ge capital european funding unlimited company · ge capital european funding unlimited company...

Registration number: 107727

GE Capital European Funding Unlimited CompanyInterim Financial Report

Half-Year ended 30 June 201$

GE Capital European Funding Unlimited CompanyCondensed consolidated interim financial report

Contents

Management Review 1 - 4

Statement of Directors responsibilities 5

Independent Review Report 6 - 7

Consolidated Condensed Statement of Comprehensive Income - Unaudited 8

Consolidated Condensed Statement of Financial Position - Unaudited 9- 10

Consolidated Condensed Statement of Changes in Equity - Unaudited 11 - 12

Consolidated Condensed Cash Flow Statement - Unaudited 13

Notes to the Condensed financial Statements 14 - 44

GE Capital European Funding Unlimited Company

Management Review

The Directors present their interim financial report for the period ended 30 June 2018.

Principal activities, business review and future developmentsGE Capital European Funding Unlimited Company (the ‘Company) is incorporated and tax resident in Ireland andoperates as a financial services company. The Company, GE Capital European Funding & Co. (the “Partnership”)and GE Capital International 6 Limited Group (‘GECI6’) (together the “Subsidiaries”) are consolidated in the GECapital European funding Unlimited Company group (the “Group”).

The Company is a public unlimited company. it is a wholly owned indirect subsidiary’ of General Electric Company(‘GEC”).

The Group has established a Euro Commercial Paper (“Commercial Paper” or “C?”) Programme and a EuroMedium Term Note (“MTN”) Programme. The MTN programme is listed on the London Stock Exchange. Thepurpose of these programmes is to obtain financing in the capital markets, to fund the operations of GEC affiliates.The Group’s intermediate parent in the capital structure, GE Capital International Holdings Limited (‘GECIHL’), hasguaranteed (assigned from General Electric Capital Corporation) the CP and MTN programmes of the Group thusreducing the risk to any potential investor and supporting the C? and MTN programmes and as of 10 April 2015,GEC, has also guaranteed the CP and MTN programmes of the Group thus reducing further the risk to any potentialinvestor. During the period, GECIHL had excess cash on hand and as a result the Group did not participate in the CPmarket.

The Directors are satisfied with the results of the Group given that the loss in the current period arises primarily dueto fair value movements and reduced interest income offset by foreigii exchange gains. The results for the half-yearare set out in the Consolidated Condensed Statement of Comprehensive Income - Unaudited on page $ and therelated notes.

The Group’s loss before taxation decreased from a loss of $88 million for the 6 month period ending 30 June 2017 toa loss of $25 million for the 6 month period ending 30 June 2018. This is primarily driven by movement in foreignexchange losses in 2017 to gains in 2018 as a result of movement in EUR’USD foreign exchange rates. This is offsetby reduced interest income primarily driven by decrease in average loan balance outstanding from GEC affiliates asa result of loan repayments made by affiliates in the period. During the period, no fixed rate debt failed hedgeeffectiveness. Fixed rate debt which failed hedge effectiveness in the prior period and has not yet matured is held atamortised cost as it is not in a qualifijing hedging relationships at the period end. The corresponding derivatives arealso held for trading as at 30 June 2018.

The average monthly number of employees in the Company and Group decreased from 35 for the year ended 3 1December 2017 to 31 for the period ended 30 June 2018 due to internal reorganisation.


Management Review (continued)

Going concernThe future growth of the Group is dependent on the cash needs of the GEC Group and in particular GECIHI. TheDirectors have assessed the loan receivable positions and have concluded that the balances remain recoverable, animpairment loss provision on adoption of JfRS 9 has been recognised on loans and advances to GEC affiliates heldat arnortised cost and is discussed in the following paragraphs. The GEC Group does not expect the need for newlong term debt issuances by the Group for the foreseeable ftirnre. As noted above, the entire debt issued by theGroup through its CP and MTN arrangements is guaranteed by GEC and GECIHL.

The Directors have also considered the below among other factors in concluding that it is appropriate to prepare thefinancial statements on a going concern basis:

• The Group has substantial positive equity and it is linked to the GEC’s European cash pool, therefore has theresources to continue in business• GECIHL has guaranteed the Group’s liabilities under its CP and MTN prograrmries, substantially niitigatingliquidity risk• GEC has also guaranteed the Group’s liabilities under its CP and MTN programmes, substantially mitigatingliquidity risk

C? and MTN’sThe following table sets out the period on period increase/(decrease) in MTNs issued, lending from GEC affiliatesand lending to GEC affiliates. The Directors define GEC affiliates to be subsidiaries, associates and joint ventures ofthe wider GEC Grotip. The CP programme continues presently albeit no CP has been issued since March 2016. Thetable has been calculated using the closing balances for the period.

30 June 2018 31 December2017

Period on period increase/(decrease)

Liabilities

Medium Term Notes (21 .6)% (9.9)%Loans from GEC affiliates 40.1% 14.9%

Assets

Loans to GEC affiliates (l6.2)% (16.0)%

The following table sets out the average maturities of MTN in issue at 30 June 2018 and 31 December 2017. Themaximum maturity date on the medium term notes is 203$.

30 June 201$ 31 December2017Medium Term Notes (floating) at amortised cost 2.8 years 2.8 yearsMedium Term Notes (fixed) in qualifying hedging relationships 6.2 years 6.7 yearsMedium Term Notes (fixed) held at amortised cost 0.9 years 1 .0 years

2



Risks & uncertainties for the remaining six months of the yearThe main financial risks that the Group is exposed to are foreign exchange risk, liquidity risk, interest rate risk,market risk, credit risk and other price risk. The Directors are responsible for the oversight of the management ofthese exposures, as set out in Note 15.

foreign exchange riskThe main financial risk of the Group is the exposure to foreign exchange (“FX”) risk. This risk arises during thecurrent period, as some operations including loans and advances to GEC affiliates and all debt securities issued arein Euro while the firnctional currency of the Group is USD. During the period, the Group recorded an fX gain of$31.3 million (30 June 2017: Loss of$l 10.7 million) driven by movement in the Euro/USD rates.

Interest rate riskDuring 201$ interest rates remained at low levels. The Company, as a funding company, is exposed to interest ratevolatility. Through the use of derivatives the Group is generally able to reduce interest rate mis-matches and in sodoing reduce its interest rate risk. The Directors monitor interest rate exposure. See Note 15(c) for analysis ofinterest rate exposure at period end.

Liquidity riskLiquidity risk is the risk that the Group will encounter difficulty in meeting obligations from its financial liabilities.The Group has access to the cash pool of the wider GEC Group to fill any short-term liquidity requirements. Seefurther analysis of liquidity risk at the period end at Note 15(b).

Market risksThe fair value of financial assets and liabilities may change due to interest rate volatility, credit spread changes andgeneral market conditions. In an effort to ensure appropriate valuations were obtained, the Group relied onindependent pricing providers such as Bloomberg and models used by the wider GEC Group which primarily useobservable market data as inputs. Such valuations necessarily involve judgments and uncertainties on the selectionof inputs. Critical judgments and ttncertainties surrounding valuations are discussed further in Note 15(c) to thecondensed financial statements.

Credit risksGEC affiliates may experience difficulty in repaying loans. By carrying out comprehensive due diligence on eachborrower the Group has been able to manage its exposure to credit risk and the Group experienced no defaultsduring the period. As a result of adoption of IfRS 9 on 1 January 201 8, an impairment loss was recognised on loansand advances held at amortised cost to GEC affiliates of $13,218 thousand. This provision was re-measured at 30,June 2018 to be $15,302 thousand. Please refer to note 3 and Note 15 for further details. The Directors will continueto monitor the financial strength of its borrowers to ensure the Group’s exposure to the risk of default is minimized.

Operational RiskOperational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with theGroup’s processes, personnel, technology and infrastructure, and from external factors other than credit, market andliquidity risks such as those arising from legal requirements and generally accepted standards of corporatebehaviour. Operational risks arise from all of the Group’s operations and are faced by all business entities. TheGroup’s seeks to manage operational risk so as to balance the avoidance of financial losses and damage to theGroup’s reputation with overall cost effectiveness and to avoid control procedures that restrict initiative andcreativity. The Directors, supported by the wider GEC Group, are responsible for the development andimplementation of controls to address operational risk.

3



This responsibility is supported by the development of overall GEC standards for the management of operationalrisk in the following areas:

• requirements for appropriate segregation of duties, including the independent authorisation of transactions;• requirements for the reconciliation and monitoring of transactions;

compliance with legal requirements;documentation of controls and procedures;

• requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures toaddress the risks identified;• training and professional development;• ethical and business standards.

Compliance with the Company and Group standards is supported by a programme of periodic reviews to ensurecompliance with GEC Group risk management policies.

Related partiesThe related party transactions have seen a decrease in loans and advances to related parties by 16% and an increaseof 40% in loans and advances from related parties. The large increase in loans and advances from related parties isdue to increased cashpool borrowings used to fl.md interest settlements on medium term notes. interest rate swapsand cross currency swaps.

Robert Holmes and F ergal Mullin were appointed as Directors of the Company effective 1 February 2018.

Columba Glavin and Kieran Tracev resigned as Directors of the Company effective 30 March 201$.

The Directors in place at period end were: Timothy Lane, Robert Holmes, Fergal Mullin, Thomas Geary(non-executive) and Michael Power (non-exectitive).

DividendsThe Directors do not propose a dividend for the current period (30 June 2017: SNI1)

Audit committeeThe Group’s ultimate parent, GEC, is a regulated entity that must meet certain requirements in accordance with itsNew York Stock Exchange listing. As a result, the GEC Group has internal audit and finance functions withresponsibility for, amongst other things, the monitoring of the effectiveness of the GEC Group’s systems of internalcontrol, internal audit and risk management. Nevertheless, the Directors having considered the matter, on 15 March2017, an audit committee was established and Kieran Tracey, Thomas Geary and Michael Power were appointed.Thomas Geary and Michael Power are non-executive Directors. On 30 March 201 8, Kieran Tracey resigned fromthe audit committee and Robert Holmes was appointed.

Subsequent eventsOn 9 August 201 $ and 3 1 August 2018, the credit spreads on the existing EUR 1 .1 billion revolving facility toGECIHL and USD 21 billion revolving facility to GEFF were amended effective 1 January 2018. These changes incredit spreads have been reflected in the unaudited condensed consolidated interim financial statements.

On 31 August 2018. the facility amount of the USD 21 billion facility to GE financial funding Unlimited Company(‘GEFF) was reduced to USD 12 billion.

No other significant events affecting the Group occurred since the reporting date, which require adjustment to ordisclosure in the condensed consolidated interim financial statements.

4

GE Capital European funding Unlimited CompanyStatement of Directors responsibilitiesfor the hafyear ended 30 June 2018

The Directors are responsible for preparing this interim management report in all material respects, in accordancewith lAS 34 Interim Financial Reporting as adopted by the EU, and the Disclosure Guidance and TransparencyRules (“the DIR”) of the UK’s financial Conduct Authority (“the UK FCA”).

In preparing the interim financial information, the directors are required to:- prepare and present the interim financial information in accordance with lAS 34 Interim Financial Reporting asadopted by the EU, and the DIR of the UK FCA;- ensure the interim financial information has adequate disclosures;- select and apply appropriate accounting policies; and- make accounting estimates that are reasonable in the circumstances.

The directors are responsible for designing, implementing and maintaining such internal controls as they determineis necessary to enable the preparation of the interim financial information that is free from material misstatementwhether due to fraud or error.

We confirm that to the best of our knowledge:

(I) the condensed set of financial statements in the half-yearly financial report of GE Capital European FundingUnlimited Company (“the Company”) for the six months ended 30 June 201 $ (“the interim financial information”)which comprises comprises the consolidated condensed statement of comprehensive income, the consolidatedcondensed statement of financial position, the consolidated condensed statements of changes in equity, theconsolidated condensed cash flow statement and the related explanatory notes, have been presented and prepared inaccordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the EuropeanUnion.(2) The interim financial information presented, as required by the DTR of the UK FCA, includes:a. an indication of important events that have occurred during the first 6 months of the financial year, and theirimpact on the condensed set of financial statements;b. a description of the principal risks and uncertainties for the remaining 6 months of the financial year.

On beha e Board

Timothy Lane Robert Holmes

Director Director

Date th it

5

kAKPMGAudit1 Harbourmaster Place

I FSCDublin 1DOl F6F5Ireland

Independent Review Report to GE Capital European Funding Unlimited Company

Introduction

We have been engaged by the Company to review the condensed set of consolidated financialstatements in the half-yearly financial report for the six months ended 30 June 2018 whichcomprises the consolidated condensed statement of comprehensive income, the consolidatedcondensed statement of financial position, the consolidated condensed statement of changes inequity, the consolidated condensed cash flow statement and the related explanatory notes. Ourreview was conducted in accordance with the Financial Reporting Council’s (“FRCs”)International Standard on Review Engagements (“ISRE”) (UK and Ireland) 2410, Review ofInterim financial hformation Feiformed by the Independent Auditor of the Entity’.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that thecondensed set of consolidated financial statements in the half-yearly report for the six monthsended 30 June 2018 is not prepared, in all material respects, in accordance with lAS 34 ‘InterimFinancial Reporting’ as adopted by the EU, and the Disclosure Guidance and Transparency Rules(“the DIR”) of the UK’s Financial Conduct Authority (“the UK FCA”).

Directors’ responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors.The directors are responsible for preparing the half-yearly financial report in accordance with theDTR of the UK FCA. As disclosed in Note 2, the annual financial statements of the Company areprepared in accordance with International Financial Reporting Standards as adopted by the EU.The directors are responsible for ensuring that the condensed set of financial statements includedin this half-yearly financial report has been prepared in accordance with lAS 34 Interim FinancialReporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set ofconsolidated financial statements in the half-yearly financial report based on our review.

6

KPMG, an Irish partnersh:p and a member firm of the KPMO netvorkof independent member firms affl;ated wrh KPMG Internationalcooperatoe l’KPMG Internarconall, a Svs enrity

Independent Review Report to GE Capital European Funding Unlimited Company(continued)

Scope of review

We conducted our review in accordance with the financial Reporting Council’s InternationalStandard on Review Engagements (UK and Ireland) 2410 ‘Review ofInterim financialh/u,nation Peijàrmed by the Independent Auditor oft/ic Entity’. A review of interim financialinformation consists of making enquiries, primarily of persons responsible for financial andaccounting matters, and applying analytical and other review procedures. A review issubstantially less in scope than an audit conducted in accordance with International Standards onActditing (Ireland) and consequently does not enable us to obtain assurance that we wouldbecome aware of all significant matters that might be identified in an audit. Accordingly, we donot express an audit opinion.

We read the other information contained in the half-yearly financial report to identify materialinconsistencies with the information in the condensed set of consolidated financial statements andto identify any information that is apparently materially incorrect based on, or materiallyinconsistent with, the knowledge acquired by us in the course of performing the review. If webecome aware of any apparent material misstatements or inconsistencies we consider theimplications for our report.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the Company in accordance with the terms of our engagement toassist the Company in meeting the requirements of the DTR of the UK FCA. Our review has beenundertaken so that we might state to the Company those matters we are required to state to it inthis report and for no other purpose. To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the Company for our review work, for this report, orfor the conclusions we have reached.

KPMGChartered Accountants, Statutory Audit firmI Harbourmaster PlaceIFSCDublin I

Date )

7


Consolidated Condensed Statement of Comprehensive Income - Unauditedfor the hafyear ended 30 June 2018

3OJune2Ol$ 30]une2Ol7Note $‘OOO S’OOO

Interest income 4 185,361 282,246

Interest expense 5 (72,009) (78,012)

Net interest income 113,352 204,234

Share of profit from associate 13 15,765 -

fee and commission income 6 4,967 2,973

Fee and commission expense 7 (14) (775)

Net fee and commission income 20,718 2,198

Net trading income 134,070 206,432

Impairment loss on loans and advances to GEC affiliates held atarnortised cost 15 (2,084) -

Net expense from financial instruments carried at fair value 9 (185,635) (180,042)

Personnel expenses (1,442) (2,048)

Otherexpenses (1,158) (1,285)

Foreign exchange gainl(loss) $ 31,266 (110,681)

Operating expense (159,053) (294,056)

Loss before income tax (24,983) (87,624)

Tax credit/(charge) 10 - -

Loss for the period (24,983) (87,624)

Total loss for the period (24,983) (87,624)

Attributable to:

Non-controlling interests 795 -

Equity holders of the Company (25,778) (87,624)

Loss (24,983) ($7,624)

The accompanying notes form an integral part of these unaudited condensed consolidated interim financialstatements.

8


Consolidated Condensed Statement of financial Position - Unauditedat 30 June 2018

30 June 2018 31 December2017Note $‘OOO 8000

Non-current assets: amounts falling due greater than oneyear

Property and equipment 12 - 353

Loans and advances to GEC affiliates 20,000 20,000

Interest in associate 13 939,570 923,805Derivative assets held for qualifying hedging relationships 17 140,942 215,512Derivative assets held for trading 17 30,765 122,315

Current assets: amounts falling due within one year

Cash and cash equivalents 11 580 3,979

Derivative assets held for qualifying hedging relationships 17 4,773 -

Derivative assets held for trading 17 22,897 238,734Loans and advances to GEC affiliates 17,577,139 20,973,145

Other assets 4,298 11,324

Taxation 18 18

Total assets 18,740,982 22,509,185

Creditors: amounts falling due within one year

Derivative liabilities held for trading 17 (230,174) -

Loans and advances from GEC affiliates (345,357) (64,691)

Debt securities issued 18 (3,032,566) (3,897,160)

Other liabilities ($66) (1,784)

Current liabilities (3,608,963) (3,963,635)

Net current assets 14,000,742 17,263,565

Total assets less current liabilities 15,132,019 18,545,550

Creditors: amounts falling due after more than one year

Loans and advances from GEC affiliates (634,527) (634,527)

Debt securities issued 1$ (11,708,364) (14,884,010)

Net assets 2,789,128 3,027,013

9

GE Capital European funding Unlimited Company

Consolidated Condensed Statement of financial Position - Unauditedat 30 June 201 $ (continued)

30 June 2018 31 December2017Note S’OOO S000

Capital and reserves

Share capital 125,789 125,789

Share premium 2,775,653 2,775.653

Capital contribution 318,011 517,683

Undenorninated capital reserve 15,402 15.402

Retained earnings (346,741) (307,843)

foreign exchange reserve (274,930) (274,930)

Shareholders equity 2,613,184 2,851,754

Non-controlling interests 175,944 175,259

Total equity 2,789,128 3,027,013

The accompanying notes form an integral part of these unaudited condensed consolidated interim financialstatements.

10

GE

Cap

ital

Eur

opea

nfu

ndin

gU

nlim

ited

Com

pany

Con

soli

date

dC

onde

nsed

Stat

emen

tof

Cha

nges

inE

quity

-U

naud

ited

for

the

hal

fyea

ren

ded

30Ju

ne

2018

For

eign

Und

enom

fnat

edC

apit

alR

etai

ned

exch

ange

Sh

are

capit

alS

har

epre

miu

mca

pit

alre

serv

esC

ontr

ibuti

on

Ear

nin

gs

Res

erve

Tota

l$‘

OO

O$‘

OO

O$‘

OO

O$‘

OO

O$‘

OO

O$‘

OO

O$‘

OO

O

Bal

ance

at1

Januar

y20

1712

5,78

92,

775,

653

15.4

0239

6.22

5(7

4,55

4)(2

74,9

30)

2,96

3,58

5T

otal

com

preh

ensi

vega

info

rth

epe

riod

--

-(8

7,62

4)-

(87,

624)

Tra

nsa

ctio

ns

wit

how

ners

:

Red

ucti

onin

capi

tal

cont

ribu

tion

--

-(2

43,9

90)

--

(243

,990

)

Bal

ance

at30

June

2017

125,

789

2.77

5,65

315

,402

152,

235

(162

,178

)(2

74,9

30)

2,63

1,97

1

Bal

ance

at1

Januar

y20

1$12

5,78

92,

775,

653

15,4

0251

7,68

3(3

07,8

43)

(274

,930

)2,

851,

754

Cha

nges

onin

itia

lap

plic

atio

no

fIF

RS

9(N

ote

3)

--

--

(13,

120)

-(1

3,12

0)

Res

tate

dbal

ance

at1

Januar

y20

1812

5,78

92,

775,

653

15,4

0251

7,68

3(3

20,9

63)

(274

,930

)2,

838,

634

Tot

alco

mpr

ehen

sive

loss

for

the

peri

od-

--

(25,

778)

-(2

5,77

8)

Tra

nsa

ctio

ns

wit

how

ners

:

Dis

trib

utio

n-

--

Red

ucti

onin

capi

tal

cont

ribu

tion

*-

-(1

99,6

72)

--

(199

.672

)

Bala

nceat3

0Ju

ne20l$

125,

789

2,77

5,65

315

,402

318,

011

(346

,741

)(2

74,9

30)

2,61

3,18

4

*T

here

duct

ion

inca

pita

lco

ntri

buti

onar

ises

duri

ngth

epe

riod

due

toth

ere

-pri

cing

oflo

ans

prev

ious

lypr

ovid

edto

aG

EC

affi

liat

eco

mpa

nyat

anab

ove

mar

ket

rate

.

11

GE

Cap

ital

Eur

opea

nF

undi

ngU

nlim

ited

Com

pany

Con

soli

date

dC

onde

nsed

Stat

emen

tof

Cha

nges

inE

quity

-U

naud

ited

for

the

half

-yea

ren

ded

30Jt

me

2018

(‘co

ntin

ued)

Non-c

ontr

oll

ing

inte

rest

sT

ota

lE

quit

y$‘

OO

O$‘

OO

O

Bal

ance

at1

Januar

y20

17-

2,96

3,58

5T

otal

com

preh

ensi

vega

info

rth

epe

riod

-(8

7,62

4)

Tra

nsa

ctio

ns

wit

how

ners

:

Red

ucti

onin

capi

tal

cont

ribu

tion

-(2

43,9

90)

Bal

ance

at30

June

2017

-2,

631,

971

Bal

ance

at1

Januar

y20

1$17

5,25

93,

027,

013

Cha

nges

onin

itial

appl

icat

ion

ofIf

RS

9(N

ote

3)(9

8)(1

3,21

8)

Res

tate

dbal

ance

atI

Januar

y20

1$17

5,16

13,

013,

795

Tot

alco

mpr

ehen

sive

loss

for

the

peri

od79

5(2

4,98

3)

Tra

nsa

ctio

ns

wit

how

ners

:

Dis

trib

utio

n(1

2)(1

2)R

educ

tion

inca

pita

lco

ntri

butio

n*-

(199

,672

)

Bal

ance

at3O

June

201$

175,

944

2,78

9,12

8

*T

here

duct

ion

inca

pita

lco

ntri

buti

onar

ises

duri

ngth

epe

riod

due

toth

ere

-pri

cing

oflo

ans

prev

ious

lypr

ovid

edto

aG

EC

affi

liate

com

pany

atan

abov

em

arke

tra

te.

The

acco

mpa

nyin

gno

tes

form

anin

tegr

alpa

rtof

thes

etr

naud

ited

cond

ense

dco

nsol

idat

edin

teri

mfi

nanc

ial

stat

emen

ts.

12


Consolidated Condensed Cash Flow Statement - Unauditedfor the half-year ended 30 June 2018

30 June 201$ 30 June 2017Note S’OOO S,000

Cash flows from operating activitiesLoss for the year (25,778) (87,624)Adjustments for:

Net interest income (113,353) (204,234)Interest in associate (15,765) -

Foreign exchange (gain)/loss 8 (31,267) 110,681Change in loans and advances to GEC affiliates 3,317,966 4,010,371Depreciation add-back 358 62Change in other assets 7,026 5,110Change in derivative assets held for qualifying hedging relationships (122,041) 39,140Change in derivative liabilities held for qualifying hedgingrelationships

- 9,497Fair value movement on fixed rate debt securities in qualii’inghedging relationships (10,028) 29,663Change in accrued interest on debt securities issued (8,320) 21.853Change in derivative assets held for trading 215,870 80,922Change in derivative liabilities held for trading 182,231 (10,380)Change in loans and advances from GEC affiliates 278,211 271,556Other liabilities (920) (159)

3,674,190 4,276,458

Interest received 394,201 454,305Interest paid (632,599) (661,355)

Net cash provided by operating activities 3,435,792 4,069,408

Cash flows from financing activities

Debt securities redeemed (3,336,594) (4,079.782)Capital contribution reduction (96,488)

________________

Net cash flows used in financing activities (3,433,082) (4,079,782)

Net increase/(decrease) in cash and cash equivalents 2,710 (10,374)

Cash and cash equivalents at 1 January 11 3,979 18,773

Effect of exchange rate fluctuations on cash held (6,109) (7.816)

Cash and cash equivalents at 30 June 11 580 583

Effect of exchange rate fluctuations in 201 $ and 2017 arises in the Consolidated Cash Flow Statement due toactivity denominated in EUR and large gross movements included within balances in the Cash Flow Statements.

13


Notesfor the half year ended 30 June 2018

Reporting entity

GE Capital European funding Unlimited Company is an Irish incorporated, public unlimited company and is Irishtax resident. The unaudited consolidated condensed interim financial statements of the Company as at and for the sixmonths ended 30 June 201$ comprise the Company, its Partnership and its Subsidiary (together referred to as theGroup and individually as Grotip entities). The Group is primarily involved in obtaining financing in the capitalmarkets to fund the operations of the wider GEC Group.

2 Basis of preparation

(a) Statement of compliance

The unaudited consolidated condensed financial statements of the Group have been prepared in accordance withInternational Accounting Standard 34 Interim Financial Reporting, as adopted by the European Union (“EU”).Selected explanatory notes are included to explain events and transactions that are significant to an understanding ofthe changes in financial position and performance of the Group since the last annual consolidated financialstatements as at and for the year ended 3 1 December 201 7, which were prepared in accordance with InternationalFinancial Reporting Standards (“IFRS”) as adopted by the EU, and interpretations adopted by the InternationalAccounting Standards Board (“IASB”), and under the requirements of Irish Company Latv. The condensed interimfinancial statements for the six months ended 30 June 2018 are unaudited, but have been reviewed by the auditorwhose report is set out on pages 6 and 7. The financial information presented herein for the year to 31 December2017 does not amount to statutory financial statements that are required by Irish Company Law to be annexed to theannual return of the Company. The statutory financial statements for the year ended 3 1 December 201 7 wereannexed to the annual return and filed with the Registrar of Companies. The audit report on those statutory financialstatements was unqualified and did not contain any matters to which attention was drawn by way of emphasis.

(b) Judgements and estimates

Preparing the interim financial report requires management to make judgements, estimates and assumptions thataffect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.

In preparing these unaudited condensed consolidated interim financial statements, significant judgements made bymanagement in applying the Group’s accounting policies and the key sources of estimation uncertainty were thesame as those applied to the consolidated financial statements as at and for the year ended 31 December 2017,except for new significant judgements and key sources of estimation uncertainty related to the application of IFRS 9as described in Note 3.

3 Significant accounting policies

Except as described below, the same accounting policies, presentation and methods of computation have beenfollowed in these unaudited consolidated condensed financial statements as were applied in the preparation of theGroup’s consolidated financial statements for the year ended 31 December 2017.

The changes in accounting policies are also expected to be reflected in the Company and Group’s financialstatements for the year ending 31 December 201$.

14


Notesfor the hal/year ended 30 June 2018 (‘continued)

3 Significant accounting policies (continued)

The Group has initially adopted IfRS 15 Revenuefrom Contracts with Customers and IFRS 9 Financial Instrumentsfrom 1 January 201$. The adoption of IFRS 15 does not have a material impact on the Group’s financial statement. Anumber of other new standards are effective from 1 January 2018 but they do not have a material effect on theGroup’s financial statements.

IFRS 9 Financial Instruments

IfRS 9 sets out the requirements for recognising and measuring financial assets and financial liabilities. It replaceslAS 39 Financial Instruments: Recognition and Measurement.

The following table summarises the impact, net of tax, of transition to IfR$ 9 on the opening balance of reserves,retained earnings and non-controlling interests (‘Nd’) (for a description of the transition method, see (iv) below)

NoteImpact of adopting IFRS9

on opening balance

In thousands of$Retained earnings 15 -

Recognition of expected credit losses under IfRS 9 13,120

Impact at 1 January 2018 13,120

Non-controlling interests

Recognition of expected credit losses under IFRS 9 98

Impact at 1 January 2018 9$

The details of new significant accounting policies and the nature and effect of the changes to previous accountingpolicies are set out below.

i) ClassifIcation and measurement offinancial assets andfinancial liabilities

The adoption of IfRS 9 has not had a significant effect on the Groups’ accounting policies related to classificationand measurement of financial assets and liabilities and derivative financial instruments.

A Financial asset is measured at arnortised cost if it meets both of the following conditions and is not designated asat fair value through profit or loss (FVTPL);

- it is held within a business model whose objective is to hold assets to collect contractual cash flows; and- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest onthe principal amount outstanding.

A debt investment is measured at fair value through other comprehensive income (fVOCI) if it meets both of thefollowing conditions and is not designated as at FVTPL;

15


Notesfor the half-rear ended 30 June 2018 (‘continued)


-it is held within a business model whose objective is achieved by both collecting contractual cash flows and sellingfinancial assets; and-its contractual tenus give rise on specified dates to cash flows that are solely payments of principal and interest onttie principal amount outstanding.

The effect of adopting IfRS 9 on the carrying value of financial assets at 1 January 201$ relates solely to the newimpairment requirements, as further described below.

The following table and the accompanying notes below explain the original measurement categories under lAS 39and the new measurement categories under IfRS 9 for each class of the Group’s financial assets as at 1 January2018.

OriginalOriginal New New carrying

In thousands of $ carryingNote classification classification amount under

under lAS 39 under IFRS 9amount under

IFRS 9

Property and equipment 12 Arnortised cost Arnortised cost 353 353

Loans and advances toAmortised cost Arnortised cost 20,993,145 20,979,927

GEC affiliates

Interest in associate 13 Arnortised cost Amortised cost 923,805 923,805

Derivative assets held forqualifying hedging 16 FVTPL FVTPL 215,512 215,512relationships

Derivative assets held for16 fVTPL fVTPL 361.049 361.049

trading

Cash and cash .

11 Amortised cost Arnortised cost 3 979 , 979equivalents

Other assets Arnortised cost Amortised cost 11,324 11,324

Taxation Arnortised cost Amortised cost 18 18

Total financial assets 22,509,185 22,495,967

16


Notesfor the half-v ear ended 30 June 2018 (‘continued)


10 Impairment

IFRS 9 replaces the ‘incurred loss’ model in lAS 39 with an ‘expected credit loss’ (ECL) model. The newimpairment model applies to the Groups’ financial assets measured at amortised cost.

Under IFRS 9, loss allowances are measured on either of the following bases:

• 12 month ECLs: these are ECLs that result from possible default events within the 12 months after the reportingdate; and

• lifetime ECLs: these are the ECLs that result from all possible default events over the expected life of a financialinstrument.

The Group measures loss allowances for loans and advances to GEC affiliates measured at amortised cost as12-month ECLs.

The Group considers a loan to be in default when any of the follow occur:• default in the payment of any principal amount when due;• default in the payment of interest or Commitment Fees where such payment has become due, and either (A) theLender has by written notice demanded such payment, and such payment has not been made within 5 Business Daysafter the date of such written notice or (B) unless otherwise agreed in writing between the Lender and the Borrower,365 days after the date on which such payment of interest or Commitment Fees has become due if the Borrower hasnot made all payments then dtie to the Lender under the terms of the loan agreement;• default in the compliance with any representation or other agreement of the Borrower, which default is notremedied within 30 Business Days after receipt of notice thereof from the Lender;• default in respect of any other borrowing of the Borrower in an amount of $500,000 or more that results inacceleration thereof or default in the payment of such other borrowing when due; or• bankruptcy, reorganization, insolvency, receivership or similar proceedings are instituted by or against theBorrower, and, if instituted against the Borrower, are not vacated within 60 calendar days, or any receiver, trustee,custodian, administrative receiver or similar officer is appointed in respect of the Borrower for all or any materialportion of the Borrower’s assets (or an application for such appointment is made), or the Borrower makes anassignment for the benefit of creditors, or the Borrower is unable to pay its debts generally as they become due andadmits expressly such inability in writing.

17


Notesfor the half-i’ear ended 30 Jt,ne 2018 (continued)


When determining whether the credit risk of a financial asset has increased significantly since the initial recognitionwhen estimating ECLs, the Group considers reasonable and supportable information that is relevant and availablewithout undue cost or effort.

The Group considers a debt security to have a low credit risk when its credit risk rating is equivalent to the globallyunderstood definition of ‘investment grade’. The Group considers this to be BBB- or higher as per Standard andPoor’s (S&P) rating scale.

The Group assumes that the following trigger a review to determine a significant increase in credit risk on afinancial asset: if it is more than 30 days past due or if the credit risk rating moves out of investment grade or movesby more than 4 notches within investment grade.

Measurement ofECLs

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value ofcashflows.

ECLs are discounted as the effective interest rate of the financial asset.

Note 15 provides further detail of how expected credit losses are measured.

Credit impairedfinancial assets

At each reporting date, the Group assess whether financial assets carried at amortised cost are credit impaired. Loansand advances are ‘credit impaired’ when the Group determines that there is objective evidence of impairment and itdoes not expect to collect all principal and interest due according to the contractual terms of the loan agreement(s).

Evidence that financial assets are impaired can include default or delinquency by a borrower, restructuring of a loanor advance by Group on terms that the Group would not otherwise consider, indications that a borrower or issuerwill enter bankruptcy, the disappearance of an active market for a security, or other observable data relating to agroup of assets such as adverse changes in the payment status of borrowers or issuers in the Group, or economicconditions that correlate with defaults in the Group.

Presentation of impairment

Impairment losses on financial assets measured at amortised cost are deducted from the gross carrying amount of theassets and presented separately in the statement of comprehensive income.

Impact ofthe izew impairment in ode!

The Group has determined that the application of IFRS 9’s impairment requirements at I January 2018 results in animpairment allowance as follows:

18


Notesfor the hallyear ended 30 June 2018 (contintied)


in thousands of $Loss allowance at 31 December 2017 under lAS 39 -

Additional impairments recognised at 1 January 2018 on:

Loans and advances to GEC affiliates 13,218

Loss allowance at 1 January 201$ under IFRS 9 13,218

The loss allowance on initial application of IFRS 9 has been recognised directly in retained earnings in the statementof financial position.

(110 Hedge accounting

The Group has elected the option to defer the adoption of the new general hedge accounting model in IfRS 9 andwill continue to apply lAS 39.

iv) Transition

The Group has taken an exemption not to restate comparative information for prior periods with respect toclassification and measurement (including impairment) requirements. The Group assessed that loan and advances toGEC affiliates had low credit risk at date of initial application and determined that the credit risk on the financialassets has not significantly increase since initial application.

Basis of ConsolidationThe Consolidated Financial Statements of the Company as at and for the period ended 30 June 2018 include theCompany, the Partnership and the Subsidiary (together referred to as the “Group” and individually as “Groupentities”).

The unaudited condensed financial statements of the Group have been prepared under the historical cost convention,except that debt securities in qualifying hedging relationships and derivative financial instruments are measured atfair value.

Financial risk factorsThe Group’s activities expose it to a variety of financial risks: foreign exchange risk, liquidity risk, interest rate risk,market risk, credit risk and other price risk.

The consolidated condensed interim financial statements do not include all financial risk information and disclosuresrequired in the annual financial statements; they should be read in conjunction with the Group’s annual financialstatements as at 3 1 December 2017. There have been no significant changes in the risk management department orin any risk management policies since the year end.

19


Notesfor the half-year ended 30 June 2018 “continued)


Fair value estimationThe Group’s derivatives are carried at fair value and are classified as Level 2. The different levels have been definedas follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, eitherdirectly (i.e. as prices) or indirectly (i.e. derived from prices).• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Standards and interpretations not yet adoptedA number of new standards, amendments to standards and interpretations have been issued but are not yet effectiveand have not been applied in preparing these unaudited consolidated condensed financial statements. These are setout below:

Effective date New standards or amendments

IfRS 16 Leases

IfRIC 23 Uncertainty over Income Tax Treatments

Prepayment features With Negative Compensation (Amendments to IFRS 9)1 January 2019 Long-term Interests in Associates and Joint Ventures (Amendments to lAS 2$)

Plan Amendments, Curtailment or Settlement (Amendments to lAS 19)

Annual Improvements to IFRSs 2015-2017 Cycle (Amendments to IFRS 3, JFRS1l,1AS 12 and lAS 23)

1 January 2021 IFRS 17 Insurance Contracts

4 Interest income

The following table details the interest income earned by the Group during the period.

30 June 201$ 30 June 2017s,000 5’OOO

Interest income from financial assets that are measured at amortised cost:Loans and advances to GEC affiliates 185,361 282,246

185,361 282,246

Interest income is earned on loans made by the Group directly to other GEC affiliates.

Movement in the period is primarily driven by volume of loans. Average balance of loans and advances to GECaffiliates held in the period has decreased due to repayments received from affiliates used to fund MTN maturities.

20


Notesfor the hal/vear ended 30 June 2018 (continued)

5 Interest expense

The following table details the interest expense incurred by the Group during the period.

30 June 201$ 30 June 2017s’OOO S000

Net interest expense for financial assets and liabilities:Debt securities issued:- in qualifying hedging relationships at adjusted arnortised cost 1 $7,904 226,997- at amortised cost 6,266 7,768Arnortisation of fair value component of debt with associated terminatedderivative assets (138,259) (164,472)Loans and advances from GEC affiliates at amortised cost 16,095 7,717Bank charges and other interest expense 3 2

72,009 78,012

Interest expense on loans and advances from GEC affiliates relates to borrowings from affiliates in the capitalstructure, GE Capital European Treasury Services Ireland Unlimited Company, GE Capital European TreasuryServices Limited. IGE USA Investments, GE Capital UK Funding & Co. and GE Financial Ireland UnlimitedCompany.

6 Fee and commission income

30 June 201$ 30 June 2017$,000 S000

Commitment fee income from GEC affiliates 2,178 957Management fee income from GEC affiliates 2,789 2,016

4,967 2,973

Increase in conirnitment fee income from GEC affiliates primarily driven by increase in undrawn facilities on loansand advances to GEC affiliates as a result of loan repayments received in the period. Increase in management feeincome from GEC affiliates primarily driven by refund received in respect of service fee expenses to indirect parentin the capital structure overpaid in year ending 3 1 December 2017.

21


Notesfor the half-veer ended 30 June 2018 (‘continued)

7 Fee and commission expense

3OJune2Ol$ 3OJune2Ol7$‘OOO $000

Service fee expense to indirect parent in the capital structure (Note 21)- 775

Commitment fee expense to GEC affiliates 14 -

14 775

Decrease in service fee expense to indirect parent in capital structure primarily driven by refund received in respectof service charges overpaid in the year ending 31 December 2017, see note 6 for further details.

At period end GECIHL, an intermediate parent of the Group has guaranteed the CP and MTN programmes of theGroup thus reducing the risk to any potential investor. No guarantee fee is payable since 3 December 2015. As of 10April 2015, GEC has also guaranteed the CP and MIN programmes of the Group. The benefit to the Group of theguarantee is realised through lower costs of funding.

8 Foreign exchange gain/(toss)

30 June 2018 30 June 2017$,000 S000

Foreign exchange gainl(Ioss) 31,266 (110,681)

Total foreign exchange gain/(Ioss) 31,266 (110,681)

The FX gainl(loss) is driven by the translation of foreign currency denominated receivables and payables to $ atperiod end rates. Movement in the period driven by change in EUR/USD FX rates (31 December 2017 - 1.2005 V 30June 2018- 1.16795).

9 Net (expense)/income from financial instruments carried at fair value

30 June 2018 30 June 2017$,000 5’OOO

fair value movement on interest rate swaps- in qualifying hedging relationships 22,620 (107,846)- held for trading (1,005) (9,122)fair value movement on fixed rate debt securities issued in qualifyinghedging relationships (Note 1$) (22,696) 94,323Fair value movement in embedded derivatives (1,420) 48Net expense from cross currency swaps carried at fair value (183,134) (157,445)

(185.635) (180,042)

22


Notesfor the halfyear ended 30 June 2018 (‘continued)

9 Net (expense)/income from financial instruments carried at fair value (continued)

The portion of net income/(expense) from financial instruments carried at fair value relating to the ineffectiveportion of fair value hedges as at 30 June 2018 was Sf1,756,699) (30 June 2017: 8(13,523,000,9. Movement isprimarily driven by basis adjustment amortisation in the period.

10 Income tax charge

30 June 201$ 30 June 2017$,000 5’OOO

Analysis of charge’(credit) in year

Cuirent tax.

Total current tax- -

Total tax charge in the Income Statement - -

No current tax charge in the 201$ due to losses in the period.

11 Cash and cash equivalents

30 June 2018 31 December20175’OOO 5000

Cash and balances with banks 580 3,979

580 3,979

There were no restricted cash balances at the period end (3] December 2017: USD Nil,). Cash balances are held withBarclays Bank, rated A (3] December 2017: A) and Citibank rated A+ (31 December 201 7:A+,).

All 2018 and 2017 ratings are S&P long-tenn counterparty credit ratings as at 30 June 201 8 (2017: 31 December2017). The percentage of cash held by each bank is Barclays Bank 99.96%, and Citibank 0.04%. (31 December2017: The percentage of cash held by each hank is BNP Paribas 64.52%, Royal Bank of canada 20.35%, BarclaysBank 15.12%, Citibank 0.01%.)

23


Notesfor the half-year ended 30 June 2018 (continued)

12 Property and equipment

Leaseholdimprovements& equipment

$,000

Cost:

Balance at 1 January 2018 1,112Foreign exchange 5

Balance at 30 June 201$ 1,117

Depreciation:

Balance at 1 January 2018 759Charge for year 358

Balanceat30June20l$ 1,117

C’ariying amount:

Balance at 30 June 2018-

Balance at3J December2017 353

13 Associates

30 June 201$ 31 December 2017s,000 $,000

Balance at beginning of year 923,805 -

Acquisition of interest in Associate 822,435Share of profit from Associate 15,765 101,370

Balance at end of year 939,570 923,805

The Group’s interest in associate comprises the following indirectly held undertaking of the Company at 30 June2018:

class of Nature of Country ofC’ontpany Name share % Holding Place ofBusiness Business incorporation/establishment

Building 4, HattersGE Money Home Lane, Watford. financialLending Holdings Ordinary WDI8 1YY, ServicesLimited Shares 41.20 Hertfordshire, UK Activities England

24


Notesfor the half-year ended 30 June 2018 (‘continued)

13 Associates (continued)

The acquisition of a 41.2% holding in GE Money Home Lending Holdings Limited was completed on 10 November2017 through the company’s acquisition of a 92.29% holding in GECI6.

The total interest in the associate at the period end was $939,569,570 (31 December 2017: $923,804,940). the shareofprofit on interest in associate for the period ended 30 June 2018 was $15,764,630 (31 June 2017: $ Nil).

14 Deferred tax asset

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be availableagainst which the asset can be recovered. At 30 June 2018, a deferred tax asset of $Nil arises (31 December 2017:$NiO. The Directors have considered the assumptions underpinning the recognition of the asset and as aconsequence of the 10 April 2015 GEC announcement which reduced the need for new long tenn debt issuance forthe foreseeable future and the change in functional currency to USD with the foreign exchange exposure. As aresult, the Group has recorded no deferred tax asset for the period ending 30 June 201 $ f31 December 2017: SNiO.

The Group has an unrecognized deferred tax asset at period end of $89 million (31 Decenther 2017: 886 million)which relates to losses carried forward.

15 Financial risk management

Introduction and overviewThe Group has exposure to the following risks from the use of financial instruments:

(a) credit risk(b) liquidity risk(c) market risks(d) other price risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives,policies and processes for measuring and managing risk, and the Group’s management of capital.

Risk managementframeworkThe Directors have overall responsibility for the establishment and oversight of the Group’s risk managementframework in line with the overall GEC risk management framework.

The Board of Directors has five members.

25


Notesfor the halfvear ended 30 June 2018 (‘continued)

15 Financial risk management (continued)

The Group’s risk management policies are based on the policies of the Group’s ultimate parent GEC and areestablished to identify and analyse the risks faced by the Group, to set appropriate risk limits and contro]s, and tomonitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflectchanges in market conditions, products and services offered. The Group, through their training and managementstandards and procedures, aim to develop a disciplined and constructive control environment, in which allemployees understand their roles and obligations.

The Directors are responsible for monitoring compliance with the Group’s risk management policies andprocedures, and for reviewing the adequacy of the risk management framework in relation to the risks faced by theGroup. The Directors are assisted in these functions by GE Corporate Audit Staff and Internal Audit.

(a) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails tomeet its contractual obligations, and arises principally from the Group’s loans and advances to GEC affiliates. forrisk management reporting purposes the Group considers and consolidates all elements of credit risk exposure (suchas individual obligor risk, default risk and country risk). The Directors monitor performance of borrowers andcontinually assess recoverability of loans (see points below). All loans and advances made by the Group are withGEC affiliates. All loans are uncollateralized.

Management ofcredit riskThe Directors are responsible for the oversight of the Group’s credit risk in line with the overall GEC riskframework, including:

• following GEC credit policies covering credit assessment, risk grading and reporting, documentary and legalprocedures, and compliance with regulatory and statutory requirements;• Establishing the authorization structure for the approval and renewal of credit facilities;• Reviewing and assessing credit risk. The Directors assess all credit exposures prior to facilities being committed,and these facilities are subject to periodic review based on the overall risk associated as determined by Management.

for each quarterly review, a comprehensive due diligence is carried out on each borrower.

At 30 June 2018 the total carrying amount of lending exposed to credit risk in the Group amounted to 517,597million (31 December 2017: 820,993 million).

As at 30 June 2018, the loans and advances to GECIRL was 8% (31 Dece,nber 2017: 7%) of the total loan portfoliofor the Group. As at 30 June 201 8. the loans and advances to GEFF was 64% (31 Decenther 2017: 70%) of the totalloan portfolio for the Group. The Directors monitor the performance of GEC affiliates to assess the recoverability ofthe loans in line with the overall GEC risk framework. As at 30 June 2018, the Directors consider none of the loansand advances to be either past due or individually impaired. Impairment loss provisions recognised as a result ofadoption of IFRS 9 on 1 January 2018 are discussed further in this note and in Note 3.

Other assets are comprised of management fees receivable from GEC affiliates and other accruals. Cash and cashequivalents are held with financial institutions rated from A to A+ by Standard and Poor at the period end as perNote 11.

26


NotesJir the half-year ended 30 June 2018 (‘continued)


Loans with renegotiated termsLoans with renegotiated terms are loans that have been restructured due to the deterioration of the borrower’sfinancial position. No loans on the Consolidated Condensed Statement of Financial Position - Unaudited as at 30June 2018 were renegotiated during the period (3] December2017: SN11,).

Allowances for impairmentThe Group establishes an allowance for impairment based on the ECL model as required by IfRS 9.

IFRS 9 outlines at ‘three-stage’ model for impairment based on changes in credit quality since initial recognition assummarised below:

• A financial asset that is not credit-impaired on initial recognition is classified in ‘Stage 1’• If a significant increase in credit risk since initial recognition is identified, the financial asset is moved to ‘Stage 2’but is not yet determined to be credit-impaired. Please refer to note 3 for how the Group defines a significantincrease in credit risk.

If the financial asset is credit-impaired it is moved to ‘Stage 3’. Please refer to note 3 for a description of how theGroup defines credit-impaired and default.• Financial instruments in Stage I have their ECLs measured at an amount equal to the portion of lifetime expectedcredit losses that result from default events possible in the next 12 months. instruments in Stages 2 or 3 have theirECL measured based on expected credit losses on a lifetime basis.

it is considered that all loans and advances are Stage 1, as all loans are to GEC affiliates comprise of interest andprincipal and are paid in a timely maimer as per the terms of the loan agreements and there has been no significantincrease in credit risk in the period. No previous impairments have been recognised in respect of the borrowersimder lAS 39 and there is no history of default.

Measuring EC’L - explanation of inputs, assumptions and estimation techniques:The ECL is measured on either a 12-month or Lifetime basis depending on whether a significant increase in creditrisk has occurred since initial recognition or whether an asset is considered to be credit-impaired. ECLs are thediscounted prodtict of Probability of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD),defined as follows:

• The PD represents the likelihood of a borrower defaulting on its financial obligation either in the next 12 months orthe remaining lifetime of the obligation. The PD for the Group is considered low as all loans are to GEC affiliates.S&Ps ‘Credit Model’ is used to assign a rating to internal GEC entities. This model produces outputs on the S&Prating scale. Reviewing S&P’s model documents confirms that the “Credit Model” rating output maps directly to theS&P scale. Since the S&P rating is the industry reference, this is also used to set the GE Obligor Rating (OR) scalewhich was directly mapped to the S&P scale, which in turn assigns a PD.

27


Notesfor Ihe halfvear ended 30 June 2018 (‘continued)


EAD is based on the amounts the Group expects to be owed at the time of default. For revolving credit agreements(RCAs), the Group includes the current drawn balance plus any further amount that is expected to be drawn up tothe current contractual limit by the time of default, should it occur.• LGD is assumed to be 60%. for GE intercompany loans, given the fact that all these loans are senior unsecured, anexternal benchmark is leveraged for the LGD assumption. According to Moody’s Corporate Default and Recoverydataset. the LGD of 60% is estimated based on the summary statistics from US Corporate Senior Unsecured Bondspopulation.• The discount rate used in the ECL calculation is determined to be the original effective interest rate on the loan(market rate of interest).

The following table provides information about exposure to credit risk and ECLs as at 30 June 2018:

GrossImpairment lossIn thousand s of $ S&P rating carrying Credit impaired

allowanceamount

Low risk

Loans and advances to GEC affiliates BBB 17,612,441 (15,302) No

Total 17.612,441 (15.302)

The movement in the allowance for impairment in respect of loans and advances to GEC affiliates during thereporting period was as follows:

In thousands of$ Note

Balance at 1 January 2018* 3 13,218

Increase in loss allowance 2,084

Balance at3O June 2018 15,302

*Tlie Group has initially applied IFRS 9 at I Januan’ 2018. Under the transition method chosen, comparativeinformation is not restated. See note 3forfi,,iher details.

The increase in loss allowance is mainly attributable to the change in S&P rating of the borrowers from BBB+ at 3 1December 2017 to BBB at 30 June 2018.

fair value adjustment for credit riskThe Group assesses the valuation adjustments required for credit risks associated with derivatives measured at fairvalue as at 30 June 2018. All derivatives are executed with GE financial Markets Unlimited Company (“GEFM”)and a credit valuation adjustment (“CVA”) is calculated to reflect the credit risk of GEFM. A debit valuationadjustment (“DVA”) is calculated to reflect the credit risk of the Group with the bilateral adjustment recorded in thei-neasurement of the derivatives in the Interim financial Report. As at 30 June 201$ the bilateral adjustment for theGroup amounted to $0.6 million (31 December 2017: Credit of $5 million,) which has been recorded as a credit tothe ‘Net expense from financial instruments carried at fair value” in the Statement of Comprehensive Income.

2$


Notesfor the half-vear ended 30 June 2018 fcontinued)


(b) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations from its financial liabilities.

Management of liquidity risk

The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficientliquidity to ineet its liabilities when due, under both normal and stressed conditions, without incurring unacceptablelosses or risking damage to the Group’s reputation.

As a result of the GE Capital restructuring it is anticipated that there will be no requirement for the Group to issuenew long term debt for the foreseeable future with the expectation that the current MTN portfolio remains untilmaturity. The CP programme continues presently albeit no CP is in issue at period end. The Group has access to thecash pool should it be required.

The Group’s intermediate parent GECIHL has guaranteed that it will meet the liabilities of the CP and MTNprogrammes should the Group be unable to meet these liabilities. As of 10 April 2015, GEC, rated A, has alsoguaranteed the CP and MTN programmes of the Group thus reducing further the risk to any potentia1 investor andsupporting the CP and MTN programmes. As part of the Group’s processes, management monitor the ratings ofGEC.

GEC receives information from other business units regarding the liquidity profile of their financial assets andliabilities and details of other projected cash flows arising from projected future business. The repayment tenus ofdebt securities are outlined in Note 18. The Group has loans and advances to GEC affiliates net of impaiment lossprovisions of $17,597 million (3] December 2017: $20,993 million,). At period end, 8% of Group lending was toGECIHL and 64% of Group lending was to GEFF. GEC maintains a portfolio of short-term liquid investmentsecurities, loans and advances to banks and other inter-bank facilities, to ensure that sufficient liquidity ismaintained within the Group. The Group also have access to short term liquidity through their access to the GEEuropean Cashpool operated by GE Capital European Treasury Services Ireland Unlimited Company (‘GECETS’).The Directors with the assistance of GEC monitor the on-going liquidity requirements of the Group, and by way ofshort-term loans from GEC to cover any short-term fluctuations and obtain longer term funding to address anystructural liquidity requirements. The overall group daily liquidity position is monitored by GEC.

The Group held derivative assets for qualifying hedging relationships purposes of $146 million (31 December 2017:$216 million) and derivative assets for trading purposes of $54 million at 30 June 2018 (31 December 2017: 8361million). The Group held derivative liabilities for quali’ing hedging relationships purposes of SNil (‘3] December2017: $Nil] and derivative liabilities for trading purposes of $230 million at 30 June 2018(31 Decenther 2017:SN11). The derivative assets and liabilities have been split between qualifying hedging relationships and held fortrading, disclosing separately those derivatives that qualify as hedged under 1AS39 from those that do not. Duringthe period, no fixed rate debt failed hedge effectiveness. Fixed rate debt which failed hedge effectiveness in the priorperiod (2017: $3 Billion ) and has not yet matured is held at amortised cost and is no longer in qualifying hedgingrelationships at the period end. The corresponding derivatives are also held for trading as at the period end.

29




Residual contractual maturities of financial assets

In millions of S30 June 201$Non-derivative financial assets

Cash and cash equivalents

Loans and advances to GEC affiliates

Interest in associateProperty and equipment

Other assets

Derivative assets

Inflow - held for qualifying hedging relationshipsInflow - held for trading

Outflow - held for qualifying hedging relationshipsOutflow - held for trading

1,833

175

(1,687)(122)

199

18,741

Carrying Current Non-currentamount amount amountNote

11 1

17,597

940

4

18,542

17,577 20

- 940

4 -

17,582 960

5 1,828

97 78- (1,687)

(74) (48)

28 171

17,610 1,131

17

17

17

17

30


Notesfor the half-year ended 30 June 2018 (‘continued,)


Residual contractual maturities of financial assetsCarrying Current Non-current

Note amount amount amount

In million of$31 December 2017Non-den votive financial assets

Cash and cash equivalents 11 4 4 -

Loans and advances to GEC affiliates 20,993 20,973 20Property and equipment

- -

Other assets 11Investment in associate 924 - 924

21,932 20,988 944

Derivative assets

Inflow - held for qualifying hedging relationships 17 2,095 4 2,091Inflow - held for trading 17 13,362 14,772 1,590Outflow - held for qualifying hedging relationships 17 (1,879) - (1,879)Outflow - held for trading 17 (16,001) (14.533) (1.468)

(2,423) 243 334

19,509 21,231 1,278

The above tables show the undiscounted cash flows on the Group’s financial assets on the basis of their contractualmaturity.

31

GE

Cap

ital

Eur

opea

nF

undi

ngU

nlim

ited

Com

pany

Not

esfo

rth

eh

al/v

ear

ende

d30

June

2012

(‘co

ntin

ued)

15F

inan

cial

risk

man

agem

ent

(con

tinu

ed)

Res

idua

lco

ntr

actu

alm

atu

riti

esof

finan

cial

liab

ilit

ies

Car

ryin

gG

ross

nom

inal

Les

sth

an1

3m

onth

sto

1M

ore

than

5N

ote

amo

un

tin

flow

/(ou

tflo

w)

mon

th1-

3m

onth

sy

ear

1-5

yea

rsyea

rs

Inni

l/lio

nof S

30Ju

ne

2018

Non

deri

vati

veli

abil

itie

s

Loa

nsan

dad

vanc

esfr

omG

EC

affi

liate

s98

0(9

80)

(345

)-

-(6

35)

-

Deb

tse

curi

ties

issu

ed18

14,7

41(1

5,74

1)(1

83)

-(3

,263

)(9

,045

)(3

,249

)O

ther

liabi

litie

s1

(1)

——

(1)

——

15,7

22(1

6,72

2)(5

28)

-(3

,264

)(9

,680

)(3

,249

)

Der

ivat

ive

liab

ilit

ies

Infl

ow-

held

for

trad

ing

(12,

134)

12,1

16-

175

11.9

41-

-

Out

flow

-he

ldfo

rtr

adin

g17

12,3

64(1

2,45

2)-

(177

)(1

2,27

5)-

-

230

(336

)-

(2)

(334

)-

-

Und

raw

nlo

anco

nim

itmen

ts-

(9,8

25)

--

-(9

,825

)-

15,9

52(2

6,88

3)(5

28)

(2)

(3,5

98)

(19,

505)

(3,2

49)

At

30Ju

ne20

18,

loan

san

dad

vanc

esfr

omG

EC

affi

liate

sre

pres

ent

outs

tand

ing

prin

cipa

lan

din

tere

stba

lanc

eson

borr

owin

gsw

ithG

EC

affi

liate

sin

the

capi

tal

stru

ctur

e.

32

GE

Cap

ital

Eur

opea

nfu

ndin

gU

nlim

ited

Com

pany

Not

esfo

rth

eha

lf-y

ear

ende

d30

June

2018

‘con

tinue

d,)

15F

inan

cial

risk

man

agem

ent

(con

tinu

ed)

Res

idual

contr

actu

alm

atu

riti

esof

finan

cial

liab

ilit

ies

Car

ryin

gG

ross

nom

inal

Les

sth

an1

3m

onth

sto

1M

ore

than

5N

ote

amo

un

tin

flow

/(ou

tflo

w)

mon

th1-

3m

onth

syea

r1-

5ye

ars

yea

rs

Inm

illio

nof$

31D

ecem

ber

2017

Non

deri

vati

veli

abil

itie

sL

oans

and

adva

nces

from

GE

Caf

filia

tes

699

(699

)(6

5)-

-(6

34)

-

Deb

tse

curi

ties

issu

ed18

18,7

81(2

0,15

1)(4

10)

-(4

,161

)(1

1,13

4)(4

,446

)O

ther

liabi

litie

s19

2(2

)-

—(2

)-

-

19,4

82(2

0,85

2)(4

75)

-(4

,163

)(1

1,76

8)(4

,446

)

Der

ivat

ive

liab

ilit

ies

Out

flow

-he

ldfo

rqu

alif

ying

hedg

ing

rela

tions

hip

17-

--

--

--

Out

flow

-he

ldfo

rtr

adin

g

Und

raw

nlo

anco

mm

itmen

ts-

(6,5

42)

--

(1)

(6,5

41)

-

19,4

82(2

7,39

4)(4

75)

-(4

,164

)(1

8,30

9)(4

,446

)

At

31D

ecem

ber

2017

,lo

ans

and

adva

nces

from

GE

Caf

filia

tes

repr

esen

tou

tsta

ndin

gpr

inci

pal

and

inte

rest

bala

nces

onbo

rrow

ings

with

GE

Caf

filia

tein

the

capi

tal

stru

ctur

e.

33


Notesfor the halfyear ended 30 June 2018 (‘continued)


The previous table shows the undiscounted cash flows on the Group’s financial liabilities and unrecognised loancommitments on the basis of their earliest possible contractual maturity. The Group’s expected cash flows on theseinstruments may vary significantly from this analysis. For example, undrawn loan commitments are not all expectedto be drawn down immediately, but upon draw down would have contractual maturity not greater than 4 years.

Residual contractual maturities of financial liabilities

The gross nominal inflow/(outflow) disclosed in the previous table is the contractual, undiscounted cash flow on thefinancial liability or commitment. The disclosure for derivatives shows a net amount for derivatives that are netsettled, and a gross inflow and outflow amount for derivatives that have simultaneous gross settlement.

To manage the liquidity risk arising from financial liabilities, the Group holds liquid assets comprising cash andcash equivalents and is linked to the GECETS cashpool. Hence, the Group believes that it is not necessary todisclose a maturity analysis in respect of these assets to enable users to evaluate the nature and extent of liquidityrisk. The cash balances pool with another GEC affiliate nightly, is payable on demand and is recorded under loansand advances from GEC affiliates and/or loans and advances to GEC affiliates depending on whether the cash hasbeen borrowed from or lent to the cashpool.

(c) Market risks

Exposure to foreign currency riskThe principal market risk faced by the Group relates to currency risk as almost all borrowing and lending is in Eurowhile the functional currency is USD. The following table sets out the Groups non-USD monetary assets andliabilities at 30 June 201$ and 31 December 2017 and the net exposure in original currency and USD of thosemonetary assets and liabilities.

Original Currency AmountsMonetary Monetary

Currency .. Swaps Net Exposure Year end Rates Net ExposureAssets Liabilities

30 June 2018 ‘000 ‘000 ‘000 ‘000 $‘OOO

EUR 1,150,051 (12,639,966) 10,555,744 (934,171) 1.16$ (1,091,065)

Original CurrencyAmounts

Monetary MonetaryCurrency . Swaps Net Exposure Year end Rates Net ExposureAssets Liabilities

31 December 2017 ‘000 ‘000 ‘000 ‘000 S’OOO

EUR 1,153,612 (15,667,482) 13,636,582 ($77,289) 1.2005 (1,053,185)

GBP 1,926 - - 1,926 1.3513 2,603

34


Notesfor the half year ended 30 June 2018 (continued)


Since August 2016, through the use of cross currency derivatives, the Company is able to reduce currency exposure.A 1% appreciationldepreciation in the EUR!USD exchange rate as at 30 June 2018 would give rise to approximatelya $11 million loss/profit based on the net exposure at 30 June 2018 (2017: A 1% appreciation/depreciation in theEUR/USD exchange rate as at 31 December 2017 would give rise to approximately a $11 million loss/prqjIt basedon the net exposure at 31 Decenther 20] 7,).

Exposure to interest rate riskThe Group has exposure to interest rates. This is mitigated by entering into interest rate swaps to match the maturityof assets and liabilities held by the Group.

Portfolios are exposed to the risks associated with fixed rate liabilities versus floating rate receivables, the loss fromfluctuations in the future cash flows and fair values of financial instruments because of a change in market interestrates. Interest rate risk is managed principally through monitoring interest rate gaps and the Directors are responsiblefor monitoring such interest rate gaps.

The interest rate on floating rate assets and liabilities are reset quarterly from the initial date of funding. Thereforemovements in the benchmark interest rate during the quarter can give rise to a mismatch between interest expenseand income. The effect on the group of a 0.5% increase in the benchmark rate for a full year could give rise toadditional profit of approximately 514 million (3] December2017: $15 million,). A decrease of 0.5% would have anequal and opposite effect.

(d) Other price riskOther price risk is the risk that the fair value of the financial instruments will fluctuate as a result of changes inmarket prices (other than those arising from interest rate risk or currency risk), whether caused by factors specific toan individual instrument, its issuer or factors affecting all instruments traded in the market.

The Directors consider the impact of other price risk to be low.

The process for monitoring and measuring this risk is unchanged from year end.

One GEC affiliate, GECIHL, engaged in financial services and incorporated in the United Kingdom (‘UK”)accounted for 0% of Group revenue ‘2017: 21%). One GEC affiliate, GEFF. engaged in financial services andincorporated in Ireland accounted for 76% of Group revenue (2017: 76%).

In addition to the above, the Group had entered into lending commitments of 59,825 million (31 December 2017:$6,541 million,) with 100% owned GEC affiliates.

35

GE

Cap

ital

Eur

opea

nF

undi

ngU

nlim

ited

Com

pany

Not

esfo

rth

eha

lf-y

ear

ende

d30

June

2018

(‘co

ntin

ued)

16A

ccou

ntin

gcl

assi

fica

tion

san

dfa

irva

lues

The

tabl

ebe

low

sets

out

the

carr

ying

amou

nts

and

fair

valu

esof

the

Gro

up’s

fina

ncia

las

sets

and

liabi

litie

s.In

the

Gro

up,

embe

dded

deri

vativ

esw

itha

valu

eof

$24

mil

lion

(201

7:$2

4m

illi

on)

have

been

pres

ente

dw

ith

thei

rho

stco

ntra

cts

and

incl

uded

,at

fair

valu

e,in

debt

secu

ritie

sin

the

Con

soli

date

dC

onde

nsed

Stat

emen

tof

Fina

ncia

lPo

sitio

n-

Una

tidite

d.

fair

valu

eth

rough

pro

fit

or

loss

Am

ort

ised

Cos

tH

eld

for

Qua

lify

ing

qual

ifyi

nghe

dgin

gIn

mil

lion

sof$

hedg

ing

Loa

nsan

dre

lati

onsh

ips

atT

ota

lC

arry

ing

30Ju

ne

201X

rela

tionsh

ips

Hel

dfo

rtr

adin

gre

ceiv

able

sA

mor

tise

dco

stam

ort

ised

cost

Am

ount

Fai

rV

alue

*

Cas

han

dca

sheq

uiva

lent

s-

-i

--

iD

eriv

ativ

eas

sets

held

for

qual

ifyi

nghe

dgin

gre

lati

onsh

ips

146

--

--

146

146

Der

ivat

ive

asse

tshe

ldfo

rtr

adin

g-

54-

--

5454

Loa

nsan

dad

vanc

esto

GE

Caf

fili

ates

-

-17

,597

--

17,5

9717

,597

Oth

eras

sets

--

-4

-4

4

146

5417

,598

4-

17,8

0217

,802

Der

ivat

ive

liab

ilit

ies

held

for

trad

ing

-23

0-

--

230

230

Loa

nsan

dad

vanc

esfr

omG

EC

affi

liat

es-

--

980

-98

01,

017

Deb

tse

curi

ties

issu

ed-

--

6,66

98,

072

14,7

4114

,687

Oth

erli

abil

itie

s-

-—

1-

1

__

__

__

__

__

__

__

__

-23

0-

7,65

08,

072

15,9

5215

,935

36

GE

Cap

ital

Eur

opea

nF

undi

ngU

nlim

ited

Com

pany

Not

esfo

rth

eha

lf-y

ear

ende

d30

June

2018

(‘conti

nu

e

16A

ccou

ntin

gcl

assi

fica

tion

san

dfa

irva

lues

(con

tinu

ed)

Fai

rva

lue

thro

ug

hpro

fit

orlo

ssA

mort

ised

Cos

tH

eld

for

Qua

lify

ing

qual

ifyi

nghe

dgin

gIn

mill

ions

of S

hedg

ing

Loa

nsan

dre

lati

onsh

ips

atT

ota

lC

arry

ing

31D

ecem

ber

2017

rela

tionsh

ips

Tra

din

gre

ceiv

able

sA

mor

tise

dco

stam

ort

ised

cost

Am

ount

Fai

rV

alue

*

Cas

han

dca

sheq

uiva

lent

s-

-4

--

44

Der

ivat

ives

asse

tshe

ldfo

rqu

alif

ying

hedg

ing

rela

tion

ship

s21

6-

--

-21

621

6D

eriv

ativ

eas

sets

held

for

trad

ing

-36

1-

--

361

361

Oth

eras

sets

--

11-

1111

Loa

nsan

dad

vanc

esto

GE

Caf

filia

tes

--

20,9

93-

-20

,993

20,9

93

216

361

20,9

9711

-21

,585

21,5

85

Loa

nsan

dad

vanc

esfr

omG

EC

affi

liate

s-

--

699

-69

969

4D

ebt

secu

ritie

sis

sued

--

-10

,338

8,44

318

,781

18,9

37O

ther

liabi

litie

s-

--

2-

22

--

-11

,039

8,44

319

,482

19,6

33*

Rea

ders

ofth

isIn

teri

mfi

nanc

ial

Rep

ort

are

advi

sed

tous

eca

utio

nw

hen

usin

gth

eda

tain

the

tabl

eab

ove

toev

alua

teth

eG

roup

’sfi

nanc

ial

posi

tion

orto

mak

eco

mpa

riso

nsw

ithot

her

inst

itutio

ns.

All

“Loa

nsan

dad

vanc

esto

affi

liate

s”ar

etv

ithG

EC

affi

liate

san

dpl

anne

dto

behe

ldto

mat

urity

.M

arke

tri

sks

are

key

assu

mpt

ions

inth

ees

timat

ion

ofth

efa

irva

lue

of“l

oans

and

adva

nces

toG

EC

affi

liate

s”.

Der

ivat

ive

asse

tsan

dlia

bilit

ies

are

valu

edus

ing

inte

rnal

mod

els.

The

sem

odel

sm

axim

ise

the

use

ofm

arke

tob

serv

able

inpu

tsin

clud

ing

mar

ket

obse

rvab

lesw

apra

tes

and

spre

adin

dica

tors

obta

ined

from

thre

ele

adin

gm

arke

tm

aker

s.

37



17 Financial assets and liabilities

Fair value hedging relationshipsAt 30 June 2018, certain MTN’s shown within debt securities issued are in interest rate hedging relationships valuedat $8,048 million (31 December 2017: 88,420 million). These are fair valued with respect to the hedged interest risk.

Derivatives held for risk management and tradingAt 30 June 2018 certain derivatives are entered into (hr risk management purposes however those that qualify underlAS 39 for hedge accounting are disclosed separately from those that are not. All the derivatives are with a GECaffiliate. GEFM.

30 June 2018 31 December20175’OOO 8’OOO

Derivative assetsInstrument type:

Interest rate swaps held for qualifying hedging relationships - noncurrent 140,942 215,512Interest rate swaps held for qualifying hedging relationships -

current 4,773interest rate swaps held for trading -non current 30,765 99.792interest rate swaps held for trading - current 22,897 57.262Cross currency swaps held for trading - non current 22,523Cross currency swaps held for trading - current 1 81,472

Derivative liabilitiesinstrument type:

Cross currency swaps held for trading - non currentCross currency swaps held for trading - current (230,174)

____________________

(30,797) 576,561

3$


Notesfor the half-rear ended 30 June 2018 (‘continued)

17 Financial assets and liabilities (continued)

Movement in interest rate swaps held for qualifying hedge relationships in the period driven by realised net couponpayments in the period. Movement in interest rate swaps held for hedging driven by maturities in the period.

Movement in cross currency swaps from an asset position at 31 December 2017 to a liability position at 30 June2018 driven by movement in teh EUR’USD FX rate in the period, forecast cash outflows on USD leg to exceedforecast cash inflows on EUR leg converted to USD at 30 June 2018.

Fair value hedges of interest rate riskThe Group use interest rate swaps to hedge its exposure to changes in the fair value of its fixed rate Euro MTN’s.Interest rate swaps are matched to specific issuances of fixed rate notes. The fair value of derivative assetsdesignated as fair value hedges is $146 million (31 December 2017: $216 million,) and the fair value of derivativeliabilities designated as fair value hedges is SNil million (3] December 20] 7. $Nil).

Other derivatives held for qualifying hedging relationshipThe Group use other derivatives, not designated in a qualifying hedge relationship, to manage the exposure tointerest rate risk and foreign exchange risk. The instruments used include interest rate swaps and cross currencystvaps. The fair values of those derivatives are shown in the table above.

The notional amounts of all interest rate swaps outstanding at 30 June 2018 were $10,567 million (31 December2017: $13,562 million,). The notional amounts of all cross currency swaps outstanding at 30 June 2018 were $12,086million (31 December2017: $]5,320 million,).

1$ Debt securities issued

30 June 201$ 31 December2017s,000 $,000

Fixed rate debt securities in qualifying hedging relationship 8,071,981 8,443,264Floating rate debt securities issued at amortised cost 2,741,377 3,412,564Fixed rate debt securities held at amortised cost (no longer inqualifying hedging relationships) 3,927,572 6,925,342

14,740,930 18,781,170

At 30 June 2018, $11,708 million (3] December 2017: $14,884 million,) of nominal debt securities issued areexpected to be settled more than twelve months after the reporting date.

39



18 Debt securities issued (continued)

30 June 2018 31 December2017S’OOO $000

Debt securities issued in qualifying hedging relationship

Medium term notes fixed rate 8,047,735 8,419,742Embedded derivative 24,246 23,522

8,071,981 8,443,264

floating rate debt securities issued by the MTN program held at amortised cost have maturities from 2 months to 15years (31 December 2017. 5 months to lSyears,,i, a weighted average maturity of 2.8 years (31 December 2017: 2.8years,) and a range of interest rates from 3 month Euribor pIus 0.21% to 3 month Euribor plus 1.00% (31 December2017: from 3 month Euribor plus 0.2 1% to 3 month Euribor plus 1.00%).

fixed rate debt securities issued in qualifying hedging relationships by the MTN program have a range of maturitiesfrom 2 years to 20 years (31 December 2017: 2 veers to 21 years), a weighted average maturity of 6.2 years (31December 2017: 6.7 years) and a range of interest rates from 0.80% to 6.025% (31 December 2017: 0.80% to6.025%,).

fixed rate debt securities issued at amortised cost no longer in qualifying hedging relationships by the MTNprogram have a range of maturities from 6 months to 3 years (31 December 201 7: 4 months to 3 veers), a weightedaverage maturity of 0.94 years (31 December 2017: 0.2 years) and a range of interest rates from 2.25% to 6% (31December 2017: 1.625% to 6%).

The Group had unutilised loan conmiittnents, all to other GEC affiliates, of $9,825 million at 30 June 2018 (31December 2017: 36,541 million,). An unutilised commitment is the amount of any given credit facility that has notbeen drawn by the borrower. The longest of these conmitments has the potential to extend to 2022. The table belowanalyses nominal movements in medium term notes and commercial paper:

30 June 2018 31 December2017Medium Term Notes Medium Term Notes

s,000 $,000Opening balance 16,975,250 18,839,573Maturities (3,343,775) (4,085,3 80)Foreign Exchange (328,349) 2,221,057

Closing Balance 13,303,126 16,975,250

The Group has not had any defaults of principal, interest or other breaches with respect to its debt securities during2018 or 2017.

Foreign exchange arises due to large gross movements in balances, redemptions and issuances which have beentranslated at the rates of exchange prevailing at the dates of transaction and opening and closing balances have beentranslated at the closing rates of exchange as at 31 December 2017 and 30 June 2018.

40


Notesfor the ha/f-year ended 30 June 2018 (‘contthued

19 Changes in liabilities from financing activities

1 January CashNon-cash Changes 30 June 2018201$ Flows

fXFair

Value OtherMovementsChanges

$‘OOO $‘OOO $‘000 S’OOO $‘OOO $‘OOo

Debt securities issued 18,781,170 (3,783,544) (413,303) 148,287 8,320 14,740,930

The other column includes the effect of accrued but not yet paid interest on debt securities issued. the Group classifyinterest paid on debt securities issued of $446,950 thousand as cash flows from operating activities.

20 Operating segments

It is the Directors’ view that the Group’s business is organised as a single segment. The Group has earned all itsrevenues in the Republic of Ireland and all of the Group’s revenues arise from the provision of loans to GECaffiliates and from management fee income from GEC affiliates.

Group30 June 2018 30 June 2017

Ireland Irelandst000 5’OOO

Revenue from loans and advances to GEC affiliates 185,361 282.246Revenue from commitment fees and management fees from GECaffiliates 4,967 2,973

Total segment revenue 190,328 285,219

Reportable segment loss before tax (24,983) (87,624)

30 June 2018 31 December 2017$,000 s’000

Reportable segment assets 18.740,982 22,509,185Reportable segment liabilities 15,951,854 19,482,172

One GEC affiliate, GECIHL, accounted for 0% of total revenue of the Group during the period (30 June 2017:20%), another GEC affiliate, GEFF, accounted for 76% of total revenue of the Group during the period (30 June201 7: 78%) and another GEC affiliate, GE Capital European Treasury Services ireland Unlimited Company(“GECETS’), accounted for 23% of total revenue of the Group during the period (30 June 2017: 0.7%). No otherGEC affiliates accounted for more than 10% of total revenue.

Loans to GECETS, accounted for 27% of segment assets at 30 June 2018 (31 December 2017: 22%,). Loans toGEFF, accounted for 64% of segment assets at 30 June 2018 (31 Decenther 2017: 64%). No other GEC affiliatesaccounted for more than 10% of segment assets.

41


Notesfor the hal/vear ended 30 June 2018 (‘continued)

21 Related party disclosures

(a) Transactions with subsidiaiy undertakings and other affiliate GEC Group affiliatesThe Group enters into financial transactions with its subsidiaries and other GEC affiliates in the normal course ofbusiness. These include loans, derivative instruments and foreign currency transactions on an “ann’s length” basis.In addition, the Group enters into transactions with GEC affiliates and derivative transactions with GEfM.Transactions and balances between the Company and its Partnership and other GEC affiliates are detailed in Notes4,5,6,7,9, 15, 16, 18,20 and 21.

Profit and loss transactions with related parties3OJune2Ol8 3OJune2Ol7

S’OOO $000Partnership -

Affiliate/other group companies/Intermediate parent 172,278 167,198

172,278 167,198

GE Capital Edinburgh Ltd.

GE Financial Markets Funding I

GE Capital Eireann Funding I Unlimited Company

GE Capital Irish EUR Funding Co I Unlimited Company

GE Global Emerald Finance Unlimited Company

GE Capital UK Finance

GE Global Financial Ireland Unlimited Company

GE Capital Irish PLZ Funding Co Unlimited Company

GE Capital UK Funding & Co.

Balances with related parties

GEC Affiliates

30 June 201831 December2017$,000 $1000

16,590,756 21,632,972

16,590,756 21,632,972

GE Financial Markets Unlimited Company

The following are the related parties with whom the Group has balances or has transacted with during the period:

GE Financial Funding Unlimited Company GE Capital International Holdings Limited

GE Capital European Treasury Services Ireland UnlimitedCompany

GE Capital US Holdings, Inc.

GE Capital UK Funding Unlimited Company

GE Emerald Finance Unlimited Company

GE Ireland Financial Funding Unlimited Company

GE Capital Finance 111 GmbH & Co. KG

GE Capital Irish GBP Ftinding Co 11 Unlimited Company

GE Capital Irish Holdings I Unlimited Company

GE Capital European Treasury Services Limited

GE Capital Eireann Holdings Unlimited Company

42


Notesfor the ha/fyear ended 30 June 2018 (continued)

21 Related party disclosures (continued)

GE Treasury Services industrial Ireland UnlimitedCompany

GE Indtistrial Funding (Ireland) Unlimited Company

GE financial Ireland Unlimited Company

GE Healthcare funding Ireland Unlimited Company

GE Capital Irish EUR Holding Co I Unlimited Company

GE Capital Irish EUR Funding Co III UnlimitedCompany

GE Capital International Funding Company UnlimitedCompany

GE Ireland Holdings Unlimited Company

GE Ireland CHF Funding Unlimited Company

GE Ireland USD Holdings Unlimited Company

GEPSF Cayrnan I Ltd

Millmeran Holdings II Limited

IGE USA Investments

GE Capital Treasury Services (U.S.) LLC

GE Capital International investments Limited

Alcyone Corporation

GE Ventures Limited

GE Healthcare Holding Ireland Unlimited Company

GE Industrial Hedging Services Unlimited Company

GE Capital Irish EUR Funding IV Unlimited Company

General Electric Services (Bennuda) Ltd.

GE Capital Irish USD Funding Co I Unlimited Company

GE Ireland AUD Funding Unlimited Company

GE Ireland USD Funding Unlimited Company

GE Capital International 6 Limited

Project Finance XI, Ltd

GE Money Home Lending Holdings Limited

GE Financial Holdings Unlimited Company

PK Transportation Holding Unlimited Company

(b,) Sate of loansIn the current period no loans were sold (31 December 2017: No loans sold).

(c) Compensation ofkey management personnelThere has been no material change in the remuneration of key management personnel for the period ended 30 June201$.

Under lAS 24,”Key Management Personnel” are defined as comprising of the Directors together with seniorexecutive officers.

(d) Transactions with key inanagemelit personnelThere were no loans, quasi-loans or credit transactions outstanding by the Group to its Directors at any time duringthe current or preceding year.

(e) Offbalance sheet arrangements

As part of the wider GEC Group, the Group avail of services provided by other GEC affiliates. These include cashoperations, treasury, human resources and technical accounting services.

43


Notesfor the ha/f-year ended 30 June 2018 (continued)

22 Subsequent events

On 9 August 2018 and 31 August 2018, the credit spreads on the existing EUR 1.1 billion revolving facility toGECIHL and USD 21 billion revolving facility to GEFF were amended effective 1 January 201$. These changes incredit spreads have been reflected in the unaudited condensed consolidated interim financial statements.

On 31 August 201$, the facility amount of the USD21 billion facility to GEFF was reduced to USD 12 billion.

No other significant events affecting the Group occurred since the reporting date, which require adjustment to ordisclosure in the condensed consolidated interim financial statement.

23 Approval of financial statements

The unaudited condensed consolidated interim financial report was approved by the Directors on 26 September2018.

44

ge capital european funding unlimited company · ge capital european funding unlimited company...

Documents