FINANCIAL STATEMENTS OF THE EUROPEAN COAL AND STEEL COMMUNITY AT 31 DECEMBER 1995

(96/C 251/03)

In accordance with undertakings given by the Commission on behalf of the ECSC with regard to its borrowing activities, the following financial statements, drawn up in conformity with Article 45c of the Treaty establishing the ECSC, are published:

- the balance sheet of the European Coal and Steel Community at 31 December 1995,

- the profit-and-loss accounts for the year ending 31 December 1995,

- the allocation of the surplus for the year ending 31 December 1995,

- the notes relating to the financial statements at 31 December 1995.

These financial statements are accompanied by the report of the Court of Auditors provided for under Article 45c of the ECSC Treaty, dealing with the financial operations of the ECSC for 1995 with the exception of those relating to revenue and expenditure of an administrative nature.

Balance sheets at 31 December 1995

(amounts in ecus)

- Before allocation of surplus -

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- Before allocation of surplus -

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Profit-and-loss accounts for the year ending 31 December 1995

(amounts in ecus)

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Allocation of the surplus for the year ending 31 December 1995

(amounts in ecus)

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NOTES RELATING TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 1995

(amounts in ecus)

1. PRESENTATION OF THE FINANCIAL STATEMENTS

1.1. The European Coal and Steel Community (ECSC) was established by the Treaty of 18 April 1951. According to the Treaty, the task of the ECSC is to contribute to the economic expansion of the Member States through the establishment of a common market for coal and steel. Most of the ECSC's funds come from the levy, the net profit from its financial activity, borrowings raised on the financial markets and direct bank loans.

1.2. The ECSC's financial statements at 31 December 1995 are presented in accordance with Council Directives 78/660/EEC and 86/635/EEC on the annual accounts and consolidated accounts of banks and other financial institutions (OJ No L 222 of 14 August 1978 and OJ No L 372 of 31 December 1986).

1.3. ECSC accounts are kept in the various currencies used for its financial activity. The financial statements are expressed in ecus.

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

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1.4. At 31 December 1995 the various currencies listed in 1.3, together with the ecu, made up the ECSC's balance sheet as follows:

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2. ACCOUNTING PRINCIPLES AND METHODS

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

2.2. Charges and income for the financial year are entered in national currency and converted to ecus at the monthly accounting rate in force on the day of the transaction.

3. BALANCES WITH CENTRAL BANKS

This item represents the ECSC's balances with the central bank of certain Member States.

4. LOANS AND ADVANCES TO CREDIT INSTITUTIONS

4.1. Repayable on demand

This item also includes loans and advances to Cedel repayable on demand.

4.2. With agreed maturity dates or periods of notice

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

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4.3. Loans

The breakdown of these loans by time to maturity is as follows:

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5. LOANS AND ADVANCES TO CUSTOMERS

5.1. Loans

The loans granted to credit institutions are shown under 'Loans and advances to credit institutions` (see note 4).

The other loans break down as follows:

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5.2. Levy

Before value adjustment, this item amounts to ECU 8 355 018 at 31 December 1995 (ECU 16 625 804 at 31 December 1994). It comprises in particular ECU 6 110 892 subject to legal proceedings (ECU 5 924 068 at 31 December 1994) and ECU 416 014 relating to temporary deferment in respect of coal in stock (ECU 432 179 at 31 December 1994).

Payment of the levy in respect of coal in stock is temporarily deferred under a general decision taken in 1972.

5.3. Fines

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

After value adjustment it amounts to ECU 64 703 179 (ECU 64 041 463 at 31 December 1994).

The main component in this item is fines totalling ECU 104 364 350 that the Commission imposed on steel companies for infringing the rules on competition in the marketing of steel beams (Decision 94/215/ECSC (1) of 16 February 1994). ECU 32 151 350 has been paid in fines under this Decision, against which appeals have been lodged with the Court of First Instance by virtually all the companies concerned.

5.4. Interest subsidies to be recovered

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

6. BONDS AND OTHER FIXED-INCOME SECURITIES

6.1. Valuation

Bonds and other fixed-income securities are valued at average purchase price or market value at 31 December 1995, whichever is the lower.

This principle is not applied in the case of securities considered as financial fixed assets (cf. 6.5).

6.2. Composition

Bonds and other fixed-income securities break down as follows:

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6.3. Maturities in 1996

Securities in the portfolio reaching final maturity during 1996 represent the following amounts (ECU):

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6.4. Listed/unlisted securities

The securities portfolio comprises ECU 1 619 284 906 of securities with a stock-exchange listing, the balance of ECU 68 850 353 being unlisted securities.

6.5. Financial fixed assets

6.5.1. Financial fixed assets are defined as securities that will remain in the portfolio until their final maturity.

They comprise mainly short-term paper and own-debt securities repurchased for servicing ECSC borrowings.

6.5.2. Financial fixed assets are valued at average purchase price or redemption value, whichever is the lower.

The redemption value of these securities exceeds the average purchase price by a total of ECU 582 828.

6.5.3. Financial fixed assets are made up as follows (ECU):

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7. TANGIBLE AND INTANGIBLE ASSETS

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The various buildings owned by the ECSC were originally leased to the European Community. The rent paid on such leases provided a return on the funds invested by the ECSC.

Under the terms of the leases, in 1994 and 1995, the Commission repaid the outstanding principal due to the ECSC with a view to transferring ownership officially from the ECSC to the European Community.

At 31 December 1995, the Haren building was the only one for which the transfer of ownership had been completed.

For the ECSC, this transaction generated a capital gain of ECU 339 066, this being the difference between the transfer price (ECU 5 639 066) and the net book value (ECU 5 300 000) at 27 February 1995, the date of the transfer.

As regards the other buildings, pending the completion of legal formalities for the transfer of ownership, the advances received from the European Community feature on the liabilities side of the balance sheet for a total of ECU 7 288 355.

8. OTHER ASSETS

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9. PREPAYMENTS AND ACCRUED INCOME

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10. AMOUNTS OWED TO CREDIT INSTITUTIONS

The time to maturity on these operations is as follows:

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11. DEBTS EVIDENCED BY CERTIFICATES

Part of the borrowings outstanding at 31 December 1995 will reach maturity during the 1996 financial year. These borrowings amount to ECU 1 613 175 985.

12. OTHER LIABILITIES

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13. ACCRUALS AND DEFERRED INCOME

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14. PROVISION FOR LIABILITIES AND CHARGES

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15. COMMITMENTS FOR THE ECSC OPERATING BUDGET

In 1995, commitments for the ECSC Operating Budget were as follows:

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16. PROVISION FOR FINANCING THE ECSC OPERATING BUDGET

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17. PROVISION FOR LARGE EXPOSURES

Against the background of the expiry of the ECSC Treaty in 2002 and the gradual reduction in outstanding loans, exposure is becoming increasingly concentrated on a limited number of large loans (these large exposures are defined in accordance with Directive 92/121/EEC of 21 December 1992 on the monitoring and control of large exposures).

The provision for large exposures concerns loans exceeding 25 % of the ECSC's own funds not covered by first-rate guarantees.

It is intended to provide cover specifically for this concentration of risk and enable the ECSC to weather any major default.

The provision, calculated on the basis of outstanding large exposures at 31 December 1995 and according to a procedure recommended by a group of international experts, totalled ECU 55 million.

18. RESERVES

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The Guarantee Fund is intended to cover lending and borrowing operations. After allocation of the 1995 instalment of new Member States' contributions (ECU 14 429 322) and the withdrawal of ECU 9 million, the Guarantee Fund totalled ECU 435 314 322 at 31 December 1995. The ECSC's solvency ratio remains within the 14 to 16 % range recommended by a team of international experts to ensure that the structure of the balance sheet remains in equilibrium, having regard to the special status of the ECSC.

The Special Reserve is used to grant loans from ECSC own funds to finance subsidized housing.

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 and has also been used to grant special loans to the coal and steel industries.

As regards the new Member States' contributions, Protocol 5 annexed to the Treaty of Accession of Austria, Finland and Sweden dated 24 June 1994 makes provision for a contribution of ECU 44 100 000 to ECSC reserves payable in two equal interest-free instalments, the first on 1 January 1995 and the second on 1 January 1996.

The first 1995 payment of ECU 22 050 000 was distributed between the Guarantee Fund, the Special Reserve and the former Pension Fund.

19. ANALYSIS OF THE RESULT FOR THE FINANCIAL YEAR

Overall ECSC performance is influenced by both the result of non-budgetary operations (lending/borrowing - investment - exchange-rate variations) and the outturn of the ECSC Operating Budget.

19.1. Non-budgetary operations

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19.2. Outturn of the ECSC Operating Budget

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19.3. Result for the financial year

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20. INTEREST AND OTHER CHARGES

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21. ADMINISTRATIVE EXPENDITURE

The ECSC paid a lump sum of ECU 5 million to the general budget of the Commission of the European Communities to cover its administrative expenditure.

22. OTHER OPERATING CHARGES

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23. INTEREST RECEIVED AND SIMILAR INCOME

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24. OTHER OPERATING INCOME

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25. INCOME RELATING TO THE OPERATING BUDGET

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26. OFF-BALANCE-SHEET COMMITMENTS

26.1. Commitments received

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26.2. Commitments given

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27. CHANGES IN THE FINANCIAL SITUATION FOR THE YEAR ENDING 31 DECEMBER 1995

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OUTTURN OF THE ECSC OPERATING BUDGET FOR 1995

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(1) OJ No L 116, 6. 5. 1994.

(1) See the Commission's outturn forecast of 9 November 1995 (OJ No C 302, 14. 11. 1995).