Criterios para la selección de las fases de análisis.

The results and financial position of all the group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

– Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

– Income and expenses for each income statement are translated at average exchange rates and

– All resulting exchange differences are recognised as a separate component of equity.

None of the entities have the functional currency of a hyper- inflationary economy.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to comprehensive income. When a foreign operation is disposed, exchange rate differences are part of the result on sale of the foreign operation.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

The following exchange rates, for the countries in which Wereldhave has operations, were used whilst preparing these consolidated financial statements:

average year-end

2010 2009 2010 2009

GBP 1.16668 1.12287 1.16178 1.12600 USD 0.75322 0.71905 0.74839 0.69416

3.4 Comprehensive income

In the statement of comprehensive income no separate line for tax on unrealized gains as a result of the investment tax status of some subsidiaries is included. This is due to the tax status of some subsidiaries, where subsequently unrealized gains are untaxed.

3.5 Cash flow statement

The cash flow statement is prepared by the indirect method. Cash flows denominated in a foreign currency are reported at foreign exchange transaction rate or, where it is impossible to determine individual transaction rates, at weighted average exchange rate. Cash flows from derivatives are presented as investment activity. Investments to reduce non-controlling interests are presented as investment under financing activities.

3.6 Impairment of non-financial assets

Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the income statement for the amount by which the asset’s carrying amount exceeds the higher of the recoverable amount, being the fair value less costs to sell, or the value in use. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

3.7 Derivatives

Derivative financial instruments are stated at fair value. The gain or loss on remeasurement is recognised in the income statement as revaluation result. Purchases and sales are recognised and derecognised using trade date accounting.

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3.8 Hedge accounting

Wereldhave uses derivatives and loans to hedge net

investments in foreign operations. Generally Wereldhave seeks to apply hedge accounting in order to minimise the effects of foreign currency fluctuations in the income statement.

The used derivatives are mainly forward rate agreements. Transactions are entered into with a limited number of counterparties with strong credit ratings. Foreign currency hedging operations are governed by internal policies and rules approved and monitored by the Board of Management.

Derivatives are recognised initially at fair value. Derivatives for which hedge accounting is not applied are accounted for as instruments at fair value through profit or loss. When derivatives qualify for hedge accounting, subsequent measurement is at fair value, and changes therein are accounted for in the equity.

Wereldhave prepares hedge documentation at inception of every net investment hedge. The hedge documentation is updated on every period closing when the effectiveness of the hedge is determined.

3.9 Investment property

Investment properties in operation

Investment properties in operation are those properties which are held either to earn rental income, for capital appreciation or both. On acquisition, investment properties in operation are initially recognised at cost including transaction cost. Investment properties in operation are subsequently stated at fair value at the balance sheet date. The fair values are based on the estimated amount for which a property could be exchanged on the date of valuation in an at arm’s length transaction.

Fair value is based on the capitalization of market rents. The net capitalisation factor and the present value of the differences between market rent and contracted rent, of vacancies and of maintenance expenditure to be taken into account are calculated for each property separately. Subsequent expenditures after acquisition are added to the asset’s carrying amount when it is probable that future economic benefits will flow to the entity and the cost of the expenditure can be measured reliably. All other expenditures, such as repairs and maintenance, are charged to the income statement during the financial period in which they are incurred.

Investments for which the land has been acquired by means of an operational lease (ground rent agreement), are valued in accordance with the fair value method classifying operational leases as an investment property. The investment property valuation will include, as a deduction, the present value of the ground rent payments to be made. For accounting purposes ground rents are accounted for as financial leases, adding the fair value of these lease liabilities back to the investment property value. At the same time the lease liabilities are recorded at the lower of fair value of the liability or discounted minimal lease payments with subsequent measurement at amortised cost.

The fair value of the portfolio is valued twice a year by independent external valuers with the relevant qualification and experience in the location and category of the investment property being valued. All properties are internally valued at fair value at the end of every quarter. Valuation differences and results on disposals are recognised in the income statement. Investment properties under redevelopment continue to be classified as investment properties. Properties in own use are classified under property and equipment and its fair value at the date of reclassification is considered to be its cost for depreciation purposes of property in own use. When properties are sold the difference between the net proceeds and book value are accounted for in the income statement under results on disposals.

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