Consolidation Principles The consolidated financial statements represent the figures of the Friesch- Groningsche Hypotheekbank N.V. and its subsidiaries. Participating interests which can be regarded as joint ventures are proportionately consolidated. Equity and Result Determination Principles Marketable securities are stated at their quoted prices on the balance sheet date, except for bonds which form part of the investment portfolio. These are stated at their redemption value less an amount equivalent to any diminution in value. Unquoted securities are included at their estimated market value as per balance sheet date. Receivables are included at face value less deductions for uncollectability of certain items. Additionally a reserve, which is included in Payables, has been formed to cover risks inherent in the granting of credit (Section 11 (2) of the Credit Supervision Act). Participating interests are stated at their net asset values, applying the valuation principles used by Friesch-Groningsche Hypotheekbank N.V. Movements in net asset value due to the results achieved are shown in Results of participating interests, as are results on sales of participating interests. Real estate development projects are included at cost including interest during the construction period, as well as a margin to cover the overhead involved in the project concerned, up to the date of completion. Real estate under development is not stated at above its market value, however. Results on sales are recognized in the year in which projects are completed, or, if the sales result is known, in the year in which parts of projects are completed. Purchase sums received are applied against the cost of development projects. A reserve is formed to cover the risk of vacancy during the period between completion and first lease of development projects. Work in progress of the construction company is included in Real estate develop ment projects after deduction of installments received. Valuation is at cost including a margin for overheads. Results are recognized in the year in which contracts are completed. Foreseeable losses are deducted from the valuation when they become evident. Real estate operated by the company, insofar as it was developed by the company, is valued on the same basis as real estate development projects. Real estate acquired from third parties is valued at purchase price. Real estate operated by the company is not stated in excess of market value. The difference between sales proceeds and book value is shown as the sales result on real estate formerly operated by the company. Office buildings in use by the company are stated at current value. Depreciation is provided on real estate operated by the company and on office buildings in use by the company, taking estimated useful life and residual values into account. 29

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Annual Reports FGH Bank | 1985 | | pagina 31