NOTES TO THE BALANCE SHEETS OF AEGON N.V. Amounts in EUR millions ACCOUNTING PRINCIPLES Unless otherwise stated, balance sheet items are valued in accordance with the accounting principles described in the notes to the consolidated balance sheets. 1 SHARES IN GROUP COMPANIES 2003 2002 Balance at January 1 12,464 11,850 Capital contribution and acquisitions — 3,756 Divestitures (119) (1,149) Net income for the financial year 1,811 1,511 Revaluations (1,904) (3,504) BALANCE AT DECEMBER 31 12,252 12,464 2 LOANS TO GROUP COMPANIES  2003 2002 Balance at January 1 5,361 6,490 Additional loans 1,439 941 Repayments or payments received (1,039) (1,019) Other changes (1,029) (1,051) BALANCE AT DECEMBER 31 4,732 5,361 3 OTHER LOANS 2003 2002 Balance at January 1 352 435 Repayments or payments received (151) (83) BALANCE AT DECEMBER 31 201 352 4 SHARE CAPITAL Common Preferred Preferred shares shares A shares B Total Authorized 360 125 125 610 Unissued 178 72 122 372 ISSUED AND OUTSTANDING 182 53 3 238 Vereniging AEGON, based in The Hague, holds all of the issued preferred shares. AEGON N.V. and Vereniging AEGON have amended the option arrangements under the 1983 Merger Agreement. Under the amended option arrangements Vereniging AEGON, in case of an issuance of new shares by AEGON N.V., has the right to have issued to it as many class B preferred shares as shall enable Vereniging AEGON to prevent or correct dilution to below its actual percentage of total voting shares. Class B preferred shares will then be issued at par value (EUR 0.25), unless a higher issue price is agreed. On September 19, 2003, and December 29, 2003, Vereniging AEGON exercised its option rights following the dilution caused by the stock dividend issuances of AEGON N.V. and acquired 10,220,000 respectively 880,000 class B preferred shares at par value to correct this dilution. AEGON N.V. and Vereniging AEGON have entered into a preferred shares voting rights agreement, pursuant to which Vereniging AEGON has voluntarily waived its right to cast 25/12 vote per class A or class B preferred share. Instead, Vereniging AEGON has agreed to exercise one vote only per preferred share, except in the event of a ’special cause’, such as the acquisition of a 15% interest in AEGON N.V., a tender offer for AEGON N.V. shares or a proposed business combination by any person or group of persons whether individually or as a group, other than in a transaction approved by the Executive Board and Supervisory Board. If, in its sole discretion, Vereniging AEGON determines that a ’special cause’ has occurred, Vereniging AEGON will notify the General Meeting of Shareholders and retain its right to exercise the full voting power of 25/12 vote per preferred share for a limited period of six months.  In both 2001 and 2002 AEGON N.V. entered into Total Return Swaps (TRSs) with Vereniging AEGON in order to hedge the stock option plan for the respective years. The TRSs give AEGON N.V. the right to the capital gains on AEGON N.V. shares (11.3 million for the 2001 TRS and 7.8 million for the 2002 TRS) at the termination date and to the dividends on these shares during the contract period. The capital gains are calculated based on an exercise price of EUR 32.04 for the 2001 TRS and EUR 26.70 for the 2002 TRS. Any losses compared to the exercise price will be paid by AEGON N.V. to Vereniging AEGON upon termination. AEGON N.V. in return will pay interest AEGON GROUP ANNUAL REPORT 2003 137 The group companies are stated at their net asset value.