Explanatory notes
21
General
Consolidation principles
Equity and result
determination principles
The real estate interests were largely transferred to a subsidiary of AEGON N. V. (Groninger
Financieringen B. V) in the year under review.
This relates to the entire capital stock of Gemeenschappelijk Eigendom B. V.including its subsi
diary Kok Groep B. Vwhich was sold at book value, and also includes the guarantee from FGH
with respect to Transveer B.V.
With the transfer of these participating interests, the financing thereof by FGH was also termi
nated. The FGH consolidated balance sheet total was reduced by NLG 400 million as a result,
half of which affected the mortgage portfolio.
AEGON N. V. has also announced that it intends to exercise its option to acquire the stock of
Aannemingsmaatschappij Gebam B.V. held by FGH, during the course of 1988.
The consolidated financial statements include the figures of the Friesch-Groningsche
Hypotheekbank N. V. and its majority participating interests, with the exeption of Aannemings
bedrijf Gebam B.Vwhich will cease to be part of the group in 1988.
Subsidiaries which can be regarded as joint ventures are as a general rule proportionately conso
lidated.
The participating interests which were transferred to AEGON N. V. in 1987 are not consolidated
in the comparative figures, but are included instead in the item Participating interests at their
net asset value. The results of these participating interests are included in Results of partici
pating interests.
Marketable securities are stated at their quoted prices on the balance sheet date. 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 Industry Supervising 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 on participating
interests.
Real estate operated by the company, is stated at cost of purchase or construction less depre
ciation or at market value, whichever is the lower.
With respect to the result on disposal of real estate operated by the company, the difference
between sales proceeds and book value is taken.
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.
Amounts in foreign currencies are translated at the exchange rates on the balance sheet date.
Exchange differences on participating interests are reflected directly in stockholders’ equity in
the item Exchange differences reserve. In a few instances long-term foreign currency loans are
entered into with the expectation that during the term of the loan the interest advantage will
exceed any exchange losses. An amount is added to the reserve for exchange risks for such loans
which is equal to the difference between interest and placement costs for these loans as
compared with similar domestic loans, reduced by any hedging costs. Exchange differences and
any hedging costs with respect to these loans are charged to this reserve. Other exchange
differences are included in the result.
Income and expense are generally recorded in the year to which they relate. Incidental income
and expense in connection with lending and borrowing activities are recognized in the income
statement in the year in which the assets or liabilities are contracted.
The corporate income tax shown in the income statement is computed on the net result taking
into account exempted income elements. The reserve for deferred tax liabilities concerns the
differences between fiscal and commercial equity, taking into account, where appropriate losses
available for relief insofar as it is reasonable to anticipate the relief being claimed.
A list of names and registered offices of participating interests has been filed with the
Amsterdam Chamber of Commerce.
The company income statement of Friesch-Groningsche Hypotheekbank NV. has been
prepared in conformity with the provisions of Section 402, Book 2 of the Dutch Civil Code.
