AFD - 2018 Registration document

CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS ACCOUNTING PRINCIPLES ADOPTED BY THE EUROPEAN UNION 6 Notes to the consolidated financial statements

Title

Depreciation period Non-depreciable

1. 2. 3. 4. 5.

Land

Structural systems Building envelope

40 years 20 years 15 years 10 years

Technical building services, fixtures and fittings

Sundry fittings

losses expected across the sovereign loan portfolio (losses at one year, losses at completion, regulatory requirements on provisions or any other data available to AFD that can be used to anticipate the risk profile of the sovereign loan portfolio). Doubtful sovereign debts are provisioned. Furthermore, this depreciation is neutralised by deduction from the reserve account. Net provisions for reversals of provisions are recorded in Net Banking Income. Provisions for financing and guarantee commitments Financing and guarantee commitments that are not recognised at fair value through profit or loss and that do not correspond to derivative instruments are provisioned in accordance with the principles set out in IFRS 9. Provisions for subsidiary risk This item is intended to cover the cost to AFD of the takeover and liquidation of Soderag, which was decided in 1998, and to cover AFD’s risk of loss on loans issued to Sodema, Sodega and Sofideg to buy Soderag’s portfolio. These loans were transferred to Sofiag. Provision for employee benefits – Post-employment benefits Defined benefit plans Retirement and early retirement commitments Immediate retirement and early retirement commitments are all transferred to an external insurance company. Deferred retirement and early retirement commitments are kept by AFD and covered by specific insurance policies. They are valued in accordance with the provisions of contracts signed by AFD and the insurer. The assumptions used for the valuations are as follows:

Other property, plant and equipment are depreciated using the straight-line method: P office buildings in the French Overseas Departments and Collectivities are depreciated over 15 years; P residential buildings are depreciated over 15 years; P fixtures, fittings and furnishings are depreciated over 5 or 10 years; As for intangible assets, software is amortised according to type: 8 years for enterprise resource planning systems and 2 years for office automation tools. Depreciation and amortisation are calculated using the straight- line method, according to the expected useful life of the asset; its residual value is deducted from the depreciable base. On each closing date, fixed assets are valued at their amortised cost (cost minus total amortisation and any loss of value). When applicable, the useful lives and residual values are adjusted in the accounts. 6.2.3.2.6 Provisions Provisions are recorded if it is likely that an outflow of resources representative of economic benefits is necessary to meet an obligation due to past events and if the amount of the obligation can be reliably estimated. Provisions for sovereign outstandings The agreement “on the reserve account” signed on 8 June 2015 between AFD and the French State for an indefinite term, determines the mechanism for creating provisions for hedging the sovereign risk and the principles for using the provisions recognised thereby. This reserve account is intended to (i) fund the provisions that AFD would have to recognise in case a sovereign borrower defaults, (ii) serve normal unpaid interest and (iii) more generally, help compensate AFD in the event of debt cancellation for sovereign loans. The balance of this account cannot be less than the amount required to establish collective provisions on performing or restructured loans. This calibration is calculated using estimated P equipment and vehicles over 2 to 5 years.

discount rate: 0.50%;

P

P retirement age: 63 for non-executive level employees and 65 for executive level employees;

P annual increase in salary: 2.00%.

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REGISTRATION DOCUMENT 2018