# C_2004122EN.01000401.xml

| 30.4.2004 | EN | Official Journal of the European Union | C 122/4 |
| --- | --- | --- | --- |

30.4.2004

EN

Official Journal of the European Union

C 122/4

---

COMMISSION REPORT

COMMISSION REPORT

Financial Report of the ECSC in liquidation at 31 December 2003

(2004/C 122/02)

| Contents | Activity report
  Expiry of the ECSC Treaty and the management mandate given to the European Commission
  Winding-up of ECSC financial operations in progress on expiry of the ECSC Treaty
  Management of assets
  Financing of coal and steel research
  Financial statements of the ECSC in liquidation
  Balance sheet at 31 December 2003
  Profit-and-loss account for the period ending 31 December 2003
  Allocation of the surplus for the period ending 31 December 2003
  Notes to the financial statements at 31 December 2003 |
| --- | --- |
| ECSC in liquidation | The European Coal and Steel Community was established under the Treaty signed in Paris on 18 April 1951. The Treaty entered into force in 1952 for a period of 50 years and expired on 23 July 2002.
  On expiry of the Treaty, ownership of ECSC funds reverted to the Member States (Belgium, Denmark, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal, Finland, Sweden and the United Kingdom). The final objective laid down by the Member States was the transfer of ECSC funds to the European Community (EC) and the creation of a joint research fund in sectors associated with the coal and steel industries. The Nice European Council decided to annex to the Treaty of Nice a Protocol on the financial consequences of the expiry of the ECSC Treaty and on the creation and management of the Coal and Steel Research Fund. This Protocol confers the ownership of ECSC funds on the European Community with effect from 24 July 2002. Pending the entry into force of the Treaty of Nice on 1 February 2003, the Member States temporarily gave the European Commission a mandate to manage the assets concerned. |
| Commission | During the period from 24 July 2002 to 31 January 2003, the European Commission exercised the powers and responsibilities conferred on it by Decision 2002/234/ECSC of the Representatives of the Governments of the Member States, meeting within the Council, of 27 February 2002.
  With the entry into force of the Treaty of Nice on 1 February 2003, the Commission's powers and responsibilities are governed by Council Decision 2003/76/EC of 1 February 2003.
  At 31 December 2003, the members of the Commission were:






  Romano PRODI | President |
| Neil KINNOCK | Vice-President |
| Loyola DE PALACIO | Vice-President |
| Mario MONTI | Member |
| Franz FISCHLER | Member |
| Erkki LIIKANEN | Member |
| Frits BOLKESTEIN | Member |
| Philippe BUSQUIN | Member |
| Pedro SOLBES MIRA | Member |
| Poul NIELSON | Member |
| Günter VERHEUGEN | Member |
| Chris PATTEN | Member |
| Pascal LAMY | Member |
| David BYRNE | Member |
| Michel BARNIER | Member |
| Viviane REDING | Member |
| Michaele SCHREYER | Member |
| Margot WALLSTRÖM | Member |
| Antonio VITORINO | Member |
| Anna DIAMANTOPOULOU | Member |

Contents

Contents

Activity report

Expiry of the ECSC Treaty and the management mandate given to the European Commission

Winding-up of ECSC financial operations in progress on expiry of the ECSC Treaty

Management of assets

Financing of coal and steel research

Financial statements of the ECSC in liquidation

Balance sheet at 31 December 2003

Profit-and-loss account for the period ending 31 December 2003

Allocation of the surplus for the period ending 31 December 2003

Notes to the financial statements at 31 December 2003

ECSC in liquidation

ECSC in liquidation

The European Coal and Steel Community was established under the Treaty signed in Paris on 18 April 1951. The Treaty entered into force in 1952 for a period of 50 years and expired on 23 July 2002.

On expiry of the Treaty, ownership of ECSC funds reverted to the Member States (Belgium, Denmark, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal, Finland, Sweden and the United Kingdom). The final objective laid down by the Member States was the transfer of ECSC funds to the European Community (EC) and the creation of a joint research fund in sectors associated with the coal and steel industries. The Nice European Council decided to annex to the Treaty of Nice a Protocol on the financial consequences of the expiry of the ECSC Treaty and on the creation and management of the Coal and Steel Research Fund. This Protocol confers the ownership of ECSC funds on the European Community with effect from 24 July 2002. Pending the entry into force of the Treaty of Nice on 1 February 2003, the Member States temporarily gave the European Commission a mandate to manage the assets concerned.

Commission

Commission

During the period from 24 July 2002 to 31 January 2003, the European Commission exercised the powers and responsibilities conferred on it by Decision 2002/234/ECSC of the Representatives of the Governments of the Member States, meeting within the Council, of 27 February 2002.

With the entry into force of the Treaty of Nice on 1 February 2003, the Commission's powers and responsibilities are governed by Council Decision 2003/76/EC of 1 February 2003.

At 31 December 2003, the members of the Commission were:

Romano PRODI

President

Neil KINNOCK

Vice-President

Loyola DE PALACIO

Vice-President

Mario MONTI

Member

Franz FISCHLER

Member

Erkki LIIKANEN

Member

Frits BOLKESTEIN

Member

Philippe BUSQUIN

Member

Pedro SOLBES MIRA

Member

Poul NIELSON

Member

Günter VERHEUGEN

Member

Chris PATTEN

Member

Pascal LAMY

Member

David BYRNE

Member

Michel BARNIER

Member

Viviane REDING

Member

Michaele SCHREYER

Member

Margot WALLSTRÖM

Member

Antonio VITORINO

Member

Anna DIAMANTOPOULOU

Member

The management of the ECSC in liquidation and of the Coal and Steel Research Fund are the responsibility of Mr Pedro SOLBES MIRA.

Directorate-General for Economic and Financial Affairs

Directorate-General for Economic and Financial Affairs

The ECFIN Directorate-General — Directorate L — conducts the main financial operations of the ECSC in liquidation under the authority, at 31 December 2003, of Mr Klaus REGLING, Director-General of DG ECFIN, and Mr David MCGLUE, Director of Directorate L.

Address

Address

| European Commission |
| --- |
| Directorate-General ECFIN — L |
| Centre Wagner |
| Rue Alcide De Gasperi |
| L-2920 Luxembourg |
| Tel. (352) 4301 1 |
| Fax (352) 43 63 22 |
| E-mail: registry@cec.eu.int |

European Commission

Directorate-General ECFIN — L

Centre Wagner

Rue Alcide De Gasperi

L-2920 Luxembourg

Tel. (352) 4301 1

Fax (352) 43 63 22

E-mail: registry@cec.eu.int

The euro

The euro

Article 121 of the Treaty establishing the European Community laid down 1 January 1999 as the starting date for the third phase of economic and monetary union. On 3 May 1998 a Council meeting of the Heads of State or Government confirmed that Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland met the conditions required for adopting the single currency, the euro, from 1 January 1999. Greece joined this group of countries on 1 January 2001. On 31 December 1998 (1) (19 June 2000 for the Greek drachma (2)), the Council fixed irrevocably the conversion rates between the euro and the currencies of the Member States which were to adopt it:

1

2

| 1 euro = | 40,3399 | Belgian francs |
| --- | --- | --- |
| 1,95583 | German marks |
| 340,750 | Greek drachmas |
| 166,386 | Spanish pesetas |
| 6,55957 | French francs |
| 0,787564 | Irish pounds |
| 1 936,27 | Italian lire |
| 40,3399 | Luxembourg francs |
| 2,20371 | Dutch guilders |
| 13,7603 | Austrian schillings |
| 200,482 | Portuguese escudos |
| 5,94573 | Finnish markka |
| The euro exchange rates for the currencies of the other EU countries and some non-member countries are given in Note B.2.2. |

1 euro =

40,3399

Belgian francs

1,95583

German marks

340,750

Greek drachmas

166,386

Spanish pesetas

6,55957

French francs

0,787564

Irish pounds

1 936,27

Italian lire

40,3399

Luxembourg francs

2,20371

Dutch guilders

13,7603

Austrian schillings

200,482

Portuguese escudos

5,94573

Finnish markka

The euro exchange rates for the currencies of the other EU countries and some non-member countries are given in Note B.2.2.

ACTIVITY REPORT

Expiry of the ECSC Treaty and the management mandate given to the European Commission

Expiry of the ECSC Treaty and the management mandate given to the European Commission

The ECSC Treaty expired on 23 July 2002, and on 24 July 2002 the ownership of ECSC funds reverted to the Member States.

The final objective laid down by the Member States was the transfer of ECSC funds to the European Community and the creation of a joint research fund in sectors associated with the coal and steel industries. This objective was already present in the resolution of the European Council meeting in Amsterdam on 16 June 1997 and in the resolutions adopted by the Council and the Representatives of the Governments of the Member States on 20 July 1998 and 21 June 1999.

The Nice European Council decided to annex to the Treaty of Nice a Protocol on the financial consequences of the expiry of the ECSC Treaty and on the Coal and Steel Research Fund. It was decided that all ECSC assets at the time of the expiry of the Treaty would be transferred to the European Community with effect from 24 July 2002. The net worth of these assets and liabilities is to be considered as assets earmarked for research in the sectors associated with the coal and steel industries. The revenue from these assets is to be used exclusively for research in these sectors.

Since the Treaty of Nice was not ratified before the expiry of the ECSC Treaty, the Member States temporarily entrusted the European Commission (3) with the task of managing the assets of the ECSC in liquidation by applying the same principles as provided for in the Protocol to the Treaty of Nice.

3

On the entry into force of the Treaty of Nice on 1 February 2003, ownership of the ECSC's funds reverted to the European Community with retroactive effect to 24 July 2002.

On 1 February 2003 (4) the Council laid down the measures necessary for the implementation of the Protocol, annexed to the Treaty establishing the European Community, on the financial consequences of the expiry of the ECSC Treaty and on the Research Fund for Coal and Steel. The Commission is responsible for winding up the financial operations of the ECSC that were still in progress at the moment of the expiry of the ECSC Treaty. It is also responsible for managing the assets in such a way as to ensure their long-term profitability. The objective in placing the available assets must be to obtain the highest possible yield that is securely attainable.

4

The Decision of 1 February 2003 further stipulates that the net revenue from investing the available assets constitutes revenue in the general budget of the European Union and that this revenue is to be used to finance, in the sectors associated with the coal and steel industries, research projects that are not covered by the framework research programme. This revenue forms the Research Fund for Coal and Steel and is managed by the Commission.

Winding-up of ECSC financial operations in progress on expiry of the ECSC Treaty

Winding-up of ECSC financial operations in progress on expiry of the ECSC Treaty

Management of borrowings of the ECSC in liquidation

During the winding-up period from 24 July to 31 December 2003, the debt of the ECSC in liquidation changed as follows:

| (EUR million) |
| --- |
| Currency | Number of borrowings at 31 December 2002 | Debt outstanding at 31 December 2002 | Reimbursements from 1 January to 31 December 2003 | Exchange-rate adjustments | Debt outstanding at 31 December 2003 | Number of borrowings at 31 December 2003 |
| EUR | 18 | 295,5 | 241,0 | — | 54,5 | 11 |
| GBP | 6 | 322,0 | — | – 24,8 | 297,2 | 6 |
| USD | 1 | 95,4 | — | – 16,2 | 79,2 | 1 |
| Total | 25 | 712,9 | 241,0 | – 41,0 | 430,9 | 18 |

(EUR million)

Currency

Number of borrowings at 31 December 2002

Debt outstanding at 31 December 2002

Reimbursements from 1 January to 31 December 2003

Exchange-rate adjustments

Debt outstanding at 31 December 2003

Number of borrowings at 31 December 2003

EUR

EUR

18

18

295,5

295,5

241,0

241,0

—

—

54,5

54,5

11

11

GBP

6

322,0

—

– 24,8

297,2

6

USD

1

95,4

—

– 16,2

79,2

1

Total

Total

25

25

712,9

712,9

241,0

241,0

– 41,0

– 41,0

430,9

430,9

18

18

The amortisation of the borrowings outstanding at 31 December 2003 breaks down as follows:

| (EUR million) |
| --- |
| | EUR | GBP | USD | Total |
| 2004 | 2,3 | | | 2,3 |
| 2005 | 2,2 | | | 2,2 |
| 2006 | 2,0 | | | 2,0 |
| 2007 | 2,0 | | | 2,0 |
| 2008 | 0,3 | | 79,2 | 79,5 |
| 2009 | | 85,1 | | 85,1 |
| 2010 | | | | 0,0 |
| 2011 | | | | 0,0 |
| 2012 | 45,7 | | | 45,7 |
| 2013 | | | | 0,0 |
| 2014 | | | | 0,0 |
| 2015 | | | | 0,0 |
| 2016 | | | | 0,0 |
| 2017 | | 95,4 | | 95,4 |
| 2018 | | | | |
| 2019 | | 116,7 | | 116,7 |
| | 54,5 | 297,2 | 79,2 | 430,9 |

(EUR million)

EUR

GBP

USD

Total

2004

2,3

2,3

2005

2,2

2,2

2006

2,0

2,0

2007

2,0

2,0

2008

0,3

79,2

79,5

2009

85,1

85,1

2010

0,0

2011

0,0

2012

45,7

45,7

2013

0,0

2014

0,0

2015

0,0

2016

0,0

2017

95,4

95,4

2018

2019

116,7

116,7

54,5

297,2

79,2

430,9

The main characteristics of the borrowings outstanding are as follows:

| Year of issue | Interest (%) per year (5) | Term (years) | Initial amount | Amount outstanding at 31 December 2003 |
| --- | --- | --- | --- | --- |
| in borrowing currency | equivalent in EUR |
| Contracts redenominated in EUR |
| 1990 | 9,16 | 15 | 2 700 000 DEM | | 276 098 |
| 1990 | 9,0 | 15 | 24 400 000 DEM | | 122 710 |
| 1992 | 2,2705 | 15 | 11 900 000 DEM | | 2 249 684 |
| 1992 | 1,625 | 15 | 9 000 000 000 ITL | | 1 859 245 |
| 1992 | 2,854 | 20 | 300 000 000 FRF | | 45 734 705 |
| 1992 | 2,18263 | 15 | 11 000 000 DEM | | 2 433 749 |
| 1992 | 8,34 | 15 | 2 300 000 DEM | | 470 389 |
| 1993 | 7,08 | 15 | 1 750 000 DEM | | 447 380 |
| 1993 | 6,39 | 15 | 1 355 000 DEM | | 346 400 |
| 1993 | 6,64 | 15 | 1 185 000 DEM | | 302 941 |
| 1993 | 6,75 | 15 | 1 000 000 DEM | | 255 646 |
| Total per currency | | 54 498 947 |
| Contracts in GBP |
| 1990 | 11,875 | 19 | 60 000 000 GBP | 60 000 000 | 85 130 533 |
| 1992 | 9,875 | 25 | 50 000 000 GBP | 17 220 000 | 24 432 463 |
| 1992 | 9,875 | 25 | 30 000 000 GBP | 30 000 000 | 42 565 267 |
| 1993 | 9,875 | 24 | 20 000 000 GBP | 20 000 000 | 28 376 844 |
| 1994 | 6,875 | 25 | 50 000 000 GBP | 35 261 000 | 50 029 796 |
| 1994 | 8,9375 | 25 | 47 000 000 GBP | 47 000 000 | 66 685 585 |
| Total per currency | 209 481 000 | 297 220 488 |
| Contracts in USD |
| 1993 | 6,375 | 15 | 100 000 000 USD | 100 000 000 | 79 176 564 |
| Total per currency | 100 000 000 | 79 176 564 |
| Grand total in EUR | | 430 895 999 |

Year of issue

Interest (%) per year (5)

5

Term (years)

Initial amount

Amount outstanding at 31 December 2003

in borrowing currency

equivalent in EUR

Contracts redenominated in EUR

1990

9,16

15

2 700 000 DEM

276 098

1990

9,0

15

24 400 000 DEM

122 710

1992

2,2705

15

11 900 000 DEM

2 249 684

1992

1,625

15

9 000 000 000 ITL

1 859 245

1992

2,854

20

300 000 000 FRF

45 734 705

1992

2,18263

15

11 000 000 DEM

2 433 749

1992

8,34

15

2 300 000 DEM

470 389

1993

7,08

15

1 750 000 DEM

447 380

1993

6,39

15

1 355 000 DEM

346 400

1993

6,64

15

1 185 000 DEM

302 941

1993

6,75

15

1 000 000 DEM

255 646

Total per currency

Total per currency

54 498 947

54 498 947

Contracts in GBP

1990

11,875

19

60 000 000 GBP

60 000 000

85 130 533

1992

9,875

25

50 000 000 GBP

17 220 000

24 432 463

1992

9,875

25

30 000 000 GBP

30 000 000

42 565 267

1993

9,875

24

20 000 000 GBP

20 000 000

28 376 844

1994

6,875

25

50 000 000 GBP

35 261 000

50 029 796

1994

8,9375

25

47 000 000 GBP

47 000 000

66 685 585

Total per currency

Total per currency

209 481 000

297 220 488

Contracts in USD

1993

6,375

15

100 000 000 USD

100 000 000

79 176 564

Total per currency

Total per currency

100 000 000

100 000 000

79 176 564

79 176 564

Grand total in EUR

Grand total in EUR

430 895 999

430 895 999

NB: Payments of capital and interest in respect of borrowings in GBP totalling GBP 102 481 000 are secured by the holding of bonds (financial fixed assets) with the same rate and maturity date.

Management of loans from the ECSC in liquidation

Over the period ending 31 December 2003, the changes in loans from borrowed funds (pursuant to Articles 54 and 56 ECSC) were as follows:

the changes in loans from borrowed funds

| (EUR million) |
| --- |
| Member State | Number of loans | Amount outstanding at 31 December 2002 | Amortisation from1 January to 31 December 2003 | Exchange-rate adjustment | Amount outstanding at 31 December 2003 | Number of loans |
| Greece | 1 | 95,36 | — | – 16,18 | 79,18 | 1 |
| France | 4 | 362,49 | – 228,67 | — | 133,82 | 2 |
| Italy | 56 | 19,83 | – 11,96 | — | 7,87 | 17 |
| United Kingdom | 1 | 72,25 | — | – 5,56 | 66,69 | 1 |
| Total Community | 62 | 549,93 | – 240,63 | – 21,74 | 287,56 | 21 |

(EUR million)

Member State

Number of loans

Amount outstanding at 31 December 2002

Amortisation from1 January to 31 December 2003

Exchange-rate adjustment

Amount outstanding at 31 December 2003

Number of loans

Greece

1

95,36

—

– 16,18

79,18

1

France

4

362,49

– 228,67

—

133,82

2

Italy

56

19,83

– 11,96

—

7,87

17

United Kingdom

1

72,25

—

– 5,56

66,69

1

Total Community

Total Community

62

62

549,93

549,93

– 240,63

– 240,63

– 21,74

– 21,74

287,56

287,56

21

21

The loans from borrowed funds outstanding at 31 December 2003 were backed by guarantees as follows:

The loans from borrowed funds

| (EUR million) |
| --- |
| Member State | Guarantee by public body | Bank guarantee | Industrial grouping | No guarantee | Total |
| Greece | 79,18 | — | — | — | 79,18 |
| France | — | — | 133,82 | — | 133,82 |
| Italy | — | 7,87 | — | — | 7,87 |
| United Kingdom | — | — | — | 66,69 | 66,69 |
| Total Community | 79,18 | 7,87 | 133,82 | 66,69 | 287,56 |

(EUR million)

Member State

Guarantee by public body

Bank guarantee

Industrial grouping

No guarantee

Total

Greece

79,18

—

—

—

79,18

France

—

—

133,82

—

133,82

Italy

—

7,87

—

—

7,87

United Kingdom

—

—

—

66,69

66,69

Total Community

Total Community

79,18

79,18

7,87

7,87

133,82

133,82

66,69

66,69

287,56

287,56

Over the period ending 31 December 2003, the changes in loans from own funds (pursuant to Articles 54 and 54.2 ECSC) were as follows:

the changes in loans from own funds

| (EUR million) |
| --- |
| Member State | Number of loans | Amount outstanding at 31 December 2002 | Amortisation from 1 January to 31 December 2003 | Exchange-rate adjustment | Amount outstanding at 31 December 2003 | Number of loans |
| Belgium | 24 | 5,49 | – 0,62 | — | 4,87 | 24 |
| Denmark | 4 | 0,01 | 0,00 | 0,00 | 0,01 | 1 |
| Germany | 41 | 52,45 | – 6,83 | — | 45,62 | 38 |
| Greece | 9 | 0,46 | – 0,04 | — | 0,42 | 9 |
| Spain | 21 | 10,20 | – 1,05 | — | 9,15 | 21 |
| France | 41 | 13,11 | – 4,11 | — | 9,00 | 37 |
| Ireland | 10 | 0,32 | – 0,03 | — | 0,29 | 9 |
| Italy | 21 | 6,67 | – 0,81 | — | 5,86 | 21 |
| Luxembourg | 7 | 0,97 | – 0,11 | — | 0,86 | 7 |
| Netherlands | 7 | 0,92 | – 0,08 | — | 0,84 | 7 |
| Austria | 2 | 3,93 | – 0,18 | — | 3,75 | 2 |
| Portugal | 6 | 0,63 | – 0,07 | — | 0,56 | 6 |
| Finland | 2 | 0,75 | – 0,03 | — | 0,72 | 2 |
| United Kingdom | 28 | 7,87 | – 1,13 | – 0,61 | 6,13 | 24 |
| Total Community | 223 | 103,78 | – 15,09 | – 0,61 | 88,08 | 208 |

(EUR million)

Member State

Number of loans

Amount outstanding at 31 December 2002

Amortisation from 1 January to 31 December 2003

Exchange-rate adjustment

Amount outstanding at 31 December 2003

Number of loans

Belgium

24

5,49

– 0,62

—

4,87

24

Denmark

4

0,01

0,00

0,00

0,01

1

Germany

41

52,45

– 6,83

—

45,62

38

Greece

9

0,46

– 0,04

—

0,42

9

Spain

21

10,20

– 1,05

—

9,15

21

France

41

13,11

– 4,11

—

9,00

37

Ireland

10

0,32

– 0,03

—

0,29

9

Italy

21

6,67

– 0,81

—

5,86

21

Luxembourg

7

0,97

– 0,11

—

0,86

7

Netherlands

7

0,92

– 0,08

—

0,84

7

Austria

2

3,93

– 0,18

—

3,75

2

Portugal

6

0,63

– 0,07

—

0,56

6

Finland

2

0,75

– 0,03

—

0,72

2

United Kingdom

28

7,87

– 1,13

– 0,61

6,13

24

Total Community

Total Community

223

223

103,78

103,78

– 15,09

– 15,09

– 0,61

– 0,61

88,08

88,08

208

208

NB: These are loans for financing the construction of subsidised housing at an interest rate of 1 % p.a.

The loans from own funds outstanding at 31 December 2003 were backed by guarantees as follows:

The loans from own funds

| (EUR million) |
| --- |
| Member State | Guarantee by public body | Bank guarantee  (6) | Industrial grouping | No guarantee | Total |
| Public | Private |
| Belgium | — | 4,87 | — | — | — | 4,87 |
| Denmark | — | 0,01 | — | — | — | 0,01 |
| Germany | — | 45,62 | — | — | — | 45,62 |
| Greece | — | 0,42 | — | — | — | 0,42 |
| Spain | — | 9,15 | — | — | — | 9,15 |
| France | — | 8,11 | 0,42 | — | 0,47 | 9,00 |
| Ireland | 0,29 | — | — | — | — | 0,29 |
| Italy | — | 5,86 | — | — | — | 5,86 |
| Luxembourg | — | 0,86 | — | — | — | 0,86 |
| Netherlands | — | — | — | 0,84 | — | 0,84 |
| Austria | — | 3,75 | — | — | — | 3,75 |
| Portugal | — | 0,56 | — | — | — | 0,56 |
| Finland | — | 0,72 | — | — | — | 0,72 |
| United Kingdom | — | 6,13 | — | — | — | 6,13 |
| Total Community | 0,29 | 86,06 | 0,42 | 0,84 | 0,47 | 88,08 |

(EUR million)

Member State

Guarantee by public body

Bank guarantee  (6)

6

Industrial grouping

No guarantee

Total

Public

Private

Belgium

—

4,87

—

—

—

4,87

Denmark

—

0,01

—

—

—

0,01

Germany

—

45,62

—

—

—

45,62

Greece

—

0,42

—

—

—

0,42

Spain

—

9,15

—

—

—

9,15

France

—

8,11

0,42

—

0,47

9,00

Ireland

0,29

—

—

—

—

0,29

Italy

—

5,86

—

—

—

5,86

Luxembourg

—

0,86

—

—

—

0,86

Netherlands

—

—

—

0,84

—

0,84

Austria

—

3,75

—

—

—

3,75

Portugal

—

0,56

—

—

—

0,56

Finland

—

0,72

—

—

—

0,72

United Kingdom

—

6,13

—

—

—

6,13

Total Community

Total Community

0,29

0,29

86,06

86,06

0,42

0,42

0,84

0,84

0,47

0,47

88,08

88,08

Levies

Total claims at 31 December 2002 amounted to EUR 4 858 425.

These were covered in their entirety by value adjustments. Over the period ending on 31 December 2003, payments were received totalling EUR 184 847. Irrecoverable claims totalling EUR 192 945 were cancelled. Total claims at 31 December 2003 thus amounted to EUR 4 480 633, covered in their entirety by value adjustments.

Interest subsidies

Total claims at 31 December 2002 amounted to EUR 2 666 527. Value adjustments were made totalling EUR 2 454 855. During the period ending on 31 December 2003, the ECSC in liquidation received payments of EUR 205 441 and issued new demands for the recovery of EUR 1 064 909. It waived or cancelled claims amounting to EUR 1 218 566. Consequently, at 31 December 2003 total claims amounted to EUR 2 307 429, covered by value adjustments in the sum of EUR 1 965 926.

Fines

A.   THE FOLLOWING FINES, IMPOSED ON STEEL COMPANIES BY THE COMMISSION IN ACCORDANCE WITH THE RULES SET OUT IN THE ECSC TREATY, ARE STILL OUTSTANDING (IN EURO, NET OF INTEREST)

1.   Fines imposed between 1982 and 1984 for infringement of the system of prices and quotas

| | Amount (capital) outstanding at |
| --- | --- |
| 31 December 2002 | 31 December 2003 |
| Three Italian companies | 1 034 270 | 1 034 270 |

Amount (capital) outstanding at

31 December 2002

31 December 2003

Three Italian companies

1 034 270

1 034 270

The three companies are in liquidation. A value adjustment of 100 % has been entered in our books.

2.   Fines imposed on 16 February 1994 (Decision 94/215/ECSC) for infringement of the competition rules in the market for steel beams

By a judgment dated 2 October 2003, the Court of Justice dismissed the appeals of two German companies and one Spanish company. The Court annulled in part the judgment passed on a second Spanish company and referred the case back to the Court of First Instance. As a result of these judgments, in 2003 the ECSC in liquidation received payments totalling EUR 7 759 000 (capital) and EUR 5 285 390 (surcharges for late payment).

The changes in total claims in respect of capital were as follows:

| | Amount (capital) outstanding at |
| --- | --- |
| 31 December 2002 | 31 December 2003 |
| One Italian company (in liquidation since 28 February 1993) | 9 500 000 | 9 500 000 |
| German companies | 4 409 000 | — |
| Spanish companies | 10 450 000 | 7 100 000 |

Amount (capital) outstanding at

31 December 2002

31 December 2003

One Italian company (in liquidation since 28 February 1993)

9 500 000

9 500 000

German companies

4 409 000

—

Spanish companies

10 450 000

7 100 000

A value adjustment of 100 % has been entered in our books.

3.   Fines imposed on 21 January 1998 (Decision 98/247/ECSC) for collusion on the formula for calculating the alloy surcharge

| | Amount (capital) outstanding at |
| --- | --- |
| 31 December 2002 | 31 December 2003 |
| Two companies (German/Italian) | 8 064 000 | 8 064 000 |

Amount (capital) outstanding at

31 December 2002

31 December 2003

Two companies (German/Italian)

8 064 000

8 064 000

The two companies have appealed against the judgment of the Court of First Instance. A value adjustment of 100 % has been entered in our books.

B.   THE FOLLOWING FINES HAVE BEEN PAID, BUT THE COMPANIES HAVE APPEALED AGAINST THE JUDGMENT OF THE COURT OF FIRST INSTANCE. THE ECSC HAD CONSTITUTED A PROVISION FOR LIABILITIES AND CHARGES (AMOUNT IN EURO, NET OF INTEREST)

1.   Fines imposed on 16 February 1994 (Decision 94/215/ECSC) for infringement of the competition rules in the market for steel beams

By a judgment dated 2 October 2003, the Court of Justice dismissed the appeals of one British company and one German company, but it annulled in their entirety the judgment of the Court of First Instance relating to the Luxembourg company and the relevant Commission decision.

The changes in provisions for liabilities and charges were as follows:

| | Amount (capital) in provision at |
| --- | --- |
| 31 December 2002 | 31 December 2003 |
| British, Luxembourgish and German companies | 41 947 108 | — |

Amount (capital) in provision at

31 December 2002

31 December 2003

British, Luxembourgish and German companies

41 947 108

—

2.   Fines imposed on 21 January 1998 (Decision 98/247/ECSC) for infringement of the competition rules with regard to the alloy surcharge

| | Amount (capital) in provision at |
| --- | --- |
| 31 December 2002 | 31 December 2003 |
| Spanish company | 3 136 000 | 3 136 000 |

Amount (capital) in provision at

31 December 2002

31 December 2003

Spanish company

3 136 000

3 136 000

Outstanding commitments under ECSC operating budgets

During the period ending on 31 December 2003, payments were made totalling EUR 98 million and cancellations totalled EUR 22 million. The changes in the commitments relating to the ECSC operating budgets from 1 January to 31 December 2003 were as follows:

| | Amounts at 31.12.2002 | Payments | Cancellations | Amounts at 31.12.2003 |
| --- | --- | --- | --- | --- |
| Redeployment | 121 238 825 | 35 127 481 | 10 351 074 | 75 760 270 |
| Research | 158 711 869 | 56 145 090 | 3 459 355 | 99 107 424 |
| Subsidies (Article 56) | 16 044 579 | 197 428 | 4 640 707 | 11 206 444 |
| Social measures: coal (Rechar) | 46 562 452 | 6 499 153 | 3 671 873 | 36 391 426 |
| Total | 342 557 725 | 97 969 152 | 22 123 009 | 222 465 564 |

Amounts at 31.12.2002

Payments

Cancellations

Amounts at 31.12.2003

Redeployment

121 238 825

35 127 481

10 351 074

75 760 270

Research

158 711 869

56 145 090

3 459 355

99 107 424

Subsidies (Article 56)

16 044 579

197 428

4 640 707

11 206 444

Social measures: coal (Rechar)

46 562 452

6 499 153

3 671 873

36 391 426

Total

Total

342 557 725

342 557 725

97 969 152

97 969 152

22 123 009

22 123 009

222 465 564

222 465 564

Management of assets

Management of assets

The net worth of the ECSC's assets and liabilities at the moment of the expiry of the ECSC Treaty is regarded as assets to be used for research in the sectors associated with the coal and steel industries. These assets are managed by the Commission so as to ensure their long-term profitability, the objective being to obtain the highest possible yield under secure conditions. During the liquidation phase, treasury investments take account of the constraints regarding maturity dates and liquidity.

The total cash holdings of the ECSC in liquidation at 23 July 2002 amounted to EUR 1 592 million. At that date, commitments in respect of the operating budget amounted to EUR 401 million, the Guarantee Fund stood at EUR 529 million and the provisions for financing coal and steel research from 2003 onwards amounted to EUR 240 million. The free reserves after allocation of the surplus amounted at the same date to EUR 268 million.

The changes in total cash holdings, provisions and free reserves since then have been as follows (EUR million):

| | 23 July 2002 | 31 December 2002 | 31 December 2003 |
| --- | --- | --- | --- |
| Total cash holdings | 1 592 | 1 584 | 1 557 |
| Commitments, operating budget | 401 | 343 | 222 |
| Debt provisions, research financing | 240 | 240 | 293 |
| Guarantee fund | 529 | 497 | 243 |
| Free reserves (after allocation) | 268 | 350 | 707 |

23 July 2002

31 December 2002

31 December 2003

Total cash holdings

1 592

1 584

1 557

Commitments, operating budget

401

343

222

Debt provisions, research financing

240

240

293

Guarantee fund

529

497

243

Free reserves (after allocation)

268

350

707

The return on investment, including the variation in the market value of bonds (calculated by the Modified Dietz Method) was 3,56 % for the year 2003, compared with a reference rate for the ECSC in liquidation of 3,1 %.

Financing of coal and steel research

Financing of coal and steel research

The net revenue generated by the assets of the ECSC in liquidation, constituting the Coal and Steel Research Fund, is used exclusively for research carried out in the sectors associated with the coal and steel industries. The net revenue for year n is exclusively made available to the budget of the European Community for research in year n + 2. In order to reduce as far as possible the fluctuations that movements in the financial markets could cause in the financing of research, a smoothing arrangement is applied (7). This financing mechanism took effect in 2003. The revenue for 2003 will be used for research in 2005.

7

Calculation of the allocation for research in 2005:

| Financing provisions for 2004 | 60 000 000 |
| --- | --- |
| Net revenue in 2003 (rounded) | 53 000 000 |
| Difference | 7 000 000 |

Financing provisions for 2004

60 000 000

Net revenue in 2003 (rounded)

53 000 000

Difference

7 000 000

Allocation:

| Net revenue in 2003 | 53 000 000 |
| --- | --- |
| Half of the difference | 3 500 000 |
| Available for research in 2005 | 56 500 000 |

Net revenue in 2003

53 000 000

Half of the difference

3 500 000

Available for research in 2005

56 500 000

Financing:

| Net revenue in 2003 | 53 000 000 |
| --- | --- |
| Withdrawal from the provision for smoothing | 3 500 000 |
| | 56 500 000 |

Net revenue in 2003

53 000 000

Withdrawal from the provision for smoothing

3 500 000

56 500 000

FINANCIAL STATEMENTS OF THE ECSC IN LIQUIDATION

This is the second report on the ECSC in liquidation, covering the period ending on 31 December 2003.

The ECSC's balance sheet, profit-and-loss account and statement of the allocation of the surplus for the year ending 31 December 2003 were submitted to the Commission for approval according to written procedure E/1514/2004 of 29 July 2004 and are shown in this financial report in the form approved by the Commission.

Auditors' report on the financial statements

Auditors' report on the financial statements

In accordance with the mandate given to us, we have audited the financial statements of the ECSC in liquidation for the period ending on 31 December 2003.

The financial statements are the responsibility of the European Commission. Our responsibility is to express an opinion on these financial statements on the basis of our audit.

We have conducted our audit in accordance with international auditing standards. Those standards require that we plan and perform the audit in such a way as to obtain reasonable assurance that the financial statements are free of material misstatement. An audit involves examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. It also includes assessing the accounting principles and methods used and any significant estimates made by the ECFIN-L Directorate in drawing up the financial statements and evaluating the overall presentation of the statements.

The audit procedures employed included the following:

| 1. | Checking the administrative and accounting procedures and the system of checks applying in the ECFIN-L Directorate for the ECSC in liquidation and spot-checking that these procedures have been followed. |
| --- | --- |

1.

Checking the administrative and accounting procedures and the system of checks applying in the ECFIN-L Directorate for the ECSC in liquidation and spot-checking that these procedures have been followed.

| 2. | Checking the supporting documents for the transactions recorded in the accounts. |
| --- | --- |

2.

Checking the supporting documents for the transactions recorded in the accounts.

| 3. | Checking files on borrowings and loans (content, preservation of documents, monitoring of repayments, validity of guarantees). |
| --- | --- |

3.

Checking files on borrowings and loans (content, preservation of documents, monitoring of repayments, validity of guarantees).

| 4. | Analysing accounts, checking calculations. |
| --- | --- |

4.

Analysing accounts, checking calculations.

| 5. | Checks in connection with cash holdings (compliance with limits, examination of positions, checks on swap operations). |
| --- | --- |

5.

Checks in connection with cash holdings (compliance with limits, examination of positions, checks on swap operations).

We consider that our audit provides a reasonable basis for expressing our opinion.

Beyond examining the global confirmations received from DG Budget, our task did not extend to verifying the nature of and supporting documents for the payments and commitments made under the operating budget of the ECSC in liquidation, as these operations are recorded by DG Budget. We understand that these operations are in any case checked by the European Court of Auditors and published in the Official Journal.

With the exception of the potential impact of the point raised in the previous paragraph, in our view the attached financial statements give, in conformity with generally accepted accounting principles in the European Union and the specific accounting principles described in Note B.1 to the financial statements of the ECSC in liquidation, a true and fair view of the assets and financial situation of the ECSC in liquidation at 31 December 2003 and of the results of its operations for the period then ended.

Luxembourg, 6 May 2004.

KPMG Audit

Corporate Auditors

P. CORBARD

Balance sheet at 31 December 2003

(Amounts in EUR) — Before allocation of surplus

ASSETS

| | 31 December 2003 | 31 December 2002 |
| --- | --- | --- |
| Loans and advances to credit institutions | | | | |
| — | repayable on demand |

31 December 2003

31 December 2002

Loans and advances to credit institutions

—

repayable on demand

14 191 243

6 625 169

| — | with agreed maturity dates or periods of notice (Note C.1.1) |
| --- | --- |

—

with agreed maturity dates or periods of notice (Note C.1.1)

41 353 110

6 905 570

| — | loans (Note C.1.2) |
| --- | --- |

—

loans (Note C.1.2)

77 879 727

100 034 710

Total

133 424 080

113 565 449

Loans and advances to customers

| — | loans (Note C.2.1) |
| --- | --- |

—

loans (Note C.2.1)

361 318 524

628 718 200

| — | levy (Note C.2.2) |
| --- | --- |

—

levy (Note C.2.2)

—

—

| — | fines (Note C.2.3) |
| --- | --- |

—

fines (Note C.2.3)

—

—

| — | interest subsidies repayable (Note C.2.4) |
| --- | --- |

—

interest subsidies repayable (Note C.2.4)

341 503

211 672

| — | repayment, research |
| --- | --- |

—

repayment, research

—

20 764

Total

361 660 027

628 950 636

Bonds and other fixed-income securities (Note C.3)

| — | issued by public bodies |
| --- | --- |

—

issued by public bodies

866 240 984

1 026 326 228

| — | issued by other borrowers |
| --- | --- |

—

issued by other borrowers

619 665 223

525 130 526

Shares and other variable-income securities (Note C.4)

15 748 425

18 768 046

Total

1 501 654 632

1 570 224 800

Intangible assets (Note C.5)

1 900

2 850

Tangible assets (Note C.6)

9 396

14 094

Other assets (Note C.7)

3 283 931

3 298 920

Accruals and deferred income (Note C.8)

56 457 898

73 044 693

Total assets

Total assets

2 056 491 864

2 056 491 864

2 389 101 442

2 389 101 442

Off-balance-sheet commitments (Note C.24)

249 437 630

279 829 637

Balance sheet at 31 December 2003

(Amounts in EUR) — Before allocation of surplus

LIABILITIES

| | 31 December 2003 | 31 December 2002 |
| --- | --- | --- |
| Amounts owed to credit institutions (Note C.9) | | | | |
| — | with agreed maturity dates or periods of notice |

31 December 2003

31 December 2002

Amounts owed to credit institutions (Note C.9)

—

with agreed maturity dates or periods of notice

8 764 242

21 140 965

Debts evidenced by certificates (Note C.10)

422 131 757

691 795 132

Other liabilities (Note C.11)

3 163 658

1 429 545

Accruals and deferred income (Note C.12)

34 267 370

49 766 058

Outstanding commitments ECSC operating budget (Note C.13)

Outstanding commitments ECSC operating budget (Note C.13)

222 465 564

342 557 725

Provisions for liabilities and charges

Provisions for liabilities and charges

Guarantee Fund (Note C.14.1)

243 000 000

497 000 000

Other provisions (Note C.14.2)

4 150 039

57 741 255

Total provisions

247 150 039

554 741 255

Budget for financing coal and steel research (Note C.15)

Budget for financing coal and steel research (Note C.15)

293 000 000

240 000 000

Reserves and surplus (Note C.16)

Special reserve

88 100 000

103 800 000

Former pension fund

30 000 000

34 000 000

Assets of the Coal and Steel Research Fund

369 570 762

120 200 000

Profit deferred

—

161 918 722

Surplus for the period (Note C.17)

337 878 472

67 752 040

Total reserves and surplus

825 549 234

487 670 762

Total liabilities

Total liabilities

2 056 491 864

2 056 491 864

2 389 101 442

2 389 101 442

Off-balance-sheet commitments entered into (Note C.24)

252 569 131

276 607 536

Profit-and-loss account for the period ending 31 December 2003

(Amounts in EUR)

CHARGES

| | 1 January to 31 December 2003 | 24 July to 31 December 2002 | 1 January to 23 July 2002 |
| --- | --- | --- | --- |
| Interest payable and similar charges (Note C.18) | | 57 938 886 | | 32 986 478 | | 53 081 195 |
| Commission paid | | 211 887 | | 89 173 | | 314 770 |
| Net losses on financial operations | | | | | | |
| — | exchange difference |

1 January to 31 December 2003

24 July to 31 December 2002

1 January to 23 July 2002

Interest payable and similar charges (Note C.18)

57 938 886

32 986 478

53 081 195

Commission paid

211 887

89 173

314 770

Net losses on financial operations

—

exchange difference

—

246 938

—

| — | losses on bonds and other fixed-income securities |
| --- | --- |

—

losses on bonds and other fixed-income securities

5 450 344

862 608

4 427 896

| — | value adjustments for bonds and other fixed-income securities (Note C.3) |
| --- | --- |

—

value adjustments for bonds and other fixed-income securities (Note C.3)

7 821 336

654 707

63 570 916

| — | value adjustments for shares and other variable-income securities (Note C.4) |
| --- | --- |

—

value adjustments for shares and other variable-income securities (Note C.4)

2 942 548

9 150 238

1 405 587

Total

Total

16 214 228

16 214 228

10 914 491

10 914 491

69 404 399

69 404 399

Administrative overheads (Note C.17.4)

280 274

1 455 616

2 794 520

Value adjustments on tangible and intangible assets (Notes C.5 and C.6)

5 648

5 649

—

Other operating charges (Note C.19)

3 470 180

188 424

715 908

Value adjustments for loans and advances and provisions for liabilities and commitments

| — | value adjustment for loans and advances |
| --- | --- |

—

value adjustment for loans and advances

510 508

4 936 775

916 445

| — | allocation to other provisions for liabilities and charges (Note C.14.2) |
| --- | --- |

—

allocation to other provisions for liabilities and charges (Note C.14.2)

336 906

728 531

3 215 253

Total

Total

847 414

847 414

5 665 306

5 665 306

4 131 698

4 131 698

Extraordinary charges

—

74 154

39 771

Legal commitments for the period

—

—

127 988 619

Allocation to the budget for financing coal and steel research (Notes C.15 and C.17.3)

56 500 000

—

—

Total charges

Total charges

135 468 517

135 468 517

51 379 291

51 379 291

258 470 880

258 470 880

Surplus for the period (Note C.17)

337 878 472

67 752 040

158 668 388

Total

Total

473 346 989

473 346 989

119 131 331

119 131 331

417 139 268

417 139 268

Profit-and-loss account for the period ending 31 December 2003

(Amounts in EUR)

INCOME

| | 1 January to 31 December 2003 | 24 July to 31 December 2002 | 1 January to 23 July 2002 |
| --- | --- | --- | --- |
| Interest receivable and similar income (Note C.20) | | 119 191 862 | | 62 114 830 | | 91 425 315 |
| Commission received | | 298 205 | | — | | 141 300 |
| Net profit on financial operations | | | | | | |
| — | exchange difference |

1 January to 31 December 2003

24 July to 31 December 2002

1 January to 23 July 2002

Interest receivable and similar income (Note C.20)

119 191 862

62 114 830

91 425 315

Commission received

298 205

—

141 300

Net profit on financial operations

—

exchange difference

4 276 296

—

381 759

| — | profit on bonds and other fixed-income securities |
| --- | --- |

—

profit on bonds and other fixed-income securities

4 118 984

2 604 116

5 253 120

| — | profit on shares and other variable-income securities |
| --- | --- |

—

profit on shares and other variable-income securities

—

—

3 491 224

| — | withdrawal of value adjustments for bonds and other fixed-income securities (Note C.3) |
| --- | --- |

—

withdrawal of value adjustments for bonds and other fixed-income securities (Note C.3)

3 301 779

7 842 639

7 580 807

Total

Total

11 697 059

11 697 059

10 446 755

10 446 755

16 706 910

16 706 910

Withdrawals of value adjustments for loans and advances and from the provisions for liabilities and commitments:

| — | withdrawal of value adjustments for loans and advances (Note C.21) |
| --- | --- |

—

withdrawal of value adjustments for loans and advances (Note C.21)

18 727 214

1 907 062

22 011 553

| — | withdrawal of provision for major exposures |
| --- | --- |

—

withdrawal of provision for major exposures

—

—

6 000 000

| — | withdrawal from other provisions for liabilities and charges (Notes C.14.2 and C.22) |
| --- | --- |

—

withdrawal from other provisions for liabilities and charges (Notes C.14.2 and C.22)

42 255 636

—

51 371 610

Total

Total

60 982 850

60 982 850

1 907 062

1 907 062

79 383 163

79 383 163

Other operating income (Note C.23)

23 677 013

12 662 684

8 022 885

Withdrawal from provision for smoothing (Notes C.15 and C.17.3)

3 500 000

—

—

Income relating to the ECSC operating budget

—

—

20 665 175

Withdrawal from the provision for budgetary contingencies

—

—

31 000 000

Withdrawal from the provision for financing the operating budget

—

—

118 794 520

Withdrawal from the Guarantee Fund (Note C.14.1)

254 000 000

32 000 000

51 000 000

Total income

Total income

473 346 989

473 346 989

119 131 331

119 131 331

417 139 268

417 139 268

Allocation of the surplus for the period ending 31 December 2003

(Amounts in EUR)

| | 1 January to 31 December 2003 | 24 July to 31 December 2002 | 1 January to 23 July 2002 |
| --- | --- | --- | --- |
| Surplus brought forward at start of period | — | 3 618 722 | 3 250 334 |
| Surplus for the period to be allocated | 337 878 472 | 67 752 040 | 158 668 388 |
| Total | 337 878 472 | 71 370 762 | 161 918 722 |
| Allocation to the assets of the Coal and Steel Research Fund (Note C.16) | 337 878 472 (8) | 71 370 762 | 158 300 000 |
| Surplus brought forward at start of period | — | — | 3 618 722 |

1 January to 31 December 2003

24 July to 31 December 2002

1 January to 23 July 2002

Surplus brought forward at start of period

—

3 618 722

3 250 334

Surplus for the period to be allocated

337 878 472

67 752 040

158 668 388

Total

Total

337 878 472

337 878 472

71 370 762

71 370 762

161 918 722

161 918 722

Allocation to the assets of the Coal and Steel Research Fund (Note C.16)

337 878 472 (8)

8

71 370 762

158 300 000

Surplus brought forward at start of period

—

—

3 618 722

Notes to the financial statements at 31 December 2003

Notes to the financial statements at 31 December 2003

(Amounts in EUR)

A.   THE ECSC IN LIQUIDATION

The European Coal and Steel Community (ECSC), established by the Treaty signed in Paris on 18 April 1951, expired on 23 July 2002. The Nice European Council decided to annex to the Treaty of Nice of 26 February 2001 (9) a protocol on the financial consequences of the expiry of the ECSC Treaty and on the creation and management of the Coal and Steel Research Fund. It was decided that, on the expiry of the Treaty, all assets and liabilities of the ECSC would be transferred to the European Community with effect from 24 July 2002.

9

Pending the entry into force of the Treaty of Nice (1 February 2003), the Member States entrusted to the European Commission the task of managing the assets of the ECSC in liquidation by applying the same principles (10) as provided for in the Protocol to the Treaty of Nice.

10

Subject to any increase or decrease resulting from the liquidation operations, the net worth of all the ECSC's assets and liabilities, as they appear in the ECSC balance sheet at 23 July 2002, is regarded as assets earmarked for research in the sectors associated with the coal and steel industries. These assets, termed the ‘ECSC in liquidation’, will be known after the end of the liquidation process as the ‘Assets of the Coal and Steel Research Fund’.

The Commission is responsible for winding up the financial operations of the ECSC that were still in progress at the moment of the expiry of the ECSC Treaty. The winding-up is conducted in accordance with the rules and procedures applying to these operations, with the Community institutions enjoying the existing powers and prerogatives provided for by the ECSC Treaty and the secondary legislation in force on 23 July 2002. The assets of the ECSC in liquidation, including its loans portfolio and its investments, are used as necessary to meet the ECSC's remaining obligations in terms of outstanding borrowings resulting from previous operating budgets and other contingencies.

Where the ECSC's assets are not needed to meet these obligations, they are invested so as to ensure long-term profitability. The objective in placing the available assets must be to obtain the highest possible yield that is securely attainable. The net revenue from these investments, known as the ‘Coal and Steel Research Fund’, constitutes revenue in the general budget of the European Union and will be used exclusively for research in the sectors associated with the coal and steel industries, in accordance with Council Decision 2003/76/EC of 1 February 2003 establishing the measures necessary for the implementation of the Protocol, annexed to the Treaty establishing the European Community, on the financial consequences of the expiry of the ECSC Treaty and on the Research Fund for Coal and Steel.

The net revenue available for financing research projects in year n + 2 appears in the balance sheet of the ECSC in liquidation for year n, and after the liquidation process has been completed will appear as assets in the balance sheet of the Coal and Steel Research Fund. In order to reduce as far as possible the fluctuations that movements in the financial markets could cause in the financing of research, a smoothing arrangement is applied and a provision for contingencies has been created. The algorithms for smoothing and for determining the size of the provision for contingencies are set out in the Appendix to Annex 1 to the abovementioned Decision. The identified revenue is divided between research relating to coal and that relating to steel in proportions of 27,2 % and 72,8 % respectively.

B.   ACCOUNTING PRINCIPLES AND METHODS

1.   Presentation of the financial statements

The financial statements are drawn up in accordance with generally recognised accounting principles.

The accounting principles and evaluation methods used for the items in the financial statements take account of the constraints and resolutions applicable to the ECSC in liquidation under the Treaties and other decisions adopted by the institutions of the European Communities.

The accounting methods used also take account of the absence of continuity after 23 July 2002, when the ECSC Treaty expired.

They are presented in accordance with Council Directives 78/660/EEC and 86/635/EEC (11) on the annual accounts and consolidated accounts of banks and other financial institutions wherever these are applicable and subject to the abovementioned necessary adjustments. Directive 2001/65/EC (12) amending the abovementioned Directives concerning the valuation rules and in particular fair value is not yet applicable to the financial statements of the ECSC in liquidation. On 17 December 2002 the Commission decided to apply from 2005 onwards the international accounting standards for the public sector.

11

12

Where appropriate, the necessary presentational adjustments have been made to the figures for the corresponding items in previous periods so as to ensure comparability.

2.   Conversion of items expressed in foreign currency

The currency used for the financial statements of the ECSC in liquidation is the euro (EUR).

All foreign-currency transactions carried out by the ECSC in liquidation are converted into euro at the monthly rate communicated by the European Central Bank.

The value of non-financial assets/liabilities is converted into euro at the monthly rate applicable on the date on which they were acquired or on which their value was last adjusted.

At the balance-sheet date, financial assets/liabilities are converted into euro at the monthly rate applicable on that date. Negative differences are entered under ‘charges’ in the profit-and-loss account, while positive differences are deferred and entered under ‘accruals and deferred income’ on the liabilities side.

2.1.   Conversion rates

The following rates have been used for converting balance-sheet amounts expressed in national currency into euro:

| | 31 December 2003 | 31 December 2002 | 23 July 2002 |
| --- | --- | --- | --- |
| Danish krone | 7,4450 | 7,4288 | 7,43310 |
| Pound sterling | 0,70480 | 0,65050 | 0,63290 |
| Swiss franc | 1,5579 | 1,4524 | 1,45490 |
| United States dollar | 1,2630 | 1,0487 | 0,99100 |

31 December 2003

31 December 2002

23 July 2002

Danish krone

7,4450

7,4288

7,43310

Pound sterling

0,70480

0,65050

0,63290

Swiss franc

1,5579

1,4524

1,45490

United States dollar

1,2630

1,0487

0,99100

2.2.   At 31 December 2003 the various currencies listed above, together with the euro, made up the balance sheet of the ECSC in liquidation as follows (EUR):

| Currency | Assets | Liabilities |
| --- | --- | --- |
| Euro | 1 686 623 947 | 1 646 623 945 |
| Danish krone | 810 149 | — |
| Pound sterling | 278 672 331 | 319 531 199 |
| Swiss franc | 5 | — |
| United States dollar | 90 385 432 | 90 336 720 |
| Total | 2 056 491 864 | 2 056 491 864 |

Currency

Assets

Liabilities

Euro

1 686 623 947

1 646 623 945

Danish krone

810 149

—

Pound sterling

278 672 331

319 531 199

Swiss franc

5

—

United States dollar

90 385 432

90 336 720

Total

Total

2 056 491 864

2 056 491 864

2 056 491 864

2 056 491 864

3.   Treasury investment and valuation of bonds and other securities

The internal prudential rules of the ECSC in liquidation stipulate that portfolio investments are to be confined to securities issued by first-ranking entities. However, in 1998, under an agreement to restructure the debt of a defaulting debtor, the ECSC exceptionally acquired shares and other variable-income securities from a private-sector company.

Bonds and other fixed-income securities and shares and other variable-income securities are valued at the average purchase price or the market value obtaining at the end of the financial year, whichever is the lower.

This principle is not applied in the case of securities considered as financial fixed assets, which are valued at the average purchase price or the redemption value, whichever is the lower.

4.   Intangible and tangible fixed assets

Value adjustments are calculated on the basis of Commission Regulation (EC) No 2909/2000 (13). Computer software is written off over a period of four years, as is hardware.

13

5.   Special features of the ECSC financial statements

(a)   ECSC operating budget

Part of the funds of the ECSC in liquidation is made available to the ECSC operating budget, which was adopted annually by the Commission after informing the Council and consulting the European Parliament. The last such budget was drawn up for the period from 1 January to 23 July 2002.

From 24 July 2002 onwards, the income and charges relating to the operating budget are shown in the accounts as ‘other liquidation income/charges’.

The changes between 1 January and 31 December 2003 in commitments vis-à-vis third parties entered into under the operating budget are shown under the heading ‘Outstanding commitments under the ECSC operating budget’ (see Note C.13).

(b)   Budget for financing coal and steel research

The Council has decided that the income from managing the assets of the ECSC in liquidation should be allocated to the general budget of the European Union (14). This income is earmarked for a research programme relating to the coal and steel industries, as stated in Note A to this report.

14

The ECSC in liquidation has already constituted provisions in order to prepare the ground for this mechanism for financing coal and steel research. These provisions are entered under the heading 'Budget for financing coal and steel research' (see Note C.15).

C.   EXPLANATORY NOTES TO THE HEADINGS IN THE BALANCE SHEET AND THE PROFIT-AND-LOSS ACCOUNT

1.   Loans and advances to credit institutions

1.1.   With agreed maturity dates or periods of notice

The breakdown of the remaining time to maturity of these operations is as follows:

| (EUR) |
| --- |
| | 31 December 2003 | 31 December 2002 |
| up to three months | 41 353 110 | 6 905 570 |
| Total | 41 353 110 | 6 905 570 |

(EUR)

31 December 2003

31 December 2002

up to three months

41 353 110

6 905 570

Total

Total

41 353 110

41 353 110

6 905 570

6 905 570

1.2.   Loans

The breakdown of the remaining time to maturity of these operations is as follows:

| (EUR) |
| --- |
| | 31 December 2003 | 31 December 2002 |
| up to three months | 534 466 | 4 000 015 |
| three months to one year | 6 374 614 | 13 553 271 |
| one to five years | 24 493 333 | 27 905 538 |
| over five years | 46 477 314 | 54 575 886 |
| Total | 77 879 727 | 100 034 710 |

(EUR)

31 December 2003

31 December 2002

up to three months

534 466

4 000 015

three months to one year

6 374 614

13 553 271

one to five years

24 493 333

27 905 538

over five years

46 477 314

54 575 886

Total

Total

77 879 727

77 879 727

100 034 710

100 034 710

2.   Loans and advances to customers

2.1.   Loans

The loans granted to credit institutions are shown under ‘Loans and advances to credit institutions’ (see Note C.1.2).

The other loans break down as follows:

| (EUR) |
| --- |
| | 31 December 2003 | 31 December 2002 |
| 1. | Loans disbursed from borrowed funds |

(EUR)

31 December 2003

31 December 2002

1.

Loans disbursed from borrowed funds

| — | amounts outstanding |
| --- | --- |

—

amounts outstanding

341 346 876

604 761 954

| — | value adjustments |
| --- | --- |

—

value adjustments

– 20 710 979

– 24 539 291

Subtotal

Subtotal

320 635 897

320 635 897

580 222 663

580 222 663

| 2. | Loans from the special reserve for financing subsidised housing |
| --- | --- |

2.

Loans from the special reserve for financing subsidised housing

11 530 061

15 400 184

Interim total

Interim total

332 165 958

332 165 958

595 622 847

595 622 847

The breakdown of these loans (net of value adjustments) by time remaining to maturity was as follows:

| | 31 December 2003 | 31 December 2002 |
| --- | --- | --- |
| — | Up to three months |

31 December 2003

31 December 2002

—

Up to three months

1 370 204

1 374 317

| — | Three months to one year |
| --- | --- |

—

Three months to one year

1 776 869

230 721 357

| — | One to five years |
| --- | --- |

—

One to five years

87 763 012

11 563 579

| — | Over five years |
| --- | --- |

—

Over five years

261 966 852

376 502 885

352 876 937

620 162 138

| 3. | Loans disbursed from the former Pension Fund to officials of the European Communities for housing construction |
| --- | --- |

3.

Loans disbursed from the former Pension Fund to officials of the European Communities for housing construction

28 909 384

32 809 702

| 4. | Other debtors |
| --- | --- |

4.

Other debtors

243 182

285 651

Grand total

Grand total

361 318 524

361 318 524

628 718 200

628 718 200

NB: Loans are generally guaranteed by Member States, banks or businesses or by mortgages.

NB:

2.2.   Levies

The claims relate to years prior to 1998. They are mainly claims on companies in liquidation.

This item breaks down as follows:

| (EUR) |
| --- |
| | 31 December 2003 | 31 December 2002 |
| Gross amount | 4 480 633 | 4 858 425 |
| Value adjustments | – 4 480 633 | – 4 858 425 |
| Net amount | — | — |

(EUR)

31 December 2003

31 December 2002

Gross amount

4 480 633

4 858 425

Value adjustments

– 4 480 633

– 4 858 425

Net amount

Net amount

—

—

—

—

2.3.   Fines

This item contains the Commission's claims on companies fined in accordance with the rules set out in the Treaty.

This item breaks down as follows:

| (EUR) |
| --- |
| | 31 December 2003 | 31 December 2002 |
| Fines due under the ‘quota system’ |
| — | Capital |

(EUR)

31 December 2003

31 December 2002

Fines due under the ‘quota system’

—

Capital

1 034 270

1 034 270

| — | Surcharges for late payment |
| --- | --- |

—

Surcharges for late payment

340 962

340 962

Fines due pursuant to Decision 94/215/ECSC (15)

15

| — | Capital |
| --- | --- |

—

Capital

16 600 000

24 359 000

| — | Surcharges for late payment |
| --- | --- |

—

Surcharges for late payment

3 842 457

11 615 343

Fines due pursuant to Decision 98/247/ECSC (16)

16

| — | Capital |
| --- | --- |

—

Capital

8 064 000

8 064 000

| — | Surcharges for late payment |
| --- | --- |

—

Surcharges for late payment

2 623 285

2 159 605

Total

32 504 974

47 573 180

Value adjustments

– 32 504 974

– 47 573 180

Net amount

Net amount

—

—

—

—

2.4.   Interest subsidies to be recovered

This item comprises claims on companies in receipt of subsidised loans of which the Commission has been obliged to ask to reimburse all or part of the interest subsidy already paid.

| (EUR) |
| --- |
| | 31 December 2003 | 31 December 2002 |
| Subsidies to be repaid | 2 307 429 | 2 666 527 |
| Value adjustments | – 1 965 926 | – 2 454 855 |
| Net amount | 341 503 | 211 672 |

(EUR)

31 December 2003

31 December 2002

Subsidies to be repaid

2 307 429

2 666 527

Value adjustments

– 1 965 926

– 2 454 855

Net amount

Net amount

341 503

341 503

211 672

211 672

3.   Bonds and other fixed-income securities

3.1.   Composition

The bonds and other fixed-income securities break down as follows:

| (EUR) |
| --- |
| | Net change in value adjustments | 31 December 2003 | 31 December 2002 |
| Issued by public bodies: |
| Gross value | | 927 466 782 | 1 089 374 949 |
| Value adjustments | – 1 822 923 | – 61 225 798 | – 63 048 721 |
| Net value | | 866 240 984 | 1 026 326 228 |
| Issued by other borrowers: |
| Gross value | | 622 441 469 | 526 241 560 |
| Value adjustments | 1 665 212 | – 2 776 246 | – 1 111 034 |
| Net value | | 619 665 223 | 525 130 526 |
| Total bonds and other fixed-income securities: |
| Gross value | | 1 549 908 251 | 1 615 616 509 |
| Value adjustments | – 157 711 | – 64 002 044 | – 64 159 755 |
| Net value | | 1 485 906 207 | 1 551 456 754 |

(EUR)

Net change in value adjustments

31 December 2003

31 December 2002

Issued by public bodies:

Issued by public bodies:

Gross value

927 466 782

1 089 374 949

Value adjustments

– 1 822 923

– 61 225 798

– 63 048 721

Net value

866 240 984

1 026 326 228

Issued by other borrowers:

Issued by other borrowers:

Gross value

622 441 469

526 241 560

Value adjustments

1 665 212

– 2 776 246

– 1 111 034

Net value

619 665 223

525 130 526

Total bonds and other fixed-income securities:

Total bonds and other fixed-income securities:

Gross value

1 549 908 251

1 615 616 509

Value adjustments

– 157 711

– 64 002 044

– 64 159 755

Net value

1 485 906 207

1 551 456 754

The net change of EUR – 157 711 in value adjustments between 1 January and 31 December 2003 breaks down as follows:

| — | exchange difference |
| --- | --- |

—

exchange difference

4 677 268

| — | allocation to value adjustments: |
| --- | --- |

—

allocation to value adjustments:

821 336

| — | withdrawal from value adjustments: |
| --- | --- |

—

withdrawal from value adjustments:

3 301 779

– 157 711

3.2.   Maturities in 2004

Securities in the portfolio reaching final maturity in the course of 2004 represent the following amounts (EUR):

| — | Issued by public bodies: |
| --- | --- |

—

Issued by public bodies:

222 348 066

| — | Issued by other borrowers: |
| --- | --- |

—

Issued by other borrowers:

10 945 000

Total

Total

233 293 066

233 293 066

3.3.   Financial fixed assets (See Note B.3)

Financial fixed assets are defined as securities that will remain in the portfolio until their final maturity. They comprise long-term paper for servicing ECSC borrowings.

At 31 December 2003, financial fixed assets totalled EUR 157 541 891 in nominal terms, which was less than the average acquisition price. The value adjustments at 31 December 2003 amounted to EUR 56 032 457 (EUR 60 709 724 at 31 December 2002).

3.4.   Return on investment

Treasury investments take account of the maturity dates and liquidity requirements applicable to ECSC financial operations. They are subject to strict criteria with regard to the financial standing of the counterparty (17).

17

The return on investment, including the variation in the market value of bonds (calculated by the Modified Dietz Method) was 3,56 % for the year 2003. This compares with a reference rate for the ECSC in liquidation of 3,1 %.

3.5.   Structure of the portfolio by maturity date and rating (18)

18

(a)   Time to maturity less than one year

| (EUR million) | Rating | 31 December 2003 |
| --- | --- | --- |
| AAA | 110,4 | 302,5 |
| AA1 | 20,0 | — |
| AA2 | 69,4 | 60,6 |
| AA3 | — | 33,0 |
| A1 | 34,5 | 15,0 |
| 15,0 | 234,3 | 411,1 |

(EUR million)

Rating

31 December 2003

AAA

110,4

302,5

AA1

20,0

—

AA2

69,4

60,6

AA3

—

33,0

A1

34,5

15,0

15,0

234,3

411,1

(b)   Time to maturity between one and three years

| Rating | 31 December 2003 | 31 December 2002 |
| --- | --- | --- |
| AAA | 213,8 | 250,0 |
| AA1 | 34,2 | 39,2 |
| AA2 | 55,7 | 82,0 |
| AA3 | 34,8 | 38,8 |
| A1 | 20,0 | — |
| A2 | — | 53,7 |
| Subtotal | 358,5 | 463,7 |

Rating

31 December 2003

31 December 2002

AAA

213,8

250,0

AA1

34,2

39,2

AA2

55,7

82,0

AA3

34,8

38,8

A1

20,0

—

A2

—

53,7

Subtotal

358,5

463,7

(c)   Time to maturity between three and five years

| Rating | 31 December 2003 | 31 December 2002 |
| --- | --- | --- |
| AAA | 170,2 | 163,3 |
| AA1 | 58,3 | 32,9 |
| AA2 | 60,0 | 45,1 |
| AA3 | 18,4 | 38,4 |
| Subtotal | 306,9 | 279,7 |

Rating

31 December 2003

31 December 2002

AAA

170,2

163,3

AA1

58,3

32,9

AA2

60,0

45,1

AA3

18,4

38,4

Subtotal

306,9

279,7

(d)   Time to maturity between 5 and 7 years

| Rating | 31 December 2003 | 31 December 2002 |
| --- | --- | --- |
| AAA | 204,8 | 99,0 |
| AA1 | 0,0 | 15,5 |
| AA2 | 53,7 | 35,1 |
| AA3 | 10,0 | 15,1 |
| Subtotal | 268,5 | 164,7 |

Rating

31 December 2003

31 December 2002

AAA

204,8

99,0

AA1

0,0

15,5

AA2

53,7

35,1

AA3

10,0

15,1

Subtotal

268,5

164,7

(e)   Time to maturity more than seven years

| Rating | 31 December 2003 | 31 December 2002 |
| --- | --- | --- |
| AAA | 317,7 | 232,3 |
| Sub total | 317,7 | 232,3 |

Rating

31 December 2003

31 December 2002

AAA

317,7

232,3

Sub total

317,7

232,3

(f)   Total per category

| | 31 December 2003 | 31 December 2002 |
| --- | --- | --- |
| AAA | 1 016,9 | 1 047,1 |
| AA1 | 112,5 | 87,6 |
| AA2 | 238,8 | 222,8 |
| AA3 | 63,2 | 125,3 |
| A1 | 54,5 | 15,0 |
| A2 | — | 53,7 |
| Total | 1 485,9 | 1 551,5 |

31 December 2003

31 December 2002

AAA

1 016,9

1 047,1

AA1

112,5

87,6

AA2

238,8

222,8

AA3

63,2

125,3

A1

54,5

15,0

A2

—

53,7

Total

Total

1 485,9

1 485,9

1 551,5

1 551,5

4.   Shares and other variable-income securities

Developments with regard to shares and other variable-income securities were as follows:

| (EUR) |
| --- |
| | Net change in value adjustments | 31 December 2003 | 31 December 2002 |
| Gross value | | 40 728 758 | 40 950 784 |
| Value adjustments | 2 797 595 | – 24 980 333 | – 22 182 738 |
| Net value | | 15 748 425 | 18 768 046 |

(EUR)

Net change in value adjustments

31 December 2003

31 December 2002

Gross value

40 728 758

40 950 784

Value adjustments

2 797 595

– 24 980 333

– 22 182 738

Net value

15 748 425

18 768 046

These shares and other variable-income securities were received by the ECSC in liquidation as part of the restructuring plan of a defaulting debtor.

The net change of EUR 2 797 595 in value adjustments between 1 January and 31 December 2003 breaks down as follows:

| — | Exchange difference |
| --- | --- |

—

Exchange difference

– 144 953

| — | Allocation to value adjustments |
| --- | --- |

—

Allocation to value adjustments

2 942 548

2 797 595

5.   Intangible fixed assets

Developments with regard to intangible fixed assets were as follows:

| (EUR) |
| --- |
| | Balance at 31 December 2002 | Value adjustments | Balance at 31 December 2003 |
| Intangible fixed assets | 2 850 | – 950 | 1 900 |

(EUR)

Balance at 31 December 2002

Value adjustments

Balance at 31 December 2003

Intangible fixed assets

2 850

– 950

1 900

These assets consist of computer software (see also Note B.4)

6.   Tangible fixed assets

Developments with regard to tangible fixed assets were as follows:

| (EUR) |
| --- |
| | Balance at 31 December 2002 | Value adjustments | Balance at 31 December 2003 |
| Tangible fixed assets | 14 094 | – 4 698 | 9 396 |

(EUR)

Balance at 31 December 2002

Value adjustments

Balance at 31 December 2003

Tangible fixed assets

14 094

– 4 698

9 396

These assets consist of computer hardware (see also Note B.4)

7.   Other assets

The other assets break down as follows:

| (EUR) |
| --- |
| | 31 December 2003 | 31 December 2002 |
| Current account, ECSC operating budget
  (see Note 11) | 128 | — |
| Withholding taxes and VAT to be reclaimed | 115 637 | 117 017 |
| Loans to officials | 3 239 963 | 3 251 715 |
| Miscellaneous | 83 051 | 86 415 |
| Subtotal | 3 438 779 | 3 455 147 |
| Value adjustments | – 154 848 | – 156 227 |
| Total | 3 283 931 | 3 298 920 |

(EUR)

31 December 2003

31 December 2002

Current account, ECSC operating budget

(see Note 11)

128

—

Withholding taxes and VAT to be reclaimed

115 637

117 017

Loans to officials

3 239 963

3 251 715

Miscellaneous

83 051

86 415

Subtotal

Subtotal

3 438 779

3 438 779

3 455 147

3 455 147

Value adjustments

– 154 848

– 156 227

Total

Total

3 283 931

3 283 931

3 298 920

3 298 920

8.   Prepayments and accrued income

The repayments and accrued income break down as follows:

| (EUR) |
| --- |
| | 31 December 2003 | 31 December 2002 |
| Interest on loans and swaps | 24 470 852 | 38 425 745 |
| Interest on deposits and securities portfolio securities | 31 987 046 | 39 949 750 |
| Miscellaneous | — | 5 475 |
| Subtotal | 56 457 898 | 78 380 970 |
| Cumulative value adjustments | — | – 5 336 277 |
| Total | 56 457 898 | 73 044 693 |

(EUR)

31 December 2003

31 December 2002

Interest on loans and swaps

24 470 852

38 425 745

Interest on deposits and securities portfolio securities

31 987 046

39 949 750

Miscellaneous

—

5 475

Subtotal

Subtotal

56 457 898

56 457 898

78 380 970

78 380 970

Cumulative value adjustments

—

– 5 336 277

Total

Total

56 457 898

56 457 898

73 044 693

73 044 693

The value adjustment of EUR 5 336 277 at 31 December 2002 was calculated with regard to the accrued interest for a defaulting debtor. The claim concerned was relinquished in the course of January 2003.

9.   Amounts owed to credit institutions

The remaining time to maturity on these operations is as follows:

| (EUR) |
| --- |
| | 31 December 2003 | 31 December 2002 |
| With agreed maturity dates or periods of notice: | | |
| —   Borrowings |
| up to three months | 1 124 378 | 4 622 846 |
| three months to one year | 1 098 766 | 7 753 878 |
| one to five years | 6 541 098 | 8 493 768 |
| over five years | — | 270 473 |
| Total | 8 764 242 | 21 140 965 |

(EUR)

31 December 2003

31 December 2002

With agreed maturity dates or periods of notice:

Borrowings

up to three months

1 124 378

4 622 846

three months to one year

1 098 766

7 753 878

one to five years

6 541 098

8 493 768

over five years

—

270 473

Total

Total

8 764 242

8 764 242

21 140 965

21 140 965

10.   Debts evidenced by certificates

This item comprises loan securities issued by the ECSC.

At 31 December 2003, no debt evidenced by a certificate had a remaining time to maturity of less than one year (EUR 228 673 526 at 31 December 2002).

11.   Other liabilities

The other liabilities break down as follows:

| (EUR) |
| --- |
| | 31 December 2003 | 31 December 2002 |
| Current account, ECSC operating budget
  (see Note 7) | — | 11 356 |
| Early loan repayment | 2 529 713 | 720 649 |
| Other | 633 945 | 697 540 |
| Total | 3 163 658 | 1 429 545 |

(EUR)

31 December 2003

31 December 2002

Current account, ECSC operating budget

(see Note 7)

—

11 356

Early loan repayment

2 529 713

720 649

Other

633 945

697 540

Total

Total

3 163 658

3 163 658

1 429 545

1 429 545

12.   Accruals and deferred income

The accruals and deferred income break down as follows:

| (EUR) |
| --- |
| | 31 December 2003 | 31 December 2002 |
| Interest on borrowings and credit lines | 31 284 706 | 45 574 490 |
| Commissions on loans | 2 386 | 2 982 |
| Miscellaneous | 12 854 | 5 536 |
| Deferred positive exchange differences | 2 967 424 | 4 183 050 |
| Total | 34 267 370 | 49 766 058 |

(EUR)

31 December 2003

31 December 2002

Interest on borrowings and credit lines

31 284 706

45 574 490

Commissions on loans

2 386

2 982

Miscellaneous

12 854

5 536

Deferred positive exchange differences

2 967 424

4 183 050

Total

Total

34 267 370

34 267 370

49 766 058

49 766 058

The deferred positive exchange differences include amounts relating to currency and interest-rate swap operations (see Note 24).

13.   Outstanding commitments under the ECSC operating budget

During the period from 1 January to 31 December 2003, the changes in the item for the ECSC operating budget were as follows:

| (EUR) |
| --- |
| | Amounts at 31 December 2002 | Payments | Cancellations | Amounts at 31 December 2003 |
| Commitments |
| Redeployment | 121 238 825 | 35 127 481 | 10 351 074 | 75 760 270 |
| Research | 158 711 869 | 56 145 090 | 3 459 355 | 99 107 424 |
| Interest subsidies Article 56 | 16 044 579 | 197 428 | 4 640 707 | 11 206 444 |
| Social measures: coal (Rechar) | 46 562 452 | 6 499 153 | 3 671 873 | 36 391 426 |
| Total | 342 557 725 | 97 969 152 | 22 123 009 | 222 465 564 |

(EUR)

Amounts at 31 December 2002

Payments

Cancellations

Amounts at 31 December 2003

Commitments

Commitments

Redeployment

121 238 825

35 127 481

10 351 074

75 760 270

Research

158 711 869

56 145 090

3 459 355

99 107 424

Interest subsidies Article 56

16 044 579

197 428

4 640 707

11 206 444

Social measures: coal (Rechar)

46 562 452

6 499 153

3 671 873

36 391 426

Total

Total

342 557 725

342 557 725

97 969 152

97 969 152

22 123 009

22 123 009

222 465 564

222 465 564

14.   Provisions for liabilities and charges

14.1.   Guarantee fund

The Guarantee Fund is intended to cover lending and borrowing operations. After a withdrawal of EUR 254 million, the Guarantee Fund stood at EUR 243 million at 31 December 2003.

On 11 September 1996 the Commission confirmed its intention of maintaining reserves to cover 100 % of those loans outstanding after 23 July 2002 which are not guaranteed by the government of a Member State. Following repayments over the period from 1 January to 31 December 2003 of loans not guaranteed by a Member State, it was possible to reduce the Guarantee Fund.

The changes in the Guarantee Fund were as follows:

| (EUR) |
| --- |
| 31 December 2002 | Withdrawal | 31 December 2003 |
| 497 000 000 | 254 000 000 | 243 000 000 |

(EUR)

31 December 2002

Withdrawal

31 December 2003

497 000 000

254 000 000

243 000 000

14.2.   Other provisions

The changes in other provisions were as follows:

| (EUR) |
| --- |
| | 31 December 2002 | Change over the period from 1 January to 31 December 2003 | 31 December 2003 |
| Allocation | Withdrawal | Balance-sheet movements (utilisation) |
| Provision for special costs relating to banking activities  (19) | 300 000 | — | — | — | 300 000 |
| Provision for appeals against Decision 94/215/ECSC  (20) | 53 728 649 | 199 473 | – 42 255 636 | – 11 672 486 | — |
| Provision for appeals against Decision 98/247/ECSC  (21) | 3 712 606 | 81 784 | — | — | 3 794 390 |
| Other | — | 55 649 | — | — | 55 649 |
| Total | 57 741 255 | 336 906 | – 42 255 636 | – 11 672 486 | 4 150 039 |

(EUR)

31 December 2002

Change over the period from 1 January to 31 December 2003

31 December 2003

Allocation

Withdrawal

Balance-sheet movements (utilisation)

Provision for special costs relating to banking activities  (19)

19

300 000

—

—

—

300 000

Provision for appeals against Decision 94/215/ECSC  (20)

20

53 728 649

199 473

– 42 255 636

– 11 672 486

—

Provision for appeals against Decision 98/247/ECSC  (21)

21

3 712 606

81 784

—

—

3 794 390

Other

—

55 649

—

—

55 649

Total

Total

57 741 255

57 741 255

336 906

336 906

– 42 255 636

– 42 255 636

– 11 672 486

– 11 672 486

4 150 039

4 150 039

15.   Budget for financing coal and steel research

This item breaks down as follows:

| (EUR) |
| --- |
| | 31 December 2003 | 31 December 2002 |
| Commitments, 2003 coal research budget | 16 132 752 | — |
| Commitments, 2003 steel research budget | 43 676 856 | — |
| Future commitments, coal research budget | 187 248 | — |
| Future commitments, steel research budget | 3 144 | — |
| Provision for research in 2003 | — | 60 000 000 |
| Provision for research in 2004 | 60 000 000 | 60 000 000 |
| Provision for research in 2005 | 56 500 000 | — |
| Provision for smoothing | 116 500 000 | 120 000 000 |
| Total | 293 000 000 | 240 000 000 |

(EUR)

31 December 2003

31 December 2002

Commitments, 2003 coal research budget

16 132 752

—

Commitments, 2003 steel research budget

43 676 856

—

Future commitments, coal research budget

187 248

—

Future commitments, steel research budget

3 144

—

Provision for research in 2003

—

60 000 000

Provision for research in 2004

60 000 000

60 000 000

Provision for research in 2005

56 500 000

—

Provision for smoothing

116 500 000

120 000 000

Total

Total

293 000 000

293 000 000

240 000 000

240 000 000

In view of the expiry of the ECSC Treaty on 23 July 2002 and the winding-up of the ECSC, it was decided that all ECSC assets at the time of the expiry of the Treaty would be managed by the European Commission with effect from 24 July 2002 (22). The net worth of these assets and liabilities is to be considered as assets earmarked for research in the sectors associated with the coal and steel industries. The income generated by these assets will be allocated exclusively to research in these sectors.

22

In practice, the net profit from the management of the assets (invested mainly in a securities portfolio and term deposits) in year n will be transferred to the general budget of the European Community and will be used for research in year n + 2. In order to reduce fluctuations in research funding resulting from movements on the financial markets, a smoothing formula will be applied in accordance with the procedures approved by the Member States. This smoothing formula has been applied for the first time to the results for the 2003 financial year and will serve to determine the allocation for research in 2005.

The net surplus on the management of assets in 2003 amounts to EUR 53 million (see Note C.17.2), and the allocation for research in 2004 has been set at EUR 60 million. Applying the smoothing formula, the allocation for research in 2005 will amount to EUR 56 500 000. This amount will be broken down between coal research (27,2 % = EUR 15 368 000) and steel research (72,8 % = EUR 41 132 000) in accordance with Article 4 of the abovementioned Decision.

16.   Reserves and surpluses

| (EUR) |
| --- |
| | Situation at 31 December 2002 before allocation | Allocation at 23 July 2002  (23) | Allocation at 31 December 2002  (24) | Situation at 31 December 2002 after allocation | Movements at 31 December 2003 | Situation at 31 December 2003 before allocation | Allocation at 31 December 2003  (25) | Situation at 31 December 2003 after allocation |
| Special reserve | 103 800 000 | — | — | 103 800 000 | – 15 700 000 | 88 100 000 | — | 88 100 000 |
| Former Pension Fund | 34 000 000 | — | — | 34 000 000 | – 4 000 000 | 30 000 000 | — | 30 000 000 |
| Assets of the Coal and Steel Research Fund | 120 200 000 | 158 300 000 | 71 370 762 | 349 870 762 | 19 700 000 | 369 570 762 | 337 878 472 | 707 449 234 |
| Profit deferred | 161 918 722 | – 158 300 000 | – 3 618 722 | — | | | | — |
| Surplus for the period from 24 July to 31 December 2002 | 67 752 040 | — | – 67 752 040 | — | | | | — |
| Surplus for the period from 1 January to 31 December 2003 | — | — | — | — | 337 878 472 | 337 878 472 | – 337 878 472 | — |
| Total | 487 670 762 | — | — | 487 670 762 | 337 878 472 | 825 549 234 | — | 825 549 234 |

(EUR)

Situation at 31 December 2002 before allocation

Allocation at 23 July 2002  (23)

23

Allocation at 31 December 2002  (24)

24

Situation at 31 December 2002 after allocation

Movements at 31 December 2003

Situation at 31 December 2003 before allocation

Allocation at 31 December 2003  (25)

25

Situation at 31 December 2003 after allocation

Special reserve

103 800 000

—

—

103 800 000

– 15 700 000

88 100 000

—

88 100 000

Former Pension Fund

34 000 000

—

—

34 000 000

– 4 000 000

30 000 000

—

30 000 000

Assets of the Coal and Steel Research Fund

120 200 000

158 300 000

71 370 762

349 870 762

19 700 000

369 570 762

337 878 472

707 449 234

Profit deferred

161 918 722

– 158 300 000

– 3 618 722

—

—

Surplus for the period from 24 July to 31 December 2002

67 752 040

—

– 67 752 040

—

—

Surplus for the period from 1 January to 31 December 2003

—

—

—

—

337 878 472

337 878 472

– 337 878 472

—

Total

Total

487 670 762

487 670 762

—

—

—

—

487 670 762

487 670 762

337 878 472

337 878 472

825 549 234

825 549 234

—

—

825 549 234

825 549 234

The Special Reserve is used to grant loans from the own funds of the ECSC in liquidation to finance subsidised housing. At 31 December 2002, the amount outstanding corresponding to the loans granted was EUR 88,1 million (EUR 103,8 million at 31 December 2002). Consequently, it was possible to release EUR 15,7 million, which was transferred to the free reserves.

The former Pension Fund originally represented the ECSC's total pension obligations prior to 5 March 1968. Since that date, the Member States have assumed responsibility, via the general budget, for the payment of staff pensions. This fund is used to finance housing loans for officials of the European Communities. At 31 December 2003, the amount outstanding corresponding to the loans granted was EUR 30 million (EUR 34 million at 31 December 2002). Consequently, it was possible to release EUR 4 million, which was transferred to the free reserves.

The ‘Assets of the Coal and Steel Research Fund’ reserve, created in the context of the winding-up of the ECSC (see Note C.15), comprises the free reserves.

17.   Analysis of the result for the period

The overall performance of the ECSC in liquidation is affected by the result of winding up the ECSC's financial operations, the net return on investments, the funding of coal and steel research and administrative costs.

| (EUR) |
| --- |
| | 1 January to 31 December 2003 | 24 July to 31 December 2002 |
| Winding up financial operations (see Note 17.1) | 338 114 826 | 42 051 133 |
| Net investment income (see Note 17.2) | 53 043 920 | 27 156 523 |
| Funding of coal and steel research (Note 17.3) | – 53 000 000 | — |
| Administrative overheads (see Note 17.4) | – 280 274 | – 1 455 616 |
| Total | 337 878 472 | 67 752 040 |

(EUR)

1 January to 31 December 2003

24 July to 31 December 2002

Winding up financial operations (see Note 17.1)

338 114 826

42 051 133

Net investment income (see Note 17.2)

53 043 920

27 156 523

Funding of coal and steel research (Note 17.3)

– 53 000 000

—

Administrative overheads (see Note 17.4)

– 280 274

– 1 455 616

Total

Total

337 878 472

337 878 472

67 752 040

67 752 040

17.1.   Winding up the financial operations of the ECSC in liquidation

| (EUR) |
| --- |
| Result | 1 January to 31 December 2003 | 24 July to 31 December 2002 |
| (a)   Lending/borrowing activities |
| Net interest | 6 970 990 | 3 627 099 |
| Miscellaneous charges/income | – 41 633 | – 66 523 |
| Net change in value adjustments | 2 102 720 | – 2 355 829 |
| Withdrawal from Guarantee Fund | 254 000 000 | 32 000 000 |
| Subtotal | 263 032 077 | 33 204 747 |
| (b) | Winding up commitments under operating budget (cancellations) |

(EUR)

Result

1 January to 31 December 2003

24 July to 31 December 2002

Lending/borrowing activities

Net interest

6 970 990

3 627 099

Miscellaneous charges/income

– 41 633

– 66 523

Net change in value adjustments

2 102 720

– 2 355 829

Withdrawal from Guarantee Fund

254 000 000

32 000 000

Subtotal

263 032 077

33 204 747

(b)

Winding up commitments under operating budget (cancellations)

22 123 009

11 269 047

Winding-up — other activities

Levy, fines, interest subsidies

55 457 334

437 104

Research

594 431

119 190

Other

99 431

– 764 061

Subtotal

56 151 196

– 207 767

Exchange-rate differences and changes in market value

Exchange-rate differences

4 276 296

246 938

Securities market

– 7 462 105

1 962 307

Other

– 5 647

5 649

Subtotal

– 3 191 456

2 214 894

Total

Total

338 114 826

338 114 826

42 051 133

42 051 133

17.2.   Net investment income

| (EUR) |
| --- |
| | 1 January to 31 December 2003 | 24 July to 31 December 2002 |
| Income |
| Interest on nostro account | 78 571 | 65 573 |
| Interest on deposit account | 1 010 128 | 581 393 |
| Interest on securities portfolio
  (excluding dedicated portfolio) | 53 491 215 | 24 857 191 |
| Profit on sales of portfolio | 4 118 985 | 2 604 116 |
| Total income | 58 698 899 | 28 108 273 |
| Charges |
| Debit interest on nostro account | 242 | 2 903 |
| Losses on sales of portfolio | 5 450 344 | 862 608 |
| Bank and portfolio transaction charges | 204 393 | 86 239 |
| Total charges | 5 654 979 | 951 750 |
| Difference = net income | 53 043 920 | 27 156 523 |
| Rounded to nearest million | 53 000 000 | 27 000 000 |
| From 2003 onwards, net income is made available to the general budget of the European Union for financing research projects (see Notes A and C.15) | | |

(EUR)

1 January to 31 December 2003

24 July to 31 December 2002

Income

Income

Interest on nostro account

78 571

65 573

Interest on deposit account

1 010 128

581 393

Interest on securities portfolio

(excluding dedicated portfolio)

53 491 215

24 857 191

Profit on sales of portfolio

4 118 985

2 604 116

Total income

Total income

58 698 899

58 698 899

28 108 273

28 108 273

Charges

Charges

Debit interest on nostro account

242

2 903

Losses on sales of portfolio

5 450 344

862 608

Bank and portfolio transaction charges

204 393

86 239

Total charges

Total charges

5 654 979

5 654 979

951 750

951 750

Difference = net income

Difference = net income

53 043 920

53 043 920

27 156 523

27 156 523

Rounded to nearest million

53 000 000

27 000 000

From 2003 onwards, net income is made available to the general budget of the European Union for financing research projects (see Notes A and C.15)

17.3.   Application of Decision 2003/76/EC

| (EUR) |
| --- |
| | Income | Charges |
| Allocation for 2005 | | 56 500 000 |
| Provision for smoothing | 3 500 000 | |
| Total | 3 500 000 | 56 500 000 |
| Net | | 53 000 000 |

(EUR)

Income

Charges

Allocation for 2005

56 500 000

Provision for smoothing

3 500 000

Total

Total

3 500 000

3 500 000

56 500 000

56 500 000

Net

53 000 000

Pursuant to Article 4 of Decision 2003/76/EC, the net income from investment of EUR 53 000 000 (see Note C.17.2) constitutes revenue in the general budget of the European Union. Article 5 of that Decision lays down that in order to reduce as far as possible fluctuations in research funding due to movements on the financial markets, the smoothing formulae detailed in the Annex to the Decision are to be applied.

In 2003, on the basis of these calculations, EUR 3 500 000 needed to be withdrawn from the provision for smoothing in order to raise the allocation for research in 2005 to EUR 56 500 000.

17.4.   Administrative overheads

Pursuant to Decision 2002/234/ECSC (Annex 1, point 6) of the Representatives of the Governments of the Members States meeting within the Council (see Note A), the administrative expenditure of the ECSC in liquidation is to be met by the Commission from a lump-sum payment of EUR 3,3 million per year pro rata temporis transferred to the general budget of the European Union during the period of the Commission's mandate (see Note A).

The lump-sum payment for the period from 1 January to 31 January 2003 amounts pro rata temporis to EUR 280 274 (EUR 1 455 616 for the period from 24 July to 31 December 2002). With the entry into force of the Treaty of Nice on 1 February 2003, all the ECSC's assets were transferred to the European Community, and the obligation to pay a lump sum to the budget of the European Union lapsed on that date.

18.   Interest and similar charges

| (EUR) |
| --- |
| | 1 January to 31 December 2003 | 24 July to 31 December 2002 | 1 January to 23 July 2002 |
| Interest on loans and swaps | 57 938 644 | 32 983 575 | 52 182 248 |
| Bank interest | 242 | 2 903 | 30 200 |
| Issuing costs and redemption premiums | — | — | 868 747 |
| Total | 57 938 886 | 32 986 478 | 53 081 195 |

(EUR)

1 January to 31 December 2003

24 July to 31 December 2002

1 January to 23 July 2002

Interest on loans and swaps

57 938 644

32 983 575

52 182 248

Bank interest

242

2 903

30 200

Issuing costs and redemption premiums

—

—

868 747

Total

Total

57 938 886

57 938 886

32 986 478

32 986 478

53 081 195

53 081 195

19.   Other operating charges

| (EUR) |
| --- |
| | 1 January to 31 December 2003 | 24 July to 31 December 2002 | 1 January to 23 July 2002 |
| Borrowing costs | 11 523 | 27 904 | 78 123 |
| SWIFT/Reuters charges | 8 153 | 76 766 | 132 483 |
| Loss on loans and advances | 3 435 455 | 82 870 | 441 587 |
| Other | 15 049 | 884 | 63 715 |
| Total | 3 470 180 | 188 424 | 715 908 |

(EUR)

1 January to 31 December 2003

24 July to 31 December 2002

1 January to 23 July 2002

Borrowing costs

11 523

27 904

78 123

SWIFT/Reuters charges

8 153

76 766

132 483

Loss on loans and advances

3 435 455

82 870

441 587

Other

15 049

884

63 715

Total

Total

3 470 180

3 470 180

188 424

188 424

715 908

715 908

The loss on loans and advances is offset by a withdrawal from the corresponding value adjustment.

20.   Interest received and other income

| (EUR) |
| --- |
| | 1 January to 31 December 2003 | 24 July to 31 December 2002 | 1 January to 23 July 2002 |
| Interest on loans and swaps | 51 752 113 | 30 364 393 | 50 010 165 |
| Payment and redemption premiums | 517 | — | 867 660 |
| Bank interest | 1 088 700 | 646 966 | 2 796 887 |
| Interest on bonds and other fixed-income securities | 66 350 532 | 31 103 471 | 37 750 603 |
| Total | 119 191 862 | 62 114 830 | 91 425 315 |

(EUR)

1 January to 31 December 2003

24 July to 31 December 2002

1 January to 23 July 2002

Interest on loans and swaps

51 752 113

30 364 393

50 010 165

Payment and redemption premiums

517

—

867 660

Bank interest

1 088 700

646 966

2 796 887

Interest on bonds and other fixed-income securities

66 350 532

31 103 471

37 750 603

Total

Total

119 191 862

119 191 862

62 114 830

62 114 830

91 425 315

91 425 315

21.   Withdrawal of value adjustments for loans and advances

| (EUR) |
| --- |
| | 1 January to 31 December 2003 | 24 July to 31 December 2002 | 1 January to 23 July 2002 |
| Loans | 2 102 720 | 1 690 839 | 21 545 422 |
| Levies | 377 792 | 117 449 | 466 131 |
| Fines | 15 531 886 | — | — |
| Interest rate rebates | 488 929 | 98 774 | — |
| Research (ECSC operating budget) | 225 887 | — | — |
| Total | 18 727 214 | 1 907 062 | 22 011 553 |

(EUR)

1 January to 31 December 2003

24 July to 31 December 2002

1 January to 23 July 2002

Loans

2 102 720

1 690 839

21 545 422

Levies

377 792

117 449

466 131

Fines

15 531 886

—

—

Interest rate rebates

488 929

98 774

—

Research (ECSC operating budget)

225 887

—

—

Total

Total

18 727 214

18 727 214

1 907 062

1 907 062

22 011 553

22 011 553

22.   Withdrawal from other provisions for liabilities and charges

| (EUR) |
| --- |
| | 1 January to 31 December 2003 | 24 July to 31 December 2002 | 1 January to 23 July 2002 |
| Withdrawal from provision for interest-rate risk | — | — | 51 371 610 |
| Provision for appeals against Decision 94/215/ECSC (see Note C.14.2) | 42 255 636 | — | — |
| Total | 42 255 636 | — | 51 371 610 |

(EUR)

1 January to 31 December 2003

24 July to 31 December 2002

1 January to 23 July 2002

Withdrawal from provision for interest-rate risk

—

—

51 371 610

Provision for appeals against Decision 94/215/ECSC (see Note C.14.2)

42 255 636

—

—

Total

Total

42 255 636

42 255 636

—

—

51 371 610

51 371 610

23.   Other operating/liquidation income

| (EUR) |
| --- |
| | 1 January to 31 December 2003 | 24 July to 31 December 2002 | 1 January to 23 July 2002 |
| Other operating/liquidation income |
| Other income from lending and treasury activities | 68 | 41 961 | 7 678 149 |
| Lapsed coupons and bonds | 14 520 | 38 442 | 1 404 |
| Income from fines | 962 362 | 656 956 | — |
| Income from levies, subsidies, research and redeployment | 492 143 | 656 091 | — |
| Cancellation of legal commitments ECSC operating budget | 22 123 009 | 11 269 048 | — |
| Miscellaneous | 84 911 | 186 | 343 332 |
| Subtotal I | 23 677 013 | 12 662 684 | 8 022 885 |
| Income relating to the ECSC operating budget (before 24 July 2002) |
| Fines | | | 4 600 000 |
| Cancellation of legal commitments | | | 15 421 811 |
| Repayment of subsidies | | | 370 492 |
| Other matters | | | 272 872 |
| Subtotal II | — | — | 20 665 175 |
| Total | 23 677 013 | 12 662 684 | 28 688 060 |

(EUR)

1 January to 31 December 2003

24 July to 31 December 2002

1 January to 23 July 2002

Other operating/liquidation income

Other income from lending and treasury activities

68

41 961

7 678 149

Lapsed coupons and bonds

14 520

38 442

1 404

Income from fines

962 362

656 956

—

Income from levies, subsidies, research and redeployment

492 143

656 091

—

Cancellation of legal commitments ECSC operating budget

22 123 009

11 269 048

—

Miscellaneous

84 911

186

343 332

Subtotal I

Subtotal I

23 677 013

23 677 013

12 662 684

12 662 684

8 022 885

8 022 885

Income relating to the ECSC operating budget (before 24 July 2002)

Fines

4 600 000

Cancellation of legal commitments

15 421 811

Repayment of subsidies

370 492

Other matters

272 872

Subtotal II

Subtotal II

—

—

—

—

20 665 175

20 665 175

Total

Total

23 677 013

23 677 013

12 662 684

12 662 684

28 688 060

28 688 060

Until 23 July 2002 the income from fines, subsidies, the cancellation of legal commitments in the ECSC operating budgets, etc., was booked in the ‘Income relating to the ECSC operating budget’ account.

Following the expiry of the ECSC Treaty and the end of ECSC operating budgets, this income is booked under ‘Other operating/liquidation income’.

24.   Off-balance-sheet commitments

The capital commitments relating to interest-rate and currency swaps arise from the following operations:

Interest-rate swaps

| Commitments received | Commitments entered into | Maturity |
| --- | --- | --- |
| USD 100 million, 6,375 % | USD 100 million, 12,0770 % | 26 March 2008 |
| GBP 60 million, 11,875 % | GBP 60 million, Libor three months -31 b.p. | 13 March 2009 |

Commitments received

Commitments entered into

Maturity

USD 100 million, 6,375 %

USD 100 million, 12,0770 %

26 March 2008

GBP 60 million, 11,875 %

GBP 60 million, Libor three months -31 b.p.

13 March 2009

Interest-rate and currency swaps

| Commitments received | Commitments entered into | Maturity |
| --- | --- | --- |
| GBP 60 million, Libor three months -31 b.p. | EUR 88 095 042 million, Libor three months -31 b.p. | 13 March 2009 |

Commitments received

Commitments entered into

Maturity

GBP 60 million, Libor three months -31 b.p.

EUR 88 095 042 million, Libor three months -31 b.p.

13 March 2009

24.1.   Commitments received

| (EUR) |
| --- |
| | 31 December 2003 | 31 December 2002 |
| Commitments arising from swaps | | |
| — | Notional capital commitments relating to interest-rate swaps |

(EUR)

31 December 2003

31 December 2002

Commitments arising from swaps

—

Notional capital commitments relating to interest-rate swaps

164 307 097

187 592 896

| — | Capital commitments relating to interest-rate and currency swaps |
| --- | --- |

—

Capital commitments relating to interest-rate and currency swaps

85 130 533

92 236 741

Total

Total

249 437 630

249 437 630

279 829 637

279 829 637

24.2.   Commitments entered into

| (EUR) |
| --- |
| | 31 December 2003 | 31 December 2002 |
| (a)   Commitments arising from swaps |
| — | Notional capital commitments relating to interest-rate swaps |

(EUR)

31 December 2003

31 December 2002

Commitments arising from swaps

—

Notional capital commitments relating to interest-rate swaps

164 307 097

187 592 896

| — | Capital commitments relating to interest-rate and currency swaps |
| --- | --- |

—

Capital commitments relating to interest-rate and currency swaps

88 085 042

88 085 042

| (b) | Loans granted to Community officials but not yet disbursed |
| --- | --- |

(b)

Loans granted to Community officials but not yet disbursed

176 992

649 324

| (c) | Administrative overheads (26) |
| --- | --- |

(c)

Administrative overheads (26)

26

—

280 274

Total

Total

252 569 131

252 569 131

276 607 536

276 607 536

25.   Financial situation for the period ending 31 December 2003

| (EUR million) |
| --- |
| | Period from 1 January to 31 December 2003 | Period from 24 July to 31 December 2002 | Period from 1 January to 23 July 2002 |
| Origin of funds |
| Balance of profit-and-loss account | 337,9 | 67,8 | 158,7 |
| Items not involving movements of funds |
| — | Amortisation of issuing costs and redemption premiums |

(EUR million)

Period from 1 January to 31 December 2003

Period from 24 July to 31 December 2002

Period from 1 January to 23 July 2002

Origin of funds

Origin of funds

Balance of profit-and-loss account

337,9

67,8

158,7

Items not involving movements of funds

—

Amortisation of issuing costs and redemption premiums

—

—

0,9

| — | Value adjustments in respect of financial assets (withdrawals) |
| --- | --- |

—

Value adjustments in respect of financial assets (withdrawals)

2,6

2,0

13,0

| — | Value adjustments in respect of loans and advances, net |
| --- | --- |

—

Value adjustments in respect of loans and advances, net

– 9,1

– 24,6

– 62,3

| — | Decrease in ‘ECSC operating budget’ |
| --- | --- |

—

Decrease in ‘ECSC operating budget’

– 120,1

– 58,4

– 172,2

| — | Increase (decrease) in ‘Budget for financing coal and steel research’ |
| --- | --- |

—

Increase (decrease) in ‘Budget for financing coal and steel research’

53,0

—

—

| — | Increase (decrease) in accruals and deferred payments |
| --- | --- |

—

Increase (decrease) in accruals and deferred payments

– 15,5

27,2

– 59,3

| — | Increase (decrease) in accruals and deferred income and issuing costs/redemption premiums |
| --- | --- |

—

Increase (decrease) in accruals and deferred income and issuing costs/redemption premiums

21,9

– 23,7

42,7

| — | Increase (decrease) in other liabilities |
| --- | --- |

—

Increase (decrease) in other liabilities

1,7

– 35,2

32,1

| — | Increase in other assets |
| --- | --- |

—

Increase in other assets

—

2,5

47,8

| — | Allocation to (withdrawal from) the provisions for liabilities and charges |
| --- | --- |

—

Allocation to (withdrawal from) the provisions for liabilities and charges

– 53,6

0,7

– 51,3

| — | Allocation to (withdrawal from) the provision for major exposures |
| --- | --- |

—

Allocation to (withdrawal from) the provision for major exposures

—

—

– 6,0

| — | Exchange-rate adjustments in respect of borrowings and loans |
| --- | --- |

—

Exchange-rate adjustments in respect of borrowings and loans

– 13,6

– 3,2

2,4

| — | Allocation to (withdrawal from) the Guarantee Fund/Special Reserve |
| --- | --- |

—

Allocation to (withdrawal from) the Guarantee Fund/Special Reserve

– 254,0

– 32,0

– 51,0

Total funds

Total funds

– 48,8

– 48,8

– 76,9

– 76,9

– 104,5

– 104,5

Other resources

| — | Loan repayments |
| --- | --- |

—

Loan repayments

266,2

86,6

619,4

| — | Decreases in bank balances and securities portfolio |
| --- | --- |

—

Decreases in bank balances and securities portfolio

23,9

6,6

149,7

Total resources

Total resources

241,3

241,3

16,3

16,3

664,6

664,6

Use of funds

| — | Loan disbursements/increase in loans and advances |
| --- | --- |

—

Loan disbursements/increase in loans and advances

0,3

1,2

0,7

| — | Redemption of borrowings |
| --- | --- |

—

Redemption of borrowings

241,0

15,1

663,9

Total uses

Total uses

241,3

241,3

16,3

16,3

664,6

664,6

---

(1)  Council Regulation (EC) No 2866/98 (OJ L 359, 31.12.1998).

1

(2)  Council Regulation (EC) No 1478/2000 (OJ L 167, 7.7.2000).

2

(3)  Decision 2002/234/ECSC of the Representatives of the Governments of the Member States, meeting within the Council, on the financial consequences of the expiry of the ECSC Treaty (OJ L 79, 22.3.2002, p. 42).

3

(4)  Council Decision 2003/76/EC of 1 February 2003 establishing the measures necessary for the implementation of the Protocol, annexed to the Treaty establishing the European Community, on the financial consequences of the expiry of the ECSC Treaty and on the Research Fund for Coal and Steel (OJ L 29, 5.2.2003, p. 22).

4

(5)  Fixed or variable rates, as the case may be

5

(6)  Mainly loans granted to financial institutions for on-lending to final recipients.

6

(7)  See Annex to Decision 2003/76/EC.

7

(8)  Proposal to the Commission.

8

(9)  OJ C 80, 10.3.2001.

9

(10)  Decision 2002/234/ECSC of the Representatives of the Governments of the Member States, meeting within the Council, of 27 February 2002 on the financial consequences of the expiry of the ECSC Treaty and on the research fund for coal and steel.

10

(11)  OJ L 222, 14.8.1978, and OJ L 372, 31.12.1986.

11

(12)  OJ L 283, 27.10.2001.

12

(13)  OJ L 336, 30.12.2000, p. 75.

13

(14)  Decision 2003/76/EC.

14

(15)  Seven companies lodged appeals against the judgments of the Court of First Instance. By a judgment dated 2 October 2003, the Court of Justice dismissed the appeals of the two German companies and one Spanish company. The Court annulled in part the judgment passed on one other company and referred the case back to the Court of First Instance.

15

(16)  Three companies have lodged appeals against the judgment of the Court of First Instance. Pending the decision of the European Court of Justice, a total (without interest) of EUR 8 064 000 remained outstanding at 31 December 2003.

16

(17)  See paragraph 3 of the Annex to Council Decision 2003/77/EC of 1 February 2003 (OJ L 29, 1.2.2003, p. 26).

17

(18)  Valued at average acquisition price or market value (EUR million), whichever is lower — except for financial fixed assets (time to maturity more than seven years) totalling EUR 141,5 million.

18

(19)  This provision was created to cover any legal costs and other unforeseen expenditure. The risk in question is primarily in the legal field because for its operations the ECSC has less recourse to national agents who bear all expenditure relating to loan operations.

19

(20)  This provision was created from the fines and accrued interest paid since these payments pursuant to Decision 94/215/ECSC of 16 February 1994 to cover the possible reimbursement of the amounts received should the Court of First Instance rule in favour of the companies which have appealed against the judgment of the Court of First Instance of 11 March 1999. The Court of Justice handed down its judgment on 2 October 2003.

20

(21)  This provision was created from the fines and accrued interest paid since these payments under Decision 98/247/ECSC of 21 January 1998 to cover the possible reimbursement of the amounts received should the Court of First Instance rule in favour of the companies which have appealed against the judgment of the Court of First Instance of 13 December 2001.

21

(22)  Decision 2003/76/EC.

22

(23)  Commission Decision of 7 January 2003 (Written procedure E/2698/2002).

23

(24)  Commission Decision of 30 September 2003 (Written procedure E/1661/2003).

24

(25)  Proposal to the Commission.

25

(26)  Pursuant to Decision 2002/234/ECSC (Annex 1, point 6) of the Representatives of the Governments of the Members States meeting within the Council (see Note A), the administrative expenditure of the ECSC in liquidation is to be met by the Commission from a lump-sum payment of EUR 3,3 million per year pro rata temporis transferred to the general budget of the European Union during the period of the Commission's mandate (see Note A).

26

The amount corresponding to administrative overheads for the period from 1 January 2003 to 31 January 2003, i.e. EUR 280 274, is entered as a commitment entered into.

With the entry into force of the Treaty of Nice on 1 February 2003, all the ECSC's assets have been transferred to the European Community, and the obligation to pay a lump sum to the budget of the European Union lapses.

---