AFD_REGISTRATION_DOCUMENT_2017

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AFD’S ANNUAL FINANCIAL STATEMENTS Accounting principles and assessment methods

7.2 ACCOUNTING PRINCIPLES

7.1.4 Approval change AFD’s approval changed on 30bJune 2017. The European Central Bank (ECB) approved a status change from Bank to Financing company. This change affected neither its EPIC (industrial and commercial public undertaking) status under French law, nor its mission, as the objectives remained the same. Because of the approval change, on 30bJune 2017 AFD ceased to be supervised by the ECB and was placed under the supervision of the French Prudential Supervisory Authority ( Autorité de Contrôle Prudentiel et de Résolution or ACPR). The ACPR began an audit of AFD and Proparco in Octoberb2017. The main aim of this audit is to review credit risk. 7.1.5 AFDb– Caisse desbDépôts Group (CDC)b– STOA investment vehicle On 15b June 2017, the Board of Directors authorised the subscription by AFD to the capital of the equity investment vehicle in infrastructure projects in partnership with the CDC for a maximum amount of €100M for AFD within five years following the negotiations led by AFD’s senior management, in accordance with the 23bMarch 2017bresolution of the Board of Directors. At 31bDecember 2017, the public limited company ( société anonyme ) STOA had share capital of €120M, to which AFD subscribed for €20M. 7.1.6 Disposal of equity stakes held in SIDOM On 28bSeptember 2017, a meeting of AFD’s Board of Directors approved the disposal of stakes AFD held on its own behalf in SIDR, SIM, SIGUY and Simar. In Decemberb2017, AFD sold all of these stakes for a sale price of €20.8M, resulting in a capital gain of €18.2M in AFD’s financial statements at 31bDecember 2017. 7.1.7 Impairment of Fisea securities The Fisea investment phase, which was initially scheduled to end in 2014, was extended until 2016band then 2019. An impairment loss of €11.1M was recognised at 31bDecember 2017bfor impairments observed on funds in the management phase. 7.1.8 Method change for the collective provision allocation The method was fine-tuned to ensure better consideration and harmonisation of changes to the collective provision allocation models in the Group’s consolidated financial statements. The adjustment led to a €48.5M reversal of collective provisions.

AND ASSESSMENT METHODS

7.2.1 General comments The annual financial statements of Agence Française de Développement are presented according to the accounting principles for credit institutions and financing companies prevailing in France, in accordance with ANC Regulation 2014- 07 of 26bNovember 2014. The individual financial statements include the balance sheet, off-balance sheet, income statement and notes to the financial statements, which supplement the information provided in the first two documents. These have been prepared in accordance with the principles of prudence, going concern, separation of accounting periods and consistency of methods. In accordance with current standards, since 1bJanuary 2006 AFD has applied: P CRC Regulation 2005-03, which was repealed and replaced by ANC Regulation 2014-07 of 26bNovember 2014, relative to accounting practice for credit risk; P as of 1bJanuary 2014, AFD has applied ANC recommendation 2013-02 of 7b November 2013b on the assessment and accounting rules for retirement obligations and similar benefits, which supersedes CNC Recommendation 2003-R01 of 1bApril 2003. 7.2.2 Conversion of foreign currencies Amounts receivable, amounts payable and off-balance sheet commitments denominated in foreign currencies are evaluated based on the exchange rates on the closing date of the financial year. The conversion into a common currency, using the closing dates, results in differences in the income statement except in the following transactions, where the difference is shown in an adjustment account: P equity stakes denominated in foreign currencies but financed in euros; P balance sheet and off-balance sheet items recorded in illiquid currencies. Foreign currency income and expenditure on loans, borrowings, securities or off-balance sheet operations are recorded in the foreign currency, in profit and loss accounts kept for each of the currencies concerned, with conversions made on a monthly closing date. Foreign currency income and expenditure are converted to euros on a monthly basis, and any subsequent variations in exchange rates result in exchange gains or losses in the income statement. With regard to AFD borrowings used to finance the International Monetary Fund’s PRGF (1) programme, it should be noted that foreign exchange gains and losses on interest are offset by subsidies, and therefore have no impact on the final result. In the case of transactions in illiquid currencies, only unrealised losses are taken into account by booked provisions. In compliance with regulations, unrealised gains on such transactions are not taken into account.

(1) PRGF: Poverty Reduction and Growth Facility.

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REGISTRATION DOCUMENT 2017

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