AFD - Universal Registration Document 2020

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

through a deterioration in the performance and fundamentals of the entities concerned and/or of the transaction multiples observed in terms of valuation. The valuation methods of the equity portfolio remained unchanged as of 31 Ǿ December Ǿ 2020. These methods are based on standard valuation approaches (share price, comparable to recent transactions, discounted cash flow, net book value, Ǿ etc.). However, in the context of the Covid-19 pandemic and the uncertainties involved, the AFD Group completed its assessment policy: P in the absence of annual financial statements reflecting the effects of the crisis, on the one hand, and the persistence of uncertainties concerning the impact of the said crisis on the counterparties, on the other hand, certain valuations obtained by applying the usual methods have been subject to a discount; P this discount was determined by observing the behaviour of the main stock markets in the AFD Group’s areas of operation and benchmarks that track the composition of the portfolio ( e.g. MSCI Ǿ Index). This value adjustment applied since 30 Ǿ June Ǿ 2020 was applied to a lesser extent in the preparation of the financial statements at 31 Ǿ December Ǿ 2020. As of 31 Ǿ December Ǿ 2020, the AFD Group recorded a decrease in valuations of €153M. Continuing activity in an uncertain context The AFD Group has decided to support weakened economies by providing responses in the form of counter-cyclical operations to support the policies and response plans implemented by countries and territories in terms of managing the health crisis but also, supporting the business fabric, and reviving the economy towards trajectories in line with the Sustainable Development Goals and the Paris Climate Agreement The AFD Group is responding to requests from its partners and is fast-tracking operations to respond to the health crisis and its economic and social consequences, mainly in the form of lines of credit to support SMEs penalised by the paralysis of the economy, as well as in the form of budget financing to support public policies to combat the epidemic. Proparco, an AFD Group subsidiary, is also stepping up its monitoring of clients and offering them solutions to help them cope with the economic crisis, notably by making existing loans more flexible (moratoriums and changes of purpose). Additional financing may be provided to support the economic recovery and revival that will follow the health crisis. Other measures accompany AFD’s response, namely: P “Health in Common” initiative; P institutional partnerships for Africa and the Middle East; P support for NGOs; P “Outre-mer en commun” programme; P global response with other development actors.

AFD is participating in the implementation of the DSSI, under which 35 of its sovereign counterparts have been declared eligible, but only 27 of them have requested a DSSI from the Paris Club. Of these 27 Ǿ countries, as of 31 Ǿ December Ǿ 2020, 26 had signed the MoU, and 15 had also turned the MoU into a bilateral agreement with France. Payment suspensions have also been granted on the non- sovereign and other sovereign scope. As at 31 Ǿ December Ǿ 2020, the payment suspensions under these moratoriums had an insignificant impact on the financial statements. The contractual amendments resulting from these moratoriums did not constitute substantial modifications requiring the derecognition of assets. Assessment of credit risk As part of the various publications of the regulators and the IASB, in particular that of 27 Ǿ March Ǿ 2020 on the recognition of expected credit losses in connection with IFRS Ǿ 9 on financial instruments, the importance of the exercise of judgement in the application of the standard in respect of credit risk was emphasised. In the context of the preparation of the Group’s annual financial statements, the extension of maturity alone did not constitute a significant increase in credit risk leading to a shift in the recognition of impairment losses on loans estimated on the basis of 12-month credit losses (stage Ǿ 1) to the recognition of impairment losses expected at maturity (stage Ǿ 2), nor to the systematic shift of loans to the doubtful category (stage Ǿ 3). Deferral of maturity in a context other than the moratoria presented above was deemed in the majority of cases to be a significant increase in credit risk leading to a downgrading to stage Ǿ 2 unless it could be demonstrated that the cash flow difficulties were temporary and that the pre-Covid financial situation was deemed to be healthy with the capacity to quickly resume the pace of repayments (1) . In addition, given the uncertainties that remain in the air and tourism sectors, the AFD Group decided to adopt a multi- scenario approach in order to take into account the increased vulnerability of the tourism sector in the AFD Group’s countries and territories of intervention as well as the extent of the crisis in the air sector marked by the brutal halt of the global air sector. The assumptions and estimates used to prepare the annual financial statements led to an additional allocation of €79.4M on exposure to the air and tourism sectors. Valuation of the equity portfolio IFRS Ǿ 13 defines fair value as “the price that would be received for the sale of an asset or paid for the transfer of a liability in a normal transaction between market participants at the valuation date”. The Group applies IFRS Ǿ 13 in the preparation of these interim financial statements. The impact of the Covid-19 crisis on the AFD Group’s regions and counterparty portfolio has led to a decrease in the valuations of a majority of the Agency’s equity investments, for example

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(1) This exception was not applied for: — Counterparties in the air transport and tourism transport sectors; — Moratoriums resulting in a loss of NPV > Ǿ 1%; — Moratoriums resulting in an extension of the credit maturity.

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2020 UNIVERSAL REGISTRATION DOCUMENT