AFD - Universal Registration Document 2020

AFD’S ANNUAL PARENT COMPANY FINANCIAL STATEMENTS Highlights of the financial year

7.1 Highlights of the financial year

IMPLEMENTATION OF MORATORIUMS In the context of the Covid-19 global health crisis, the G20 and the Paris Club jointly took the initiative in April Ǿ 2020 to propose a Debt Service Suspension Initiative (DSSI) for the Poorest Countries. It potentially covers 77 poor countries and is conditional on the countries already benefiting from IMF programmes or having applied for emergency financing from the IMF. The implementation of the DSSI, for France and other bilateral creditor members, is conducted in the framework of the Paris Club. Each country eligible for the DSSI and wishing to benefit from it must sign a Memorandum of Understanding (MoU) (1) , based on a standard template, with the Paris Club. The MoU provides for a suspension of the debt service in terms of interest for all sums due and unpaid on 30 Ǿ April 2020, as well as sums due between the 1 Ǿ May and 31 Ǿ December 2020. Under the general terms, the suspended amounts will be deferred and repaid in six instalments between 15 Ǿ June 2022 and 15 Ǿ December 2024. The mechanism also provides for the capitalisation of interest accrued in 2020 and aims to preserve the net present value of the original claims. 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 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 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 As part of the various publications of the regulators and the IASB, in particular that of 27 Ǿ March 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). requiring the derecognition of assets. ASSESSMENT OF CREDIT RISK

7.1.1 Growth of the balance sheet At 31 Ǿ December 2020, the total balance sheet stood at €53.5bn, up 12% compared to the previous year. This change mainly stems from the growth in activity, with an increase of 9% in outstanding loans on its own behalf over the period. 7.1.2 Financing of the Group’s activity To finance the growth of its own activity, AFD issued six public bonds and seven private placements in 2020, as well as eight top-up operations, for a total volume of €9.9bn. 7.1.3 Appropriation of 2019 earnings Pursuant to Article Ǿ 79 of the 2001 amending Finance Bill No. Ǿ 2001-1276 of 28 Ǿ December 2001, the amount of the dividend paid by AFD to the French State is set by ministerial decree. The 2019 financial statements were approved by the Board of Directors on 2 Ǿ April 2020. In anticipation of the impact of the health crisis linked to the COVID-19 pandemic on AFD’s activities, the AFD Board of Directors of 2 Ǿ April 2020 proposed the full allocation of AFD’s income for 2019 (€160.1M) to reserves. 7.1.4 Proparco capital increase At 31 Ǿ December 2020, AFD subscribed to Proparco’s capital increase and now holds a 78.19% stake compared with 74.18% in 2019. AFD subscribed for an amount of €185M out of the €200M capital increase. 7.1.5 The impact of the health situation linked to the COVID-19 pandemic In thecontext of theCOVID-19healthcrisis, strongmeasureswere applied. As a result, whole sectors of the economy, particularly in services, have been affected by significant restrictions on working conditions or the closure of establishments. Alongside these measures, the government has announced a number of measures to support the economy in order to mitigate the negative impact of the health measures taken. Similar measures have been taken in all countries affected by the pandemic. Different governments have announced strong health measures to avoid overburdening their health systems, with varying degrees of support for the economy. AFD Group has mobilised to provide responses to the health and economic emergency and to translate the French government’s commitments to support priority countries for French official development assistance.

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(1) Memorandum of understanding on the treatment of the debt service.

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2020 UNIVERSAL REGISTRATION DOCUMENT