AFD - 2018 Registration document

7

AFD’S ANNUAL FINANCIALS STATEMENTS Accounting principles and assessment methods

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:

Title Land

Depreciation period Non-depreciable

1. 2. 3. 4. 5.

Structural systems Building envelope

40 years 20 years 15 years 10 years

Technical building services, fixtures and fittings

Sundry fittings

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”. 7.2.9 Forward financial instruments Off-balance sheet assets for financial instruments result entirely from outright transactions – interest-rate swaps and cross-currency swaps – made over-the-counter. These instruments are managed primarily as part of transactions for micro-hedging debt and loans. In accordance with ANC Regulation 2014-07 (1) , the par value of these contracts is recorded off balance sheet, while symmetry in relation to the hedged item results in income or expenses recorded as interest and related income or expenses for hedged items. Such income and expenses are not offset.

Other property, plant and equipment are depreciated using the straight-line method: P 15 years for office buildings in the French Overseas Departments and Collectivities;

P 15 years for residential buildings;

P 5 or 10 years for fixtures, fittings and furnishings;

P 2 to 5 years for equipment and vehicles.

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

(1) Book II, Title 5, of ANC Regulation 2014-07 concerning forward financial instruments, which repeals and replaces CRBF Regulation 90-15 as amended by CRBF 92-04.

186

www.afd.fr

REGISTRATION DOCUMENT 2018