AFD - 2018 Registration document

CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS ACCOUNTING PRINCIPLES ADOPTED BY THE EUROPEAN UNION Statutory auditors’ report on the consolidated financial statements

As regards the AFD Group’s consolidated financial statements at 31 December 2018, the total amount of provisions amounts to €664 million as indicated in Notes 3.2.3, 3.4.1, note 5.2 and 3.4.2 note 17 to the consolidated financial statements.

Audit procedures implemented in response to risks identified To assess the reasonableness of the provisions created, we:

P reviewed the process for evaluating the provisions and the internal control procedures governing them; P reviewed the governance of the impairment processes for the credit risk of non-sovereign loans; P verified the consistency of data from the risk management systems with the accounting data; P assessed the consistency of changes in impairment, outstandings and the risk burden. If the impairment was calculated on a collective basis (Tiers 1 and 2), we put in place the following substantive procedures: P check to ensure the bases are exhaustive and the classification rules have been correctly applied to each tier; P check to ensure the consistency of the parameters applied in the calculation method and any updates in line with validated methodologies;

P verification of the arithmetical accuracy of the calculations made;

P assessment of the consistency of changes in impairments, outstandings and the risk burden. When the impairment was determined on an individual basis (tier 3), our work consisted in:

P testing the underlying assumptions and data used by Management to estimate impairments using credit file samples;

P verifying the correct implementation of the decisions made during Risk Committee meetings;

P ensuring that the downgrading rules for doubtful outstandings were not changed compared to the previous year and were correctly applied throughout the financial year. Valuation of financial assets at fair value - tier 2 and tier 3 Risks identified The Agence Française de Développement Group holds financial assets at fair value as detailed in Notes 3.2.3, 3.4.1 - note 1, note 3 and note 4 to the consolidated financial statements. Changes in fair value from one statement to the next are recognised either through profit or loss or through equity depending on the IFRS 9 accounting classification used. Due to the limited availability of market data, the valuation of some of these tier 2 and tier 3 financial instruments requires the exercise of judgement by management for the selection of the valuation method and parameters to be used. We considered the valuation of financial assets at fair value (tiers 2 and 3) to be a key point of the audit, given:

P the significant impact from the choice of the valuation method on AFD’s results; P the sensitive nature of the parameters used for Management’s assumptions;

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P the significance of those amounts in the financial statements. Audit procedures implemented in response to risks identified In this context, our work consisted of:

P For the portfolio of equity securities (direct investments and stakes in investment funds):

P updating our knowledge and then testing the effectiveness of the control procedures relating to the determination of the valuation method used; P testing, on the basis of sampling, the correct application of the valuation method to a selection of securities; P reconciling, on the basis of sampling, the valuation of these securities with the external documentation that justified it.

P checking the consistency between accounts and management.

P For the portfolio of loans not eligible for recognition at amortised cost under IFRS 9:

P assessing the methods used to determine the valuations (coherence between assumptions and market parameters used);

P checking the exhaustiveness of the scope used as a basis for calculation of the fair values;

P checking the consistency of the parameters applied in the calculation method and any updates in line with the methods validated;

P checked the arithmetical accuracy of the calculations made on a sample of loans;

P checked the consistency between accounts and management. We also verified the appropriateness of the accounting methods used by the Group and we made sure that they were correctly applied.

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REGISTRATION DOCUMENT 2018