AFD_REGISTRATION_DOCUMENT_2017

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

IFRSb16 Leases IFRSb16 Leases will replace IASb17band all the associated interpretations (IFRICb4, Determining whether an Arrangement contains a Lease, SIC 15, Operating Leases –bIncentives and SIC 27, Evaluating the Substance of Transactions in the Legal Form of a Lease). It will apply to all annual periods starting 1bJanuary 2019. The main change introduced by IFRSb16brelates to lessee accounting. IFRSb16bwill require lessees to adopt a model which accounts for all leases in their balance sheet, recognising in liabilities all commitments for the full duration of the agreement and, in assets, a usage right to be amortised. An initial impact study on the implementation of IFRSb16bwithin the Group is currently being finalised. 6.2.3 Principles and methods applied to the financial statements at 31bDecember 2017 6.2.3.1 Consolidation scope and methods 6.2.3.1.1 Consolidation scope AFD’s consolidated financial statements cover all fully- controlled enterprises, joint ventures and companies on which the Institution exerts a significant influence. The following are not included in the consolidation scope: P companies of no real significance; P foreign companies in which AFD holds a minority interest and does not exercise significant influence due to the companies being either fully or partially state-owned. Consolidation standards IFRSb10-11-12: Significant judgements and assumptions used in determining the scope of consolidation: The elements used to draw a conclusion on whether AFD exercises control or influence over the entities in which it invests are many. Accordingly, the Group determines its ability to exercise influence over the management of another entity by taking due consideration of the entity’s structure, shareholders, arrangements and the participation of AFD and its subsidiaries in decision-making bodies. Moreover, materiality with regard to Group accounts is also subject to analysis. The list of companies in which AFD directly or indirectly holds an equity interest that exceeds 20% of the company’s share capital is presented on the following page.

Calculation of the expected credit losses (ECLs) is based on three key parameters: probability of default (PD), loss given default (LGD) and exposure at default (EAD), bearing in mind the amortisation profiles. Based on the specificities of the AFD Group’s portfolio, work was undertaken to define the methodological choices for calculating expected credit losses for all of the Group’s assets eligible for recognition at amortised cost or at fair value through equity, in line with stage 1bof IFRSb9. The Group’s chosen calculation method was thus based on internal data and concepts, and also adaptations of external transition matrices. The Group validated its financial asset classifications and all the credit risk provision and impairment calculation parameters before 31bDecember 2017. To ascertain the opening net position for 2018, adjustments to take account of the reclassification of assets and the credit risk impairment and provision amount will be decided in the first half-year 2018, based on data at 1bJanuary 2018. Hedge accounting There is little change between IASb39band IFRSb9bfor hedge accounting (excluding fair value macro-hedging transactions). The IFRSb9bprovisions apply to the following: P all micro-hedging transactions; and P macro-hedging transactions for cash flow only. This does not include fair value macro-hedging for interest rate risk which can remain in the IASb39bscope (option). While awaiting the forthcoming IFRSb9bsupplement specific to macro-hedging, AFD Group will continue to apply the IASb39btemporary carve-out. Transition IFRSb9bis mandatory, and applies retrospectively, from 1bJanuary 2018. There is an option, which the Group has chosen, of not restating the comparative data from previous financial years. At 1bJanuary 2018, the impacts of application of the new standard (classification and measurements and impairment) will be recognised directly in equity.

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REGISTRATION DOCUMENT 2017

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