AFD_REGISTRATION_DOCUMENT_2017

7

AFD’S ANNUAL FINANCIAL STATEMENTS Accounting principles and assessment methods

P interests representing over 10% of rights in the capital issued by a credit institution or a company that is in the same line of business as the holding company. Other long-term investments This category includes investments in securities designed to promote the development of lasting business relations by creating a special link with the issuing company, but with no influence on the management of the companies in which the shares are held given the small percentage of voting rights they represent. In view of its negligible impact, this last item is not included separately in the notes to the financial statements. For these three categories: P shares are recorded at acquisition cost. Impairment is recorded when the estimated value, assessed according to the company’s net position and its prospects (which are estimated based on economic and financial information gathered on the company, particularly on conditions in its country) or its stock market valuation, as the case may be, is lower than the acquisition cost; P a 100% provision for foreign exchange loss is made in the case of conversion differentials if the currency concerned is devalued; P dividends are recorded as income on receipt of the minutes of the general meetings held until 31bDecember of the financial year. Capital gains or losses on disposal of these shares are recorded under “gains or losses on fixed assets”. AFD also holds interests in 28bcompanies, either through managed funds (Cidom, FAC, Fides, and Fidom) or through State funds. These holdings, recorded at cost, do not appear on the publishable off-balance sheet. Details of the amounts involved

are provided in Noteb35. These holdings, which were subscribed to on behalf of the French State with public funds made available to AFD, are not included in ownership or control percentages and are therefore not consolidated in the financial statements. 7.2.6 Bonded debt Call premiums (the difference between the redemption price and par value of securities) and positive or negative share premiums (the difference between the issue price and par value of securities) are spread over the maturity of the borrowings using the actuarial method. 7.2.7 Subsidies The “Subsidies” item records the subsidies on loans for global budget support and investment subsidies on mixed loans, which are paid by the State at the start of the loan and which enable the granting of concessional loans by lowering the average cost of the funding allocated in each of the loan categories concerned. These grants and investment subsidies are amortised over the life of each of the loans they help to finance. 7.2.8 Fixed assets Fixed assets appearing on AFD’s balance sheet include property, plant and equipment and intangible assets used for operations. Intangible assets are mainly custom or purchased software. Fixed assets are recorded at their acquisition cost (cost price net of recoverable VAT) plus directly related expenses. If a fixed asset consists of a number of items that may be regularly replaced and have different useful lives, each item is booked separately according to its own depreciation table. This item-by-item approach has been used for head office.

Depreciation periods have been estimated on the basis of each item’s useful life:

b

Title Land

Depreciation period

1. 2. 3. 4. 5.

Non-depreciable

Structural systems Building envelope

40byears 20byears 15byears 10byears

Technical building services, fixtures and fittings

Sundry fittings

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 15byears; P residential buildings are depreciated over 15byears; P fixtures, fittings and furnishings are depreciated over 5bor 10byears; P equipment and vehicles over 2bto 5byears. As for intangible assets, software is amortised according to its type: eight years for enterprise resource planning systems and two years for office automation tools.

Impairment testing is conducted on depreciable/amortisable assets when signs of loss of value are identified at the end of the financial year. If there is a loss of value, an impairment charge is recorded under “Provisions for the depreciation of property, plant and equipment and the amortisation of intangible assets”, which may be reversed if there is a change in the conditions that led to it being recognised. This impairment reduces the depreciable/ amortisable amount of the asset and thus also affects its future depreciation/amortisation schedule. Capital gains or losses from the sale of assets used in operations are recorded under “Net gains or losses on fixed assets”.

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REGISTRATION DOCUMENT 2017

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