Report by the European Court of Auditors on the financial statements of the European Coal and Steel Community as at 31 December 2001
Date: 2002-07-03
Institutions: European Court of Auditors
Subjects: ECSC, balance sheet, financial management, financial year

C 158/2

EN

Official Journal of the European Communities

3.7.2002

REPORT BY THE EUROPEAN COURT OF AUDITORS ON THE FINANCIAL STATEMENTS OF
THE EUROPEAN COAL AND STEEL COMMUNITY AS AT 31 DECEMBER 2001

(2002/C 158/02)

This report concerns the reliability of the accounts drawn up by the Commission in accordance with

1.
Article 45(c)(5) of the Treaty establishing the European Coal and Steel Community.

2.
The Court has audited the accounts and financial statements of the European Coal and Steel
Community at 31 December 2001 in accordance with generally accepted auditing standards and carried
out such checks as it considered necessary. By means of this audit the Court has obtained a reasonable
basis for the opinion expressed below.

3.
In the Court's opinion, the attached financial statements (balance sheet at 31 December 2001,
profit-and-loss account, statement of the allocation of the surplus for the financial year then ended and
notes to the financial statements), which have been drawn up in accordance with generally accepted
accounting principles, give a true and fair view of the assets and financial situation of the European
Coal and Steel Community at 31 December 2001 and of the results of its operations for the year then
ended.

The ECSC's balance sheet, profit-and-loss account and statement of the allocation of profit for the year
ending 31 December 2001 were submitted to the Commission for approval under written procedure No
E/947/2002 of 5 June 2002 and are shown in this financial report as approved by the Commission.

ASSETS

(Amounts in euro)

— Before allocation of surplus —

31 December 2001

31 December 2000

Balances with central banks (Note C.1)

63 130

84 650

Loans and advances
— repayable on demand
— with agreed maturity dates or periods of

notice (Note C.2.1)
— loans (Note C.2.2)

8 553 937

133 272 729
355 368 358

8 331 435

25 381 261
611 297 253

Total

497 195 024

645 009 949

Loans and advances to customers
— loans (Note C.3.1)
— levy (Note C.3.2)
— fines (Note C.3.3)
— interest subsidies repayable (Note C.3.4)

1 045 139 605
66 213
39 806 715
2 579 066

1 459 488 702
61 041
38 950 716
3 304 216

Total

1 087 591 599

1 501 804 675

Bonds and other fixed-income securities (Note
C.4)
— issued by public bodies
— issued by other borrowers
Shares and other variable-income securities (Note
C.5)

1 090 184 127
478 711 875

44 205 202

973 765 678
705 940 156

44 040 538

Total

Other assets (Note C.6)

Prepayments and accrued income (Note C.7)

TOTAL ASSETS

Off-balance-sheet commitments (Note C.23)

1 613 101 204

7 092 794

82 534 005

3 287 577 756

310 674 984

1 723 746 372

5 170 347

96 173 610

3 971 989 603

430 881 628

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LIABILITIES

— Before allocation of surplus —

31 December 2001

31 December 2000

—

604 294 572

352 822

981 277 746

LIABILITIES VIS-À-VIS THIRD PARTIES

Amounts owed to credit institutions (Note C.8)

— repayable on demand
— with agreed maturity dates or periods of

notice

Total

Debts evidenced by certificates (Note C.9)
Other liabilities (Note C.10)
Accruals and deferred income (Note C.11)

Liabilities vis-à-vis third parties

ECSC OPERATING BUDGET (Note C.12)

PROVISIONS FOR LIABILITIES AND CHARGES

Guarantee Fund (Note C.14.1)
Provisions for major exposures (Note C.14.2)
Other provisions (Note C.14.3)

580 000 000
6 000 000
150 699 271

Total provisions

Budget for financing coal and steel research (Note
C.13)

RESERVES AND SURPLUS (Note C.15)

Special Reserve
Former Pension Fund
Assets of the Coal and Steel Research Fund

Surplus brought forward

Surplus for the financial year (Note C.16)

Total reserves and surplus

TOTAL LIABILITIES

Off-balance-sheet commitments (Note C.23)

118 000 000
40 000 000
92 632 605

2 029 066

8 588 663

604 294 572

836 250 262
301 104
78 061 265

1 518 907 203

530 720 948

736 699 271

240 000 000

261 250 334

3 287 577 756

300 196 287

565 000 000
17 000 000
158 663 347

176 055 284
74 577 321
—

213 454

1 815 612

981 630 568

1 062 076 396
7 494 034
91 947 305

2 143 148 303

835 516 282

740 663 347

—

252 661 671

3 971 989 603

426 626 265

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Official Journal of the European Communities

3.7.2002

Profit-and-loss account for the year ending 31 December 2001

(Amounts in euro)

CHARGES

Interest payable and similar charges (Note C.17)

Commission paid

Net losses on financial operations
— exchange difference (Note B.2)
— losses on bonds and other

securities

fixed-income

— value adjustments for bonds and other fixed-

income securities (Note C.4)
adjustments

for

— value

shares

and other

variable-income securities (Note C.5)

Total

Administrative overheads (Note C.18)

Value adjustments for land and buildings

Other operating charges (Note C.19)

Value adjustments for loans and advances and
provisions for liabilities and commitments:
— value adjustment for loans and advances
— allocation to the Guarantee

Fund (Note

C.14.1)

— allocation to other provisions for liabilities

and charges (Note C.14.3)

Total

Extraordinary charges
Legal commitments for the financial year (Note
C.12)
Allocation to the budget for financing coal and
steel research (Note C.13)

TOTAL CHARGES

Surplus for the financial year (Note C.16)

TOTAL

Financial year 2001

Financial year 2000

141 299 615

379 849

170 536 669

439 219

862 006

6 703 555

2 960 265

13 920 110

12 590 342

12 000 000

17 134 135

268 248

2 248 893

6 760 668

3 072 877

4 743 980

15 000 000

2 057 973

12 350 686

5 000 000

—

1 711 089

21 801 953

31 139

184 554 560

240 000 000

607 128 891

8 588 663

615 717 554

24 445 936

5 000 000

166 180

315 884

41 724 477

270 668

129 942 347

—

372 841 380

1 815 612

374 656 992

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INCOME

Interest receivable and similar income (Note C.20)
(including interest on fixed-income securities:
EUR 69 658 619 in 2001 and EUR 73 603 257
in 2000)

Commissions received

Net profit on financial operations
— profit on bonds and other

fixed-income

securities

— withdrawal of value adjustments for bonds
and other fixed-income securities (Note C.4)
— withdrawal of value adjustments for shares
(Note

and other variable-income securities
C.5)

Financial year 2001

Financial year 2000

214 741 377

253 300

248 795 316

93 400

696 145

17 200 348

1 179 177

2 158 217

16 334 306

7 951 984

Total

19 075 670

26 444 507

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

advances
— withdrawal

from the provision for major

exposures (Note C.14.2)

— withdrawal

from other

provisions

for

liabilities and charges (Note C.14.3)

Total

Other operating income (Note C.21)
Extraordinary income

Income relating to the ECSC operating budget
(Note C.22)
Withdrawal from the provision for financing the
ECSC operating budget (Note C.12)

TOTAL INCOME

49 478 703

11 000 000

3 477 090

13 155 711

1 000 000

0

63 955 793

83 387
1 879 316

64 523 231

251 205 480

615 717 554

14 155 711

2 122 461
2 427 191

74 618 406

6 000 000

374 656 992

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Allocation of the surplus for the year ending 31 December 2001

(Amounts in euro)

Financial year 2001

Financial year 2000

Surplus brought forward at 1 January

Surplus for the year to be allocated

2 029 066

8 588 663

Total

10 617 729

Allocation to the assets of the Coal and Steel Research Fund
(Note C.15)

Surplus brought forward at 31 December

7 367 395

3 250 334

213 454

1 815 612

2 029 066

0

2 029 066

NOTES RELATING TO THE FINANCIAL STATEMENTS AT 31 DECEMBER 2001

A. THE ECSC

(Amounts in euro)

The European Coal and Steel Community (ECSC) was established by the Treaty of 18 April 1951.
According to the Treaty, the task of the ECSC was to contribute to the economic expansion of the
Member States through the establishment of a common market for coal and steel.

The ECSC Treaty is due to expire on 23 July 2002. The Nice European Council decided to annex to the
Nice Treaty a protocol on the financial consequences of the expiry of the ECSC Treaty and on the creation
and management of the Coal and Steel Research Fund. It was decided that all ECSC assets at the time of
the expiry of the Treaty will be transferred to the European Community with effect from 24 July 2002.
The net value of these assets is considered to be earmarked for research in the sectors associated with the
coal and steel industry. The income generated by these assets will be allocated exclusively to research in
these sectors.

Since the Nice Treaty will probably not be ratified before the expiry of the ECSC Treaty, the Member States
have temporarily entrusted to the European Commission (1) the task of managing the assets of the ECSC in
liquidation by applying the same rules.

In view of the expiry of the ECSC Treaty, the rate of the ECSC levy was reduced to zero in 1998, and the
ECSC's lending activity has been discontinued since July 1997 (Commission Decision of 22 June 1994).
Thus most of the ECSC's funds now come from the net balance obtained in the management of the various
reserves and provisions.

B. ACCOUNTING PRINCIPLES AND METHODS

1. Presentation of the financial statements

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

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

The accounting methods used also take account of the fact that the ECSC will not operate after 23 July
2002, when the ECSC Treaty expires.

(1) Decision of the Representatives of the ECSC Member States, meeting within the Council, of 27 February 2002 (OJ

L 79, 22.3.2002, p. 42).

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They are presented in accordance with Council Directives 78/660/EEC and 86/635/EEC (1) on the annual
accounts and consolidated accounts of banks and other financial institutions wherever these are applicable
and subject to the abovementioned necessary adjustments. Directive 2001/65/EC (2) amending the above-
mentioned Directives concerning the valuation rules and in particular fair value is not yet applicable to the
ECSC financial statements. This Directive must be applied by 31 December 2003.

2. Conversion of foreign currency

The currency used by the ECSC for its annual accounts is the euro (EUR).

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

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

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

2.1. Conversion rates

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

Euro zone

Belgian and Luxembourg francs

German mark

Greek drachma

Portuguese escudo

French franc

Finnish markka

Dutch guilder

Irish pound

Italian lira

Austrian schilling

Spanish peseta

Danish krone

Swedish krone

Pound sterling

Swiss franc

United States dollar

Japanese yen

Non-euro zone 2001

(1) OJ L 222, 14.8.1978; OJ L 372, 31.12.1986.
(2) OJ L 283, 27.10.2001.

40,3399

1,95583

340,75

200,482

6,55957

5,94573

2,20371

0,787564

1 936,27

13,76030

166,386

31 December

2001

7,43650

9,30120

0,60850

1,48290

0,88130

115,330

2000

7,46310

8,83130

0,62410

1,52320

0,93050

106,920

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2.2. At 31 December 2001, the various currencies listed above, together with the euro, made up the

ECSC's balance sheet as follows:

Currency

Assets

Liabilities

(euro)

Euro

Danish krone

Swedish krone

Pound sterling

Swiss franc

2 583 240 668

2 638 980 434

779 613

294 980

11 794

0

570 597 241

514 241 928

205 598

212 386

United States dollar

132 459 656

134 131 214

Total

3 287 577 756

3 287 577 756

3. Treasury investment and valuation of bonds and other securities

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

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

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

4. Special features of the ECSC financial statements

(a) ECSC operating budget

Part of the ECSC's funds are made available to the ECSC operating budget, which is adopted annually by
the Commission after informing the Council and consulting the European Parliament.

The commitments entered into by the operating budget vis-à-vis third parties and the provisions for
financing the operating budget are shown under the heading ‘ECSC operating budget’ (see Note C.12).

(b) Budget for financing coal and steel research

The Member States of the European Union have decided that the income from the management of ECSC
assets after 23 July 2002 should be allocated to the general budget of the European Communities (1). This
income is earmarked for a research programme relating to the coal and steel industries, as stated in Note A
to this report.

(1) Decision of the Representatives of the ECSC Member States, meeting within the Council, of 27 February 2002 (OJ

L 79, 22.3.2002, p. 42).

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The ECSC has already constituted provisions at 31 December in order to prepare the ground for this
mechanism for financing coal and steel research. These provisions are entered under the heading ‘Budget
for financing coal and steel research’ (see Note C.13).

(c) Fines and interest subsidies

Fines and interest subsidies whose repayment has been requested are not regarded as ECSC resources until
they have actually been received. Fines imposed but not yet paid and interest subsidies whose repayment
has been requested are therefore allocated to provisions (see Note C.14.3.a).

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

ACCOUNTS

1. Balances with central banks

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

2. Loans and advances to credit institutions

2.1. With agreed maturity dates or periods of notice

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

Up to three months

Three months to one year

(euro)

31 December

2001

2000

133 272 729

25 381 261

—

—

Total

133 272 729

25 381 261

2.2. Loans

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

Up to three months

Three months to one year

One to five years

Over five years

31 December

2001

2000

(euro)

33 692 382

218 222 375

39 999 682

63 453 919

40 095 286

215 609 298

284 383 600

71 209 069

Total

355 368 358

611 297 253

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3. Loans and advances to customers

3.1. Loans

The loans granted to credit institutions are shown under ‘Loans and advances to credit institutions’ (see
Note C.2).

The other loans break down as follows:

1. Loans disbursed from borrowed funds

— amounts outstanding

— value adjustments

31 December

2001

2000

(euro)

1 091 388 811

1 546 451 118

– 99 348 028

– 143 192 092

Sub-total

992 040 783

1 403 259 026

2. Loans from the special reserve for financing subsidised

housing

17 483 206

19 509 794

Interim total

1 009 523 989

1 422 768 820

The breakdown of these loans by time remaining to maturity at
31 December is as follows:

— Up to three
months

— Three months
to one year

— One to five

years

2001

2000

170 535 047

131 767 190

166 153 710

315 397 548

240 749 165

593 899 440

— Over five years

531 434 095

524 896 734

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

34 817 280

36 087 234

4. Loan repayments overdue and interest on arrears

798 336

632 648

Grand total

1 045 139 605

1 459 488 702

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

3.2. Levy

The levy rate for 1998-2001 was 0 %, so the claims at 31 December 2001 relate to previous years.

This item breaks down as follows:

Gross amount

Value adjustments

(euro)

31 December

2001

2000

5 455 706

– 5 389 493

5 621 065

– 5 560 024

Net amount

66 213

61 041

It includes in particular EUR 5 377 782 subject to legal proceedings (EUR 5 551 715 at 31 December
2000).

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3.3. Fines

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

After value adjustment it amounts to EUR 39 806 715 (EUR 38 950 716 at 31 December 2000).

This item has two main components.

A fine totalling EUR 104 364 350 that the Commission imposed on steel companies for infringing the
rules on competition in the marketing of steel beams (Decision 94/215/ECSC (1) of 16 February 1994). In
its judgment of 11 March 1999, the Court of First Instance reduced the total fines by EUR 24 774 000 to
EUR 79 590 350. Seven companies have lodged appeals against the judgment of the Court of First
Instance. Pending the decision of
interest) of
the European Court of
EUR 28 959 000 remained outstanding at 31 December 2001.

Justice, a total

(without

A fine totalling EUR 27 380 000 was imposed by the Commission (Decision 98/247/ECSC (2) of 21
January 1998) under Article 65 of the Treaty on steel companies for concerted agreement on the
formula for calculating the alloy surcharge. In its judgment of 13 December 2001, the Court of First
Instance reduced the total amount of fines by EUR 4 970 000 to EUR 22 410 000. A total (without
interest) of EUR 8 064 000 had not yet been paid at 31 December 2001.

3.4. Interest subsidies to be recovered

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

4. Bonds and other fixed-income securities

4.1. Composition

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

Value adjustments
on bonds and other
fixed-income
securities
Allocation
(withdrawal)

(euro)

31 December

2001

2000

1 102 728 104

995 016 008

– 8 706 353

– 12 543 977

– 21 250 330

1 090 184 127

973 765 678

481 525 476

710 521 782

– 1 768 025

– 2 813 601

– 4 581 626

478 711 875

705 940 156

1 584 253 580

1 705 537 790

– 10 474 378

– 15 357 578

– 25 831 956

1 568 896 002

1 679 705 834

Issued by public bodies:

Gross value

Value adjustments

Net value

Issued by other borrowers:

Gross value

Value adjustments

Net value

Total bonds:

Gross value

Value adjustments

Net value

(1) OJ L 116, 6.5.1994.
(2) OJ L 100, 1.4.1998.

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4.2. Maturities in 2002

Securities in the portfolio reaching final maturity during 2002 represent the following amounts:

— Issued by public bodies

— Issued by other borrowers

(euro)

309 802 520

142 525 164

Total

452 327 684

4.3. Financial fixed assets (see Note B.3)

Financial fixed assets are defined as securities that will remain in the portfolio until their final maturity.
They comprise mainly short- or medium-term paper and own-debt securities repurchased for servicing
ECSC borrowings.

At 31 December 2001, financial fixed assets totalled EUR 48 519 675.

The redemption value of these securities is EUR 1 548 471 less than the average acquisition price.

4.4. Return on investment

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

The return on investment, including the variation in the market value of bonds (calculated by the Modified
Dietz Method) was 5,6 % for the year ending 31 December 2001.

5. Shares and other variable-income securities

Shares and other variable-income securities break down as follows:

Value adjustments
on shares and other
variable-income
securities
Allocation
(withdrawal)

(euro)

31 December

2001

2000

100 198 015

98 139 651

1 893 700

– 55 992 813

– 54 099 113

44 205 202

44 040 538

Gross amount

Value adjustments

Net value

These shares and other variable-income securities were received by the ECSC as part of the restructuring
plan of a defaulting debtor (see Note B.3).

A portion of one of these securities, representing a net value of EUR 17 070 666, was the subject of a
loan contract with a credit institution (maturity date 1 July 2004 with call option 1 July 2002).

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6. Other assets

Other assets break down as follows:

— Current account, ECSC operating budget

— Withholding taxes and VAT to be reclaimed

— Loans to officials

— Miscellaneous

31 December

(euro)

2001

724 633

2 446 873

3 900 732

20 556

Total

7 092 794

2000

—

2 374 098

2 763 544

32 705

5 170 347

7. Prepayments and accrued income

Prepayments and accrued income break down as follows:

— Interest on loans and swaps

— Interest on deposits and securities portfolio

— Issuing costs and redemption premiums

— Cumulative value adjustments

31 December

2001

2000

(euro)

65 111 062

25 205 627

868 748

91 185 437

– 8 651 432

74 306 162

25 819 166

2 750 794

102 876 122

– 6 702 512

Total

82 534 005

96 173 610

8. Amounts owed to credit institutions

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

(euro)

31 December

2001

—

2000

352 822

211 944 169

371 209 437

18 846 752

2 294 214

59 539 460

374 269 101

543 151 231

4 317 954

Total

604 294 572

981 277 746

Repayable on demand

With agreed maturity dates or periods of notice:

— Borrowings

Up to three months

Three months to one year

One to five years

Over five years

9. Debts evidenced by certificates

This item comprises loan securities.

EUR 104 115 280 of the borrowings outstanding at 31 December 2001 is due to reach maturity during
the 2002 financial year.

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10. Other liabilities

Other liabilities break down as follows:

Current account, ECSC operating budget

Other

31 December

(euro)

2001

0

301 104

2000

7 431 189

62 845

Total

301 104

7 494 034

11. Accruals and deferred income

Accruals and deferred income break down as follows:

31 December

2001

2000

(euro)

65 877 350

86 307

1 700 611

10 396 997

76 202 004

132 307

3 684 239

11 928 755

Total

78 061 265

91 947 305

Interest on borrowings and credit lines

Commissions on loans

Issuing premiums

Deferred positive exchange differences

12. ECSC operating budget

item comprises

This
EUR 380 926 428
(EUR 434 516 282 at 31 December 2000) and provisions associated with financing the operating
budget totalling EUR 149 794 520 (EUR 401 000 000 at 31 December 2000).

commitments

operating

totalling

budget

the

for

In 2001, commitments for the ECSC operating budget were as follows:

Amount at 31.12.2000 New legal commitments

Payments

Cancellations

Amount at 31.12.2001

(euro)

Redeployment

Research

Interest subsidies Article 54

Interest subsidies Article 56

Social measures steel industry

Social measures coal industry
(Rechar)

130 901 577

184 602 943

137 545

40 515 789

19 916 641

79 963 352

77 186 200

0

0

0

58 718 224

78 703 941

137 545

5 221 149

23 185 896

128 960 809

9 061 207

174 023 995

0

0

10 285 961

25 008 679

10 787 499

9 129 142

0

58 441 787

27 405 008

26 577 715

6 336 135

52 932 945

Total

434 516 282

184 554 560

180 146 073

57 998 341

380 926 428

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The provision for financing future operating budgets (1) and the provision for budgetary contingencies (2)
were as follows:

Amount at 31.12.2000

Allocation

Withdrawal 2001

Amount at 31.12.2001

(euro)

Provision for financing future operating budgets:

— provision for the 2001 operating budget

— provision for the 2002 operating budget (3)

Provision for budgetary contingencies

108 000 000

220 000 000

73 000 000

108 000 000

0

101 205 480

118 794 520

42 000 000

31 000 000

Total

401 000 000

—

251 205 480

149 794 520

(1) This provision was constituted by the budgetary authority when it approved the 1997 ECSC operating budget. It was prompted by the reduction of the levy to 0 %

from 1998 and the need to plan for the regular financing of future operational budgets until 2002.

(2) This provision is intended to guarantee the planned ECSC commitments on the resources of the 2002 operating budget (1.1-23.7).
(3) Commission Decision No 2537/2001/ECSC of 21 December 2001 (2002 operating budget). Part of these provisions freed by the expiry of the ECSC Treaty is

earmarked for the mechanism to finance the Coal and Steel Research Fund (see Notes B.4.b and C.13).

13. Budget for financing coal and steel research

This item breaks down as follows:

Provision for research in 2003

Provision for research in 2004

Provision for smoothing

31 December

2001

2000

(euro)

60 000 000

60 000 000

120 000 000

Total

240 000 000

0

0

0

0

In view of the expiry of the ECSC Treaty on 23 July 2002 and the winding-up of the ECSC, it has been
decided that all ECSC assets at the time of the expiry of the Treaty will be transferred to the European
Community with effect from 24 July 2002 (1). The net value of these assets is considered to be earmarked
for research in the sectors associated with the coal and steel industries. The income generated by these
assets will be allocated exclusively to research in these sectors.

In practice, the net profit from the management of the assets (invested mainly in the portfolio of securities
and term deposits) in year n will be transferred to the general budget of the European Community and will
be used for research in year n+2. On the basis of simulations of the net profit from the management of the
assets, it was decided to set the initial funding at EUR 60 million.

In order to reduce fluctuations in research funding resulting from movements on the financial markets, a
smoothing formula will be applied in accordance with the procedures approved by the Member States.
This smoothing formula will be applied for the first time to the results for the 2003 financial year and will
be used to determine the allocation for research in 2005. In order to launch this mechanism, the ECSC
constituted a provision at 31 December 2001 of EUR 120 million.

(1) Decision of the Representatives of the ECSC Member States, meeting within the Council, of 27 February 2002 (OJ

L 79, 22.3.2002, p. 42).

C 158/16

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Official Journal of the European Communities

3.7.2002

14. Provision for liabilities and charges

14.1. Guarantee Fund

The Guarantee Fund is intended to cover lending and borrowing operations. After allocation of EUR 15
million, the Guarantee Fund totalled EUR 580 million at 31 December 2001. This reinforcing of the
Guarantee Fund is connected with the forthcoming expiry of the ECSC Treaty.

On 11 September 1996 the Commission confirmed its intention of maintaining reserves to cover 100 % of
those loans outstanding after 23 July 2002 which are not guaranteed by the government of a Member
State. This means that the Guarantee Fund must be gradually increased to approximately EUR 580 million
(calculated at the conversion rate applicable on 31 December 2001). At 31 December 2001, this coverage
was 100 % on condition that there is no default on the loans due to mature before 23 July 2002.
However, since some of the loans are denominated in GBP, the 100 % coverage may change as a result
of fluctuation in the GBP/EUR exchange rate.

The Guarantee Fund increased as follows:

31 December 2000

565 000 000

Allocation 2001

15 000 000

(euro)

31 December 2001

580 000 000

14.2. Provision for major exposures

the background of

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

the expiry of

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

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

The provision, calculated on the basis of outstanding major exposures at 31 December 2001 according to
a procedure recommended by a firm of international experts, totals EUR 6 million (EUR 17 million at 31
December 2000).

14.3. Other provisions

This item comprises provisions for fines and interest subsidies repayable totalling EUR 42 385 781
EUR 108 313 490
(EUR 42 272 249 at 31 December 2000)
(EUR 116 391 098 at 31 December 2000).

and other provisions

totalling

(a) Provisions for fines and interest subsidies repayable (See Note B.5):

31 December 2000

Change in 2001
balance sheet

31 December 2001

(euro)

Provision for
payment to be paid

fines and surcharges

for

late

Provision for interest subsidies repayable

38 950 716

3 321 533

855 999

39 806 715

– 742 467

2 579 066

Total

42 272 249

113 532

42 385 781

3.7.2002

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Official Journal of the European Communities

C 158/17

(b) Other provisions:

Operations in 2001

31 December
2000

Allocation

Withdrawal

(euro)

Exchange-rate
movement and
balance-sheet
movement

31 December
2001

53 437 191

2 848 997

1 369 959

51 958 153

200 000

—

200 000

53 940 614

1 865 039

209 704

– 3 488 450

52 107 499

8 813 293

192 934

418 389

– 4 540 000

4 047 838

Provision for interest-rate
risk (1)

Provision for special costs
relating to banking
activities (2)

Provision for appeal
against Decision
94/215/ECSC (3)

Provision for appeal
against Decision
98/247/ECSC (4)

Total

116 391 098

2 057 973

3 477 090

— 108 313 490

(1) Following the default of one borrower, long-term securities issued by the ECSC (i.e. with a maturity date after 2002) are no
longer paired with asset items bearing an equivalent interest rate. Under the principle of caution and in view of the expiry of
the ECSC Treaty in 2002, a provision has been constituted to fully cover interest-rate risks.

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

(3) This provision was created from the fines paid under Decision 94/215/ECSC of 16 February 1994 to cover the possible
reimbursement of the amounts received should the Court of Justice rule in favour of the companies which have appealed
against the judgment of the Court of First Instance of 11 March 1999 (Note C.3.3).

(4) This provision was created from the fines paid under Decision 98/247/ECSC of 21 January 1998 to cover the possible
reimbursement of the amounts received should the Court of First Instance rule in favour of the companies which have
appealed against this Decision. The ECSC was informed during December 2001 that one of the appeals had been lodged
with the Court of First Instance after the time limit and had subsequently been withdrawn by the appellant. The Court also
reduced the amount of one fine on 13 December 2001, and the ECSC has repaid the excess in 2002 (Note C.3.3).

15. Reserves

Reserves at
31.12.2000
after allocation

Changes
2001

Reserves at
31.12.2001
before allocation

Allocation at
31.12.2001

Reserves at
31.12.2001
after allocation

(euro)

Special reserve

176 055 284

– 58 055 284

118 000 000

Former Pension Fund

74 577 321

– 34 577 321

40 000 000

0

0

118 000 000

40 000 000

Assets of
Research Fund

the Coal and Steel

0

92 632 605

92 632 605

7 367 395

100 000 000

Total

250 632 605

0

250 632 605

7 367 395

258 000 000

The Special Reserve is used to grant loans from ECSC own funds to finance subsidised housing. At 31
December 2001,
it proved
possible to release EUR 58 055 284, which was transferred to free reserves.

loans outstanding totalled approximately EUR 118 million. Consequently,

C 158/18

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Official Journal of the European Communities

3.7.2002

The former Pension Fund originally represented the ECSC's total pension obligations prior to 5 March
1968. Since that date, the Member States have assumed responsibility, via the general budget, for the
payment of staff pensions. This fund is used to finance housing loans for officials of the European
Communities. At 31 December 2001,
the amount outstanding on these loans was approximately
EUR 40 million. Consequently, it proved possible to release EUR 34 577 321, which was transferred to
free reserves.

The ‘Assets of the Coal and Steel Research Fund’ reserve, constituted in the context of the winding-up of
the ECSC (see Note 13), comprises free reserves. The freeing of the abovementioned reserves means that
EUR 92 632 605 can already be allocated to the assets of the Coal and Steel Research Fund. The allocation
of the surplus recorded at 31 December 2001 will further increase these assets to a total of EUR 100
million.

16. Analysis of the result for the financial year

Overall ECSC performance is influenced by both the result of non-budgetary operations (lending/
borrowing — treasury investment — exchange-rate variations) and the out-turn of the ECSC operating
budget.

16.1. Non-budgetary operations

Result

Gross operating margin before changes in provisions

— Lending/borrowing operations

— Interest on bank accounts

— Transactions concerning portfolio securities

— Loss on loans and advances

— Exchange-rate difference

— Miscellaneous

31 December

2001

2000

(euro)

1 485 339

1 919 600

78 473 087

– 1 376 363

– 268 248

27 257

2 179 046

2 604 998

78 095 255

—

– 862 006

1 691 025

Total

80 260 672

83 708 318

Net changes in provisions

— Provision for liabilities and charges (1)

— Provision for major exposures (2)

— Value adjustments in respect of loans and advances

1 419 117

11 000 000

44 734 723

– 3 134 135

1 000 000

565 369

— Provision for

financing the operating budget/budgetary

contingencies (Note C.14.3.a)

174 205 480

– 14 000 000

— Budget for financing coal and steel research

– 240 000 000

—

— Guarantee Fund (Note C.14.1)

– 15 000 000

– 12 000 000

Result after changes in provisions

56 619 992

56 139 552

Amount allocated to financing the operating budget (3)
(= net balance)

– 48 031 329

– 54 323 940

Result after deducting the net balance but before allocation
of the surplus

8 588 663

1 815 612

(1) Note C.14.3.b.
(2) Note C.14.2.
(3) In accordance with the change of accounting method on 31 December 1992, income received during the 2001 financial year has

been allocated to financing the 2001 operating budget (net balance as in Note C.16.2).

3.7.2002

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Official Journal of the European Communities

C 158/19

16.2. Out-turn of the ECSC operating budget

Out-turn of the budget

Expenditure

— Administrative expenditure (Note C.18)

— Legal commitments (Note C.12)

— Financing of future operating budgets

Revenue (net amounts)

— Levy (Note C.22)

— Fines (Note C.22)

— Repayment of interest subsidies (Note C.22)

— Miscellaneous (Note C.22)

— Cancellations of legal commitments (Note C.22)

— Financing of future operating budgets

— Net balance for the year (Note C.16.1)

31 December

2001

2000

(euro)

5 000 000

184 554 560

0

5 000 000

129 942 347

0

Total

189 554 560

134 942 347

—

4 540 000

826 462

1 158 428

57 998 341

77 000 000

48 031 329

—

—

1 955 203

1 035 599

71 627 605

6 000 000

54 323 940

Total

189 554 560

134 942 347

Budget out-turn

0

0

17. Interest and similar charges

31 December

2001

2000

(euro)

Interest on borrowings and swaps

139 407 674

168 492 330

Bank interest

Issuing costs and redemption premiums

9 895

1 882 046

51 772

1 992 567

Total

141 299 615

170 536 669

18. Administrative overheads

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

19. Other operating charges

Borrowing costs

SWIFT/Reuters charges

Loss on loans and advances

Other

31 December

(euro)

2001

133 559

192 668

1 376 363

8 499

Total

1 711 089

2000

128 969

158 354

—

28 561

315 884

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

C 158/20

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Official Journal of the European Communities

3.7.2002

20. Interest received and other income

Interest on loans and swaps

Payment and redemption premiums

Bank interest

Interest on bonds and other fixed-income securities

Income from shares and other variable-income securities

(euro)

31 December

2001

2000

138 793 019

168 699 496

2 339 954

2 196 563

69 658 619

1 753 222

2 072 568

2 696 044

73 603 257

1 723 951

Total

214 741 377

248 795 316

21. Other operating income

Lapsed coupons and bonds

Other income from lending activities

Miscellaneous

31 December

(euro)

2001

39 383

—

44 004

83 387

2000

5 456

1 961

2 115 044

2 122 461

Total

22. Income relating to the operating budget

Levy (1)

Fines (2)

Miscellaneous

Cancellation of legal commitments (Note C.12)

Repayment of interest subsidies (Note B.4.c and C.3.4) (3)

31 December

(euro)

2001

—

4 540 000

1 158 428

57 998 341

826 462

Total

64 523 231

2000

—

—

1 035 598

71 627 605

1 955 203

74 618 406

(1) The ECSC is authorised under the Treaty to impose a levy on coal and steel produced by undertakings in the Community. The levy is
calculated on the basis of the average values in the Community of the various products concerned. The European Commission
decided to set the levy rate for the years 1998-2001 at 0 %.

(2) This item comprises the revenue from fines imposed by the Commission in accordance with Articles 58 and 65 of the ECSC Treaty,

together with surcharges for late payment.

(3) This item comprises the revenue from the repayments of interest subsidies which the Commission was obliged to demand.

3.7.2002

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Official Journal of the European Communities

C 158/21

23. Off-balance-sheet commitments

23.1. Commitments received

31 December

2001

2000

Commitments arising from swaps

— Notional capital commitments relating to interest-rate swaps

212 071 862

229 991 973

— Capital commitments relating to interest-rate and currency

swaps

98 603 122

200 889 655

Total

310 674 984

430 881 628

23.2. Commitments given

31 December

2001

2000

(a) Commitments arising from swaps

Notional capital commitments relating to interest-rate swaps

212 071 862

229 991 973

(b) Capital commitments relating to interest-rate and currency

swaps

88 085 042

196 628 836

(c) Receipts from lapsed coupons and bonds

39 383

5 456

Total

300 196 287

426 626 265

(euro)

(euro)

The ECSC has always been keen to meet the commitments it has entered into and therefore has tradi-
tionally honoured coupons even after they have lapsed. The winding-up of the ECSC will see the end of
this practice.

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Official Journal of the European Communities

3.7.2002

24. Changes in the financial situation for the year ending 31 December 2001

2001

2000

(million euro)

Origin of funds

Balance of profit-and-loss account

Items not involving a movement of funds

— Amortisation of issuing costs and redemption premiums

— Value adjustments in respect of financial assets (withdrawals)

— Value adjustments in respect of tangible assets

— Value adjustments in respect of loans and advances, net

— Decrease in ‘ECSC operating budget’

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

— Increase (decrease) in accruals and deferred payments

— Decrease in accruals and deferred income and issuing costs/

redemption premiums

— Increase (decrease) in other liabilities

— Increase in other assets

— Allocation to (withdrawal

from) the provisions for liabilities and

charges

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

— Exchange-rate adjustments in respect of borrowings and loans

— Allocation to the Guarantee Fund/Special Reserve

8,5

1,9

– 8,5

0,0

– 40,2

– 304,7

240,0

– 7,6

9,8

– 28,5

12,8

– 8,1

– 11,0

– 12,4

15,0

1,8

2,0

– 7,4

0,2

0,7

– 113,1

0

– 5,2

7,0

– 12,1

7,4

2,9

– 1,0

– 12,6

12,0

Total funds

– 133,0

– 117,4

Other resources

— Proceeds from borrowings

— Loan repayments

— Disposals of buildings

— Decreases in bank balances and securities portfolio

Use of funds

— Loan disbursements/increase in loans and advances

— Redemption of borrowings

Total resources

Total uses

—

745,8

—

10,8

623,6

5,4

618,2

623,6

—

425,4

0,5

94,8

403,3

3,8

399,5

403,3