AFD_REGISTRATION_DOCUMENT_2017

CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH IFRS 6 Notes to the consolidated financial statements

amendment, which provides additional information, comes into force on the same date (in accordance with regulation EU 2017/1987). IFRSb15bwill replace IASb11 Construction Contracts, IASb18 Revenue, and all interpretations linked to IFRICb13 Customer Loyalty Programmes, IFRICb15 Agreements for the Construction of Real Estate, IFRICb18 Transfer of Assets from Customers and SIC 31 Revenue - Barter Transactions Involving Advertising Services. It brings together in a single text the principles for recognising revenue from the sale of long-term contracts, sales of goods and also services which do not fall within the scope of the standards for financial instruments (IASb39/IFRSb9), insurance policies (IFRSb4/IFRSb17) and leases (IASb17/IFRSb16). It introduces new concepts which could change the way some items of net banking income are recognised. Based on the conclusions of the impact study conducted in 2017, the Group anticipates that implementation of IFRSb15bwill not have a material impact on opening equity at 1bJanuary 2018. IFRSb9 Financial Instruments IFRSb9 Financial Instruments is intended to replace IASb39 Financial Instruments: Recognition and Measurement It was adopted by the European Union on 22bNovember 2016band published in the Official Journal of the European Union on 29bNovember 2016. It will be mandatory for annual periods starting 1bJanuary 2018. The “Prepayment features with negative compensation” amendment, which provides instructions for recognising debt instruments which have clauses of this type, is currently being adopted by the European Union and should come into effect on 1bJanuary 2019, with the option of early application on 1bJanuary 2018. IFRSb9bsets out new principles for classifying and measuring financial instruments, depreciation of credit risk and hedge accounting, excluding macro-hedges. The main changes introduced are as follows: Classification and measurement of financial assets Financial assets are classified into three categories (amortised cost, fair value through profit and loss and fair value through equity) according to the characteristics of their contractual cash flows and how the entity manages its financial instruments (“business model”). The contractual characteristics (“Solely Payments of Principal & Interests” or “SPPI” test) Contractual cash flows which fall into the “solely payments of principal & interests” category are likened to a basic loan for which interest is paid essentially in consideration of the time value of the money and the credit risk.

The interest may also however contain consideration for other risks (liquidity risk, for example) and charges (admin charges, for instance) for holding the financial asset for a certain period. The interest may include a margin which is in keeping with a basic loan agreement. However, when the contractual arrangements expose the contractual cash flows to risks or volatility which are not commensurate with a basic loan agreement, for example exposure to variations in the price of equities or goods, the contractual cash flows are not solely payments of principal and interests and the contract is therefore recognised at fair value through profit and loss. The management model The management model defines how the instruments used to generate cash flows are managed. The management model is identified at portfolio level, and not instrument by instrument, primarily by analysing and observing: P the performance reports submitted to the Group’s senior management; P the compensation policy for portfolio managers; P completed and anticipated asset sales (size, frequency, etc.). Based on the criteria observed, the three management models for the classification and measurement of financial assets are: P the collection only model for contractual cash flows of financial assets; P the model based on the collection of contractual cash flows and the sale of financial assets; and P the sales only model. Debt instruments (loans, receivables and securities) will be recognised: P at amortised cost if the contractual cash flows are made up of payments of principal and interest and if the management model is to hold the instrument in order to collect contractual cash flows; P at fair value through equity if the contractual cash flows are made up of payments of principal and interest and if the management model is to hold the instrument in order to collect contractual cash flows and sell the assets; When sold, the unrealised gains and losses previously recognised as equity will be recycled as income; P at fair value through profit or loss if the debt instruments are not eligible for recognition at amortised cost or fair value through equity. Equity instruments (share-type investments) must, by default, be recognised at fair value through profit or loss. There is also an irrevocable option of recognising them at fair value through non-recyclable equity, provided they are not held for transaction purposes. In the latter case, when the securities are sold, the

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REGISTRATION DOCUMENT 2017

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