AFD_REGISTRATION_DOCUMENT_2017

CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS 6 Report of the statutory auditors on the consolidated financial statements

The assessments thus made fall within the context of the audit of the consolidated financial statements taken as a whole and the formation of our opinion expressed above. We do not express an opinion on items in those consolidated financial statements in isolation. Identification and assessment of credit risk Risks identified The Agence Française de Développement Group is exposed to credit and counterparty risks. These risks are defined as the probability that a debtor will be unable to handle the repayment of the financing granted. A default by a counterparty can have a material impact on the results of AFD or its subsidiaries (especially PROPARCO S.A.). Your group is creating impairments to cover these risks. They are estimated on a collective or individual basis, taking into account the value of guarantees held. The determination of the collective provisions is based on the estimate of estimated residual losses (ERLs) based on qualitative and quantitative analyses of homogeneous credit portfolios obtained by type of borrower and country class. Individual impairment losses are determined on the basis of assumptions such as the counterparty’s financial position, the country risk associated with the counterparty, the valuation of any guarantees and expected future cash flows. As a result, there is a risk that the basis for the doubtful outstandings identified by the Group is not exhaustive and the provisions created do not adequately cover the credit risk of the outstandings portfolio. Consequently, we were of the opinion that the collective and individual provisioning of credit risk constitutes a key point of the audit because it is a significant area of accounting estimation that requires the exercise of the judgement of Management in the assumptions made. As regards the AFD consolidated financial statements at 31 December 2017, the total amount of provisions amounts to €825 million as indicated in Notes 3.2.2, 3.2.6, 3.2.7 and 4.1-note 4 to the consolidated financial statements. P verified the consistency of data from the risk management systems with the accounting data. If the provision was calculated on a collective basis, we put in place the following substantive procedures: P verification of the comprehensiveness of the basis on which the calculation of the provision was made and assessment of the relevance of the assumptions of the provisioning model; P verification of the arithmetical accuracy of the calculations made; P assessment of the consistency of changes in provisions, outstandings and the risk burden. When the provision was determined on an individual basis, our work consisted of: 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. We also made sure that the downgrading rules for outstandings were not changed compared to the previous year. Valuation of available-for-sale securities Risks identified The Agence Française de Développement Group holds available-for-sale assets as detailed in Notes 3.2.3, 4.1 - note 3 and Note 14 to the consolidated financial statements. These securities are recognised at their fair value. The assets are impaired over the long term in the event of unrealised losses over three consecutive financial years or a decrease of more than 50% in the acquisition value of the security, as described in Note 3.2.3. Due to the limited availability of market data, the valuation of some of these 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 available-for-sale financial assets to be a key point of the audit, given: Audit procedures put in place 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 provisioning processes;

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; P the significance of those amounts in the financial statements.

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REGISTRATION DOCUMENT 2017

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