks involved in lending, a reserve provision was established under section 329 of volume two of 'Burgerlijk Wetboek' (the civil code) which is listed under'Receivables and transitory items'. Borrowings resulting from debt financing are recorded at face value. Securities are valued at the lower of purchase or market price. In calculating the results, interest received and paid as well as other gains and expenses are accounted for in the year to which they apply. In orderto give a better insight into how the interest balance is made up, the reporting practice has been changed from the previous years. The comparative 1980 figures have also been revised to reflect this change in reporting. All assets and liabilities denominated in foreign currencies are recalculated at the exchange rates existing as of the date of the balance sheet. The resulting currency differences are passed on from the whole group to a central account with the parent company, and the balance due to currency fluctuations is booked as a change in equity capital. Incidental gains such as loan origination fees and charges such as commissions paid, etc. incurred in mortgage and debt financing are accounted for in the profit and loss account of the yearwhen the money is received or expended. The corporation tax included in the profit and loss account is calculated on the balance of this account, after allowing for tax-free profit items. The principles of valuation and determination of profits and losses for the annual accounts of Friesch-Groningsche Hypotheekbank nv are the same as those applied in the consolidated annual accounts. The expla natory notes only show figures for the consolidated annual accounts. For the names and places of registration of participations, we refer you to the list deposited with the Amsterdam commercial register. 36

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Annual Reports FGH Bank | 1981 | | pagina 38