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Annual Statements

Financial reporting

Price winner 2012 in the category non-listed

Home Annual Statements Financial Statements 2012 Notes to the consolidated financial statements Notes to the consolidated income statement Fair value gains and losses on property

3. Fair value gains and losses on property

(in thousands of euros)

2012

2011

New long leases granted

422

-

Purchase and completions of buildings

-

1,497

Fair value adjustments: land

- 620

- 4,017

Fair value adjustments: buildings

- 23,823

1,856

- 24,021

- 664

The gains from granting new long leases were connected with the change in measurement of leasehold land from historical cost to fair value upon release. Fair value is calculated by discounting the annual ground rents from the leases concerned (DCF method), using a discount rate based on the interest rate on Dutch government bonds plus a risk premium.

Property under development is recognised at fair value, provided this can be measured reliably. A change in value is recognised as ‘fair value gains and losses on property’, as are changes in value resulting from the refurbishment of existing properties (which may have been purchased recently) so that they can be leased more profitably, leading to an increase in fair value.

The fair value of all the properties is assessed each year and adjusted as necessary on the basis of in-house and external appraisals taking into account any lease incentives granted. The resulting adjustments to fair value are included in market value adjustments for land and buildings.