EUROPEAN COMMISSION Brussels, 23.7.2015 COM(2015) 376 final COMMUNICATION FROM THE COMMISSION ANNUAL ACCOUNTS OF THE EUROPEAN COMMISSION 2014



Annual accounts of the European Commission 2014 CONTENTS 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 CERTIFICATION OF THE ACCOUNTS The annual accounts of the European Commission for the year 2014 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 13 July 2015 EUROPEAN COMMISSION FINANCIAL YEAR 2014 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 3.NOTES TO THE STATEMENT OF FINANCIAL PERFORMANCE

4.CONTINGENT ASSETS & LIABILITIES AND OTHER SIGNIFICANT DISCLOSURES 5.FINANCIAL INSTRUMENTS DISCLOSURES 6.RELATED PARTIES 7.EVENTS AFTER THE BALANCE SHEET DATE BALANCE SHEET EUR millions Note 31.12.2014 31.12.2013 NON-CURRENT ASSETS Intangible assets 2.1 109 78 Property, plant and equipment 2.2 4 799 2 888 Investments accounted for using the equity method 2.3 409 349 Financial assets 2.4 55 027 58 490 Pre-financing 2.5 18 184 37 995 Exchange receivables and non-exchange recoverables 2.6 1 230 529 79 758 100 329 CURRENT ASSETS Financial assets 2.4 11 134 4 821 Pre-financing 2.5 34 347 21 189 Exchange receivables and non-exchange recoverables 2.6 14 192 13 007 Inventories 2.7 82 85 Cash and cash equivalents 2.8 16 187 8 275 75 942 47 377 TOTAL ASSETS 155 700 147 706 NON-CURRENT LIABILITIES Pension and other employee benefits 2.9 (58 045) (46 103) Provisions 2.10 (1 378) (1 303) Financial liabilities 2.11 (50 932) (55 406) (110 355) (102 812) CURRENT LIABILITIES Provisions 2.10 (734) (489) Financial liabilities 2.11 (8 783) (3 124) Payables 2.12 (42 986) (36 015) Accrued charges and deferred income 2.13 (55 575) (55 881) (108 078) (95 509) TOTAL LIABILITIES (218 433) (198 321) NET ASSETS (62 733) (50 615) Reserves 2.14 2 641 2 298 Amounts to be called from Member States* 2.15 (65 374) (52 913) NET ASSETS (62 733) (50 615) * The European Parliament adopted a budget on 17 December 2014 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 2015. 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 2014 2013 (reclassified) REVENUE Revenue from non-exchange transactions GNI resources 104 688 110 194 Traditional own resources 3.1 17 137 15 467 VAT 17 462 14 019 Fines 2 297 2 757 Recovery of expenses 3.2 3 418 1 764 Other 3.3 1 936 520 Total 146 938 144 721 Revenue from exchange transactions Financial income 3.4 2 241 1 926 Other 3.5 797 965 Total 3 039 2 891 149 977 147 613 EXPENSES * Implemented by Member States 3.6 European Agricultural Guarantee Fund (44 465) (45 067) European Agricultural Fund for Rural Development and other rural development instruments (14 046) (13 585) European Regional Development Fund & Cohesion Fund (43 345) (47 767) European Social Fund (12 651) (12 126) Other (2 307) (1 525) Implemented by the Commission and executive agencies 3.7 (15 328) (12 486) Implemented by other EU agencies and bodies 3.8 (1 362) (1 017) Implemented by third countries and int. organisations 3.8 (2 770) (2 465) Implemented by other entities 3.8 (1 799) (1 694) Staff and pension costs 3.9 (7 357) (6 845) Changes in employee benefits actuarial assumptions (9 052) (1 941) Finance costs 3.10 (2 877) (2 327) Share of net deficit of joint ventures and associates (640) (608) Other expenses 3.11 (3 204) (2 844) (161 203) (152 298) ECONOMIC RESULT OF THE YEAR (11 226) (4 685) * Implemented by Member States: Shared management Implemented by the Commission and executive agencies: Direct management

Implemented by other EU agencies and bodies, third countries, international organisations and other entities: Indirect management CASHFLOW STATEMENT EUR millions Note 2014 2013 Economic result of the year (11 226) (4 685) Operating activities Amortisation 15 9 Depreciation 164 139 (Reversal of) impairment losses on investments – 6 (Increase)/decrease in loans (1 241) 30 (Increase)/decrease in pre-financing 6 653 (1 547) (Increase)/decrease in exchange receivables and non-exchange recoverables (1 886) 980 (Increase)/decrease in inventories 4 0 Increase/(decrease) in pension and employee benefits liability 11 942 4 483 Increase/(decrease) in provisions 321 (160) Increase/(decrease) in financial liabilities 1 185 (81) Increase/(decrease) in payables 6 971 (12 195) Increase/(decrease) in accrued charges and deferred income (306) 14 664 Prior year budgetary surplus taken as non-cash revenue (1 005) (1 023) Other non-cash movements 112 (17) Investing activities (Increase)/decrease in intangible assets and property, plant and equipment (2 120) (566) (Increase)/decrease in investments accounted for using the equity method (60) 42 (Increase)/decrease in available for sale financial assets (1 610) (1 082) NET CASHFLOW 7 912 (1 003) Net increase/(decrease) in cash and cash equivalents 7 912 (1 003) Cash and cash equivalents at the beginning of the year 2.8 8 275 9 278 Cash and cash equivalents at year-end 2.8 16 187 8 275 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 31.12.2012 96 2 158 (42 142) (5 008) (44 896) Movement in Guarantee Fund reserve - 46 (46) - - Fair value movements (13) - - - (13) Other - 11 (9) - 2 Allocation of the 2012 economic result - - (5 008) 5 008 - 2012 budget result credited to Member States - - (1 023) - (1 023) Economic result of the year - - - (4 685) (4 685) 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) NOTES TO THE FINANCIAL STATEMENTS

For further information in addition to the notes below, please also see the 2014 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 2 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, this being 52 controlled entities, 7 joint ventures and 1 associate. The complete list of consolidated entities can be found in note 10 of the EU accounts. In comparison with 2013, the scope of consolidation remains unchanged, noting that 1 associate has now been reclassified as a joint venture and following the amalgamation of 2 other associates the resulting entity has been classified as a joint venture. 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. It is clear that an individual assessment for each entity needs to be made in order to decide whether one or all of the criteria listed above are sufficient to trigger control. Under this approach, the EU's institutions (except the European Central Bank - 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-company 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 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 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 31.12.2014 31.12.2013 Currency 31.12.2014 31.12.2013 BGN 1.9558 1.9558 LTL 3.4528 3.4528 CZK 27.7350 27.4270 PLN 4.2732 4.1543 DKK 7.4453 7.4593 RON 4.4828 4.4710 GBP 0.7789 0.8337 SEK 9.3930 8.8591 HRK 7.6580 7.6265 CHF 1.2024 1.2276 HUF 315.5400 297.0400 JPY 145.2300 144.7200 LVL - 0.7028 USD 1.2141 1.3791 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. Historical 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 % Fixtures and fittings 10 % to 33 % 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 inception of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance 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 assets' 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. Payments made under operating leases are charged to the statement of financial performance on a straight-line basis over the period of the lease.

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 the 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. They are included in non-current assets, except for maturities within 12 months of the balance sheet date even if the maturity date of the entire loan dates more than 12 months from the balance sheet date. (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 time period in which the EU expects to dispose of them which is usually the remaining maturity at the balance sheet date. Investments in unconsolidated entities and other equity investments (e.g. Risk Capital Operations) that are not accounted for using the equity method 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 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 European Financial Stability Mechanism (EFSM), Balance of Payment (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 have been transferred and the EU has transferred substantially all risks and rewards of ownership. 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. (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. 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 pre-financing agreement. The float or advance is repaid or used for the purpose for which it was provided during the period defined in the agreement. If the beneficiary does not incur eligible expenditure, he has 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) and amounts returned. At year-end, outstanding pre-financing amounts are valued at the original amount(s) paid less: amounts returned, eligible amounts expensed, estimated eligible amounts not yet cleared at year-end, and value reductions. Amounts defined in the Financial Regulation as "financial instruments under shared management" are from an accounting point of view classified as pre-financing amounts. These pre-financing amounts are valued at the original amounts paid to Member States less an estimation of amounts utilised. 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 in the balance sheet. 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 that do not arise out of a contract (sovereign recoverables). 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. 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 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. 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 beneficiaries 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. 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 principal of 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, it 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 cost. 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 31.12.2013 135 Additions 45 Disposals (1) Transfer between asset categories 1 Other changes 1 Gross carrying amount at 31.12.2014 182 Accumulated amortisation at 31.12.2013 (57) Amortisation charge for the year (15) Disposals 1 Transfer between asset categories (1) Other changes (1) Accumulated amortisation at 31.12.2014 (72) Net carrying amount at 31.12.2014 109 Net carrying amount at 31.12.2013 78 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 31.12.2013 1 277 344 69 229 124 1 515 1 182 4 739 Additions 16 317 4 24 12 6 1 691 2 069 Disposals (3) (12) (3) (18) (6) 0 - (42) Transfer between asset categories 76 58 - 7 0 (8) (134) (1) Other changes 2 1 1 3 1 - 1 10 Gross carrying amount at 31.12.2014 1 368 708 72 245 130 1 514 2 739 6 776 Accumulated depreciation at 31.12.2013 (697) (271) (51) (189) (91) (552) (1 851) Depreciation charge for the year (35) (38) (4) (23) (10) (53) (164) Depreciation written back - - - - - - - Disposals 2 12 3 18 6 0 40 Transfer between asset categories - 0 - (7) 0 7 1 Other changes 0 0 (1) (1) 0 - (3) Accumulated depreciation at 31.12.2014 (731) (298) (54) (202) (96) (597) (1 978) NET CARRYING AMOUNT AT 31.12.2014 637 411 18 44 34 917 2 739 4 799 NET CARRYING AMOUNT AT 31.12.2013 579 73 18 40 33 963 1 182 2 888 22.3.INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD EUR millions Note 31.12.2014 31.12.2013 Participations in joint ventures 2.3.1 – – Participations in associates 2.3.2 409 349 Total 409 349 23.Participations in joint ventures EUR millions GJU SESAR ITER Clean Sky IMI ECSEL FCH Total Participations at 31.12.2013 0 0 0 0 0 0 0 0 Contributions 0 95 118 125 166 75 69 647 Share of net result 0 (95) (118) (125) (166) (75) (69) (647) Other equity movements 0 0 0 0 0 0 0 (0) Participations at 31.12.2014 0 0 0 0 0 0 0 (0) Unrecognised share of loss – (230) (36) (99) (73) (40) (116) (594) The following carrying amounts are attributable to the Commission based on its percentage of participation: EUR millions 31.12.2014 31.12.2013 Non-current assets 250 198 Current assets 178 63 Non-current liabilities – – Current liabilities (813) (394) Revenue 2 1 Expenses (666) (412) 24.Participations in associates EUR millions EIF Participations at 31.12.2013 349 Contributions 38 Share of net result 7 Other equity movements 15 Participations at 31.12.2014 409 The following carrying amounts are attributable to the Commission based on its percentage of participation: EUR millions 31.12.2014 31.12.2013 Assets 497 499 Liabilities (87) (240) Revenue 38 37 Surplus/(deficit) 21 (221) European Investment Fund EUR millions Total EIF capital Commission subscription Total share capital 4 161 1 011 Paid-in (832) (202) Uncalled 3 329 809

24.1.FINANCIAL ASSETS EUR millions Note 31.12.2014 31.12.2013 Non-current financial assets Available for sale financial assets 2.4.1 5 356 4 367 Loans 2.4.2 49 671 54 123 Total 55 027 58 490 Current financial assets Available for sale financial assets 2.4.1 2 351 1 730 Loans 2.4.2 8 783 3 090 Total 11 134 4 821 Total 66 161 63 311 25. Available for sale financial assets EUR millions 31.12.2014 31.12.2013 Guarantee Fund for external actions* 1 825 1 773 BUFI investments 3 068 1 911 Risk Sharing Finance Facility (RSFF) 842 1 197 ETF Start up 399 339 European Bank for Reconstruction and Development (EBRD) 188 188 Risk Capital Operations 145 124 Loan Guarantee Instrument for TEN-T projects (LGTT) 186 120 Horizon 2020 514 – European Fund for South East Europe 117 116 Project Bond Initiative 125 67 Other available for sale investments 298 262 Total 7 707 6 097 Non-current 5 356 4 367 Current 2 351 1 730 * The Guarantee Fund holds EFSM bonds (EUR 20 million) issued by the Commission, so these have been eliminated Fair value hierarchy of available for sale financial assets: EUR millions 31.12.2014 31.12.2013 Level 1: Quoted prices in active markets 6 499 4 911 Level 2: Observable inputs other than quoted prices 61 61 Level 3: Valuation techniques with inputs not based on observable market data 1 147 1 125 Total 7 707 6 097 Reconciliation of financial assets measured using valuation techniques with inputs not based on observable market data (level 3): EUR millions Opening balance at 31.12.2013 1 126 Purchases and sales (57) Gains or losses for the period in surplus or deficit (2) Gains or losses in net assets 81 Transfers into level 3 – Transfers out of level 3 – Other (1) Closing balance at 31.12.2014 1 147 26. Loans EUR millions 31.12.2014 31.12.2013 Non-current 49 671 54 123 Current 8 783 3 090 Total 58 454 57 213 Loans granted from borrowed funds EUR millions MFA Euratom BOP EFSM Total Total at 31.12.2013 569 387 11 623 44 468 57 047 New loans 1 360 - - 3 000 4 360 Repayments (96) (39) (3 000) - (3 135) Exchange differences - 1 - - 1 Changes in carrying amount 9 – (33) 39 15 Impairment - - - - – Total at 31.12.2014 1 842 349 8 590 47 507 58 288 Non-current 1 762 299 5 700 41 800 49 561 Current 80 50 2 890 5 707 8 727 Loans effective interest rates (expressed as a range of interest rates) Loans 31.12.2014 31.12.2013 Macro Financial Assistance (MFA) 0.181%-4.54% 0.27%-4.54% Euratom 0.26%-5.76% 0.34%-5.76% Balance of Payment (BOP) 2.375%-3.625% 2.375%-3.625% European Financial Stability Mechanism (EFSM) 1.875%-3.750% 2.375%-3.750%

27.Balance of Payments BOP Nominal value EUR millions Hungary Latvia Romania Total Total loans granted 6 500 3 100 8 400 18 000 Disbursed at 31.12.2013 5 500 2 900 5 000 13 400 Disbursed in 2014 – – – – Loans disbursed 31.12.2014 5 500 2 900 5 000 13 400 Loans repaid at 31.12.2014 (4 000) (1 000) – (5 000) Outstanding amount at 31.12.2014 1 500 1 900 5 000 8 400 28.European Financial Stabilisation Mechanism EFSM Nominal value EUR millions Ireland Portugal Total Total loans granted 22 500 26 000 48 500 Disbursed at 31.12.2013 21 700 22 100 43 800 Disbursed in 2014 800 2 200 3 000 Loans disbursed at 31.12.2014 22 500 24 300 46 800 Loans repaid at 31.12.2014 – – – Loans outstanding at 31.12.2014 22 500 24 300 46 800 28.1.PRE-FINANCING EUR millions Note 31.12.2014 31.12.2013 Non-current pre-financing Pre-financing 2.5.1 15 806 34 742 Other advances to Member States 2.5.2 2 378 3 253 Total 18 184 37 995 Current pre-financing Pre-financing 2.5.1 29 332 16 225 Other advances to Member States 2.5.2 5 015 4 963 Total 34 347 21 189 Total 52 531 59 184 29.Pre-financing EUR millions Gross amount Cleared via cut-off Net amount at 31.12.2014 Gross amount Cleared via cut-off Net amount at 31.12.2013 Shared Management EAFRD & other rural development instruments 5 644 (2 115) 3 528 6 359 (1 032) 5 327 ERDF & CF 24 934 (2 182) 22 752 25 701 (2 164) 23 537 ESF 6 884 (953) 5 931 6 857 (492) 6 365 Other 4 626 (2 535) 2 091 4 191 (2 054) 2 137 Direct Management Implemented by: Commission 13 376 (10 407) 2 969 14 854 (9 467) 5 387 EU executive agencies 9 079 (6 618) 2 461 8 729 (5 271) 3 458 Indirect Management Implemented by: Other EU agencies & bodies 1 862 (1 487) 375 1 284 (1 165) 118 Third countries 1 981 (1 169) 812 1 678 (782) 897 International organisations 6 236 (3 476) 2 760 4 172 (2 460) 1 712 Other entities 4 369 (2 910) 1 460 5 515 (3 487) 2 028 Total 78 991 (33 853) 45 138 79 341 (28 374) 50 967 Non-current 15 806 – 15 806 34 742 – 34 742 Current 63 185 (33 853) 29 332 44 600 (28 374) 16 225 30.Other advances to Member States EUR millions 31.12.2014 31.12.2013 Advances to Member States for financial instruments under shared management Non-current 2 090 2 118 Current 1 733 2 118 Total 3 823 4 236 Aid Schemes Non-current 288 1 135 Current 3 282 2 845 Total 3 570 3 981 Total 7 393 8 216 30.1.EXCHANGE RECEIVABLES & NON-EXCHANGE RECOVERABLES EUR millions Note 31.12.2014 31.12.2013 Non-current Recoverables from non-exchange transactions 2.6.1 1 201 526 Receivables from exchange transactions 2.6.2 29 4 Total 1 230 529 Current Recoverables from non-exchange transactions 2.6.1 13 831 12 521 Receivables from exchange transactions 2.6.2 361 486 Total 14 192 13 007 Total 15 422 13 536 31. Recoverables from non-exchange transactions EUR millions Note 31.12.2014 31.12.2013 Non-current Member States 2.6.1.1 305 478 Accrued income and deferred charges 2.6.1.2 853 – Other recoverables 43 48 Total 1 201 526 Current Member States 2.6.1.1 10 623 5 509 Fines 2 270 4 071 Accrued income and deferred charges 2.6.1.2 740 2 722 Other recoverables 198 218 Total 13 831 12 521 Total 15 032 13 046 32.Recoverables from Member States EUR millions 31.12.2014 31.12.2013 Recoverables related to own resources: Established in the A account 2 789 47 Established in the separate account 1 617 1 228 Own resources to be received 5 413 3 054 Impairment (1 144) (743) Other 12 6 Own resource recoverables 8 686 3 592 Recoverables in the area of agriculture and rural development: European Agricultural Guarantee Fund (EAGF) 2 250 2 294 European Agricultural Fund for Rural Development (EAFRD) 52 82 Temporary Rural Development Instrument (TRDI) 27 45 Special Accession Programme for Agriculture and Rural Development (SAPARD) 166 155 Impairment (840) (819) EAGF and rural development recoverables 1 655 1 757 Pre-financing recovery expected 437 542 VAT paid and recoverable 16 20 Other recoverables from Member States 134 77 Total 10 928 5 987 Non-current 305 478 Current 10 623 5 509

33. Accrued income and deferred charges EUR millions 31.12.2014 31.12.2013 Own resources accrued income – 2 424 Cohesion, Agricultural & Rural Development Funds: financial corrections 1 502 31 Other accrued income 69 201 Deferred charges relating to non-exchange transactions 22 66 Total 1 593 2 722 Non-current 853 – Current 740 2 722 34. Receivables from exchange transactions EUR millions 31.12.2014 31.12.2013 Non-current Other receivables 29 4 Total 29 4 Current Customers 160 329 Impairment on receivables from customers (101) (100) Deferred charges relating to exchange transactions 146 150 Others 157 107 Total 361 486 Total 390 490 34.1.INVENTORIES EUR millions 31.12.2014 31.12.2013 Scientific materials 66 70 Other 15 15 Total 82 85 34.2.CASH AND CASH EQUIVALENTS EUR millions 31.12.2014 31.12.2013 Accounts with Treasuries and Central Banks 11 840 2 505 Current accounts 303 168 Imprest accounts 4 4 Transfers (cash in transit) – (1) Other term deposits 28 29 Bank accounts for budget implementation & other term deposits 12 174 2 705 Cash belonging to financial instruments 1 275 1 406 Cash relating to fines 2 738 4 165 Total 16 187 8 275 LIABILITIES 34.3.PENSION AND OTHER EMPLOYEE BENEFITS EUR millions 31.12.2014 31.12.2013 Pensions – staff 50 897 40 933 Pensions – other 751 301 Joint Sickness Insurance Scheme 6 396 4 869 Total 58 045 46 103 35.Pensions – staff Actuarial assumptions - staff pension liability 31.12.2014 31.12.2013 Nominal discount rate 2.0% 3.7% Expected inflation rate 1.3% 1.9% Real discount rate 0.7% 1.8% Probability of marriage: man/woman 81%/49% 81%/49% General salary growth/pension revaluation (0.2)% (0.2)% International Civil Servants Life Table (ICSLT) ICSLT 2013 ICSLT 2013 EUR millions Movement in gross employee benefits liability Pensions - staff Pensions - other Joint Sickness Insurance Scheme Gross liability at previous year-end 45 947 345 5 133 Transfers from other institutions - 303 - Service/normal cost 2 153 61 - Interest cost 1 683 25 49 Benefits paid (1 368) (19) (68) Actuarial losses 8 255 82 1 554 Change due to newcomers 461 67 - Gross liability at year-end 57 131 864 6 668 Correction coefficients applied to pensions 1 371 N/A N/A Deduction of taxes on pensions (7 605) (113) N/A Plan assets N/A N/A (272) Net liability at 31.12.2014 50 897 751 6 396 Net liability at 31.12.2013 40 933 301 4 869 EUR millions 2010 2011 2012 2013 2014 Employee benefits liability 36 415 34 138 41 620 46 103 58 045

35.1.PROVISIONS EUR millions Amount at 31.12.2013 Additional provisions Unused amounts reversed Amounts used Transfer to current Change in estimation Amount at 31.12.2014 Legal cases 481 480 (95) (227) - 0 638 Nuclear site dismantling 963 - - (31) - 159 1 091 Financial 282 117 0 (76) - 9 332 Fines - 30 - - - - 30 Other 65 16 (40) (20) - - 22 Total 1 792 642 (135) (354) – 168 2 113 Non-current 1 303 85 (93) (12) (69) 164 1 378 Current 489 557 (41) (343) 69 4 734 35.2.FINANCIAL LIABILITIES EUR millions Note 31.12.2014 31.12.2013 Non-current financial liabilities Borrowings 2.11.1 49 551 53 964 Other financial liabilities 2.11.2 1 381 1 442 Total 50 932 55 406 Current financial liabilities Borrowings 2.11.1 8 716 3 064 Other financial liabilities 2.11.2 66 60 Total 8 783 3 124 Total 59 714 58 530 36.Borrowings EUR millions 31.12.2014 31.12.2013 Borrowings 58 287 57 048 Elimination Guarantee Fund* (20) (20) Total 58 267 57 028 *The Guarantee Fund holds EFSM bonds issued by the Commission, so these need to be eliminated. Borrowings by Financial Instrument EUR millions MFA Euratom BOP EFSM Total Total at 31.12.2013 569 387 11 623 44 468 57 047 New borrowings 1 360 - - 3 000 4 360 Repayments (96) (39) (3 000) - (3 135) Exchange differences - 1 - - 1 Changes in carrying amounts 9 – (33) 39 15 Total at 31.12.2014 1 842 349 8 590 47 507 58 288 Non-current 1 762 299 5 700 41 800 49 561 Current 80 50 2 890 5 707 8 727 Borrowings effective interest rates (expressed as a range of interest rates): Borrowings 31.12.2014 31.12.2013 Macro Financial Assistance (MFA) 0.181%-4.54% 0.27%-4.54% Euratom 0.138%-5.6775% 0.291%-5.6775% Balance of Payment (BOP) 2.375%-3.625% 2.375%-3.625% European Financial Stability Mechanism (EFSM) 1.875%-3.750% 2.375%-3.750% 37.Other financial liabilities EUR millions 31.12.2014 31.12.2013 Non-current Finance lease liabilities 1 041 1 084 Buildings bought on credit 318 336 Other 22 23 Total 1 381 1 442 Current Finance lease liabilities 48 44 Buildings bought on credit 17 16 Other 1 1 Total 66 61 Total 1 447 1 503 Finance lease liabilities: EUR millions Description Future amounts to be paid < 1 year > 1 year > 5 years Total Liability Land and buildings 42 205 828 1 075 Other tangible assets 6 8 – 14 Total at 31.12.2014 48 213 828 1 089 Interest element 61 216 293 569 Total future minimum lease payments at 31.12.2014 109 429 1 121 1 658 Total future minimum lease payments at 31.12.2013 107 426 1 227 1 760 37.1.PAYABLES

EUR millions Gross Amount Adjustments* Net Amount 2014 Cost claims and invoices received from: Member States European Agricultural Fund for Rural Development & other rural development instruments 318 (23) 296 European Regional Development Fund & Cohesion Fund 19 928 (2 306) 17 623 European Social Fund 5 893 (272) 5 621 Other 751 (93) 658 Private and public entities 1 718 (106) 1 612 Total costs claims & invoices received 28 609 (2 800) 25 810 European Agricultural Guarantee Fund 11 066 N/A 11 066 Own Resources Payables 5 945 N/A 5 945 Sundry Payables 166 N/A 166 Total at 31.12.2014 45 786 (2 800) 42 986 2013 Total costs claims & invoices received 27 304 (2 918) 24 386 European Agricultural Guarantee Fund 11 252 N/A 11 252 Own Resources Payables 244 N/A 244 Sundry Payables 132 N/A 132 Total at 31.12.2013 38 932 (2 918) 36 015 * Estimated non-eligible amounts and pending prepayments. 37.2.ACCRUED CHARGES AND DEFERRED INCOME EUR millions 31.12.2014 31.12.2013 Accrued charges 55 436 55 725 Deferred income 122 138 Other 16 18 Total 55 575 55 881



The split of accrued charges is as follows: EUR millions 31.12.2014 31.12.2013 European Agricultural Guarantee Fund 33 667 33 491 European Agricultural Fund for Rural Development & other rural development instruments 13 414 12 458 European Regional Development Fund and Cohesion Fund 3 157 4 371 European Social Fund 976 1 109 Other 4 222 4 296 Total 55 436 55 725 NET ASSETS 37.3.RESERVES EUR millions Note 31.12.2014 31.12.2013 Fair value reserve 2.14.1 202 83 Guarantee Fund reserve 2 372 2 125 Other reserves 66 90 Total 2 641 2 299 38. Fair value reserve EUR millions Movements of fair value reserve during the period 2014 2013 Included in fair value reserve 107 (13) Included in statement of financial performance (3) – Total 104 (13) In addition, an amount of EUR 15 million in the overall movement of the fair value reserve relates to investments accounted for using the equity method. 38.1. AMOUNTS TO BE CALLED FROM MEMBER STATES EUR millions Amounts to be called from Member States at 31.12.2013 52 913 Return of 2013 budget surplus to Member States 1 005 Movement in Guarantee Fund reserve 247 Other reserve movements (17) Economic result of the year 11 226 Total amounts to be called from Member States at 31.12.2014 65 374 39.NOTES TO THE STATEMENT OF FINANCIAL PERFORMANCE

REVENUE REVENUE FROM NON-EXCHANGE TRANSACTIONS: TAXES 39.1.TRADITIONAL OWN RESOURCES EUR millions 2014 2013 Customs duties 17 204 15 268 Sugar levies (67) 199 Total 17 137 15 467 REVENUE FROM NON-EXCHANGE TRANSACTIONS: TRANSFERS 39.2.RECOVERY OF EXPENSES EUR millions 2014 2013 Shared management 3 328 1 628 Direct management 46 55 Indirect management 44 6 Decentralised management – 41 Joint management – 33 Total 3 418 1 764 39.3.OTHER REVENUE FROM NON-EXCHANGE TRANSACTIONS EUR millions 2014 2013 Transfer of assets 1 448 – Budgetary adjustments 794 1 187 Staff taxes and contributions 975 878 Contribution of third countries 331 364 Agricultural levies 409 48 Adjustments/provisions 349 174 Funding of institutions (3 000) (3 075) Other 631 944 Total 1 936 520 REVENUE FROM EXCHANGE TRANSACTIONS

39.4.FINANCIAL INCOME EUR millions 2014 2013 Interest income on: Pre-financing 16 29 Late payments 387 88 Available for sale financial assets 47 45 Loans 1 709 1 698 Cash and cash equivalents 6 18 Interest income 2 165 1 878 Dividend income 6 6 Realised gains on sale of financial assets 9 3 Other financial income 61 40 Total 2 241 1 926 Net gains and losses on financial assets EUR millions 2014 2013 Net gains/(loss) on available for sale financial assets 13 3 39.5.OTHER REVENUE FROM EXCHANGE TRANSACTIONS EUR millions 2014 2013 Property, plant and equipment related revenue 9 13 Foreign exchange gains 466 326 Sales revenue 21 32 Other 303 595 Total 798 965 EXPENSES TRANSFER PAYMENTS AND SUBSIDIES BY MANAGEMENT MODE 39.6.SHARED MANAGEMENT EUR millions Implemented by Member States 2014 2013 European Agricultural Guarantee Fund 44 465 45 067 European Agricultural Fund for Rural Development & other rural development instruments 14 046 13 585 European Regional Development Fund and Cohesion Fund 43 345 47 767 European Social Fund 12 651 12 126 Other 2 307 1 525 Total 116 814 120 070



39.7. DIRECT MANAGEMENT EUR millions 2014 2013 Implemented by the Commission 10 447 8 688 Implemented by EU Executive Agencies 4 881 3 798 Total 15 328 12 486 39.8.INDIRECT MANAGEMENT EUR millions 2014 2013 Implemented by other EU agencies & bodies 1 362 1 017 Implemented by third countries 1 005 720 Implemented by international organisations 1 765 1 745 Implemented by other entities 1 799 1 694 Total 5 931 5 176

39.9.STAFF AND PENSION COSTS EUR millions 2014 2013 Staff costs 3 161 3 080 Pension costs 4 195 3 765 Total 7 357 6 845 39.10.FINANCE COSTS EUR millions 2014 2013 Interest expenses: Borrowings 1 696 1 682 Other 21 21 Finance leases 61 64 Impairment losses on available for sale financial assets 3 7 Impairment loss on loans and receivables 1 030 469 Realised loss on sale of financial assets 17 (0) Other finance costs 49 85 Total 2 877 2 327 39.11.OTHER EXPENSES EUR millions 2014 2013 Adjustments/provisions 687 400 Property, plant and equipment related expenses 547 532 Foreign exchange losses 359 382 Administrative and IT expenses 998 1 059 Funding and contributions to other EU bodies 439 436 Other 175 36 Total 3 204 2 844 Included under property, plant and equipment are operating leases expenses. Amounts committed to be paid during the remaining term of these lease contracts are as follows: EUR millions Future amounts to be paid < 1 year 1- 5 years > 5 years Total Buildings 124 429 367 920 IT materials and other equipment 3 4 – 7 Total 127 433 367 927 Expenses relating to research and development are as follows: EUR millions 2014 2013 Research costs 353 329 Non-capitalised development costs 54 50 Total 406 379 39.12.SEGMENT REPORTING BY MULTI FINANCIAL FRAMEWORK HEADINGS EUR millions Smart and inclusive growth Sustainable growth Security and citizenship Global Europe Administration Not assigned to MFF headings* Total GNI resources – – – – – 104 688 104 688 Traditional own resources – – – – – 17 137 17 137 VAT – – – – – 17 462 17 462 Fines – – – – – 2 297 2 297 Recovery of expenses 1 136 2 226 3 53 – – 3 418 Other 1 981 508 4 53 995 (1 605) 1 936 Non-exchange revenue 3 117 2 734 6 106 995 139 979 146 938 Financial income 66 3 0 36 (1) 2 136 2 241 Other 119 (11) (4) 97 131 465 798 Exchange revenue 185 (8) (4) 134 131 2 601 3 039 Total revenue 3 302 2 726 2 240 1 126 142 580 149 977 Expenses implemented by Member States: EAGF – (44 465) – – – – (44 465) EAFRD & other rural development instruments – (14 033) – (12) – – (14 046) ERDF & CF (43 345) – – – – – (43 345) ESF (12 651) – – – – – (12 651) Other (561) (542) (1 109) (94) – – (2 307) Implemented by the Commission and executive agencies (9 809) (339) (1 114) (4 046) 9 (29) (15 328) Implemented by other EU agencies and bodies (792) (58) (473) (40) – – (1 362) Implemented by third countries and international organisations (246) 4 (8) (2 520) (0) – (2 770) Implemented by other entities (1 317) – (5) (478) (0) 1 (1 799) Staff and pension costs (1 538) (324) (362) (566) (4 566) – (7 357) Changes in employee benefits actuarial assumptions – – – – (9 052) – (9 052) Finance costs (152) (25) (1) (26) (527) (2 146) (2 877) Share of net deficit of joint ventures and associates (640) – – – – – (640) Other expenses (1 397) (60) (115) (126) (1 152) (354) (3 204) Total expenses (72 446) (59 843) (3 189) (7 908) (15 289) (2 527) (161 203) Economic result of the year (69 144) (57 117) (3 186) (7 668) (14 163) 140 053 (11 226) *Including off-budget operations and unallocated immaterial programmes. 39.13.Reclassification of 2013 figures: So as to better present information to the users of these accounts, the layout of the statement of financial performance has been restructured in the 2014 annual accounts. As required by the EU accounting rules, a reclassification of the 2013 figures is made, noting that no amounts have been changed, only the presentation of existing figures – revenues, expenses and the result remain as originally published in the 2013 accounts. An overview of the impact of the changes is given below:

EUR millions Own resource and contributions revenue Other operating revenue Total operating revenue Admini- strative expenses Operating expenses Total operating expenses Surplus from operating activities Financial revenue Financial expenses Movement pension and other employee benefits liability Share of net deficit of joint ventures and associates Economic result of the year 2013 (reclassified) 2013 (published) 138 156 7 484 145 640 (5 107) (138 886) (143 993) 1 647 1 972 (1 990) (5 706) (608) (4 685) Non-exchange revenue GNI Resources 110 194 – 110 194 – – – – – – – – – 110 194 Traditional own resources 15 467 – 15 467 – – – – – – – – – 15 467 VAT 14 019 – 14 019 – – – – – – – – – 14 019 Fines – 2 757 2 757 – – – – – – – – – 2 757 Recovery of expenses – 1 764 1 764 – – – – – – – – – 1 764 Other (1 524) 2 044 520 – – – – – – – – – 520 Total non-exchange revenue 138 156 6 565 144 721 – – – – – – – – – 144 721 Exchange revenue Financial income – – – – – – – 1 926 – – – – 1 926 Other exchange revenue – 919 919 – – – – 46 – – – – 965 Total exchange revenue – 919 919 – – – – 1 972 – – – – 2 891 TOTAL REVENUE 138 156 7 484 145 640 – – – – 1 972 – – – – 147 613



EUR millions Own resource and contributions revenue Other operating revenue Total Admini- strative expenses Operating expenses Total operating expenses Surplus from operating activities Financial revenue Financial expenses Movement pension and other employee benefits liability Share of net deficit of joint ventures and associates Economic result of the year 2013 (reclassified) Expenses implemented by Member States: European Agricultural Guarantee Fund – – – – (45 067) (45 067) – – – – – – (45 067) European Agricultural Fund for Rural Development & other rural development instruments – – – – (13 585) (13 585) – – – – – – (13 585) European Regional Development Fund & Cohesion Fund – – – – (47 767) (47 767) – – – – – – (47 767) European Social Fund – – – – (12 126) (12 126) – – – – – – (12 126) Other – – – – (1 525) (1 525) – – – – – – (1 525) Implemented by the Commission and executive agencies – – – – (12 486) (12 486) – – – – – – (12 486) Implemented by other EU agencies and bodies – – – – (1 017) (1 017) – – – – – – (1 017) Implemented by third countries and intern. Organisations – – – – (2 465) (2 465) – – – – – – (2 465) Implemented by other entities – – – – (1 694) (1 694) – – – – – – (1 694) Staff and pension costs – – – (3 080) – (3 080) – – – (3 765) – – (6 845) Changes in employee benefits actuarial assumptions – – – – – – – – – (1 941) – – (1 941) Finance costs – – – – (469) (469) – – (1 858) – – – (2 327) Share of net deficit of joint ventures and asociates – – – – – – – – – – (608) – (608) Other expenses – – – (2 027) (686) (2 713) – – (131) – – – (2 844) TOTAL EXPENSES – – – (5 107) (138 886) (143 993) – – (1 990) (5 706) (608) – (152 298) Economic result of the year 138 156 7 484 145 640 (5 107) (138 886) (143 993) 1 647 1 972 (1 990) (5 706) (608) (4 685) 40.CONTINGENT ASSETS & LIABILITIES AND OTHER SIGNIFICANT DISCLOSURES 40.1.CONTINGENT ASSETS EUR millions 31.12.2014 31.12.2013 Guarantees received: Performance guarantees 193 226 Other guarantees 3 3 Other contingent assets 45 13 Total 241 243 40.2.CONTINGENT LIABILITIES EUR millions Note 31.12.2014 31.12.2013 Guarantees given 4.2.1 20 846 22 162 Fines 5 602 5 227 EAGF, rural development and pre-accession 505 1 537 Cohesion policy 9 137 Legal cases and other disputes 774 685 Other contingent liabilities 3 1 Total 27 739 29 749 41.Guarantees given EUR millions 31.12.2014 31.12.2013 Guarantees on loans granted by the EIB 65% guarantee 18 283 19 077 70% guarantee 447 1 361 75% guarantee 168 257 100% guarantee 300 461 Total 19 198 21 156 Other guarantees given 1 648 1 006 Total 20 846 22 162 41.1.OTHER SIGNIFICANT DISCLOSURES 42.Outstanding budgetary commitments not yet expensed EUR millions 31.12.2014 31.12.2013 Outstanding budgetary commitments not yet expensed 141 600 175 828 43. Significant legal commitments*

EUR millions Note 31.12.2014 31.12.2013 Structural Actions 4.3.2.1 433 527 150 Protocol with Mediterranean countries 264 264 Fisheries agreements 176 79 Galileo 719 – Copernicus 3 476 – Trans-European Transport Networks (TEN-T) – 850 Other contractual commitments 496 522 Total 438 657 1 864 * These concern legal commitments where the budgetary commitment has not yet been made. 44.Structural Actions EUR millions Funds Financial framework 2014-2020 (A) Legal commitments concluded (B) Budget commitments (C ) Decommit- ments (D) Legal commitments less budget commitments (=B-C+D) Future obligations (=A-C) European Regional Development Fund and Cohesion Fund 259 799 133 163 16 837 – 116 325 242 962 European Social Fund 89 624 57 828 9 273 – 48 555 80 350 Fund for European Aid to the most Deprived 3 814 3 723 501 – 3 222 3 313 HEADING 1B: COHESION POLICY FUNDS 353 236 194 714 26 611 – 168 102 326 625 European Agricultural Fund for Rural Development 99 348 20 707 3 295 – 17 413 96 053 European Maritime and Fisheries Fund 5 749 140 19 – 121 5 730 HEADING 2: NATURAL RESOURCES 105 097 20 847 3 314 – 17 533 101 783 Asylum and Migration Fund 2 752 – – – – 2 752 Internal Security Fund 2 367 – – – – 2 367 HEADING 3: SECURITY & CITIZENSHIP 5 119 – – – – 5 119 Total 463 452 215 561 29 925 – 185 636 433 527 45.FINANCIAL INSTRUMENTS DISCLOSURES 45.1.RECONCILIATION OF CARRYING AMOUNT AND FAIR VALUE OF FINANCIAL INSTRUMENTS Reconciliation of the carrying amounts and fair value of financial assets by class: EUR millions 31.12.2014 31.12.2013 Carrying amount Fair value Carrying amount Fair value Financial assets at fair value Available for sale financial assets 7 707 7 707 6 098 6 098 Cash and cash equivalents 16 187 16 187 8 275 8 275 Total 23 895 23 895 14 373 14 373 Financial assets at amortised cost Loans 58 454 58 454 57 213 57 213 Exchange receivables and non-exchange recoverables 15 422 15 422 13 536 13 536 Total 73 876 73 876 70 749 70 749 Total 97 770 97 770 85 122 85 122 Reconciliation of the carrying amounts and fair value of financial liabilities by class: EUR millions 31.12.2014 31.12.2013 Carrying amount Fair value Carrying amount Fair value Financial liabilities at fair value – – – – Financial liabilities at amortised cost Borrowings 58 267 58 267 57 028 57 028 Finance lease liabilities 1 089 1 089 1 128 1 128 Payables 42 986 42 986 36 014 36 014 Other 359 359 376 376 Total 102 701 102 701 94 545 94 545 45.2.CURRENCY RISKS Exposure of the EC to currency risk at year end – net position EUR millions 31.12.2014 31.12.2013 USD GBP DKK SEK EUR Other Total USD GBP DKK SEK EUR Other Total Financial assets Available for sale financial assets 68 77 7 9 7 504 42 7 707 39 66 13 19 5 960 6 097 Loans* 2 – – – 135 28 165 1 157 8 166 Receivables and recoverables – 4 098 49 87 11 057 131 15 422 1 043 40 78 12 157 217 13 536 Cash and cash equivalents 38 1 126 467 926 12 878 752 16 187 33 136 441 257 7 026 382 8 275 Total 108 5 301 523 1 022 31 575 953 39 482 73 1 245 494 354 25 300 607 28 074 Financial liabilities Payables – – – – (42 986) – (42 986) (36 014) (36 014) Total – – – – (42 986) – (42 986) – – – – (36 014) – (36 014) Total 108 5 301 523 1 022 (11 411) 953 (3 504) 73 1 245 494 354 (10 714) 607 (7 940) *excluding back-to-back operations. If the EUR had strengthened against the currency concerned by 10% then this would have had the following impact: EUR millions Economic result USD GBP DKK SEK Other 31.12.2014 (4) (475) (47) (92) – 31.12.2013 (3) (107) (44) (30) EUR millions Net assets USD GBP DKK SEK Other 31.12.2014 (6) (7) (1) (1) – 31.12.2013 (4) (6) (1) (2) If the EUR had weakened against the currency concerned by 10% then this would have had the following impact:

EUR millions Economic result USD GBP DKK SEK Other 31.12.2014 4 580 57 113 – 31.12.2013 4 131 53 38 EUR millions Net assets USD GBP DKK SEK Other 31.12.2014 8 9 1 1 – 31.12.2013 4 7 1 2 45.3. INTEREST RATE RISK The following table illustrates the sensivity of available for sale financial assets with variable interest rates (cashflow risk) and fixed interest rates (price risk) in relation to the economic result of the year and net assets to a reasonably possible change in interest rates of +/- 1%. EUR millions Increase (+) / decrease (-) in basis points Effect on economic result and net assets 31.12.2014: Available for sale financial assets +100 (96) -100 103 31.12.2013: Available for sale financial assets +100 (58) -100 60 45.4.CREDIT RISK Financial assets that are neither past due nor impaired EUR millions Total Neither past due nor impaired Past due but not impaired < 1 year 1-5 years > 5 years Loans 58 454 58 454 – – – Receivables and recoverables 15 422 7 815 5 622 1 846 138 Total at 31.12.2014 73 875 66 269 5 622 1 846 138 Loans 57 213 57 211 1 1 Receivables and recoverables 13 536 9 898 1 081 2 115 443 Total at 31.12.2013 70 749 67 109 1 082 2 116 443 Financial assets by risk category EUR millions 31.12.2014 31.12.2013 Available for sale Loans & receivables Cash Total Available for sale Loans & receivables Cash Total Counterparties with external credit rating Prime and high grade 6 192 2 549 12 821 21 562 4 680 4 450 6 266 15 396 Upper medium grade 150 25 017 2 800 27 967 72 143 1 572 1 787 Lower medium grade 177 5 996 249 6 422 160 31 886 182 32 228 Non-investment grade 27 28 186 307 28 520 33 26 781 253 27 067 Total 6 545 61 748 16 178 84 471 4 945 63 260 8 273 76 478 Counterparties without external credit rating Group 1 (debtors without defaults in the past) 15 4 385 10 4 409 – 3 712 2 3 714 Group 2 (debtors with defaults in the past) – 136 – 136 – 137 – 137 Total 15 4 521 10 4 545 – 3 849 2 3 851 Total 6 560 66 269 16 187 89 016 4 945 67 109 8 275 80 329 45.5.LIQUIDITY RISK Maturity analysis of financial liabilities by remaining contractual maturity EUR millions < 1 year 1-5 years > 5 years Total Borrowings 8 716 15 194 34 357 58 267 Finance lease liabilities 48 213 828 1 089 Payables 42 983 2 0 42 986 Other financial liabilities 17 84 234 335 Total at 31.12.2014 51 764 15 493 35 420 102 677 Borrowings 3 065 21 368 32 595 57 028 Finance lease liabilities 44 199 885 1 128 Payables 36 014 - - 36 014 Other financial liabilities 16 78 258 352 Total at 31.12.2013 39 139 21 645 33 738 94 522 46.RELATED PARTIES The related parties of the entity are the EU consolidated entities and the key management personnel of these entities. Transactions between these entities take place as part of the normal operations of the EU and as this is the case, no specific disclosure requirements are necessary for these transactions in accordance with the EU accounting rules. Details on key management entitlements are provided in note 8 of the EU consolidated annual accounts.

47.EVENTS AFTER THE BALANCE SHEET DATE At the date of transmission of these accounts, no material issues had come to the attention of the Accounting Officer of the Commission or were reported to him that would require separate disclosure under this section. The accounts and related notes were prepared using the most recently available information and this is reflected in the information presented. EUROPEAN COMMISSION FINANCIAL YEAR 2014 REPORTS ON THE IMPLEMENTATION OF THE BUDGET 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 EU BUDGET RESULT RECONCILIATION OF ECONOMIC RESULT WITH BUDGET RESULT STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS 1. IMPLEMENTATION OF EC BUDGET REVENUE 1.1.SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE 2. IMPLEMENTATION OF EC BUDGET EXPENDITURE 2.1. MFF: BREAKDOWN & CHANGES IN COMMITMENT & PAYMENT APPROPRIATIONS 2.2.MFF: IMPLEMENTATION OF COMMITMENT APPROPRIATIONS 2.3.MFF: IMPLEMENTATION OF PAYMENT APPROPRIATIONS 2.4.MFF: MOVEMENTS IN COMMITMENTS OUTSTANDING (RAL) 2.5.MFF: BREAKDOWN OF COMMITMENTS OUTSTANDING BY YEAR OF ORIGIN

2.6.POLICY AREA: BREAKDOWN AND CHANGES IN COMMITMENT AND PAYMENT APPROPRIATIONS 2.7.POLICY AREA: IMPLEMENTATION OF COMMITMENT APPROPRIATIONS 2.8.POLICY AREA: IMPLEMENTATION OF PAYMENT APPROPRIATIONS 2.9.POLICY AREA: MOVEMENTS IN COMMITMENTS OUTSTANDING 2.10.POLICY AREA: BREAKDOWN OF COMMITMENTS OUTSTANDING BY YEAR OF ORIGIN EU BUDGET RESULT EUR millions 2014 2013 Revenue for the financial year 143 940 149 504 Payments against current year's budget appropriations (141 193) (147 567) Payments against assigned revenue appropriations – – Payment appropriations carried over to year N+1 (1 787) (1 329) Cancellation of unused payment appropriations carried over from year N-1 25 34 Evolution of assigned revenue 336 403 Exchange differences for the year 110 (42) Budget result* 1 432 1 002 * Of which EFTA result is EUR (3) million in 2014 and EUR (4) million in 2013. RECONCILIATION OF ECONOMIC RESULT WITH BUDGET RESULT EUR millions 2014 2013 ECONOMIC RESULT OF THE YEAR (11 226) (4 685) Revenue Entitlements established in current year but not yet collected (6 567) (2 062) Entitlements established in previous years and collected in current year 4 798 3 343 Accrued revenue (net) (4 877) (134) Expenses Accrued expenses (net) 9 230 3 217 Amount from liaison accounts 3 000 3 075 Expenses prior year paid in current year (821) (1 123) Net-effect pre-financing 530 (823) Payment appropriations carried over to next year (1 365) (908) Payments made from carry-overs & cancellation of unused payment appropriations 1 238 899 Movement in provisions 12 263 4 323 Other (1 705) (1 069) BUDGET RESULT OF THE YEAR (COMMISSION) 4 497 4 053 BUDGET RESULT OTHER INSTITUTIONS (3 065) (3 051) BUDGET RESULT OF THE YEAR (EU) 1 432 1 002 STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS BUDGET REVENUE EUR millions Initial adopted budget Amending budgets Final adopted budget Revenue 1. Own resources 133 960 (5 572) 128 388 128 867 Of which Customs duties 16 186 (12) 16 174 16 499 Of which VAT 17 882 (192) 17 690 17 746 Of which GNI 99 767 (5 154) 94 614 94 863 3. Surpluses, balances and adjustments – 5 101 5 101 5 100 4. Revenue accruing from persons working with the institutions and with other Union bodies 939 – 939 927 5. Revenue accruing from the administrative operation of the institutions 52 – 52 256 6. Contributions and refunds in connection with Union agreements and programmes 60 – 60 3 213 7. Interests on late payments and fines 123 3 850 3 973 4 607 8. Borrowing and lending operations 2 151 153 297 9. Miscellaneous revenue 30 – 30 14 Total 135 167 3 530 138 697 143 280 BUDGET EXPENDITURE: COMMITMENTS BY MULTIANNUAL FINANCIAL FRAMEWORK (MFF) HEADING EUR millions Initial adopted budget Amending budgets & transfers Final adopted budget Additional appropri- ations* Total appropria-tions available Commitments made 1. Smart and inclusive growth 63 986 – 63 986 3 625 67 611 45 972 1a: Competitiveness for growth and jobs 16 484 – 16 484 2 645 19 129 18 018 1b: Economic, social and territorial cohesion 47 502 – 47 502 980 48 482 27 954 2. Sustainable growth: natural resources 59 267 (76) 59 191 2 105 61 296 48 263 of which: market related expenditure and direct payments 43 778 – 43 778 1 724 45 502 44 293 3. Security and citizenship 2 172 – 2 172 84 2 256 1 507 4. Global Europe 8 325 98 8 423 577 9 000 8 489 5. Administration 4 873 (0) 4 873 366 5 240 5 094 of which: Administrative expenditure of the institutions – – – – – – 6. Compensations 29 – 29 – 29 29 8. Negative reserve – – – – – – 9. Special Instruments 456 29 485 92 577 64 Total 139 109 50 139 159 6 849 146 008 109 418 * Additional appropriations include appropriations carried over from last year, assigned revenue and appropriations made availbale again following decommitments.

BUDGET EXPENDITURE: PAYMENTS BY MULTIANNUAL FINANCIAL FRAMEWORK (MFF) HEADING EUR millions Initial adopted budget Amending budgets & transfers Final adopted budget Additional appropri- ations* Total appropria-tions available Payments made 1. Smart and inclusive growth 62 393 3 470 65 863 3 836 69 699 67 683 1a: Competitiveness for growth and jobs 11 441 415 11 857 3 451 15 308 13 331 1b: Economic, social and territorial cohesion 50 951 3 055 54 006 385 54 392 54 352 2. Sustainable growth: natural resources 56 459 (500) 55 959 2 003 57 962 56 584 of which: market related expenditure and direct payments 43 777 (1) 43 776 1 738 45 514 44 287 3. Security and citizenship 1 677 (17) 1 660 88 1 747 1 711 4. Global Europe 6 191 734 6 925 556 7 481 7 206 5. Administration 4 874 1 4 875 690 5 565 5 090 of which: Administrative expenditure of the institutions – – – – – – 6. Compensations 29 – 29 – 29 29 8. Negative reserve – – – – – – 9. Special Instruments 350 (157) 193 344 536 465 Total 131 973 3 530 135 503 7 517 143 020 138 768 * Additional appropriations include appropriations carried over from last year, assigned revenue and appropriations made availbale again following decommitments.

1.IMPLEMENTATION OF EC BUDGET REVENUE 1.1.SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE EUR millions Title Income appropriations Entitlements established Revenue Receipts as Outstanding Initial adopted budget Final adopted budget Current year Carried over Total On entitlements current year On entitlements carried over Total % of budget 1. Own resources 133 960 128 388 128 853 46 128 899 128 841 25 128 867 100.37% 32 3. Surpluses, balances and adjustments – 5 101 10 507 – 10 507 5 100 – 5 100 99.98% 5 407 4. Revenue accruing from persons working with the institutions and other Union bodies 939 939 924 11 934 916 11 927 98.73% 7 5. Revenue accruing from the administrative operation of the institutions 52 52 259 13 272 247 9 256 487.61% 16 6. Contributions and refunds in connection with Union agreements and programmes 60 60 3 257 208 3 465 3 110 102 3 213 5354.83% 252 7. Interests on late payments and fines 123 3 973 2 206 10 416 12 622 1 131 3 475 4 607 115.95% 8 016 8. Borrowing and lending operations 2 153 46 255 301 43 254 297 193.72% 3 9. Miscellaneous revenue 30 30 14 9 23 12 1 14 45.83% 9 Total 135 167 138 697 146 066 10 957 157 023 139 403 3 878 143 280 103.30% 13 743 EUR millions Detail Title 1: Own resources Chapter Income appropriations Entitlements established Revenue Receipts as Outstanding Initial budget voted Final adopted budget Current year Carried over Total On entitlements current year On entitlements carried over Total % of budget 11. Sugar levies 125 (90) (69) – (69) (69) – (69) 77.12% – 12. Customs duties 16 186 16 174 16 485 46 16 531 16 473 25 16 499 102.01% 32 13. VAT 17 882 17 690 17 746 – 17 746 17 746 – 17 746 100.32% – 14. GNI 99 767 94 614 94 863 – 94 863 94 863 – 94 863 100.26% – 15. Correction of budgetary imbalances – – (172) – (172) (172) – (172) 0.00% – Total 133 960 128 388 128 853 46 128 899 128 841 25 128 867 100.37% 32 EUR millions Detail Title 3: Surpluses, balances and adjustments Chapter Income appropriations Entitlements established Revenue Receipts as Outstanding Initial budget voted Final adopted budget Current year Carried over Total On entitlements current year On entitlements carried over Total % of budget 30. Surplus from previous year – 1 005 1 005 – 1 005 1 005 – 1 005 100.00% – 31. VAT balances – (81) (284) – (284) (79) – (79) 97.59% (205) 32. GNI balances – 4 176 9 825 – 9 825 4 212 – 4 212 100.87% 5 613 34. Adjustment for non-participation in JHAP – – (2) – (2) (2) – (2) 0.00% – 35. United Kingdom correction - adjustments – – (18) – (18) (18) – (18) 0.00% – 36. United Kingdom correction - Intermediate calculation – – (19) – (19) (19) – (19) 0.00% – Total – 5 101 10 507 – 10 507 5 100 – 5 100 99.98% 5 407 2.IMPLEMENTATION OF EC BUDGET EXPENDITURE 2.1.MFF: BREAKDOWN & CHANGES IN COMMITMENT & PAYMENT APPROPRIATIONS EUR millions Commitment appropriations Payment appropriations Budget appropriations Additional appropriations Total appropri- ations Budget appropriations Additional appropriations Total appropri- ations MFF Heading Initial adopted budget Amending budgets & Transfers Final adopted budget Carry-overs Assigned revenue available Initial adopted budget Amending budgets & Transfers Final adopted budget Carry-overs Assigned revenue available 1 2 3=1+2 4 5 6=3+4+5 7 8 9=7+8 10 11 12=9+10+11 1. Smart and inclusive growth 63 986 – 63 986 150 3 474 67 611 62 393 3 470 65 863 289 3 548 69 699 1a: Competitiveness for growth and jobs 16 484 – 16 484 0 2 645 19 129 11 441 415 11 857 128 3 323 15 308 1b: Economic, social and territorial cohesion 47 502 – 47 502 150 830 48 482 50 951 3 055 54 006 161 224 54 392 2. Sustainable growth: natural resources 59 267 (76) 59 191 – 2 105 61 296 56 459 (500) 55 959 35 1 968 57 962 of which: market related expenditure and direct payments 43 778 – 43 778 – 1 724 45 502 43 777 (1) 43 776 13 1 724 45 514 3. Security and citizenship 2 172 – 2 172 3 81 2 256 1 677 (17) 1 660 10 78 1 747 4. Global Europe 8 325 98 8 423 6 571 9 000 6 191 734 6 925 35 521 7 481 5. Administration 4 873 – 4 873 – 366 5 240 4 874 1 4 875 320 370 5 565 of which: Administrative expenditure of the institutions – – – – – – – – – – – – 6. Compensations 29 – 29 – – 29 29 – 29 – – 29 8. Negative reserve – – – – – – – – – – – – 9. Special Instruments 456 29 485 18 74 577 350 (157) 193 270 74 536 Total 139 109 50 139 159 178 6 671 146 008 131 973 3 530 135 503 958 6 559 143 020 2.2.MFF: IMPLEMENTATION OF COMMITMENT APPROPRIATIONS EUR millions Commitments made Appropriations carried over to 2015 Appropriations lapsing MFF Heading Total appropriations available From final adopted budget From carry-overs From assigned revenue Total % Assigned revenue Carry-overs by decision Total % From final adopted budget From carry-overs Assigned revenue (EFTA) Total % 1 2 3 4 5=2+3+4 6=5/1 7 8 9=7+8 10=9/1 11 12 13 14=11+12+13 15=14/1 1. Smart and inclusive growth 67 611 44 260 150 1 561 45 972 67.99% 1 913 8 480 10 392 15.37% 11 246 – 0 11 247 16.63% 1a: Competitiveness for growth and jobs 19 129 16 466 0 1 552 18 018 94.19% 1 092 – 1 092 5.71% 18 – 0 19 0.10% 1b: Economic, social and territorial cohesion 48 482 27 794 150 9 27 954 57.66% 820 8 480 9 300 19.18% 11 228 – – 11 228 23.16% 2. Sustainable growth: natural resources 61 296 46 866 – 1 397 48 263 78.74% 708 2 866 3 575 5.83% 9 458 – – 9 458 15.43% of which: market related expenditure and direct payments 45 502 42 910 – 1 383 44 293 97.34% 341 868 1 209 2.66% 0 – – 0 0.00% 3. Security and citizenship 2 256 1 463 3 41 1 507 66.81% 40 254 294 13.02% 455 – – 455 20.17% 4. Global Europe 9 000 8 280 6 203 8 489 94.32% 368 136 504 5.60% 7 – 0 7 0.07% 5. Administration 5 240 4 867 – 227 5 094 97.23% 139 – 139 2.66% 6 – – 6 0.11% of which: Administrative expenditure of the institutions – – – – – 0.00% – – – 0.00% – – – – 0.00% 6. Compensations 29 29 – – 29 100.00% – – – 0.00% – – – – 0.00% 8. Negative reserve – – – – – 0.00% – – – 0.00% – – – – 0.00% 9. Special Instruments 577 45 18 – 64 11.06% 74 361 435 75.37% 78 – – 78 13.57% Total 146 008 105 811 178 3 429 109 418 74.94% 3 242 12 097 15 339 10.51% 21 251 – 0 21 251 14.55% 2.3.MFF: IMPLEMENTATION OF PAYMENT APPROPRIATIONS EUR millions Payments made Appropriations carried over Appropriations lapsing MFF Heading Total appropriations available From final adopted budget From carry-overs From assigned revenue Total % Automatic carry-overs Carry-overs by decision Assigned revenue Total % From final adopted budget From carry-overs Assigned revenue (EFTA) Total % 1 2 3 4 5=2+3+4 6=5/1 7 8 9 10=7+8+9 11=10/1 12 13 14 15=12+ 13+14 16= 15/1 1. Smart and inclusive growth 69 699 65 730 267 1 686 67 683 97.11% 121 0 1 860 1 980 2.84% 12 22 2 36 0.05% 1a: Competitiveness for growth and jobs 15 308 11 740 108 1 483 13 331 87.09% 104 0 1 838 1 943 12.69% 12 20 2 33 0.22% 1b: Economic, social and territorial cohesion 54 392 53 990 159 203 54 352 99.93% 16 – 21 38 0.07% 0 2 – 2 0.00% 2. Sustainable growth: natural resources 57 962 55 050 33 1 502 56 584 97.62% 34 868 467 1 369 2.36% 7 2 – 9 0.02% of which: market related expenditure and direct payments 45 514 42 891 12 1 383 44 287 97.30% 16 868 341 1 226 2.69% 0 1 – 2 0.00% 3. Security and citizenship 1 747 1 648 8 55 1 711 97.94% 8 0 23 31 1.75% 4 2 0 5 0.31% 4. Global Europe 7 481 6 880 29 297 7 206 96.32% 34 9 224 267 3.57% 2 6 0 8 0.10% 5. Administration 5 565 4 615 294 180 5 090 91.46% 255 – 190 446 8.01% 4 25 – 30 0.53% of which: Administrative expenditure of the institutions – – – – – 0.00% – – – – 0.00% – – – – 0.00% 6. Compensations 29 29 – – 29 100.00% – – – – 0.00% – – – – 0.00% 8. Negative reserve – – – – – 0.00% – – – – 0.00% – – – – 0.00% 9. Special Instruments 536 157 270 38 465 86.70% 0 36 35 71 13.28% 0 0 – 0 0.02% Total 143 020 134 108 902 3 758 138 768 97.03% 452 913 2 799 4 164 2.91% 29 56 2 88 0.06%

2.4.MFF: MOVEMENTS IN COMMITMENTS OUTSTANDING (RAL) EUR millions Co