Commission report — Financial Report of the ECSC in liquidation at 31 December 2002
Date: 2003-10-11
Institutions: European Commission
Subjects: ECSC, audit, balance sheet, management accounting, report, validation of expenditure

11.10.2003

EN

Official Journal of the European Union

C 245/3

COMMISSION REPORT

Financial Report of the ECSC in liquidation at 31 December 2002

(2003/C 245/03)

Contents

Activity report

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

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

Management of assets

Financing of coal and steel research

Financial statements of the ECSC in liquidation

Balance sheet at 31 December 2002

Profit-and-loss account for the period ending 31 December 2002

Allocation of the surplus for the period ending 31 December 2002

Notes to the financial statements at 31 December 2002

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

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

the European Commission a mandate

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

At 31 December 2002, the members of the Commission were:

Mr Romano PRODI

President

Mr Neil KINNOCK

Vice-President

Ms Loyola DE PALACIO

Vice-President

ECSC in liquidation

Commission

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Official Journal of the European Union

11.10.2003

Mario MONTI

Franz FISCHLER

Erkki LIIKANEN

Frits BOLKESTEIN

Philippe BUSQUIN

Pedro SOLBES MIRA

Poul NIELSON

Günter VERHEUGEN

Chris PATTEN

Pascal LAMY

David BYRNE

Michel BARNIER

Viviane REDING

Michaele SCHREYER

Margot WALLSTRÖM

António VITORINO

Anna DIAMANTOPOULOU

Member

Member

Member

Member

Member

Member

Member

Member

Member

Member

Member

Member

Member

Member

Member

Member

Member

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

Directorate-General for
Economic and Financial Affairs

The ECFIN Directorate-General – Directorate L – conducts the
main financial operations of the ECSC in liquidation under the
authority, at 31 December 2002, of Mr Klaus REGLING, Director-
General of DG ECFIN, and Mr David MC GLUE, Director of Direc-
torate L.

Address

Euro

European Commission
Directorate-General ECFIN — L
Centre Wagner
Rue Alcide De Gasperi
L-2920 Luxembourg
Tel. (352) 43 01-1
Fax (352) 43 63 22
E-mail: registry@cec.eu.int

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

the euro,

(1) Council Regulation (EC) No 2866/98 (OJ L 359, 31.12.1998).
(2) Council Regulation (EC) No 1478/2000 (OJ L 167, 7.7.2000).

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Official Journal of the European Union

C 245/5

1 euro =

40,3399

1,95583

340,750

166,386

6,55957
0,787564

1 936,27

40,3399

2,20371

13,7603

200,482

5,94573

Belgian francs

German marks

Greek drachmas

Spanish pesetas

French francs
Irish pounds

Italian lire

Luxembourg francs

Dutch guilders

Austrian schillings

Portuguese escudos

Finnish markka

The euro exchange rates for the currencies of
the other EU
countries and some non-member countries are given on page 17.

ACTIVITY REPORT

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

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

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

The Nice European Council decided to annex to the Treaty of Nice a Protocol on the financial conse-
quences of the expiry of the ECSC Treaty and on the Coal and Steel Research Fund. It was decided that, on
the expiry of the Treaty, all assets and liabilities of the ECSC would be transferred to the European
Community on 24 July 2002. The net worth of these assets and liabilities is to be considered as assets
earmarked for research in the sectors associated with the coal and steel industries. The revenue from these
assets is to be used exclusively for research in these sectors. The Treaty of Nice entered into force on 1
February 2003.

Since the Treaty of Nice was not ratified before the expiry of the ECSC Treaty, the Member States
temporarily entrusted the European Commission (1) with the task of managing the assets of the ECSC
in liquidation by applying the same principles as provided for in the Protocol to the Treaty of Nice.

(1) Decision 2002/234/ECSC of the Representatives of the Governments of the Member States, meeting within the

Council, of 27 February 2002 (OJ L 79, 22.3.2002, p. 42).

C 245/6

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Official Journal of the European Union

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

Management of borrowings of the ECSC in liquidation

During the winding-up period from 24 July to 31 December 2002, the debt of the ECSC in liquidation
changed as follows:

Currency

Number of
borrowings at
23 July 2002

Debt outstanding at
23 July 2002

Redemptions from
24 July to
31 December 2002

Exchange-rate
adjustments

Debt outstanding at
31 December 2002

(EUR million)

Number of
borrowings at
31 December 2002

EUR

GBP

USD

Total

23

6

1

30

310,6

331,0

100,9

742,5

15,1

—

– 9,0

– 5,5

15,1

– 14,5

295,5

322,0

95,4

712,9

18

6

1

25

The amortisation of the borrowings outstanding at 31 December 2002 breaks down as follows:

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

EUR

241,1

2,2

2,2

2,0

2,0

0,3

45,7

295,5

GBP

USD

(EUR million)

Total

241,1

2,2

2,2

2,0

2,0

95,7

92,2

0,0

0,0

45,7

0,0

0,0

0,0

0,0

103,3

0,0

126,5

712,9

95,4

92,2

103,3

126,5

322,0

95,4

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Official Journal of the European Union

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The main characteristics of the borrowings outstanding are as follows:

Year of issue

Interest (% p.a.) (*)

Term (years)

Initial amount

Amount outstanding at 31 December 2002

In borrowing currency

Equivalent in EUR

Contracts redenominated in EUR

1990

1990

1992

1992

1992

1992

1992

1993

1993

1993

1993

1993

1993

1993

1993

1993

1993

1993

9,16

9,0

3,29

2,6875

2,854

2,96363

8,34

3,02769

7,08

6,39

6,64

3,239

6,75

3,26

3,4055

7

2,86563

3,11063

Contracts in GBP

1990

1992

1992

1993

1994

1994

11,875

9,875

9,875

9,875

6,875

8,9375

Contracts in USD

15

15

15

15

20

15

15

10

15

15

15

10

15

10

10

10

10

10

19

25

25

24

25

25

2 700 000 DEM/EUR

24 400 000 DEM/EUR

11 900 000 DEM/EUR

9 000 000 000 ITL/EUR

414 146

184 065

3 042 187

2 324 056

414 146

184 065

3 042 187

2 324 056

300 000 000 FRF/EUR

45 734 705

45 734 705

11 000 000 DEM/EUR

2 300 000 DEM/EUR

20 000 000 DEM/EUR

1 750 000 DEM/EUR

1 355 000 DEM/EUR

1 185 000 DEM/EUR

15 600 000 000 ITL/EUR

1 000 000 DEM/EUR

57 300 000 DEM/EUR

52 600 000 000 ITL/EUR

2 812 105

587 986

2 045 168

536 856

415 680

363 529

1 611 346

306 775

2 240 379

1 258 089

2 812 105

587 986

2 045 168

536 856

415 680

363 529

1 611 346

306 775

2 240 379

1 258 089

1 500 000 000 FRF/EUR

228 673 526

228 673 526

18 200 000 DEM/EUR

19 700 000 000 ITL/EUR

1 861 102

1 137 496

1 861 102

1 137 496

Total per currency

295 549 196

295 549 196

60 000 000 GBP

50 000 000 GBP

30 000 000 GBP

20 000 000 GBP

50 000 000 GBP

47 000 000 GBP

60 000 000

17 220 000

30 000 000

20 000 000

35 261 000

47 000 000

92 236 741

26 471 945

46 118 371

30 745 580

54 205 995

72 252 114

Total per currency

209 481 000

322 030 746

1993

6,375

15

100 000 000 USD

100 000 000

Total per currency

100 000 000

Grand total in EUR:

95 356 155

95 356 155

712 936 097

(*) Fixed or variable rates, depending on the case.

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

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Official Journal of the European Union

11.10.2003

Management of loans from the ECSC in liquidation

Over the period from 24 July to 31 December 2002, the changes in loans from borrowed funds (under
Articles 54 and 56 ECSC) were as follows:

Member State

Number of loans

Amount outstanding at
23 July 2002

Amortisation from
24 July to
31 December 2002

Exchange-rate adjustment

Amount outstanding at
31 December 2002

Number of
loans

(EUR million)

Greece

Spain

France

Italy

United Kingdom

Total Community

1

1

5

86

1

94

100,91

0,26

363,21

33,89

74,26

572,53

—

– 0,26

– 0,72

– 14,06

—

– 15,04

– 5,55

—

—

—

– 2,01

– 7,56

95,36

0,00

362,49

19,83

72,25

549,93

1

—

4

56

1

62

The loans from borrowed funds outstanding at 31 December 2002 were backed by guarantees as
follows:

Member State

Guarantee by public
body

Bank guarantee (1)

Industrial grouping

Public

Private

Charge on
property

No guarantee

Total

Greece

Spain

France

Italy

United Kingdom

95,36

—

—

—

—

Total Community

95,36

—

—

—

19,83

—

19,83

—

—

—

—

133,82

228,67

—

—

—

—

133,82

228,67

—

—

—

—

—

—

—

—

—

—

72,25

72,25

95,36

—

362,49

19,83

72,25

549,93

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

(EUR million)

Over the period from 24 July to 31 December 2002, the changes in loans from own funds (under Article
54.2 ECSC) were as follows:

Member State

Number of loans

Amount outstanding at
23 July 2002

Amortisation from
24 July to
31 December 2002

Exchange-rate adjustment

Amount outstanding at
31 December 2002

Number of
loans

(EUR million)

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

United Kingdom

Total Community

28

10

43

9

21

48

10

21

7

7

2

6

2

28

242

6,21

0,10

55,91

0,49

11,03

14,92

0,34

7,39

1,08

1,10

4,12

0,69

0,78

8,14

112,30

– 0,72

– 0,09

– 3,46

– 0,03

– 0,83

– 1,81

– 0,02

– 0,72

– 0,11

– 0,18

– 0,19

– 0,06

– 0,03

– 0,05

– 8,30

—

0,0

—

—

—

—

—

—

—

—

—

—

—

– 0,22

– 0,22

5,49

0,01

52,45

0,46

10,20

13,11

0,32

6,67

0,97

0,92

3,93

0,63

0,75

7,87

103,78

24

4

41

9

21

41

10

21

7

7

2

6

2

28

223

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

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Official Journal of the European Union

C 245/9

The loans from own funds outstanding at 31 December 2002 were backed by guarantees as follows:

Member State

Guarantee by public
body

Bank guarantee (1)

Industrial grouping

Public

Private

Charge on
property

No guarantee

Total

(EUR million)

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

United Kingdom

—

—

—

—

—

—

0,32

—

—

—

—

—

—

—

5,49

0,01

52,45

0,46

10,20

10,26

—

6,67

0,97

—

3,93

0,63

0,75

7,87

—

—

—

—

—

1,09

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

0,92

—

—

—

—

Total Community

0,32

99,69

1,09

0,92

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

Levy

Total claims at 23 July 2002 amounted to EUR 4 975 874.

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

1,76

—

—

—

—

—

—

—

5,49

0,01

52,45

0,46

10,20

13,11

0,32

6,67

0,97

0,92

3,93

0,63

0,75

7,87

1,76

103,78

These were covered in their entirety by value adjustments. Over the period from 24 July to 31 December
2002, payments were received totalling EUR 34 579. Irrecoverable claims totalling EUR 82 870 were
cancelled. Total claims at 31 December 2002 thus amounted to EUR 4 858 425, covered in their entirety
by value adjustments.

Interest subsidies

Total claims at 23 July 2002 amounted to EUR 3 162 873. Value adjustments were made totalling
the ECSC in liquidation
EUR 2 825 137. During the period from 24 July to 31 December 2002,
received payments of EUR 496 702 and issued new demands for the recovery of EUR 615 665.
It
waived or cancelled claims amounting to EUR 615 309. Consequently, at 31 December 2002 total
claims amounted to EUR 2 666 527, covered by value adjustments in the sum of EUR 2 454 855.

Fines

A. THE FOLLOWING FINES, IMPOSED ON STEEL COMPANIES BY THE COMMISSION IN ACCORDANCE WITH THE

RULES SET OUT IN THE TREATY, ARE STILL OUTSTANDING (IN EUROS, NET OF INTEREST)

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

3 Italian companies

Amount (capital) due at

23 July 2002

31 December 2002

1 034 270

1 034 270

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

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Official Journal of the European Union

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2. Fines imposed on 16 February 1994 (Decision 94/215/ECSC) for failure to respect the competition

rules in the field of steel beams

1 Italian company
(in liquidation since 28.12.1993).

2 German companies
(Commission decision)

6 513 000

Amount (capital) due at

23 July 2002

31 December 2002

9 500 000

9 500 000

Fines reduced by the Court of First instance to

4 409 000

4 409 000

4 409 000

2 Spanish companies
(Commission decision)

14 600 000

Fines reduced by the Court of First instance to

10 450 000

10 450 000

10 450 000

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

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

the alloy surcharge

Amount (capital) due at

23 July 2002

31 December 2002

2 companies (German/Italian)
(Commission decision)

12 640 000

Fines reduced by the Court of First instance to

8 064 000

8 064 000

8 064 000

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

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

1. Fines imposed on 16 February 1994 (Decision 94/215/ECSC) for failure to respect the competition

rules in the field of steel beams

British, Luxembourgish and German companies

41 947 108

41 947 108

Amount (capital) in provision at

23 July 2002

31 December 2002

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

the alloy surcharge

Spanish company

Amount (capital) in provision at

23 July 2002

31 December 2002

3 136 000

3 136 000

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Outstanding commitments under ECSC operating budgets

During the period from 24 July to 31 December 2002, payments were made totalling EUR 47 million and
cancellations totalled EUR 11 million. The changes in the commitments relating to the ECSC operating
budgets from 24 July to 31 December 2002 were as follows:

Conversion

Research

Subsidies (article 56)

Social
(RECHAR)

measures

coal

Amount at 23.7.2002

Payments from
24.7. to 31.12.2002

Cancellations from
24.7. to 31.12.2002

Amount at 31.12.2002

132 607 711

180 829 395

16 844 154

– 10 965 456

– 14 701 909

– 799 575

– 403 430

– 7 415 617

0

121 238 825

158 711 869

16 044 579

70 635 452

– 20 623 000

– 3 450 000

46 562 452

Total

400 916 712

– 47 089 940

– 11 269 047

342 557 725

Management of assets

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

The total cash holdings of the ECSC in liquidation at 23 July 2002 amounted to EUR 1 592 million. At
that date, commitments in respect of the operating budget amounted to EUR 401 million, the Guarantee
Fund stood at EUR 529 million and the provisions for financing coal and steel research from 2003
onwards amounted to EUR 240 million. The free reserves after allocation of the surplus amounted at
the same date to EUR 268 million. Thanks to the surplus for the period from 24 July to 31 December
2002 (see note C17 in the notes to the Financial Statements) and the reclassification of part of the Special
Reserve and the former pension fund (see note C16), after allocation of the surplus these reserves
amounted at 31 December 2002 to EUR 349 million.

The return on investment, including the variation in the market value of bonds (calculated by the Modified
Dietz Method) was 6,25 % for 2002.

Financing of coal and steel research

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

To prime the mechanism and make provision for financing coal and steel research in 2003 and 2004, a
smoothing provision (EUR 120 million) and financing provisions of EUR 60 million for each of the years
2003 and 2004 were already constituted in the balance sheet at 31 December 2001. The net revenue from
investments over the period from 24 July to 31 December 2002 (EUR 27 million) will increase the capital
of the Coal and Steel Research Fund.

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Official Journal of the European Union

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FINANCIAL STATEMENTS OF THE ECSC IN LIQUIDATION

This is the first report on the ECSC in liquidation, covering the period from 24 July to 31 December 2002.

The ECSC's balance sheet, profit-and-loss account and statement of the allocation of the surplus for the
year ending 31 December 2002 were submitted to the Commission for approval under written procedure
No E/. . . of . . . 2003 and are shown in this financial report as approved by the Commission.

For ease of comparison, the corresponding figures from the ECSC financial statements at 31 December
2001 and 23 July 2002 are shown alongside the financial statements of the ECSC in liquidation at 31
December 2002.

Auditors' report on the financial statements

Following our appointment, we have audited the financial statements of the European Community of Steel
and Coal in liquidation (‘ECSC in liquidation’) for the period from 24 July 2002 to 31 December 2002.

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

We conducted our audit in accordance with International Standards on Auditing. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles and methods used and any significant estimates made by management, as well as evaluating
the overall presentation of the financial statements.

The following audit procedures, amongst other, have been performed:

1. Review of the administrative and accounting procedures and the control system in operation within the
ECFIN — L Directorate relating to the different financial instruments administered and testing, on a
sample basis, that these procedures have been complied with.

2. Verification of supporting documents for transactions recorded in the accounting records.

3. Verification of documentation in relation to credits granted and borrowings (content, preservation of

documents, monitoring of repayments, validity of guarantees).

4. Analysis of the accounts, verification of computation.

5. Tests in the treasury department (including examination of positions, verification of swap transactions).

We believe that our audit provides a reasonable basis for our opinion.

Our tests included the examinations of global confirmations received from the DG Budget. Our audit did
not extend to verifying the nature and supporting documents for payments and commitments made under
the ECSC Operating Budget in liquidation as these operations are recorded by DG Budget. We understand
that these operations are audited by the European Court of Auditors and published in the Official Journal.

in our view the attached financial statements give,

With the exception of any potential impact which could result from the matter described in the previous
paragraph,
in conformity with generally accepted
accounting principles in the European Union and the specific accounting principles described in Note
B.1 of the financial statements of the ECSC in liquidation, a true and fair view of the assets and financial
position of the ECSC in liquidation for the period from 24 July 2002 to 31 December 2002 and of the
results of its operations for the period then ended.

Luxembourg, 30 June 2003

KPMG Audit

Réviseurs d'Entreprises

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Official Journal of the European Union

C 245/13

Balance sheet at 31 December 2002

(Amounts in EUR) — Before allocation of surplus

31 December 2002

23 July 2002

31 December 2001

ASSETS

Loans and advances to credit insti-
tutions

— repayable on demand

6 625 169

1 868 668

8 617 067

— with agreed maturity dates or
periods of notice (Note C1.1)

— loans (Note C1.2)

6 905 570

100 034 710

33 539 360

120 215 715

133 272 729

355 368 358

Total

113 565 449

155 623 743

497 258 154

628 718 200
—
—

211 672
20 764

1 026 326 228
525 130 526

18 768 046

Loans and advances to customers
— loans (Note C2.1)
— levy (Note C2.2)
— fines (Note C2.3)
— interest subsidies repayable

(Note C2.4)

— repayment, research

Total

fixed-income

Bonds
and other
securities (Note C3)
— issued by public bodies
— issued by other borrowers
Shares and other variable-income
securities (Note C4)

Total

Intangible assets (Note C5)
Tangible assets (Note C6)
Other assets (Note C7)
Prepayments and accrued income
(Note C8)

TOTAL ASSETS

Off-balance-sheet commitments
(Note C22)

682 080 134
—
—

337 736
—

1 045 139 605
66 213
39 806 715

2 579 066
—

628 950 636

682 417 870

1 087 591 599

1 129 370 124
399 531 331

27 998 410

1 090 184 127
478 711 875

44 205 202

1 570 224 800
2 850
14 094
3 298 920

73 044 693

2 389 101 442

1 556 899 865
—
—
6 023 377

47 568 362

2 448 533 217

1 613 101 204
—
—
7 092 794

82 534 005

3 287 577 756

279 829 637

290 511 586

310 674 984

C 245/14

EN

Official Journal of the European Union

11.10.2003

Balance sheet at 31 December 2002

(Amounts in EUR) — Before allocation of surplus

31 December 2002

23 July 2002

31 December 2001

21 140 965

36 202 081

604 294 572

691 795 132

1 429 545

706 302 342

36 616 446

836 250 262

301 104

49 766 058

22 564 190

78 061 265

342 557 725

400 916 712

530 720 948

LIABILITIES

Amounts owed to credit
tutions (Note C9)

insti-

— with agreed maturity dates or

periods of notice

evidenced by

Debts
(Note C10)

certificates

Other liabilities (Note C11)

Accruals
(Note C12)

and

deferred

income

OUTSTANDING COMMITMENTS
ECSC
BUDGET
(NOTE C13)

OPERATING

PROVISIONS
AND CHARGES

FOR LIABILITIES

Guarantee Fund (Note C14.1)

497 000 000

Provisions for major exposures

—

Other provisions (Note C14.2)

57 741 255

529 000 000

—

57 012 724

580 000 000

6 000 000

150 699 271

Total provisions

554 741 255

586 012 724

736 699 271

BUDGET FOR FINANCING COAL
AND STEEL RESEARCH (NOTE
C15)

RESERVES AND SURPLUS (Note
C16)

Special reserve

Former pension fund

Assets of
Research Fund

the Coal

and Steel

Surplus brought forward

103 800 000

34 000 000

120 200 000

161 918 722

Surplus for the period (Note C17)

67 752 040

240 000 000

240 000 000

240 000 000

112 300 000

36 000 000

109 700 000

3 250 334

158 668 388

118 000 000

40 000 000

92 632 605

2 029 066

8 588 663

Total reserves and surplus

TOTAL LIABILITIES

487 670 762

2 389 101 442

419 918 722

2 448 533 217

261 250 334

3 287 577 756

Off-balance-sheet
entered into (Note C22)

commitments

276 607 536

286 966 510

300 407 841

11.10.2003

EN

Official Journal of the European Union

C 245/15

Profit-and-loss account for the period ending 31 December 2002

(Amounts in EUR)

CHARGES

Interest
charges (Note C18)

payable

and

similar

Commission paid

Net losses on financial operations

— exchange difference

— losses on bonds and other

fixed-income securities

— value adjustments

other
and
securities (Note C3)

for bonds
fixed-income

From 24 July to 31 December 2002

From 1 January to 23 July 2002

From 1 January to 31 December 2001

32 986 478

89 173

53 081 195

314 770

141 299 615

379 849

246 938

862 608

—

4 427 896

268 248

2 248 893

654 707

63 570 916

6 760 668

— value adjustments

and
other
securities (Note C4)

for

shares
variable-income

9 150 238

1 405 587

3 072 877

Total

10 914 491

69 404 399

12 350 686

Administrative
C17 3)

overheads

(Note

Value adjustments on tangible and
intangible assets (Notes C5 and
C6)

Other operating
C19)

charges

(Note

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

1 455 616

2 794 520

5 000 000

5 649

188 424

—

715 908

—

1 711 089

— value adjustment for loans and

advances

4 936 775

— allocation to the Guarantee

Fund (Note C14.1)

—

916 445

—

4 743 980

15 000 000

— allocation to other provisions
charges

liabilities

and

for
(Note C14.2)

728 531

3 215 253

2 057 973

Total

Extraordinary charges

Legal commitments for the period
(Note B5)

Allocation to the
for
financing coal and steel research
(Note C15)

budget

Total charges

Surplus for the period (Note C17)

TOTAL

5 665 306

74 154

—

—

51 379 291

67 752 040

119 131 331

4 131 698

39 771

21 801 953

31 139

127 988 619

184 554 560

—

258 470 880

158 668 388

417 139 268

240 000 000

607 128 891

8 588 663

615 717 554

C 245/16

EN

Official Journal of the European Union

11.10.2003

Profit-and-loss account for the period ending 31 December 2002

(Amounts in EUR)

INCOME

From 24 July to 31 December 2002

From 1 January to 23 July 2002

From 1 January to 31 December 2001

Interest
receivable
income (Note C20)

and

similar

Commission received

Net profit on financial operations

— exchange difference

—

— profit on bonds and other

fixed-income securities

2 604 116

— profit on shares and other
variable-income securities

—

62 114 830

—

91 425 315

141 300

214 741 377

253 300

381 759

5 253 120

3 491 224

—

696 145

—

— withdrawal
adjustments
other
(Note C3)

of
for bonds

value
and
securities

fixed-income

of

value
— withdrawal
adjustments
and
for
other variable-income securities
(Note C4)

shares

7 842 639

7 580 807

17 200 348

—

—

1 179 177

Total

10 446 755

16 706 910

19 075 670

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

— withdrawal
adjustments
advances

of

for

loans

value
and

— withdrawal of provision for

major exposures

— withdrawal
provisions
charges (Note C14.2)

for

from
other
liabilities and

—

—

1 907 062

22 011 553

6 000 000

49 478 703

11 000 000

51 371 610

3 477 090

Total

1 907 062

79 383 163

63 955 793

Other operating
C21)

income

(Note

Extraordinary income

Income
to the
relating
operating budget (Note B5)

ECSC

Withdrawal from the provision for
budgetary contingencies

Withdrawal from the provision for
ECSC operating
financing
budget (Note B5)

the

Withdrawal
Fund (Note C14.1)

from the Guarantee

TOTAL INCOME

12 662 684

—

—

—

—

8 022 885

—

20 665 175

31 000 000

83 387

1 879 316

64 523 231

—

118 794 520

251 205 480

32 000 000

119 131 331

51 000 000

417 139 268

—

615 717 554

11.10.2003

EN

Official Journal of the European Union

C 245/17

Allocation of the surplus for the period ending 31 December 2002

(Amounts in EUR)

From 24 July to
31 December 2002

From 1 January to
23 July 2002

From 1 January to
31 December 2001

Surplus brought forward at start of period

3 618 722

3 250 334

Surplus for the period to be allocated

67 752 040

158 668 388

2 029 066

8 588 663

Total

71 370 762

161 918 722

10 617 729

Allocation to the assets of the Coal and
Steel Research Fund (Note C15)

Surplus carried forward at the end of the
period

(1) Proposal.
(2) Allocation decision taken on 7 January 2003.

71 370 762 (1)

158 300 000 (2)

7 367 395

—

3 618 722

3 250 334

Notes to the financial statements at 31 December 2002

(Amounts in EUR)

A. THE ECSC IN LIQUIDATION

The European Coal and Steel Community (ECSC), established by the Treaty signed in Paris on 18 April
1951, expired on 23 July 2002. The Nice European Council decided to annex to the Treaty of Nice of 26
February 2001 (1) 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 would be transferred to the European Community with effect from 24 July
2002.

Pending the entry into force of the Treaty of Nice (1 February 2003), the Member States entrusted to the
European Commission the task of managing the assets of the ECSC in liquidation by applying the same
principles (2), as provided for in the Protocol to the Treaty of Nice.

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

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

(1) OJ C 80, 10.3.2001.
(2) Decision of the Representatives of the Governments of the ECSC Member States, meeting within the Council, of 27

February 2002 (OJ L 79, 22.3.2002).

C 245/18

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Official Journal of the European Union

11.10.2003

Where the ECSC's assets are not needed to meet these obligations, they are invested so as to ensure
long-term profitability. The objective in placing the available assets must be to obtain the highest possible
yield that is securely attainable. The net revenue from these investments, known as the ‘Coal and Steel
Research Fund’, constitutes revenue in the general budget of the European Union and will be be used
exclusively for research in the sectors associated with the coal and steel industry, in accordance with the
Decision of 27 February 2002 of the representatives of the governments of the Member States and the
instruments adopted on the basis of that Decision.

The net revenue available for financing research projects in year n+2 appears in the balance sheet of the
ECSC in liquidation for year n, and after the liquidation process has been completed will appear as assets
in the balance sheet of the Coal and Steel Research Fund. In order to reduce as far as possible the
fluctuations that movements in the financial markets could cause in the financing of research, a
smoothing arrangement is applied and a provision for contingencies has been created. The algorithms
for smoothing and for determining the size of the provision for contingencies are set out in the appendix
to Annex 1 to the Decision of the representatives of the governments of the Member States of 27 February
2002. The revenue identified is apportioned between research relating to coal and that relating to steel in
proportions of 27,2 % et 72,8 % respectively.

B. ACCOUNTING PRINCIPLES AND METHODS

1. Presentation of the financial statements

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

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

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

They are presented in accordance with Council Directives 78/660/EEC and 86/635/EEC (1) on the annual
accounts and consolidated accounts of banks and other financial institutions wherever these are applicable
and subject to the above-mentioned 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
financial statements of the ECSC in liquidation. This Directive must be applied by 31 December 2003.

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

2. Conversion of items expressed in foreign currency

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

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

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

At the balance-sheet date, financial assets/liabilities are converted into euros 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.

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

11.10.2003

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Official Journal of the European Union

C 245/19

2.1. Conversion rates

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

Danish krone

Swedish krone

Pound sterling

Swiss franc

United States dollar

Japanese yen

31 December 2002

23 July 2002

31 December 2001

7,4288

9,1528

0,65050

1,4524

1,0487

7,43310

9,46450

0,63290

1,45490

0,99100

7,43650

9,30120

0,60850

1,48290

0,88130

124,39

116,370

115,330

2.2. At 31 December 2002 the various currencies listed above, together with the euro, made up the balance sheet of

the ECSC in liquidation as follows (EUR):

Currency

Assets

Liabilities

Euro

Danish krone

Swedish krone

Pound sterling

Swiss franc

United States dollar

1 879 703 516

1 936 095 126

792 397

312 554

399 336 097

5

108 956 873

Total

2 389 101 442

—

—

344 192 822

—

108 813 494

2 389 101 442

3. Treasury investment and valuation of bonds and other securities

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

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

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

4. Intangible and tangible fixed assets

Amortisation is calculated on the basis of Commission Regulation (EC) No 2909/2000 of 29 December
2000 (1). Computer software is written off over a period of four years, as is hardware.

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

C 245/20

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Official Journal of the European Union

11.10.2003

5. Special features of the ECSC financial statements

a) ECSC operating budget

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

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

The changes between 24 July and 31 December 2002 in commitments vis-à-vis third parties entered into
under the operating budget are shown under the heading ‘Outstanding commitments under the ECSC
operating budget’ (see Note C13).

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.

The ECSC has already constituted provisions in order to prepare the ground for this mechanism for
financing coal and steel research. These provisions are entered under the heading ‘Budget for financing
coal and steel research’ (see Note C15).

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

1. Loans and advances to credit institutions

1.1. With agreed maturity dates or periods of notice

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

31 December 2002

23 July 2002

31 December 2001

(in EUR)

Up to three months

6 905 570

33 539 360

133 272 729

Total

6 905 570

33 539 360

133 272 729

1.2. 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 2002

23 July 2002

31 December 2001

(in EUR)

4 000 015

13 553 271

27 905 538

54 575 886

3 312 991

27 844 126

29 060 876

59 997 722

33 692 382

218 222 375

39 999 682

63 453 919

Total

100 034 710

120 215 715

355 368 358

(1) Decision of the Representatives of the Governments of the ECSC Member States, meeting within the Council, of

27 February 2002 (OJ L 79, 22.3.2002).

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Official Journal of the European Union

C 245/21

2. Loans and advances to customers

2.1. Loans

The loans granted to credit institutions are shown under ‘Loans and advances to credit institutions’ (see
Note C1.2).

The other loans break down as follows:

1. Loans disbursed from borrowed funds

— amounts outstanding

— value adjustments

31 December 2002

23 July 2002

31 December 2001

(in EUR)

604 761 954

678 726 833

1 091 388 811

- 24 539 291

- 47 388 569

- 99 348 028

Sub-total

580 222 663

631 338 264

992 040 783

2. Loans from the special reserve for financing subsidised housing

15 400 184

17 214 002

17 483 206

Interim total

595 622 847

648 552 266

1 009 523 989

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

31 December 2002

23 July 2002

31 December 2001

1 374 317

50 752 207

170 535 047

— Up to three months
to
— Three months

one year

230 721 357

232 969 144

166 153 710

— One to five years

11 563 579

11 968 366

240 749 165

— Over five years

376 502 885

400 251 118

531 434 095

620 162 138

695 940 835

1 108 872 017

3. Loans disbursed from the former Pension Fund to officials of the

European Communities for housing construction

32 809 702

33 527 868

34 817 280

4. Other loans

285 651

—

798 336

Grand total

628 718 200

682 080 134

1 045 139 605

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

2.2. Levy

The levy rate for 1998-2002 was 0 %, so the claims at 31 December 2002 relate to previous years.

This item breaks down as follows:

31 December 2002

23 July 2002

31 December 2001

(in EUR)

Gross amount

Value adjustments

4 858 425

- 4 858 425

4 975 874

- 4 975 874

5 455 706

- 5 389 493

Net amount

—

—

66 213

C 245/22

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Official Journal of the European Union

11.10.2003

2.3. Fines

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

This item breaks down as follows:

31 December 2002

23 July 2002

31 December 2001

(in EUR)

Fines due under the ‘quota system’

— Capital

1 034 270

1 034 270

1 034 270

— Surcharges for late payment

340 962

340 962

340 962

Fines due under Decision 94/215/ECSC (1)

— Capital

24 359 000

24 359 000

28 959 000

— Surcharges for late payment

11 615 343

11 162 914

10 587 790

Fines due under Decision 98/247/ECSC (2)

— Capital

— Surcharges for late payment

8 064 000

2 159 605

8 064 000

1 955 078

8 064 000

1 695 926

Total

47 573 180

46 916 224

50 681 948

Value adjustments

- 47 573 180

- 46 916 224

- 10 875 233

Net amount

—

—

39 806 715

(1) Seven companies have lodged appeals against the judgement of the Court of First Instance. Pending the decision of the European

Court of Justice, a total (without interest) of EUR 24 359 000 remained outstanding at 31 December 2002.

(2) Three companies have lodged appeals against the judgement of the Court of First Instance. Pending the decision of the European

Court of Justice, a total (without interest) of EUR 8 064 000 remained outstanding at 31 December 2002.

2.4. Interest subsidies to be recovered

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

31 December 2002

23 July 2002

31 December 2001

(in EUR)

Subsidies to be repaid

2 666 527

3 162 873

4 926 324

Value adjustments

- 2 454 855

- 2 825 137

- 2 347 258

Net amount

211 672

337 736

2 579 066

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Official Journal of the European Union

C 245/23

3. Bonds and other fixed-income securities

3.1. Composition

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

Issued by public bodies:

Gross value

Value adjustments

Net value

Issued by other borrowers:

Gross value

Value adjustments

Net value

Total bonds and other fixed-
income securities:

Gross value

Value adjustments

Net value

Net change in value
adjustments

31 December 2002

23 July 2002

31 December 2001

(in EUR)

1 089 374 949

1 199 224 006

1 102 728 104

- 6 805 161

- 63 048 721

- 69 853 882

- 12 543 977

1 026 326 228

1 129 370 124

1 090 184 127

526 241 560

401 025 136

481 525 476

- 382 771

- 1 111 034

- 1 493 805

- 2 813 601

525 130 526

399 531 331

478 711 875

1 615 616 509

1 600 249 142

1 584 253 580

- 7 187 932

- 64 159 755

- 71 347 687

- 15 357 578

1 551 456 754

1 528 901 455

1 568 896 002

The net change of EUR - 7 187 932 in value adjustments between 23 July and 31 December 2002 breaks
down as follows:

— allocation to value adjustments:

654 707

— withdrawal from value adjustments:

- 7 842 639

- 7 187 932

3.2. Maturities in 2003

Securities in the portfolio reaching final maturity in the course of 2003 represent the following amounts
(EUR):

— Issued by public bodies:

— Issued by other borrowers:

323 025 682

90 709 370

Total

413 735 052

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

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

At 31 December 2002, financial fixed assets totalled EUR 157 541 891 in nominal terms, which was less
than the average acquisition price. The value adjustments at 31 December 2002 amounted to
EUR 60 709 724 (EUR 62 397 971 at 23 July 2002).

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Official Journal of the European Union

11.10.2003

3.4. Return on investment

Treasury investments take account of the maturity dates and liquidity requirements applicable to ECSC
financial operations. They are subject to strict criteria with regard to the financial standing of the
counterparty (1).

The return on investment, including the variation in the market value of bonds (calculated by the Modified
Dietz Method) was 6,25 % (2) for the year 2002.

3.5. Structure of the portfolio by maturity date and rating (3)

a) Time to maturity less than 1 year

(EUR million)

Rating

31 December 2002

23 July 2002

31 December 2001

AAA

AA1

AA2

AA3

A1

A2

302,5

0,0

60,6

33,0

15,0

0,0

Total

411,1

b) Time to maturity between 1 year and 3 years

209,0

39,4

91,9

32,0

0,0

0,0

372,3

324,5

73,8

10,1

53,7

0,0

0,0

462,1

Rating

31 December 2002

23 July 2002

31 December 2001

AAA

AA1

AA2

AA3

A1

A2

250,0

39,2

82,0

38,8

0,0

53,7

Total

463,7

c) Time to maturity between 3 and 5 years

229,3

105,1

29,8

122,4

0,0

18,2

504,8

230,8

105,2

51,0

225,9

0,0

17,7

630,6

Rating

31 December 2002

23 July 2002

31 December 2001

AAA

AA1

AA2

AA3

A1

A2

163,3

32,9

45,1

38,4

0,0

0,0

Total

279,7

172,4

25,2

0,0

47,0

0,0

0,0

244,6

104,6

0,0

18,5

34,9

0,0

0,0

158,0

(1) See paragraph 3 of the appendix to Annex II to the Decision of 27 February 2002 of the Representatives of the

Governments of the ECSC Member States.

(2) Compare with the ECSC in liquidation benchmark return of 6,11 % (unaudited figure).
(3) Valued at average acquisition price or market value, whichever is lower (EUR million).

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Official Journal of the European Union

C 245/25

d) Time to maturity between 5 and 7 years

Rating

31 December 2002

23 July 2002

31 December 2001

AAA

AA1

AA2

AA3

A1

A2

99,0

15,5

35,1

15,2

0,0

0,0

Total

164,7

e) Time to maturity more than 7 years

34,6

0,0

0,0

0,0

0,0

0,0

34,6

100,3

0,0

0,0

8,3

0,0

0,0

108,6

AAA

AA1

AA2

AA3

A1

A2

Rating

31 December 2002

23 July 2002

31 December 2001

232,3

367,4

209,6

0,0

0,0

0,0

0,0

0,0

Total

232,3

GRAND TOTAL

1 551,5

0,0

0,0

5,2

0,0

0,0

372,6

1 528,9

0,0

0,0

0,0

0,0

0,0

209,6

1 568,9

4. Shares and other variable-income securities

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

Gross value

Value adjustments

Net value

(in EUR)

31 December 2002

23 July 2002

31 December 2001

40 950 784

- 22 182 738

41 030 909

- 13 032 499

100 198 015

- 55 992 813

18 768 046

27 998 410

44 205 202

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

5. Intangible fixed assets

Developments with regard to intangible fixed assets were as follows:

Balance
at 23 July 2002

Purchase
during the period

Amortisation
during the period

Balance
at 31 December 2002

(in EUR)

Intangible fixed assets

—

3 800

- 950

2 850

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

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Official Journal of the European Union

11.10.2003

6. Tangible fixed assets

Developments with regard to tangible fixed assets were as follows:

Balance at
23 July 2002

Purchase
during the period

Amortisation
during the period

Balance at
31 December 2002

(in EUR)

Tangible fixed assets

—

18 793

- 4 699

14 094

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

7. Other assets

The other assets break down as follows:

Current account, ECSC operating budget
(see Note 11)

Withholding
reclaimed

taxes

and VAT to

be

Loans to officials

Miscellaneous

31 December 2002

23 July 2002

31 December 2001

—

—

724 633

(in EUR)

117 017

3 251 715

86 415

72 774

5 854 637

95 966

2 446 873

3 900 732

20 556

Sub-total

3 455 147

6 023 377

7 092 794

Value adjustments

- 156 227

—

—

Total

3 298 920

6 023 377

7 092 794

8. Prepayments and accrued income

The prepayments and accrued income break down as follows:

31 December 2002

23 July 2002

31 December 2001

(in EUR)

Interest on loans and swaps

38 425 745

Interest on deposits and securities portfolio

39 949 750

Miscellaneous

Issuing costs and redemption premiums

5 475

—

25 811 079

28 881 766

—

—

65 111 062

25 205 627

—

868 748

Sub-total

78 380 970

54 692 845

91 185 437

Cumulative value adjustments

- 5 336 277

- 7 124 483

- 8 651 432

Total

73 044 693

47 568 362

82 534 005

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9. Amounts owed to credit institutions

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

31 December 2002

23 July 2002

31 December 2001

(in EUR)

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

4 622 846

7 753 878

8 493 768

270 473

2 651 400

23 866 625

8 631 817

1 052 239

211 944 169

371 209 437

18 846 752

2 294 214

Total

21 140 965

36 202 081

604 294 572

10. Debts evidenced by certificates

This item comprises loan securities issued by the ECSC.

An amount of EUR 228 673 526 is accounted for by borrowings with less than one year to maturity
(EUR 228 673 526 at 23 July 2002).

11. Other liabilities

The other liabilities break down as follows:

31 December 2002

23 July 2002

31 December 2001

(in EUR)

Current account, ECSC operating budget
(see Note 7)

11 356

31 271 294

Early loan repayment

Other

720 649

697 540

4 638 935

706 217

Total

1 429 545

36 616 446

—

—

301 104

301 104

12. Accruals and deferred income

The accruals and deferred income break down as follows:

31 December 2002

23 July 2002

31 December 2001

(in EUR)

Interest on borrowings and credit lines

45 574 490

18 294 251

65 877 350

Commissions on loans

Miscellaneous

Issuing premiums

2 982

5 536

—

Deferred positive exchange differences

4 183 050

4 266 828

3 111

86 307

—

1 700 611

10 396 997

Total

49 766 058

22 564 190

78 061 265

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13. Outstanding commitments under the ECSC operating budget

From 24 July 2002 this item comprises the commitments still outstanding in respect of ECSC operating
budgets (see Note B5a). The provisions for financing the operating budget and for budgetary contingencies
were withdrawn on 23 July 2002.

During the period from 1 January to 31 December 2002, the changes in the item for the ECSC operating
budget were as follows:

Amounts at
31 December 2001

Amounts at
23 July 2002

Payments

Cancellations

(in EUR)

Amounts at
31 December 2002

Commitments

Redeployment

Research

128 960 809

132 607 711

- 10 965 456

- 403 430

121 238 825

174 023 995

180 829 395

- 14 701 909

- 7 415 617

158 711 869

Interest subsidies Article 56

Social measures (coal) (RECHAR)

25 008 679

52 932 945

16 844 154

- 799 575

—

70 635 452

- 20 623 000

- 3 450 000

16 044 579

46 562 452

Provisions for

— financing the operating budget

118 794 520

— budgetary contingencies

31 000 000

—

—

—

—

—

—

—

—

Total

530 720 948

400 916 712

- 47 089 940

- 11 269 047

342 557 725

14. Provision for liabilities and charges

14.1. Guarantee Fund

The Guarantee Fund is intended to cover lending and borrowing operations. After a withdrawal of EUR 32
million, the Guarantee Fund stood at EUR 497 million at 31 December 2002.

On 11 September 1996 the Commission confirmed its intention of maintaining reserves to cover 100 % of
those loans outstanding after 23 July 2002 which are not guaranteed by the government of a Member
State. Following loan repayments over the period from 24 July to 31 December 2002, it was possible to
reduce the Guarantee Fund.

The changes in the Guarantee Fund were as follows:

31 December 2001

Withdrawal

23 July 2002

Withdrawal

31 December 2002

580 000 000

51 000 000

529 000 000

32 000 000

497 000 000

(in EUR)

14.2. Other provisions

From 24 July 2002 onwards, this item includes the provisions for liabilities and charges. Following the
final discontinuation of the ECSC operating budgets, the provisions for fines and for interest subsidies
repayable were withdrawn on 23 July 2002.

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The changes in other provisions were as follows:

31 December 2001

23 July 2002

Change over the period
from 24 July to 31 December 2002

Allocation

Withdrawal

Exchange-rate
variations and
balance-sheet
movements

(in EUR)

31 December
2002

Provision for interest-rate risk

51 958 153

—

Provision for
banking activities (1)

special

costs

relating to

200 000

300 000

—

—

appeal

against Decision

appeal

against Decision

Provision for
94/215/ECSC (2)

Provision for
98/247/ECSC (3)

Provisions for

52 107 499

53 047 937

680 712

4 047 838

3 664 787

47 819

— fines and surcharges for late payment to

be paid

— interest subsidies repayable

39 806 715

2 579 066

—

—

—

—

Total

150 699 271

57 012 724

728 531

—

—

—

—

—

—

—

—

—

—

300 000

— 53 728 649

—

3 712 606

—

—

—

—

— 57 741 255

(1) 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 in liquidation

has less recourse, for its operations, to national agents who bear all expenditure relating to loan operations.

(2) This provision was created from the fines paid and the interest accrued since these payments 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 judgement of the Court of First
Instance of 11 March 1999.

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

15. Budget for financing coal and steel research

This item breaks down as follows:

31 December 2002

23 July 2002

31 December 2001

(in EUR)

Provision for research in 2003

Provision for research in 2004

Provision for smoothing

60 000 000

60 000 000

120 000 000

60 000 000

60 000 000

120 000 000

60 000 000

60 000 000

120 000 000

Total

240 000 000

240 000 000

240 000 000

In view of the expiry of the ECSC Treaty on 23 July 2002 and the winding-up of the ECSC, it has been
decided that all ECSC assets at the time of the expiry of the Treaty will be managed by the European
Commission with effect from 24 July 2002 (1). The net worth 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 securities portfolio
and term deposits) in year n will be transferred to the general budget of the European Community and will
be used for research in year n+2. 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.

(1) Decision of the Representatives of the Governments of the ECSC Member States, meeting within the Council, of

27 February 2002 (OJ L 79, 22.3.2002).

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11.10.2003

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 in
liquidation has created a provision for smoothing.

16. Reserves and surpluses

Situation at
31 December 2001
after allocation

Movements at
23 July 2002

Movements at
31 December 2002

Situation at
31 December
2002
before allocation

Allocation at
23 July 2002 (1)

Allocation at
31 December
2002 (2)

(in EUR)

Situation at
31 December
2002
after allocation

Special reserve

118 000 000

- 5 700 000

- 8 500 000

103 800 000

Former Pension Fund

40 000 000

- 4 000 000

- 2 000 000

34 000 000

—

—

— 103 800 000

— 34 000 000

Assets of the Coal and Steel
Research Fund

100 000 000

9 700 000

10 500 000

120 200 000

158 300 000

71 370 762 349 870 762

Surplus brought forward

3 250 334

—

158 668 388

161 918 722 - 158 300 000

- 3 618 722

Surplus for the period from 1
January to 23 July 2002

Surplus for the period from
24 July to 31 December
2002

— 158 668 388

- 158 668 388

—

—

—

—

—

67 752 040

67 752 040

— - 67 752 040

—

—

—

Total

261 250 334

158 668 388

67 752 040

487 670 762

—

— 487 670 762

(1) Decision of 7 January 2003 (Written procedure E/2698/2002).
(2) Proposal.

The Special Reserve is used to grant loans from ECSC own funds to finance subsidised housing. At 31
December 2002, the amount outstanding corresponding to the loans granted was of
the order of
EUR 103,8 million (EUR 112,3 million at 23 July 2002 and EUR 118 million at 31 December 2001).
it was possible to release EUR 8,5 million, which was transferred to the free reserves.
Consequently,

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 2002, the amount outstanding corresponding to the loans granted was
of the order of EUR 34 million (EUR 36 million at 23 July 2002 and EUR 40 million at 31 December
2001). Consequently, it was possible to release EUR 2 million, which was transferred to the free reserves.

The ‘Assets of the Coal and Steel Research Fund’ reserve, created in the context of the winding-up of the
ECSC (see Note C15), comprises the free reserves.

17. Analysis of the result for the period

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

Winding up financial operations (see 17.1)

Net investment income (see 17.2)

Administrative overheads (see 17.3)

24 July to 31 December 2002

(in EUR)

42 051 133

27 156 523

- 1 455 616

67 752 040

Total

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

Result

24 July to 31 December 2002

(in EUR)

a)Lending/borrowing activities

Net interest

Miscellaneous charges/income

Net change in value adjustments

Withdrawal from Guarantee Fund

b) Winding up commitments under operating budget (cancellations)

Total

c)Winding-up — other activities

Levy, fines, interest subsidies

Research

Other

d)Exchange-rate differences and changes in market value

Total

Exchange-rate differences

Securities market

Other

Total

GRAND TOTAL

17.2. Net investment income

Income

Interest on nostro account

Interest on deposit account

Interest on securities portfolio (excluding dedicated portfolio)

Profit on sales of portfolio

Total income

Charges

Debit interest on nostro account

Interest on credit lines

Losses on sales of portfolio

Bank and portfolio transaction charges

Total charges

Difference = net income

From 2003 onwards, net income will be made available to the general
budget of the European Union for financing research projects (see Notes
A et C15)

3 627 099

- 66 523

- 2 355 829

32 000 000

33 204 747

11 269 047

437 104

119 190

- 764 061

- 207 767

- 246 938

- 1 962 307

- 5 649

- 2 214 894

42 051 133

24 July to 31 December 2002

(in EUR)

65 573

581 393

24 857 191

2 604 116

28 108 273

2 903

—

862 608

86 239

951 750

27 156 523

17.3. Administrative overheads

Each year the ECSC paid a lump sum of EUR 5 million (EUR 2 794 520 for the period from 1 January to
23 July 2002) to cover administrative expenditure.

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According to Decision 2002/234/ECSC of 27 February 2002 (Annex 1, point 6) of the Representatives of
the Governments of the Member States meeting within the Council
(see Note A), the administrative
expenditure of the ECSC in liquidation was to be met by the Commission, and the ECSC in liquidation
was to transfer prorata temporis EUR 3,3 million to the budget of the European Union. The corre-
sponding amount for the period from 24 July 2002 to 31 December 2002 is EUR 1 455 616.

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

18. Interest and similar charges

31 December 2002

23 July 2002

31 December 2001

(in EUR)

Interest on loans and swaps

32 983 575

52 182 248

139 407 674

Bank interest

Issuing costs and redemption premiums

2 903

—

30 200

868 747

9 895

1 882 046

Total

32 986 478

53 081 195

141 299 615

19. Other operating charges

31 December 2002

23 July 2002

31 December 2001

(in EUR)

Borrowing costs

SWIFT/Reuters charges

Loss on loans and advances

Other

27 904

76 766

82 870

884

Total

188 424

78 123

132 483

441 587

63 715

715 908

133 559

192 668

1 376 363

8 499

1 711 089

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

20. Interest received and other income

31 December 2002

23 July 2002

31 December 2001

(in EUR)

Interest on loans and swaps

30 364 393

50 010 165

138 793 019

Payment and redemption premiums

Bank interest

—

646 966

867 660

2 796 887

2 339 954

2 196 563

Interest on bonds and other fixed-income
securities

Income from shares and other variable-
income securities

31 103 471

37 750 603

69 658 619

—

—

1 753 222

Total

62 114 830

91 425 315

214 741 377

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21. Other operating/liquidation income

31 December 2002

23 July 2002

31 December 2001

(in EUR)

Other income from lending and treasury
activities

Lapsed coupons and bonds

Other liquidation income

Miscellaneous

41 961

38 442

12 582 095

186

Total

12 662 684

7 678 149

1 404

—

343 332

8 022 885

—

39 383

—

44 004

83 387

The other liquidation income represents mainly cancellations of outstanding commitments under the ECSC
operating budget (See Note C13.).

22. Off-balance-sheet commitments

22.1. Commitments received

Commitments arising from swaps

— Notional capital commitments relating

to interest-rate swaps

— Capital

commitments
relating
interest-rate and currency swaps

to

31 December 2002

23 July 2002

31 December 2001

(in EUR)

187 592 896

195 709 880

212 071 862

92 236 741

94 801 706

98 603 122

Total

279 829 637

290 511 586

310 674 984

22.2. Commitments entered into

31 December 2002

23 July 2002

31 December 2001

(in EUR)

a)Commitments arising from swaps

— Notional capital commitments relating to

interest-rate swaps

— Capital

commitments

relating

to

interest-rate and currency swaps

b) Loans granted to EC officials but not yet

disbursed

c) Administrative overheads (1)

d) Receipts from lapsed coupons and bonds (2)

187 592 896

195 709 880

212 071 862

88 085 042

88 085 042

88 085 042

649 324

280 274

—

1 715 972

1 455 616

—

211 554

—

39 383

Total

276 607 536

286 966 510

300 407 841

(1) According to Decision No 2002/234/ECSC of 27 February 2002 (Annex 1, point 6) of the Representatives of the Governments of the
Member States meeting within the Council (see Note A), the administrative expenditure of the ECSC in liquidation is to be met by the
Commission and the ECSC is to transfer prorata temporis EUR 3,3 million to the budget of the European Union.
With the entry into force of the Treaty of Nice on 1 February 2003, all the ECSC's assets have been transferred to the European
Community, and the obligation to pay a lump sum to the budget of the European Union lapses.
The amount corresponding to administrative overheads for the period from 1 January 2003 to 31 January 2003, i.e. EUR 280 274,
is entered as a commitment entered into.

(2) The ECSC was always keen to meet the commitments it had entered into and therefore traditionally honoured coupons even after

they had lapsed. The winding-up of the ECSC has meant the end of this practice.

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23. Financial situation for the period ending 31 December 2002

Period from 24 July
to 31 December 2002

Period from 1 January
to 23 July 2002

Period from 1 January
to 23 July 2002

(EUR million)

Origin of funds

Balance of profit-and-loss account

67,8

158,7

Items not involving movements of funds

— Amortisation of issuing costs and redemption

premiums

— Value adjustments in respect of financial assets

(withdrawals)

— 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 (withdrawal from) the Guarantee

Fund/Special Reserve

Total funds

Other resources

— Proceeds from borrowings

— Loan repayments

— Decreases
portfolio

in bank balances and securities

Total resources

Use of funds

— Loan disbursements/increase

in loans and

advances

— Redemption of borrowings

Total uses

—

2,0

- 24,6

- 58,4

—

27,2

- 23,7

- 35,2

2,5

0,7

—

- 3,2

- 32,0

- 76,9

—

86,6

6,6

16,3

1,2

15,1

16,3

0,9

13,0

- 62,3

- 172,2

—

- 59,3

42,7

32,1

47,8

- 51,3

- 6,0

2,4

- 51,0

- 104,5

—

619,4

149,7

664,6

0,7

663,9

664,6

8,5

1,9

- 8,5

- 40,2

- 304,7

240,0

- 7,6

9,8

- 28,5

12,8

- 8,1

- 11,0

- 12,4

15,0

- 133,0

—

745,8

10,8

623,6

5,4

618,2

623,6