EUROPEAN COMMISSION Brussels, 11.7.2016 COM(2016) 474 final COMMUNICATION FROM THE COMMISSION ANNUAL ACCOUNTS OF THE EUROPEAN COMMISSION 2015



CONTENTS PART I CERTIFICATION OF THE ACCOUNTS FINANCIAL STATEMENTS AND EXPLANATORY NOTES BALANCE SHEET STATEMENT OF FINANCIAL PERFORMANCE CASHFLOW STATEMENT STATEMENT OF CHANGES IN NET ASSETS NOTES TO THE FINANCIAL STATEMENTS REPORTS ON THE IMPLEMENTATION OF THE BUDGET AND

EXPLANATORY NOTES Part II CERTIFICATION OF THE ACCOUNTS The annual accounts of the European Commission for the year 2015 have been prepared in accordance with the Financial Regulation applicable to the general budget of the European Union and the accounting rules adopted by myself in my capacity as the Commission's Accounting Officer, as are to be applied by all the institutions and Union bodies. I acknowledge my responsibility for the preparation and presentation of the annual accounts of the European Commission in accordance with Article 68 of the Financial Regulation.

I have obtained from the authorising officers, who certified its reliability, all the information necessary for the production of the accounts that show the European Commission's assets and liabilities and the budgetary implementation. I hereby certify that based on this information, and on such checks as I deemed necessary to sign off the accounts, I have a reasonable assurance that the accounts present fairly, in all material aspects, the financial position, the results of the operations and the cash-flow of the European Commission. [signed] Manfred Kraff Accounting Officer of the Commission 8 July 2016 EUROPEAN COMMISSION FINANCIAL YEAR 2015 FINANCIAL STATEMENTS AND EXPLANATORY NOTES

It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables below may appear not to add-up. CONTENTS BALANCE SHEET STATEMENT OF FINANCIAL PERFORMANCE CASHFLOW STATEMENT STATEMENT OF CHANGES IN NET ASSETS NOTES TO THE FINANCIAL STATEMENTS 1.SIGNIFICANT ACCOUNTING POLICIES 2.NOTES TO THE BALANCE SHEET BALANCE SHEET

EUR millions Note 31.12.2015 31.12.2014 NON-CURRENT ASSETS Intangible assets 2.1 128 109 Property, plant and equipment 2.2 5 592 4 799 Investments accounted for using the equity method 2.3 497 409 Financial assets 2.4 55 341 55 027 Pre-financing 2.5 29 884 18 184 Exchange receivables and non-exchange recoverables 2.6 899 1 230 92 341 79 758 CURRENT ASSETS Financial assets 2.4 9 579 11 134 Pre-financing 2.5 15 360 34 347 Exchange receivables and non-exchange recoverables 2.6 9 215 14 192 Inventories 2.7 75 82 Cash and cash equivalents 2.8 20 660 16 187 54 889 75 942 TOTAL ASSETS 147 230 155 700 NON-CURRENT LIABILITIES Pension and other employee benefits 2.9 (63 208) (58 045) Provisions 2.10 (1 562) (1 378) Financial liabilities 2.11 (50 897) (50 932) (115 666) (110 355) CURRENT LIABILITIES Provisions 2.10 (302) (734) Financial liabilities 2.11 (7 898) (8 783) Payables 2.12 (32 367) (42 986) Accrued charges and deferred income 2.13 (67 962) (55 575) (108 528) (108 078) TOTAL LIABILITIES (224 194) (218 433) NET ASSETS (76 964) (62 733) Reserves 2.14 2 915 2 641 Amounts to be called from Member States* 2.15 (79 879) (65 374) NET ASSETS (76 964) (62 733) * The European Parliament adopted a budget on 25 November 2015 which provides for the payment of the Commission's short-term liabilities from own resources to be collected by, or called up from, the Member States in 2016. Additionally, under article 83 of the Staff Regulations (Council Regulation 259/68 of 29 February 1968 as amended), the Member States shall jointly guarantee the liability for pensions. STATEMENT OF FINANCIAL PERFORMANCE EUR millions Note 2015 2014 REVENUE Revenue from non-exchange transactions GNI resources 95 355 104 688 Traditional own resources 3.1 18 649 17 137 VAT 18 328 17 462 Fines 531 2 297 Recovery of expenses 3.2 1 547 3 418 Other 3.3 1 223 1 936 Sub-total 135 633 146 938 Revenue from exchange transactions Financial income 3.4 1 787 2 241 Other 3.5 1 264 797 Sub-total 3 051 3 039 Total Revenue 138 684 149 977 EXPENSES * Implemented by Member States 3.6 European Agricultural Guarantee Fund (45 032) (44 465) European Agricultural Fund for Rural Development and other rural development instruments (16 376) (14 046) European Regional Development Fund & Cohesion Fund (38 745) (43 345) European Social Fund (9 849) (12 651) Other (2 380) (2 307) Implemented by the Commission, executive agencies and trust funds 3.7 (15 635) (15 328) Implemented by other EU agencies and bodies 3.8 (1 616) (1 362) Implemented by third countries and int. organisations 3.8 (3 031) (2 770) Implemented by other entities 3.8 (2 107) (1 799) Staff and pension costs 3.9 (7 537) (7 357) Changes in employee benefits actuarial assumptions (2 008) (9 052) Finance costs 3.10 (1 933) (2 877) Share of net deficit of joint ventures and associates (641) (640) Other 3.11 (4 655) (3 204) Total Expenses (151 546) (161 203) ECONOMIC RESULT OF THE YEAR (12 862) (11 226) * Implemented by Member States: Shared management Implemented by the Commission, executive agencies and trust funds: Direct management Implemented by other EU agencies and bodies, third countries, international organisations and other entities: Indirect management CASHFLOW STATEMENT EUR millions Note 2015 2014 Economic result of the year (12 862) (11 226) Operating activities Amortisation 20 15 Depreciation 221 164 (Reversal of) impairment losses on investments – – (Increase)/decrease in loans 1 455 (1 241) (Increase)/decrease in pre-financing 7 287 6 653 (Increase)/decrease in exchange receivables and non-exchange recoverables 5 308 (1 886) (Increase)/decrease in inventories 7 4 Increase/(decrease) in pension and employee benefits liability 5 163 11 942 Increase/(decrease) in provisions (249) 321 Increase/(decrease) in financial liabilities (920) 1 185 Increase/(decrease) in payables (10 619) 6 971 Increase/(decrease) in accrued charges and deferred income 12 386 (306) Prior year budgetary surplus taken as non-cash revenue (1 435) (1 005) Other non-cash movements 65 112 Investing activities (Increase)/decrease in intangible assets and property, plant and equipment (1 054) (2 120) (Increase)/decrease in investments accounted for using the equity method (87) (60) (Increase)/decrease in available for sale financial assets (214) (1 610) NET CASHFLOW 4 472 7 912 Net increase/(decrease) in cash and cash equivalents 4 472 7 912 Cash and cash equivalents at the beginning of the year 2.8 16 187 8 275 Cash and cash equivalents at year-end 2.8 20 660 16 187 STATEMENT OF CHANGES IN NET ASSETS EUR millions Reserves (A) Amounts to be called from Member States (B) Net Assets =(A)+(B) Fair value reserve Other reserves Accumulated Surplus/(Deficit) Economic result of the year BALANCE AS AT 31.12.2013 83 2 215 (48 228) (4 685) (50 616) Movement in Guarantee Fund reserve - 247 (247) - – Fair value movements 119 - - - 119 Other - (24) 18 - (6) Allocation of the 2013 economic result - - (4 685) 4 685 – 2013 budget result credited to Member States - - (1 005) - (1 005) Economic result of the year - - - (11 226) (11 226) BALANCE AS AT 31.12.2014 202 2 438 (54 147) (11 226) (62 734) Movement in Guarantee Fund reserve – 189 (189) – – Fair value movements 84 – – – 84 Other – 2 (20) – (18) Allocation of the 2014 economic result – – (11 226) 11 226 – 2014 budget result credited to Member States – – (1 435) – (1 435) Economic result of the year – – – (12 862) (12 862) BALANCE AS AT 31.12.2015 286 2 629 (67 016) (12 862) (76 964)

NOTES TO THE FINANCIAL STATEMENTS For further information in addition to the following notes, please also see the 2015 EU consolidated accounts.

1.SIGNIFICANT ACCOUNTING POLICIES The European Commission (hereinafter referred to as the Commission) applies the accounting policies of the European Union (hereinafter referred to as the EU). A summary of the significant EU accounting policies is given below. 1.1.LEGAL BASIS AND ACCOUNTING RULES The accounts of the EU are kept in accordance with Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002 (OJ L 298, 26.10.2012, p. 1) hereinafter referred to as the 'Financial Regulation' and Commission Delegated Regulation (EU) No 1268/2012 of 29 October 2012 (OJ L 362, 31.12.2012, p. 1) laying down detailed rules of application of this Financial Regulation. In accordance with article 143 of the Financial Regulation, the EU prepares its financial statements on the basis of accrual-based accounting rules that are based on International Public Sector Accounting Standards (IPSAS). These accounting rules, adopted by the Accounting Officer of the Commission, have to be applied by all the institutions and EU bodies falling within the scope of consolidation in order to establish a uniform set of rules for accounting, valuation and presentation of the accounts with a view to harmonising the process for drawing up the financial statements and consolidation. The accounts are kept in Euro on the basis of the calendar year. 1.2.ACCOUNTING PRINCIPLES The objective of the financial statements is to provide information about the financial position, performance and cashflows of an entity that is useful to a wide range of users. For the EU as a public sector entity, the objectives are more specifically to provide information useful for decision making, and to demonstrate the accountability of the entity for the resources entrusted to it. It is with these goals in mind that the present document has been drawn up. The overall considerations (or accounting principles) to be followed when preparing the financial statements are laid down in EU accounting rule 1 "Financial Statements" and are the same as those described in IPSAS 1, that is: fair presentation, accrual basis, going concern, consistency of presentation, aggregation, offsetting and comparative information. The qualitative characteristics of financial reporting according to article 144 of the Financial Regulation are relevance, reliability, understandability and comparability. Preparation of the financial statements in accordance with the above mentioned rules and principles requires management to make estimates that affect the reported amounts of certain items in the balance sheet and statement of financial performance, as well as the disclosures related to financial instruments and contingent assets and liabilities. 1.3.CONSOLIDATION Scope of consolidation The consolidated financial statements of the EU comprise all significant controlled entities (i.e. the EU institutions (including the Commission) and the EU agencies), associates and joint ventures. The complete list of consolidated entities can be found in note 9 of the EU financial statements. It now comprises 52 controlled entities, 7 joint ventures and 1 associate. In comparison with 2014, the scope of consolidation remained unchanged except for one new joint venture included and one joint venture removed – see note 2.3. Controlled entities The decision to include an entity in the scope of consolidation is based on the control concept. Controlled entities are all entities over which the EU has, directly or indirectly, the power to govern the financial and operating policies so as to be able to benefit from these entities' activities. This power must be presently exercisable. Controlled entities are fully consolidated. The consolidation begins at the first date on which control exists, and ends when such control no longer exists. The most common indicators of control within the EU are: creation of the entity through founding treaties or secondary legislation, financing of the entity from the general budget, the existence of voting rights in the governing bodies, audit by the Court and discharge by the European Parliament. An individual assessment for each entity is made in order to decide whether one or all of the criteria listed above are sufficient to result in control. Under this approach, the EU's institutions (except the ECB) and agencies (excluding the agencies of the former 2nd pillar) are considered as under the exclusive control of the EU and are therefore included in the consolidation scope. Furthermore the European Coal and Steel Community (ECSC) in Liquidation is also considered as a controlled entity. All material "inter-entity transactions and balances" between EU controlled entities are eliminated, while unrealised gains and losses on such transactions are not material and so have not been eliminated. Joint Ventures A joint venture is a contractual arrangement whereby the EU and one or more parties (the "venturers") undertake an economic activity which is subject to joint control. Joint control is the contractually agreed sharing of control, directly or indirectly, over an activity embodying service potential. Participations in joint ventures are accounted for using the equity method (see 1.5.4 below).

Associates Associates are entities over which the EU has, directly or indirectly, significant influence but not control. It is presumed that significant influence exists if the EU holds directly or indirectly 20 % or more of the voting rights. Participations in associates are accounted for using the equity method (see 1.5.4 below). Non-consolidated entities the funds of which are managed by the Commission The funds of the Joint Sickness Insurance Scheme for staff of the EU, the European Development Fund and the Participants Guarantee Fund are managed by the Commission on their behalf. However since these entities are not controlled by the EU they are not consolidated in its financial statements. 1.4.BASIS OF PREPARATION 2.Currency and basis for conversion Functional and reporting currency The financial statements are presented in millions of euros, the euro being the EU's functional and reporting currency. Transactions and balances Foreign currency transactions are translated into euros using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the re-translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of financial performance. Different conversion methods apply to property, plant and equipment and intangible assets, which retain their value in euros at the rate that applied at the date when they were purchased. Year-end balances of monetary assets and liabilities denominated in foreign currencies are converted into euros on the basis of the exchange rates applying on 31 December: Euro exchange rates Currency 31.12.2015 31.12.2014 Currency 31.12.2015 31.12.2014 BGN 1.9558 1.9558 PLN 4.2639 4.2732 CZK 27.0230 27.7350 RON 4.5240 4.4828 DKK 7.4626 7.4453 SEK 9.1895 9.3930 GBP 0.7340 0.7789 CHF 1.0835 1.2024 HRK 7.6380 7.6580 JPY 131.0700 145.2300 HUF 315.9800 315.5400 USD 1.0887 1.2141 Changes in the fair value of monetary financial instruments denominated in a foreign currency and classified as available for sale that relate to a translation difference are recognised in the statement of financial performance. Translation differences on non-monetary financial assets and liabilities held at fair value through profit or loss are recognised in the statement of financial performance. Translation differences on non-monetary financial instruments classified as available for sale are included in the fair value reserve. 3.Use of estimates In accordance with IPSAS and generally accepted accounting principles, the financial statements necessarily include amounts based on estimates and assumptions by management based on the most reliable information available. Significant estimates include, but are not limited to: amounts for employee benefit liabilities, provisions, financial risk on inventories and accounts receivable, accrued income and charges, contingent assets and liabilities, degree of impairment of intangible assets and property, plant and equipment and amounts disclosed in the notes concerning financial instruments. Actual results could differ from those estimates. Changes in estimates are reflected in the period in which they become known. 3.1.BALANCE SHEET

4.Intangible assets Acquired computer software licences are stated at historical cost less accumulated amortisation and impairment losses. The assets are amortised on a straight-line basis over their estimated useful lives. The estimated useful lives of intangible assets depend on their specific economic lifetime or legal lifetime determined by an agreement. Internally developed intangible assets are capitalised when the relevant criteria of the EU accounting rules are met and relate solely to the development phase of the asset. The costs capitalisable include all directly attributable costs necessary to create, produce, and prepare the asset to be capable of operating in the manner intended by management. Costs associated with research activities, non-capitalisable development costs and maintenance costs are recognised as expenses as incurred. 5.Property, plant and equipment All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition, construction or transfer of the asset. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits or service potential associated with the item will flow to the EU and its cost can be measured reliably. Repairs and maintenance costs are charged to the statement of financial performance during the financial period in which they are incurred. Land and works of art are not depreciated as they are deemed to have an indefinite useful life. Assets under construction are not depreciated as these assets are not yet available for use. Depreciation on other assets is calculated using the straight-line method to allocate their cost less their residual values over their estimated useful lives, as follows: Type of asset Straight line depreciation rate Buildings 4 % to 10 % Plant and equipment 10 % to 25 % Furniture and vehicles 10 % to 25 % Computer hardware 25 % to 33 % Other 10 % to 33 % Gains or losses on disposals are determined by comparing proceeds less selling expenses with the carrying amount of the disposed asset and are included in the statement of financial performance. Leases Leases of tangible assets, where the EU has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased asset and the present value of the minimum lease payments. The interest element of the finance lease payment is charged to expenditure over the period of the lease at a constant periodic rate in relation to the balance outstanding. The rental obligations, net of finance charges, are included in financial liabilities (non-current and current). The interest element of the finance cost is charged to the statement of financial performance over the lease period so as to produce a constant periodic interest rate on the remaining balance of the liability for each period. The assets held under finance leases are depreciated over the shorter of the asset's useful life and the lease term. Leases where the lessor retains a significant portion of the risks and rewards inherent to ownership are classified as operating leases. Operating lease payments are recognised as an expense in the statement of financial performance on a straight-line basis over the lease term. 6.Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation/depreciation and are tested annually for impairment. Assets that are subject to amortisation/depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable (service) amount. The recoverable (service) amount is the higher of an asset’s fair value less costs to sell and its value in use. Intangible assets and property, plant and equipment residual values and useful lives are reviewed, and adjusted if appropriate, at least once per year. An asset’s carrying amount is written down immediately to its recoverable (service) amount if the asset’s carrying amount is greater than its estimated recoverable (service) amount. If the reasons for impairments recognised in previous years no longer apply, the impairment losses are reversed accordingly. 7.Investments accounted for using the equity method Participations in associates and joint ventures Participations in associates and joint ventures are accounted for using the equity method and are initially recognised at cost. The EU's interest in the results of its associates and joint ventures is recognised in the statement of financial performance, and its share in the movements in reserves is recognised in the reserves. The initial cost together with all movements (further contributions, share of economic results and reserve movements, impairments, and dividends) give the book value of the associate or joint venture in the financial statements at the balance sheet date. Distributions received from an associate or joint venture reduce the carrying amount of the asset. If the EU's share of deficits of a joint venture equals or exceeds its interest in the joint venture, the EU discontinues recognising its share of further losses ("unrecognised losses"). The unrecognised share of losses is the result of a technical accounting exercise needed when using the equity method of accounting. These unrecognised losses do not represent losses for the EU and are due to the fact that the expense recognition normally takes place before the capital increase for the contribution in kind of the venturers other than the EU. Unrealised gains and losses on transactions between the EU and its associate or joint ventures are not material and have therefore not been eliminated. The accounting policies of associates or joint ventures may differ from those adopted by the EU for like transactions and events in similar circumstances.

If there are indications of impairment, a write-down to the lower recoverable amount is necessary. The recoverable amount is determined as described under 1.5.3. If the reason for impairment ceases to apply at a later date, the impairment loss is reversed to the carrying amount that would have been determined had no impairment loss been recognised. In cases where the EU holds 20 % or more of an investment capital fund, it does not seek to exert significant influence. Such funds are therefore treated as financial instruments and categorised as available for sale financial assets. 8.Financial assets Classification The EU classifies their financial assets in the following categories: financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; and available for sale financial assets. The classification of financial instruments is determined at initial recognition and re-evaluated at each balance sheet date. (I)Financial assets at fair value through profit or loss A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by the EU. Derivatives are also categorised in this category. Assets in this category are classified as current assets if they are expected to be realised within 12 months of the balance sheet date. During this financial year, the EU did not hold any financial assets in this category. (II)Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the EU provides money, goods or services directly to a debtor with no intention of trading the receivable, or in case the EU is subrogated to the rights of the original lender following a payment made by the EU under a guarantee contract. Payments due within 12 months of the balance sheet date are classified as current assets. Payments due after 12 months from the balance sheet date are classified as non-current assets. Loans and receivables include term deposits with the original maturity above three months. (III)Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the EU has the positive intention and ability to hold to maturity. During this financial year, the EU did not hold any investments in this category. (IV)Available for sale financial assets Available for sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are classified as either current or non-current assets, depending on the period of time the EU expects to hold them, which is usually the maturity date. Investments in entities that are neither consolidated nor accounted for using the equity method and other equity-type investments (e.g. Risk Capital Operations) are also classified as available for sale financial assets. Initial recognition and measurement Purchases and sales of financial assets at fair value through profit or loss, held-to-maturity and available for sale (except cash and cash equivalents) are recognised on trade-date – the date on which the EU commits to purchase or sell the asset. Loans are recognised when cash is advanced to the borrowers. Financial instruments are initially recognised at fair value. For all financial assets not carried at fair value through profit or loss transactions costs are added to the fair value at initial recognition. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the statement of financial performance. The fair value of a financial asset on initial recognition is normally the transaction price (i.e. the fair value of the consideration received). However, when a long-term loan that carries no interest or an interest below market conditions is granted, its fair value can be estimated as the present value of all future cash receipts discounted using the prevailing market rate of interest for a similar instrument with a similar credit rating. Loans granted are measured at their nominal amount, which is considered to be the fair value of the loan. The reasoning for this is as follows: -The “market environment” for EU lending is very specific and different from the capital market used to issue commercial or government bonds. As lenders in these markets have the opportunity to choose alternative investments, the opportunity possibility is factored into market prices. However, this opportunity for alternative investments does not exist for the EU which is not allowed to invest money on the capital markets; it only borrows funds for the purpose of lending at the same rate. This means that there is no alternative lending or investment option available to the EU for the sums borrowed. Thus, there is no opportunity cost and therefore no basis of comparison with market rates. In fact, the EU lending operation itself represents the market. Essentially, since the opportunity cost "option" is not applicable, the market price does not fairly reflect the substance of the EU lending transactions. Therefore, it is not appropriate to determine the fair value of EU lending with reference to commercial or government bonds. -Furthermore as there is no active market or similar transactions to compare with, the interest rate to be used by the EU for fair valuing its lending operations under the EFSM, BOP and other such loans, should be the interest rate charged.

-In addition, for these loans, there are compensating effects between loans and borrowings due to their back-to-back character. Thus, the effective interest for the loan equals the effective interest rate for the related borrowings. The transaction costs incurred by the EU and then recharged to the beneficiary of the loan are directly recognised in the statement of financial performance. Financial instruments are derecognised when the rights to receive cashflows from the investments have expired or the EU has transferred substantially all risks and rewards of ownership to another party. Subsequent measurement (I)Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains and losses arising from changes in the fair value of the ‘financial instruments at fair value through profit or loss’ category are included in the statement of financial performance in the period in which they arise. The EU currently holds no investments in this category. (II)Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. In the case of loans granted on borrowed funds, the same effective interest rate is applied to both the loans and borrowings since these loans have the characteristics of 'back-to-back operations' and the differences between the loan and the borrowing conditions and amounts are not material. The transaction costs incurred by the EU and then recharged to the beneficiary of the loan are directly recognised in the statement of financial performance. (III)Held to maturity – the EU currently holds no held to maturity investments. (IV)Available for sale financial assets are subsequently carried at fair value. Gains and losses arising from changes in the fair value of available for sale financial assets are recognised in the fair value reserve, except for translation differences on monetary assets which are recognised in the statement of financial performance. When assets classified as available for sale financial assets are derecognised or impaired, the cumulative fair value adjustments previously recognised in the fair value reserve are recognised in the statement of financial performance. Interest on available for sale financial assets calculated using the effective interest method is recognised in the statement of financial performance. Dividends on available for sale equity instruments are recognised when the EU's right to receive payment is established. The fair values of quoted investments in active markets are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the EU establishes a fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cashflow analysis, option pricing models and other valuation techniques commonly used by market participants. In cases where the fair value of investments in equity instruments that do not have a quoted market price in an active market cannot be reliably measured, these investments are valued at cost less impairment losses. Impairment of financial assets The EU assesses at each balance sheet date whether there is objective evidence that a financial asset is impaired. A financial asset is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset and that loss event (or events) has an impact on the estimated future cashflows of the financial asset that can be reliably estimated. (a)Assets carried at amortised cost If there is objective evidence that an impairment loss on loans and receivables or held-to-maturity investments carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cashflows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the statement of financial performance. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. The calculation of the present value of the estimated future cashflows of a collateralised financial asset reflects the cashflows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through the statement of financial performance. (b)Assets carried at fair value In the case of equity investments classified as available for sale financial assets, a significant or permanent (prolonged) decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available for sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the statement of financial performance – is removed from reserves and recognised in the statement of financial performance. Impairment losses recognised in the statement of financial performance on equity instruments are not reversed through the statement of financial performance. If, in a subsequent period, the fair value of a debt instrument classified as available for sale financial asset increases and the increase can be objectively related to an event occurring after the impairment loss was recognised, the impairment loss is reversed through the statement of financial performance. Investments in venture capital funds Investments in Venture Capital Funds are classified as available for sale financial assets and, accordingly, are carried at fair value with gains and losses arising from changes in the fair value (including translation differences) recognised in the fair value reserve. Since they do not have a quoted market price in an active market, investments in Venture Capital Funds are valued on a line-by-line basis at the lower of cost or attributable net asset value. Unrealised gains resulting from the fair value measurement are recognised through reserves and unrealised losses are assessed for impairment so as to determine whether they are recognised as impairment losses in the statement of financial performance or as changes in the fair value reserve. 9.Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. The cost of finished goods and work in progress comprises raw materials, direct labour, other directly attributable costs and related production overheads (based on normal operating capacity). Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. When inventories are held for distribution at no charge or for a nominal charge, they are measured at the lower of cost and current replacement cost. Current replacement cost is the cost the EU would incur to acquire the asset on the reporting date.

10.Pre-financing amounts Pre-financing is a payment intended to provide the beneficiary with a cash advance, i.e. a float. It may be split into a number of payments over a period defined in the particular contract, decision, agreement or basic legal act. The float or advance is either used for the purpose for which it was provided during the period defined in the agreement or it is repaid. If the beneficiary does not incur eligible expenditure, they have the obligation to return the pre-financing advance to the EU. The amount of the pre-financing may be reduced (wholly or partially) by the acceptance of eligible costs (which are recognised as expenses). Pre-financing is, on subsequent balance sheet dates, measured at the amount initially recognised on the balance sheet less eligible expenses (including estimated amounts where necessary) incurred during the period. Interest on pre-financing is recognised as it is earned in accordance with the provisions of the relevant agreement. An estimate of the accrued interest revenue, based on the most reliable information, is made at the year-end and included on the balance sheet. Other advances to Member States which originate from reimbursement by the EU of amounts paid as advances by the Member States to their beneficiaries (including "financial instruments under shared management") are recognised as assets and presented under the pre-financing heading. Other advances to Member States are subsequently measured at the amount initially recognised on the balance sheet less a best estimate of the eligible expenses incurred by final beneficiaries, calculated on the basis of reasonable and supportable assumptions. The EU contributions to the trust funds of the European Development Fund or other unconsolidated entities are also classified as prefinancing since their purpose is to give a float to the trust fund to allow it to finance specific actions defined under the trust fund's objectives. The EU contributions to trust funds are measured at the initial amount of the EU contribution less eligible expenses, including estimated amounts where necessary, incurred by the trust fund during the reporting period and allocated to the EU contribution in accordance with the underlying agreement. 11.Exchange receivables and non-exchange recoverables As the EU accounting rules require a separate presentation of exchange and non-exchange transactions, for the purpose of drawing up the accounts, receivables are defined as stemming from exchange transactions and recoverables are defined as stemming from non-exchange transactions (when the EU receives value from another entity without directly giving approximatelly equal value in exchange (for example recoverables from Member States related to own resources). Receivables from exchange transactions meet the definition of financial instruments and are thus classified as loans and receivables and measured accordingly (see 1.5.5 above). The financial instruments notes disclosures concerning receivables from exchange transactions include accrued income and deferred charges from exchange transactions as they are not material. Recoverables from non-exchange transactions are carried at original amount (adjusted for interest and penalties) less write-down for impairment. A write-down for impairment of recoverables from

non-exchange transactions is established when there is objective evidence that the EU will not be able to collect all amounts due according to the original terms of recoverables from non-exchange transactions. The amount of the write-down is the difference between the asset’s carrying amount and the recoverable amount. The amount of the write-down is recognised in the statement of financial performance. A general write-down, based on past experience, is also made for outstanding recovery orders not already subject to a specific write-down. See note 1.5.14 below concerning the treatment of accrued income at

year-end. Amounts displayed and disclosed as recoverables from non-exchanges transactions are not financial instruments as they do not arise from a contract that would give rise to a financial liability or equity instrument. However, in the notes to the financial statements recoverables from non-exchange transactions are disclosed together with receivables from exchange transactions where appropriate. 12.Cash and cash equivalents Cash and cash equivalents are financial instruments and classified as available for sale financial assets. They include cash at hand, deposits held at call or at short notice with banks and other short-term highly liquid investments with original maturities of three months or less. 13.Pension and other employee benefits Pension obligations The EU operates defined benefit pension plans. Whilst staff contribute from their salaries one third of the expected cost of these benefits, the liability is not funded. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of any plan assets. The defined benefit obligation is calculated by actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised immediately in the statement of financial performance. Past-service costs are recognised immediately in statement of financial performance, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period. Post-employment sickness benefits The EU provides health benefits to its employees through the reimbursement of medical expenses. A separate fund has been created for its day-to-day administration. Both current employees, pensioners, widowers and their relatives benefit from the system. The benefits granted to the "inactives" (pensioners, orphans, etc.) are classified as "Post-Employment Employee Benefits". Given the nature of these benefits, an actuarial calculation is required. The liability in the balance sheet is determined on a similar basis as that for the pension obligations (see above).

14.Provisions Provisions are recognised when the EU has a present legal or constructive obligation towards third parties as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognised for future operating losses. The amount of the provision is the best estimate of the expenses expected to be required to settle the present obligation at the reporting date. Where the provision involves a large number of items, the obligation is estimated by weighting all possible outcomes by their associated probabilities (“expected value” method). 15.Financial liabilities Financial liabilities are classified as financial liabilities at fair value through profit or loss or as financial liabilities carried at amortised cost. Borrowings are composed of borrowings from credit institutions and debts evidenced by certificates. They are recognised initially at fair value, being their issue proceeds (fair value of consideration received) net of transaction costs incurred, then subsequently carried at amortised cost using the effective interest method; any difference between proceeds, net of transaction costs, and the redemption value is recognised in the statement of financial performance over the period of the borrowings using the effective interest method. Financial liabilities are classified as non-current liabilities, except for maturities less than 12 months after the balance sheet date. In the case of loans granted on borrowed funds, the effective interest method may not be applied to loans and borrowings, based on materiality considerations. The transaction costs incurred by the EU and then recharged to the beneficiary of the loan are directly recognised in the statement of financial performance. Financial liabilities categorised at fair value through profit or loss include derivatives when their fair value is negative. They follow the same accounting treatment as financial assets at fair value through profit or loss, see note 1.5.5. During this financial year, the EU did not hold any financial liabilities in this category. 16.Payables A significant amount of the payables of the EU are not related to exchange transactions such as the purchase of goods or services – instead they are unpaid cost claims from beneficiaries of grants or other EU funding (non-exchange transactions). They are recorded as payables for the requested amount when the cost claim is received. Upon verification and acceptance of the eligible costs, the payables are valued at the accepted and eligible amount. Payables arising from the purchase of goods and services are recognised at invoice reception for the original amount and corresponding expenses are entered in the accounts when the supplies or services are delivered and accepted by the EU. The EU trust funds created and managed by the Commission are considered as part of the Commission's operational activities and are accounted for in the Commission accounts. Therefore, contributions from other donors to the EU trust funds fulfil the criteria of revenues from non-exchange transactions under conditions and they are presented as liabilities until the costs are incurred by the trust fund. The trust fund is required to finance specific projects and return remaining funds at the time of winding-up. At the balance sheet date the outstanding contribution liabilities are measured at contributions received less the expenses incurred by the trust fund, including estimated amounts when necessary, and allocated to the contributions of other donnors in accordance with the underlying agreements. 17.Accrued and deferred income and charges Transactions and events are recognised in the financial statements in the period to which they relate. At year-end, if an invoice is not yet issued but the service has been rendered, the supplies have been delivered by the EU or a contractual agreement exists (e.g. by reference to a treaty), an accrued income will be recognised in the financial statements. In addition, at year-end, if an invoice is issued but the services have not yet been rendered or the goods supplied have not yet been delivered, the revenue will be deferred and recognised in the subsequent accounting period. Expenses are also accounted for in the period to which they relate. At the end of the accounting period, accrued expenses are recognised based on an estimated amount of the transfer obligation of the period. The calculation of accrued expenses is done in accordance with detailed operational and practical guidelines issued by the Commission which aim at ensuring that the financial statements provide a faithful representation of the economic and other phenomena they purport to represent. 17.1.STATEMENT OF FINANCIAL PERFORMANCE 18.Revenue REVENUE FROM NON-EXCHANGE TRANSACTIONS The vast majority of the EU's revenue relates to non-exchange transactions: GNI based resources and VAT resources Revenue is recognised for the period for which the Commission sends out a call for funds to the Member States claiming their contribution. They are measured at their “called amount”. As VAT and GNI resources are based on estimates of the data for the budgetary year concerned, they may be revised as changes occur until the final data are issued by the Member States. The effect of a change in estimate is included when determining the net surplus or deficit for the period in which the change occurred.

Traditional own resources Recoverables from non-exchange transactions and related revenues are recognised when the relevant monthly "A" statements (including duties collected and amounts due that are guaranteed and not contested) are received from the Member States. At the reporting date, revenue collected by the Member States for the period but not yet paid to the Commission is estimated and recognised as accrued income. The quarterly "B" statements (including duties neither collected nor guaranteed, as well as guaranteed amounts that have been contested by the debtor) received from the Member States are recognised as revenue less the collection costs to which they are entitled. In addition, a value reduction is recognised for the amount of the estimated recovery gap. Fines Revenue from fines is recognised when the EU's decision imposing a fine has been taken and it is officially notified to the addressee. If there are doubts about the undertaking's solvency, a value reduction on the entitlement is recognised. After the decision to impose a fine, the debtors have two months from the date of notification: -either to accept the decision, in which case they must pay the fine within the time limit laid down and the amount is definitively collected by the EU; -or not to accept the decision, in which case they lodge an appeal under EU law. However, even if appealed, the fine must be paid within the time limit of three months laid down as the appeal does not have suspensory effect (Article 278 of the EU Treaty) or, under certain circumstances and subject to the agreement of the Commission's Accounting Officer, the debtor may present a bank guarantee for the amount instead. If the undertaking appeals against the decision, and has already provisionally paid the fine, the amount is disclosed as a contingent liability. However, since an appeal against an EU decision by the addressee does not have suspensory effect, the cash received is used to clear the recoverable. If a guarantee is received instead of payment, the fine remains as a recoverable. If it appears probable that the General Court may not rule in favour of the EU, a provision is recognised to cover this risk. If a guarantee had been given instead, then the recoverable outstanding is written-down as required. The accumulated interest received by the Commission on the bank accounts where received payments are deposited is recognised as revenue, and any contingent liability is increased accordingly. Since 2010, all provisionally cashed fines are managed by the Commission in a specifically created fund (BUFI) and invested in financial instruments categorised as available for sale financial assets. REVENUE FROM EXCHANGE TRANSACTIONS Revenue from the sale of goods and services is recognised when the significant risk and rewards of ownership of the goods are transferred to the purchaser. Revenue associated with a transaction involving the provision of services is recognised by reference to the stage of completion of the transaction at the reporting date. Interest income and expense Interest income and expense are recognised in the statement of financial performance using the effective interest method. This is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. When calculating the effective interest rate, the EU estimates cashflows considering all contractual terms of the financial instrument (for example prepayment options) but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest to discount the future cashflows for the purpose of measuring the impairment loss. Dividend income Dividend income is recognised when the right to receive payment is established. 19.Expenses Expenses from non-exchange transactions account for the majority of the EU's expenses. They relate to transfers to beneficiaries and can be of three types: entitlements, transfers under agreement and discretionary grants, contributions and donations.

Transfers are recognised as expenses in the period during which the events giving rise to the transfer occurred, as long as the nature of the transfer is allowed by regulation (Financial Regulation, Staff Regulations, or other regulation) or an agreement has been signed authorising the transfer; any eligibility criteria have been met by the beneficiary; and a reasonable estimate of the amount can be made. When a request for payment or cost claim is received and meets the recognition criteria, it is recognised as an expense for the eligible amount. At year-end, incurred eligible expenses due to the beneficiaries but not yet reported are estimated and recorded as accrued expenses. Expenses from exchange transactions arising from the purchase of goods and services are recognised when the supplies are delivered and accepted by the EU. They are valued at original invoice amount. Futhermore, at the balance sheet date expenses related to the service delivered during the period for which an invoice has not yet been received or accepted are estimated and recognised in the statement of financial performance. 19.1.CONTINGENT ASSETS AND LIABILITIES 20.Contingent assets A contingent asset is a possible asset that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the EU. A contingent asset is disclosed when an inflow of economic benefits or service potential is probable. 21.Contingent liabilities A contingent liability is a possible obligation that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the EU; or a present obligation that arises from past events but is not recognised because: it is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation or in the rare circumstances where the amount of the obligation cannot be measured with sufficient reliability. 22.NOTES TO THE BALANCE SHEET ASSETS 22.1.INTANGIBLE ASSETS EUR millions Gross carrying amount at 31.12.2014 182 Additions 40 Disposals (2) Transfer between asset categories - Other changes 0 Gross carrying amount at 31.12.2015 219 Accumulated amortisation at 31.12.2014 (72) Amortisation charge for the year (20) Disposals 2 Transfer between asset categories - Other changes 0 Accumulated amortisation at 31.12.2015 (91) Net carrying amount at 31.12.2015 128 Net carrying amount at 31.12.2014 109 22.2.PROPERTY, PLANT AND EQUIPMENT EUR millions Land and buildings Plant and equipment Furniture and vehicles Computer hardware Other Finance leases Assets under construction TOTAL Gross carrying amount at 31.12.2014 1 368 708 72 245 130 1 514 2 739 6 776 Additions 20 41 3 21 22 8 905 1 021 Disposals (4) (17) (3) (31) (5) (1) (38) (99) Transfer between asset categories 10 246 - 0 - 0 (257) - Other changes 1 0 1 1 0 31 1 35 Gross carrying amount at 31.12.2015 1 395 978 73 237 148 1 552 3 350 7 733 Accumulated depreciation at 31.12.2014 (731) (298) (54) (202) (96) (597) (1 978) Depreciation charge for the year (38) (86) (4) (22) (12) (58) (221) Depreciation written back - - - - - - - Disposals 4 17 3 31 5 1 61 Transfer between asset categories - - - 0 - 0 - Other changes 0 0 0 0 0 (2) (3) Accumulated depreciation at 31.12.2015 (765) (367) (56) (194) (103) (656) (2 141) NET CARRYING AMOUNT AT 31.12.2015 630 611 16 43 45 896 3 350 5 592 NET CARRYING AMOUNT AT 31.12.2014 637 411 18 44 34 917 2 739 4 799 22.3.INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

EUR millions Note 31.12.2015 31.12.2014 Participations in joint ventures 2.3.1 5 – Participations in associates 2.3.2 491 409 Total 497 409 23.Participations in joint ventures EUR millions GJU SESAR BBI Clean Sky IMI ECSEL FCH Total Participations at 31.12.2014 – 0 – 0 0 0 0 0 Contributions – 93 1 224 147 145 67 677 Share of net result – (93) 4 (163) (147) (145) (67) (611) Recognition of previously unrecognised share of loss – – – (61) – – – (61) Other equity movements – 0 0 0 0 0 0 (0) Participations at 31.12.2015 – 0 5 0 0 0 0 5 Unrecognised share of loss – (252) – (38) (161) (55) (156) (662) The following carrying amounts are attributable to the Commission based on its percentage of participation: EUR millions 31.12.2015 31.12.2014 Non-current assets 188 250 Current assets 301 178 Non-current liabilities – – Current liabilities (856) (813) Revenue 13 2 Expenses (811) (666) 24.Participations in associates EUR millions EIF Participation at 31.12.2014 409 Contributions 44 Share of net result 31 Other equity movements 7 Participation at 31.12.2015 491 The following carrying amounts are attributable to the Commission based on its percentage of participation: EUR millions 31.12.2015 31.12.2014 Assets 578 497 Liabilities (87) (87) Revenue 51 38 Surplus/(deficit) 26 21 European Investment Fund EUR millions Total EIF capital Commission subscription Total share capital 4 286 1 136 Paid-in (857) (227) Uncalled 3 429 909

24.1.FINANCIAL ASSETS EUR millions Note 31.12.2015 31.12.2014 Non-current financial assets Available for sale financial assets 2.4.1 5 820 5 356 Loans 2.4.2 49 521 49 671 Total 55 341 55 027 Current financial assets Available for sale financial assets 2.4.1 2 101 2 351 Loans 2.4.2 7 477 8 783 Total 9 579 11 134 Total 64 919 66 161 25. Available for sale financial assets EUR millions 31.12.2015 31.12.2014 BUFI investments 2 647 3 068 Guarantee Fund for external actions 2 002 1 825 European Bank for Reconstruction and Development 188 188 Sub-total 4 837 5 081 Budgetary Instruments: Risk Sharing Finance Facility (RSFF) 773 842 Horizon 2020 765 514 ETF start up 485 399 Project Bond Initiative 217 125 Loan Guarantee Instrument for TEN-T projects (LGTT) 208 186 Risk Capital Operations 152 145 European Fund for South East Europe 118 117 Other budgetary instruments 366 298 Sub-total 3 084 2 626 Total 7 921 7 707 Non-current 5 820 5 356 Current 2 101 2 351 Fair value hierarchy of available for sale financial assets: EUR millions 31.12.2015 31.12.2014 Level 1: Quoted prices in active markets 6 459 6 499 Level 2: Observable inputs other than quoted prices 152 61 Level 3: Valuation techniques with inputs not based on observable market data 1 310 1 147 Total 7 921 7 707 Reconciliation of financial assets measured using valuation techniques with inputs not based on observable market data (level 3): EUR millions Opening balance at 31.12.2014 1 147 Purchases and sales 98 Gains or losses for the period in financial income or finance costs (27) Gains or losses in net assets 91 Transfers into level 3 – Transfers out of level 3 – Other – Closing balance at 31.12.2015 1 310 26. Loans EUR millions 31.12.2015 31.12.2014 Loans from borrowed funds 56 645 58 288 Loans granted from the budget 353 165 Total 56 998 58 454 Non-current 49 521 49 671 Current 7 477 8 783 Loans granted from borrowed funds EUR millions MFA Euratom BOP EFSM Total Total at 31.12.2014 1 842 349 8 590 47 507 58 288 New loans 1 245 - - 12 160 13 405 Repayments (67) (48) (2 700) (12 160) (14 975) Exchange differences - - - - – Changes in carrying amount 4 - (79) 2 (73) Impairment - - - - – Total at 31.12.2015 3 024 301 5 811 47 509 56 645 Non-current 2 937 251 4 200 42 050 49 438 Current 87 50 1 611 5 459 7 207 Loans effective interest rates (expressed as a range of interest rates) Loans 31.12.2015 31.12.2014 Macro Financial Assistance (MFA) 0 % - 4.54 % 0.181 % - 4.54 % Euratom 0.08 % - 5.76 % 0.26 % - 5.76 % Balance of Payment (BOP) 2.375 % - 3.625 % 2.375 % - 3.625 % European Financial Stability Mechanism (EFSM) 0.625 % - 3.75 % 1.875 % - 3.750 %

Loans granted from the budget EUR millions 31.12.2015 31.12.2014 Loans with special conditions 113 130 Term deposits 3 months < 1 year 240 36 Total 353 165 Non-current 83 110 Current 270 56 Impairment on loans granted from the budget EUR millions 31.12.2014 Additions Reversals Write-off Other 31.12.2015 Loans with special conditions 6 75 - - 149 231 BOP Nominal value EUR millions Hungary Latvia Romania Total Total loans granted 6 500 3 100 8 400* 18 000 Disbursed at 31.12.2014 5 500 2 900 5 000 13 400 Disbursed in 2015 – – – – Loans disbursed 31.12.2015 5 500 2 900 5 000 13 400 Loans repaid at 31.12.2015 (4 000) (2 200) (1 500) (7 700) Outstanding amount at 31.12.2015 1 500 700 3 500 5 700 * Including precautionary assistance. EFSM Nominal value EUR millions Ireland Portugal Greece Total Total loans granted 22 500 26 000 7 160 55 660 Disbursed at 31.12.2014 22 500 24 300 - 46 800 Disbursed in 2015 5 000 – 7 160 12 160 Loans disbursed at 31.12.2015 27 500 24 300 7 160 58 960 Loans repaid at 31.12.2015 (5 000) – (7 160) (12 160) Loans outstanding at 31.12.2015 22 500 24 300 - 46 800 26.1.PRE-FINANCING EUR millions Note 31.12.2015 31.12.2014 Non-current pre-financing Pre-financing 2.5.1 28 548 15 806 Other advances to Member States 2.5.2 1 332 2 378 Contribution to Trust Funds 4 – Total 29 884 18 184 Current pre-financing Pre-financing 2.5.1 11 581 29 332 Other advances to Member States 2.5.2 3 779 5 015 Total 15 360 34 347 Total 45 244 52 531

27.Pre-financing EUR millions Gross amount Cleared via cut-off Net amount at 31.12.2015 Gross amount Cleared via cut-off Net amount at 31.12.2014 Shared Management EAFRD & other rural development instruments 4 726 (1 629) 3 097 5 644 (2 115) 3 528 ERDF & CF 24 268 (7 416) 16 852 24 934 (2 182) 22 752 ESF 7 251 (1 325) 5 926 6 884 (953) 5 931 Other 4 359 (2 365) 1 994 4 626 (2 535) 2 091 Direct Management Implemented by: Commission 12 741 (9 744) 2 997 13 376 (10 407) 2 969 EU executive agencies 11 067 (7 769) 3 298 9 079 (6 618) 2 461 Trust funds 14 (5) 9 – – – Indirect Management Implemented by: Other EU agencies & bodies 2 250 (1 649) 601 1 862 (1 487) 375 Third countries 2 151 (1 229) 922 1 981 (1 169) 812 International organisations 6 640 (4 014) 2 626 6 236 (3 476) 2 760 Other entities 5 327 (3 521) 1 806 4 369 (2 910) 1 460 Total 80 795 (40 666) 40 129 78 991 (33 853) 45 138 Non-current 28 548 – 28 548 15 806 – 15 806 Current 52 247 (40 666) 11 581 63 185 (33 853) 29 332 28.Other advances to Member States EUR millions 31.12.2015 31.12.2014 Advances to Member States for financial instruments under shared management 3 287 3 823 Aid Schemes 1 824 3 570 Total 5 111 7 393 Non-current 1 332 2 378 Current 3 779 5 015





28.1.EXCHANGE RECEIVABLES AND NON-EXCHANGE RECOVERABLES EUR millions Note 31.12.2015 31.12.2014 Non-current Recoverables from non-exchange transactions 2.6.1 899 1 201 Receivables from exchange transactions 2.6.2 0 29 Total 899 1 230 Current Recoverables from non-exchange transactions 2.6.1 8 844 13 831 Receivables from exchange transactions 2.6.2 372 361 Total 9 215 14 192 Total 10 114 15 422 29. Recoverables from non-exchange transactions EUR millions Note 31.12.2015 31.12.2014 Non-current Member States 2.6.1.1 856 305 Accrued income and deferred charges 2.6.1.2 – 853 Other recoverables 42 43 Total 899 1 201 Current Member States 2.6.1.1 6 803 10 623 Fines 1 601 2 270 Accrued income and deferred charges 2.6.1.2 242 740 Other recoverables 197 198 Total 8 844 13 831 Total 9 742 15 032 30.Recoverables from Member States EUR millions 31.12.2015 31.12.2014 Recoverables related to own resources: Established in the A account 3 041 2 789 Established in the separate account 1 283 1 617 Own resources to be received – 5 413 Impairment (760) (1 144) Other 10 12 Own resource recoverables 3 573 8 686 Recoverables in the area of agriculture and rural development: European Agricultural Guarantee Fund (EAGF) 3 846 2 250 European Agricultural Fund for Rural Development (EAFRD) 750 52 Temporary Rural Development Instrument (TRDI) 26 27 Special Accession Programme for Agriculture and Rural Development (SAPARD) 175 166 Impairment (1 092) (840) EAGF and rural development recoverables 3 705 1 655 Pre-financing recovery expected 313 437 VAT paid and recoverable 13 16 Other recoverables from Member States 56 134 Total 7 660 10 928 Non-current 856 305 Current 6 803 10 623 31. Accrued income and deferred charges EUR millions 31.12.2015 31.12.2014 Cohesion, Agricultural & Rural Development Funds: financial corrections 10 1 502 Other accrued income 162 69 Deferred charges relating to non-exchange transactions 70 22 Total 242 1 593 Non-current – 853 Current 242 740 32. Receivables from exchange transactions EUR millions 31.12.2015 31.12.2014 Non-current Other receivables 0 29 Total 0 29 Current Customers 167 160 Impairment on receivables from customers (105) (101) Deferred charges relating to exchange transactions 142 146 Others 168 157 Total 372 361 Total 372 390 32.1.INVENTORIES EUR millions 31.12.2015 31.12.2014 Scientific materials 55 66 Other 20 15 Total 75 82 32.2.CASH AND CASH EQUIVALENTS EUR millions 31.12.2015 31.12.2014 Accounts with Treasuries and Central Banks 17 119 11 840 Current accounts 110 303 Imprest accounts 4 4 Transfers (cash in transit) – – Other term deposits 28 28 Bank accounts for budget implementation & other term deposits 17 262 12 174 Cash belonging to financial instruments 1 298 1 275 Cash relating to fines 1 908 2 738 Cash relating to Trust Funds 192 – Total 20 660 16 187





LIABILITIES 32.3.PENSION AND OTHER EMPLOYEE BENEFITS Net employee benefit scheme liability EUR millions Pension Scheme of European Officials Other retirement benefit schemes Joint Sickness Insurance Scheme 31.12.2015 Total 31.12.2014 Total Defined Benefit Obligation 54 967 859 7 662 63 488 58 317 Plan assets (280) (280) (272) Net liability 54 967 859 7 382 63 208 58 045 Actuarial assumptions - employee benefits Pension Scheme of European Officials Joint Sickness Insurance Scheme 2015 Nominal discount rate 2.0 % 2.1 % Expected inflation rate 1.4 % 1.4 % Real discount rate 0.6 % 0.7 % Expected rate of salary increases 1.2 % 1.2 % Medical cost trend rates N/A 3.0 % Retirement age 63/64/65 63/64/66 2014 Nominal discount rate 2.0 % 2.1 % Expected inflation rate 1.3 % 1.3 % Real discount rate 0.7 % 0.8 % Expected rate of salary increases 1.1 % 1.1 % Medical cost trend rates N/A 3.0 % Retirement age 63/64/65 63 Movement in present value of employee benefits defined benefit obligation EUR millions Pension Scheme of European Officials Other retirement benefit schemes Joint Sickness Insurance Scheme Total Present value as at 31.12.2014 50 897 751 6 668 58 317 Current Service Cost 3 323 62 243 3 628 Interest cost 1 170 15 140 1 325 Net Actuarial (gains) and losses 1 429 59 674 2 162 Contributions from members 21 21 Benefits paid (1 244) (12) (85) (1 341) Liability increase/(decrease) due to taxes on pensions (608) (16) (624) Present value as at 31.12.2015 54 967 859 7 662 63 488

Movement in present value of plan assets of the Joint Sickness Insurance Scheme EUR millions Present value as at 31.12.2014 272 Net movement in plan assets 8 Present value as at 31.12.2015 280 5 year trend EUR millions 2011 2012 2013 2014 2015 Present Value of the defined benefit obligation 34 408 41 891 46 367 58 317 63 488 Fair Value of plan assets (270) (271) (264) (272) (280) Employee benefits liability 34 138 41 620 46 103 58 045 63 208 Amounts recognised in the Statement of Financial Performance EUR millions Pension Scheme of European Officials Other retirement benefit schemes Joint Sickness Insurance Scheme Total 2015 Current service cost 2 981 55 243 3 279 Interest cost 1 050 13 140 1 203 Past service cost – – – – Change in plan assets (71) (71) Sub-total – recorded in staff and pension costs 4 031 68 312 4 411 Actuarial gains and losses 1 282 52 674 2 008 Total 5 313 120 986 6 419 Joint Sickness Insurance Scheme sensitivity EUR millions One percentage point increase One percentage point decrease The aggregate of the current service cost and interest cost components of net periodic post-employment medical costs 88 (54) The accumulated post-employment benefit obligation for medical costs 2 765 (1 686) 32.4.PROVISIONS EUR millions Amount at 31.12.2014 Additional provisions Unused amounts reversed Amounts used Transfer to current Change in estimation Amount at 31.12.2015 Legal cases 638 251 (49) (468) - 0 371 Nuclear site dismantling 1 091 - - (32) - 19 1 078 Financial 332 262 0 (179) - (5) 410 Fines 30 4 (30) - - - 4 Other 22 11 (19) (12) - - 2 Total 2 113 528 (98) (691) – 14 1 864 Non-current 1 378 315 (48) (16) (88) 20 1 562 Current 734 213 (50) (675) 88 (6) 302

32.5.FINANCIAL LIABILITIES EUR millions Note 31.12.2015 31.12.2014 Non-current financial liabilities Borrowings 2.11.1 49 438 49 551 Other financial liabilities 2.11.2 1 459 1 381 Total 50 897 50 932 Current financial liabilities Borrowings 2.11.1 7 207 8 716 Other financial liabilities 2.11.2 690 66 Total 7 898 8 783 Total 58 794 59 714 33.Borrowings EUR millions 31.12.2015 31.12.2014 Borrowings 56 645 58 287 Elimination Guarantee Fund* - (20) Total 56 645 58 267 * At 31.12.2014, the Guarantee Fund held EFSM bonds issued by the Commission, so these needed to be eliminated. Borrowings by Financial Instrument EUR millions MFA Euratom BOP EFSM Total Total at 31.12.2014 1 842 349 8 590 47 507 58 288 New borrowings 1 245 - - 12 160 13 405 Repayments (67) (48) (2 700) (12 160) (14 975) Exchange differences - - - - – Changes in carrying amounts 4 - (79) 2 (73) Total at 31.12.2015 3 024 301 5 811 47 509 56 645 Non-current 2 937 251 4 200 42 050 49 438 Current 87 50 1 611 5 459 7 207 Borrowings effective interest rates (expressed as a range of interest rates) Borrowings 31.12.2015 31.12.2014 Macro Financial Assistance (MFA) 0 % - 4.54 % 0.181 % - 4.54 % Euratom 0 % - 5.6775 % 0.138 % - 5.6775 % Balance of Payment (BOP) 2.375 % - 3.625 % 2.375 % - 3.625 % European Financial Stability Mechanism (EFSM) 0.625 % - 3.75 % 1.875 % - 3.750 %

34.Other financial liabilities EUR millions 31.12.2015 31.12.2014 Non-current Finance lease liabilities 1 021 1 041 Buildings paid for in instalments 299 318 Financial guarantee liability relating to European Fund for Strategic Investments (EFSI) – – Other 139 22 Total 1 459 1 381 Current Fines to be reimbursed 625 – Finance lease liabilities 45 48 Buildings paid for in instalments 19 17 Other 1 1 Total 690 66 Total 2 149 1 447 Finance lease liabilities: EUR millions Description Future amounts to be paid < 1 year > 1 year > 5 years Total Liability Land and buildings 39 226 787 1 053 Other tangible assets 6 7 – 13 Total at 31.12.2015 45 233 787 1 066 Interest element 47 208 253 509 Total future minimum lease payments at 31.12.2015 93 442 1 040 1 575 Total future minimum lease payments at 31.12.2014 109 429 1 121 1 658 34.1.PAYABLES EUR millions Gross Amount Adjust- ments* Net Amount at 31.12.2015 Gross Amount Adjust- ments* Net Amount at 31.12.2014 Cost claims and invoices received from: Member States European Agricultural Fund for Rural Development & other rural development instruments 2 621 (230) 2 391 318 (23) 296 European Regional Development Fund & Cohesion Fund 8 360 (950) 7 410 19 928 (2 306) 17 623 European Social Fund 3 355 (2) 3 353 5 893 (272) 5 621 Other 436 (102) 334 751 (93) 658 Private and public entities 1 928 (223) 1 705 1 718 (106) 1 612 Total costs claims & invoices received 16 700 (1 507) 15 193 28 609 (2 800) 25 810 European Agricultural Guarantee Fund 6 851 N/A 6 851 11 066 N/A 11 066 Own Resources Payables 9 506 N/A 9 506 5 945 N/A 5 945 Sundry Payables 816 N/A 816 166 N/A 166 Total 33 873 (1 507) 32 367 45 786 (2 800) 42 986 * Estimated non-eligible amounts and pending prepayments. 34.2.ACCRUED CHARGES AND DEFERRED INCOME EUR millions 31.12.2015 31.12.2014 Accrued charges 66 947 55 436 Deferred income 980 122 Other 34 16 Total 67 962 55 575 The split of accrued charges is as follows: EUR millions 31.12.2015 31.12.2014 European Agricultural Guarantee Fund 38 263 33 667 European Agricultural Fund for Rural Development & other rural development instruments 14 806 13 414 European Regional Development Fund and Cohesion Fund 5 026 3 157 European Social Fund 2 636 976 Other 6 216 4 222 Total 66 947 55 436 NET ASSETS 34.3.RESERVES EUR millions Note 31.12.2015 31.12.2014 Fair value reserve 2.14.1 287 202 Guarantee Fund reserve 2 561 2 372 Other reserves 68 66 Total 2 915 2 641 35. Fair value reserve Movement of fair value reserve during the period EUR millions 2015 2014 Included in fair value reserve 79 107 Included in statement of financial performance (3) (3) Total 77 104