Commission Report — Financial Report of the ECSC in liquidation at 31 December 2003
Date: 2004-04-30
Institutions: European Commission
Subjects: ECSC, ECSC Treaty, activity report, budget, validation of expenditure

C 122/4

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Official Journal of the European Union

30.4.2004

COMMISSION

COMMISSION REPORT

Financial Report of the ECSC in liquidation at 31 December 2003

(2004/C 122/02)

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 2003

Profit-and-loss account for the period ending 31 December 2003

Allocation of the surplus for the period ending 31 December 2003

Notes to the financial statements at 31 December 2003

ECSC in liquidation

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 50 years and expired on 23 July 2002.

Ireland,

On expiry of the Treaty, ownership of ECSC funds reverted to the Member
States (Belgium, Denmark, Germany, Greece, Spain, France,
Italy,
Luxembourg,
the Netherlands, Austria, Portugal, Finland, Sweden and the
United Kingdom). The final objective laid down by the Member States was 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. This Protocol confers the
ownership of ECSC funds on the European Community with effect from 24 July
2002. Pending the entry into force of the Treaty of Nice on 1 February 2003,
the Member States temporarily gave the European Commission a mandate to
manage the assets concerned.

During the period from 24 July 2002 to 31 January 2003, the European
Commission exercised the powers and responsibilities conferred on it by Deci-
sion 2002/234/ECSC of the Representatives of the Governments of the Member
States, meeting within the Council, of 27 February 2002.

Commission

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With the entry into force of the Treaty of Nice on 1 February 2003, the
Commission's powers and responsibilities are governed by Council Decision
2003/76/EC of 1 February 2003.

At 31 December 2003, the members of the Commission were:

Romano PRODI

President

Neil KINNOCK

Vice-President

Loyola DE PALACIO

Vice-President

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

Antonio VITORINO

Member

Member

Member

Member

Member

Member

Member

Member

Member

Member

Member

Member

Member

Member

Member

Member

Anna DIAMANTOPOULOU

Member

The management of the ECSC in liquidation and of the Coal and Steel Research
Fund are 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
2003, of Mr Klaus REGLING, Director-General of DG ECFIN, and Mr David
MCGLUE, Director of Directorate L.

Address

European Commission
Directorate-General ECFIN — L
Centre Wagner
Rue Alcide De Gasperi
L-2920 Luxembourg
Tel. (352) 4301 1
Fax (352) 43 63 22
E-mail: registry@cec.eu.int

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The euro

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 Netherlands, Austria, Portugal and Finland met the conditions required for
adopting the single currency, the euro, from 1 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:

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

Belgian francs

German marks

Greek drachmas

Spanish pesetas

French francs

Irish pounds

Italian lire

Luxembourg francs

Dutch guilders

Austrian schillings

Portuguese escudos

5,94573

Finnish markka

The euro exchange rates for the currencies of the other EU countries and some
non-member countries are given in Note B.2.2.

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 was the transfer of ECSC funds to the European Com-
munity and the creation of a joint research fund in 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 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. 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.

Since the Treaty of Nice was not ratified before the expiry of the ECSC Treaty, the Member States tempora-
rily entrusted the European Commission (3) 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) 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).
(3) Decision 2002/234/ECSC of the Representatives of the Governments of the Member States, meeting within the

Council, on the financial consequences of the expiry of the ECSC Treaty (OJ L 79, 22.3.2002, p. 42).

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On the entry into force of the Treaty of Nice on 1 February 2003, ownership of the ECSC's funds reverted
to the European Community with retroactive effect to 24 July 2002.

On 1 February 2003 (1) the Council laid down the measures necessary for the implementation of the
Protocol, annexed to the Treaty establishing the European Community, on the financial consequences of
the expiry of the ECSC Treaty and on the Research Fund for Coal and Steel. 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. It is also responsible for managing the assets in such a way as to ensure their long-
term profitability. The objective in placing the available assets must be to obtain the highest possible yield
that is securely attainable.

The Decision of 1 February 2003 further stipulates that the net revenue from investing the available assets
constitutes revenue in the general budget of the European Union and that this revenue is to be used to
finance, in the sectors associated with the coal and steel industries, research projects that are not covered
by the framework research programme. This revenue forms the Research Fund for Coal and Steel and is
managed by the Commission.

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 2003, the debt of the ECSC in liquidation
changed as follows:

Currency

Number of
borrowings at
31 December
2002

Debt
outstanding at
31 December
2002

Reimburse-
ments from 1
January to 31
December 2003

Exchange-rate
adjustments

Debt
outstanding at
31 December
2003

Number of
borrowings at
31 December
2003

(EUR million)

EUR

GBP

USD

18

6

1

25

295,5

322,0

95,4

712,9

241,0

—

—

241,0

—

– 24,8

– 16,2

– 41,0

54,5

297,2

79,2

430,9

11

6

1

18

Total

The amortisation of the borrowings outstanding at 31 December 2003 breaks down as follows:

EUR

2,3

2,2

2,0

2,0

0,3

45,7

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

GBP

USD

Total

(EUR million)

79,2

85,1

2,3

2,2

2,0

2,0

79,5

85,1

0,0

0,0

45,7

0,0

(1) Council Decision 2003/76/EC of 1 February 2003 establishing the measures necessary for the implementation of the
Protocol, annexed to the Treaty establishing the European Community, on the financial consequences of the expiry
of the ECSC Treaty and on the Research Fund for Coal and Steel (OJ L 29, 5.2.2003, p. 22).

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Official Journal of the European Union

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2014

2015

2016

2017

2018

2019

EUR

GBP

USD

95,4

116,7

297,2

79,2

54,5

(EUR million)

Total

0,0

0,0

0,0

95,4

116,7

430,9

The main characteristics of the borrowings outstanding are as follows:

Year of issue

Interest (%) per year (*)

Term (years)

Initial amount

Amount outstanding at 31 December 2003

in borrowing currency

equivalent in EUR

Contracts redenominated in EUR

1990

1990

1992

1992

1992

1992

1992

1993

1993

1993

1993

Contracts in GBP

1990

1992

1992

1993

1994

1994

9,16

9,0

2,2705

1,625

2,854

2,18263

8,34

7,08

6,39

6,64

6,75

11,875

9,875

9,875

9,875

6,875

8,9375

Contracts in USD

1993

6,375

(*) Fixed or variable rates, as the case may be

15

15

15

15

20

15

15

15

15

15

15

19

25

25

24

25

25

15

2 700 000 DEM

24 400 000 DEM

11 900 000 DEM

9 000 000 000 ITL

300 000 000 FRF

11 000 000 DEM

2 300 000 DEM

1 750 000 DEM

1 355 000 DEM

1 185 000 DEM

1 000 000 DEM

276 098

122 710

2 249 684

1 859 245

45 734 705

2 433 749

470 389

447 380

346 400

302 941

255 646

Total per currency

54 498 947

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

85 130 533

24 432 463

42 565 267

28 376 844

50 029 796

66 685 585

Total per currency

209 481 000

297 220 488

100 000 000 USD

100 000 000

Total per currency

100 000 000

Grand total in EUR

79 176 564

79 176 564

430 895 999

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

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Management of loans from the ECSC in liquidation

Over the period ending 31 December 2003, the changes in loans from borrowed funds (pursuant to
Articles 54 and 56 ECSC) were as follows:

Member State

Number of loans

Amount
outstanding at 31
December 2002

Amortisation
from1 January to
31 December
2003

Exchange-rate
adjustment

Amount
outstanding at 31
December 2003

Number of loans

(EUR million)

Greece

France

Italy

United Kingdom

Total Community

1

4

56

1

62

95,36

362,49

19,83

72,25

549,93

—

– 228,67

– 11,96

—

– 240,63

– 16,18

—

—

– 5,56

– 21,74

79,18

133,82

7,87

66,69

287,56

1

2

17

1

21

The loans from borrowed funds outstanding at 31 December 2003 were backed by guarantees as
follows:

Member State

Guarantee by public
body

Bank guarantee

Industrial grouping

No guarantee

Greece

France

Italy

United Kingdom

79,18

—

—

—

Total Community

79,18

—

—

7,87

—

7,87

—

133,82

—

—

133,82

—

—

—

66,69

66,69

Over the period ending 31 December 2003, the changes in loans from own funds (pursuant to Articles
54 and 54.2 ECSC) were as follows:

(EUR million)

Total

79,18

133,82

7,87

66,69

287,56

(EUR million)

Member State

Number of loans

Amount
outstanding at 31
December 2002

Amortisation
from 1 January to
31 December
2003

Exchange-rate
adjustment

Amount
outstanding at 31
December 2003

Number of loans

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

United Kingdom

Total Community

24

4

41

9

21

41

10

21

7

7

2

6

2

28

223

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

– 0,62

0,00

– 6,83

– 0,04

– 1,05

– 4,11

– 0,03

– 0,81

– 0,11

– 0,08

– 0,18

– 0,07

– 0,03

– 1,13

103,78

– 15,09

—

0,00

—

—

—

—

—

—

—

—

—

—

—

– 0,61

– 0,61

4,87

0,01

45,62

0,42

9,15

9,00

0,29

5,86

0,86

0,84

3,75

0,56

0,72

6,13

88,08

24

1

38

9

21

37

9

21

7

7

2

6

2

24

208

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

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The loans from own funds outstanding at 31 December 2003 were backed by guarantees as follows:

Member State

Guarantee by
public body

Bank guarantee
(1)

Industrial grouping

Public

Private

No guarantee

Total

(EUR million)

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

Finland

United Kingdom

—

—

—

—

—

—

0,29

—

—

—

—

—

—

—

4,87

0,01

45,62

0,42

9,15

8,11

—

5,86

0,86

—

3,75

0,56

0,72

6,13

—

—

—

—

—

0,42

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

0,84

—

—

—

—

—

—

—

—

—

0,47

—

—

—

—

—

—

—

—

4,87

0,01

45,62

0,42

9,15

9,00

0,29

5,86

0,86

0,84

3,75

0,56

0,72

6,13

Total Community

0,29

86,06

0,42

0,84

0,47

88,08

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

Levies

Total claims at 31 December 2002 amounted to EUR 4 858 425.

These were covered in their entirety by value adjustments. Over the period ending on 31 December 2003,
payments were received totalling EUR 184 847. Irrecoverable claims totalling EUR 192 945 were cancelled.
Total claims at 31 December 2003 thus amounted to EUR 4 480 633, covered in their entirety by value
adjustments.

Interest subsidies

Total claims at 31 December 2002 amounted to EUR 2 666 527. Value adjustments were made totalling
EUR 2 454 855. During the period ending on 31 December 2003, the ECSC in liquidation received
payments of EUR 205 441 and issued new demands for the recovery of EUR 1 064 909. It waived or
cancelled claims amounting to EUR 1 218 566. Consequently, at 31 December 2003 total claims
amounted to EUR 2 307 429, covered by value adjustments in the sum of EUR 1 965 926.

Fines

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

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

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

Three Italian companies

1 034 270

1 034 270

Amount (capital) outstanding at

31 December 2002

31 December 2003

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

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2. Fines imposed on 16 February 1994 (Decision 94/215/ECSC) for infringement of the competition rules in the

market for steel beams

By a judgment dated 2 October 2003, the Court of Justice dismissed the appeals of two German compa-
nies and one Spanish company. The Court annulled in part the judgment passed on a second Spanish
company and referred the case back to the Court of First Instance. As a result of these judgments, in
2003 the ECSC in liquidation received payments totalling EUR 7 759 000 (capital) and EUR 5 285 390
(surcharges for late payment).

The changes in total claims in respect of capital were as follows:

Amount (capital) outstanding at

31 December 2002

31 December 2003

One Italian company (in liquidation since 28 February
1993)

9 500 000

9 500 000

German companies

Spanish companies

4 409 000

—

10 450 000

7 100 000

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

Two companies (German/Italian)

8 064 000

8 064 000

Amount (capital) outstanding at

31 December 2002

31 December 2003

The two companies have appealed against the judgment of the Court of First Instance. A value adjust-
ment 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 EURO, NET OF INTEREST)

1. Fines imposed on 16 February 1994 (Decision 94/215/ECSC) for infringement of the competition rules in the

market for steel beams

By a judgment dated 2 October 2003, the Court of Justice dismissed the appeals of one British
company and one German company, but it annulled in their entirety the judgment of the Court of First
Instance relating to the Luxembourg company and the relevant Commission decision.

The changes in provisions for liabilities and charges were as follows:

British, Luxembourgish and German companies

41 947 108

—

Amount (capital) in provision at

31 December 2002

31 December 2003

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2. Fines imposed on 21 January 1998 (Decision 98/247/ECSC) for infringement of the competition rules with

regard to the alloy surcharge

Spanish company

3 136 000

3 136 000

Amount (capital) in provision at

31 December 2002

31 December 2003

Outstanding commitments under ECSC operating budgets

During the period ending on 31 December 2003, payments were made totalling EUR 98 million and
cancellations totalled EUR 22 million. The changes in the commitments relating to the ECSC operating
budgets from 1 January to 31 December 2003 were as follows:

Amounts at
31.12.2002

Payments

Cancellations

Amounts at
31.12.2003

Redeployment

Research

121 238 825

35 127 481

10 351 074

75 760 270

158 711 869

56 145 090

3 459 355

99 107 424

Subsidies (Article 56)

16 044 579

197 428

4 640 707

11 206 444

Social measures: coal (Rechar)

46 562 452

6 499 153

3 671 873

36 391 426

Total

342 557 725

97 969 152

22 123 009

222 465 564

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 invest-
ments 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.

The changes in total cash holdings, provisions and free reserves since then have been as follows
(EUR million):

23 July 2002

31 December 2002

31 December 2003

Total cash holdings

1 592

1 584

1 557

Commitments, operating budget

Debt provisions, research financing

Guarantee fund

Free reserves (after allocation)

401

240

529

268

343

240

497

350

222

293

243

707

The return on investment, including the variation in the market value of bonds (calculated by the Modified
Dietz Method) was 3,56 % for the year 2003, compared with a reference rate for the ECSC in liquidation
of 3,1 %.

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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 Com-
munity 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 (1). This
financing mechanism took effect in 2003. The revenue for 2003 will be used for research in 2005.

Calculation of the allocation for research in 2005:

Financing provisions for 2004

Net revenue in 2003 (rounded)

Difference

Allocation:

Net revenue in 2003

Half of the difference

Available for research in 2005

Financing:

Net revenue in 2003

Withdrawal
smoothing

from the

provision

for

60 000 000

53 000 000

7 000 000

53 000 000

3 500 000

56 500 000

53 000 000

3 500 000

56 500 000

(1) See Annex to Decision 2003/76/EC.

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Official Journal of the European Union

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FINANCIAL STATEMENTS OF THE ECSC IN LIQUIDATION

This is the second report on the ECSC in liquidation, covering the period ending on 31 December 2003.

The ECSC's balance sheet, profit-and-loss account and statement of the allocation of the surplus for the
year ending 31 December 2003 were submitted to the Commission for approval according to written
procedure E/1514/2004 of 29 July 2004 and are shown in this financial report in the form approved by
the Commission.

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Auditors' report on the financial statements

In accordance with the mandate given to us, we have audited the financial statements of the ECSC in liqui-
dation for the period ending on 31 December 2003.

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

We have conducted our audit in accordance with international auditing standards. Those standards require
that we plan and perform the audit in such a way as to obtain reasonable assurance that the financial state-
ments are free of material misstatement. An audit involves examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. It also includes assessing the accounting principles
and methods used and any significant estimates made by the ECFIN-L Directorate in drawing up the finan-
cial statements and evaluating the overall presentation of the statements.

The audit procedures employed included the following:

1. Checking the administrative and accounting procedures and the system of checks applying in the
ECFIN-L Directorate for the ECSC in liquidation and spot-checking that these procedures have been
followed.

2. Checking the supporting documents for the transactions recorded in the accounts.

3. Checking files on borrowings and loans (content, preservation of documents, monitoring of repayments,

validity of guarantees).

4. Analysing accounts, checking calculations.

5. Checks in connection with cash holdings (compliance with limits, examination of positions, checks on

swap operations).

We consider that our audit provides a reasonable basis for expressing our opinion.

Beyond examining the global confirmations received from DG Budget, our task did not extend to verifying
the nature of and supporting documents for the payments and commitments made under the operating
budget of the ECSC in liquidation, as these operations are recorded by DG Budget. We understand that
these operations are in any case checked by the European Court of Auditors and published in the Official
Journal.

With the exception of the potential impact of the point raised in the previous paragraph, in our view the
attached financial statements give, in conformity with generally accepted accounting principles in the Euro-
pean Union and the specific accounting principles described in Note B.1 to the financial statements of the
ECSC in liquidation, a true and fair view of the assets and financial situation of the ECSC in liquidation at
31 December 2003 and of the results of its operations for the period then ended.

Luxembourg, 6 May 2004.

KPMG Audit

Corporate Auditors

P. CORBARD

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Official Journal of the European Union

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Balance sheet at 31 December 2003

(Amounts in EUR) — Before allocation of surplus

ASSETS

31 December 2003

31 December 2002

Loans and advances to credit institutions

— repayable on demand

14 191 243

— with agreed maturity dates or periods of

notice (Note C.1.1)

— loans (Note C.1.2)

41 353 110

77 879 727

6 625 169

6 905 570

100 034 710

Total

133 424 080

113 565 449

Loans and advances to customers

— loans (Note C.2.1)

361 318 524

628 718 200

— levy (Note C.2.2)

— fines (Note C.2.3)

—

—

— interest subsidies repayable (Note C.2.4)

341 503

— repayment, research

—

—

—

211 672

20 764

Total

361 660 027

628 950 636

Bonds and other fixed-income securities (Note
C.3)

— issued by public bodies

— issued by other borrowers

866 240 984

619 665 223

Shares
(Note C.4)

and other variable-income

securities

15 748 425

1 026 326 228

525 130 526

18 768 046

Total

1 501 654 632

1 570 224 800

Intangible assets (Note C.5)

Tangible assets (Note C.6)

Other assets (Note C.7)

Accruals and deferred income (Note C.8)

1 900

9 396

3 283 931

56 457 898

2 850

14 094

3 298 920

73 044 693

Total assets

2 056 491 864

2 389 101 442

Off-balance-sheet commitments (Note C.24)

249 437 630

279 829 637

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Official Journal of the European Union

C 122/17

Balance sheet at 31 December 2003

(Amounts in EUR) — Before allocation of surplus

LIABILITIES

Amounts owed to credit institutions (Note C.9)

— with agreed maturity dates or periods of

notice

Debts evidenced by certificates (Note C.10)

Other liabilities (Note C.11)

Accruals and deferred income (Note C.12)

Outstanding commitments ECSC operating budget
(Note C.13)

Provisions for liabilities and charges

31 December 2003

31 December 2002

8 764 242

422 131 757

3 163 658

34 267 370

21 140 965

691 795 132

1 429 545

49 766 058

222 465 564

342 557 725

Guarantee Fund (Note C.14.1)

243 000 000

Other provisions (Note C.14.2)

4 150 039

497 000 000

57 741 255

Total provisions

247 150 039

554 741 255

Budget for financing coal and steel research (Note
C.15)

Reserves and surplus (Note C.16)

Special reserve

Former pension fund

88 100 000

30 000 000

Assets of the Coal and Steel Research Fund

369 570 762

Profit deferred

—

Surplus for the period (Note C.17)

337 878 472

293 000 000

240 000 000

103 800 000

34 000 000

120 200 000

161 918 722

67 752 040

Total reserves and surplus

825 549 234

487 670 762

Total liabilities

2 056 491 864

2 389 101 442

Off-balance-sheet
(Note C.24)

commitments

entered into

252 569 131

276 607 536

C 122/18

EN

Official Journal of the European Union

30.4.2004

Profit-and-loss account for the period ending 31 December 2003

(Amounts in EUR)

CHARGES

Interest payable and similar charges
(Note C.18)

Commission paid

Net losses on financial operations

1 January to 31 December 2003

24 July to 31 December 2002

1 January to 23 July 2002

57 938 886

211 887

32 986 478

89 173

53 081 195

314 770

— exchange difference

—

— losses on bonds and other fixed-

income securities

5 450 344

246 938

862 608

—

4 427 896

— value adjustments for bonds and
securities
fixed-income

other
(Note C.3)

— value adjustments for shares and
other variable-income securities
(Note C.4)

7 821 336

654 707

63 570 916

2 942 548

9 150 238

1 405 587

Total

16 214 228

10 914 491

69 404 399

Administrative
C.17.4)

overheads

(Note

Value adjustments on tangible and
(Notes C.5 and
intangible assets
C.6)

Other
C.19)

operating

charges

(Note

Value adjustments for
loans and
advances and provisions for liabil-
ities and commitments

— value adjustment for loans and

advances

— allocation to other provisions
for liabilities and charges (Note
C.14.2)

280 274

1 455 616

2 794 520

5 648

3 470 180

5 649

188 424

—

715 908

510 508

4 936 775

916 445

336 906

728 531

3 215 253

Total

847 414

Extraordinary charges

Legal commitments for the period

Allocation to the budget for finan-
cing coal and steel research (Notes
C.15 and C.17.3)

Total charges

Surplus for the period (Note C.17)

—

—

56 500 000

135 468 517

337 878 472

5 665 306

74 154

—

—

51 379 291

67 752 040

4 131 698

39 771

127 988 619

—

258 470 880

158 668 388

Total

473 346 989

119 131 331

417 139 268

30.4.2004

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Official Journal of the European Union

C 122/19

Profit-and-loss account for the period ending 31 December 2003

(Amounts in EUR)

INCOME

receivable
Interest
income (Note C.20)

and

similar

Commission received

Net profit on financial operations

1 January to 31 December 2003

24 July to 31 December 2002

1 January to 23 July 2002

119 191 862

298 205

62 114 830

—

91 425 315

141 300

— exchange difference

4 276 296

—

— profit on bonds and other fixed-

income securities

4 118 984

— profit on shares and other vari-

able-income securities

—

2 604 116

—

381 759

5 253 120

3 491 224

— withdrawal of value adjustments
fixed-

for bonds
income securities (Note C.3)

and other

3 301 779

7 842 639

7 580 807

Total

11 697 059

10 446 755

16 706 910

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

— withdrawal of value adjustments
for loans and advances (Note
C.21)

18 727 214

1 907 062

22 011 553

— withdrawal of provision for

major exposures

—

— withdrawal

from other provi-
sions for liabilities and charges
(Notes C.14.2 and C.22)

42 255 636

—

—

6 000 000

51 371 610

Total

Other operating income (Note C.23)

Withdrawal
from provision for
smoothing (Notes C.15 and C.17.3)

Income relating to the ECSC oper-
ating budget

Withdrawal from the provision for
budgetary contingencies

Withdrawal from the provision for
financing the operating budget

Withdrawal
Fund (Note C.14.1)

from the Guarantee

60 982 850

23 677 013

3 500 000

—

—

—

1 907 062

12 662 684

—

—

—

—

79 383 163

8 022 885

—

20 665 175

31 000 000

118 794 520

254 000 000

32 000 000

51 000 000

Total income

473 346 989

119 131 331

417 139 268

C 122/20

EN

Official Journal of the European Union

30.4.2004

Allocation of the surplus for the period ending 31 December 2003

Surplus brought forward at start of period

Surplus for the period to be allocated

(Amounts in EUR)

1 January to 31 December
2003

—

337 878 472

Total

337 878 472

3 618 722

67 752 040

71 370 762

Allocation to the assets of the Coal and Steel Research
Fund (Note C.16)

337 878 472 (1)

71 370 762

Surplus brought forward at start of period

—

—

(1) Proposal to the Commission.

3 250 334

158 668 388

161 918 722

158 300 000

3 618 722

24 July to 31 December 2002

1 January to 23 July 2002

30.4.2004

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Official Journal of the European Union

C 122/21

Notes to the financial statements at 31 December 2003

(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, on the expiry of the
Treaty, all assets and liabilities of the ECSC 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.

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 used exclusively for
research in the sectors associated with the coal and steel industries, in accordance with Council Decision
2003/76/EC of 1 February 2003 establishing the measures necessary for the implementation of the
Protocol, annexed to the Treaty establishing the European Community, on the financial consequences of
the expiry of the ECSC Treaty and on the Research Fund for Coal and Steel.

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 fluctua-
tions 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 abovementioned Decision. The identified revenue is divided between research relating to coal and that
relating to steel in proportions of 27,2 % and 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.

(1) OJ C 80, 10.3.2001.
(2) Decision 2002/234/ECSC of the Representatives of the Governments of the Member States, meeting within the
Council, of 27 February 2002 on the financial consequences of the expiry of the ECSC Treaty and on the research
fund for coal and steel.

C 122/22

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Official Journal of the European Union

30.4.2004

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 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
financial statements of the ECSC in liquidation. On 17 December 2002 the Commission decided to apply
from 2005 onwards the international accounting standards for the public sector.

Where appropriate, the necessary presentational adjustments have been made to the figures for the corre-
sponding 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 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.

At 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 balance-sheet amounts expressed in national currency
into euro:

Danish krone

Pound sterling

Swiss franc

United States dollar

31 December 2003

31 December 2002

23 July 2002

7,4450

0,70480

1,5579

1,2630

7,4288

0,65050

1,4524

1,0487

7,43310

0,63290

1,45490

0,99100

2.2. At 31 December 2003 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

Pound sterling

Swiss franc

1 686 623 947

1 646 623 945

810 149

—

278 672 331

319 531 199

5

—

United States dollar

90 385 432

90 336 720

Total

2 056 491 864

2 056 491 864

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

30.4.2004

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Official Journal of the European Union

C 122/23

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

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

5. Special features of the ECSC financial statements

(a) ECSC operating budget

Part of the funds of the ECSC in liquidation is 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 such 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 1 January and 31 December 2003 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 C.13).

(b) Budget for financing coal and steel research

The Council has decided that the income from managing the assets of the ECSC in liquidation should be
allocated to the general budget of the European Union (2). 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 in liquidation 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 C.15).

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 2003

31 December 2002

(EUR)

41 353 110

Total

41 353 110

6 905 570

6 905 570

up to three months

(1) OJ L 336, 30.12.2000, p. 75.
(2) Decision 2003/76/EC.

C 122/24

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Official Journal of the European Union

30.4.2004

1.2. Loans

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

31 December 2003

31 December 2002

(EUR)

534 466

6 374 614

24 493 333

46 477 314

4 000 015

13 553 271

27 905 538

54 575 886

Total

77 879 727

100 034 710

up to three months

three months to one year

one to five years

over five years

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 C.1.2).

The other loans break down as follows:

1. Loans disbursed from borrowed funds

— amounts outstanding

— value adjustments

31 December 2003

31 December 2002

(EUR)

341 346 876

– 20 710 979

604 761 954

– 24 539 291

Subtotal

320 635 897

580 222 663

2. Loans from the special reserve for financing subsi-

dised housing

11 530 061

15 400 184

Interim total

332 165 958

595 622 847

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

31 December
2003

31 December
2002

— Up

to

three

months

— Three months

to

one year

1 370 204

1 374 317

1 776 869

230 721 357

— One to five years

87 763 012

11 563 579

— Over five years

261 966 852

376 502 885

352 876 937

620 162 138

3.

Loans disbursed from the former Pension Fund to
officials of the European Communities for housing
construction

4. Other debtors

28 909 384

243 182

32 809 702

285 651

Grand total

361 318 524

628 718 200

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

30.4.2004

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Official Journal of the European Union

C 122/25

2.2. Levies

The claims relate to years prior to 1998. They are mainly claims on companies in liquidation.

This item breaks down as follows:

31 December 2003

31 December 2002

(EUR)

4 480 633

– 4 480 633

Net amount

—

4 858 425

– 4 858 425

—

Gross amount

Value adjustments

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:

Fines due under the ‘quota system’

— Capital

— Surcharges for late payment

Fines due pursuant to Decision 94/215/ECSC (1)

— Capital

— Surcharges for late payment

Fines due pursuant to Decision 98/247/ECSC (2)

— Capital

— Surcharges for late payment

Total

Value adjustments

31 December 2003

31 December 2002

(EUR)

1 034 270

340 962

16 600 000

3 842 457

8 064 000

2 623 285

32 504 974

1 034 270

340 962

24 359 000

11 615 343

8 064 000

2 159 605

47 573 180

– 32 504 974

– 47 573 180

Net amount

—

—

(1) Seven companies lodged appeals against the judgments of the Court of First Instance. By a judgment dated 2 October 2003, the
Court of Justice dismissed the appeals of the two German companies and one Spanish company. The Court annulled in part the judg-
ment passed on one other company and referred the case back to the Court of First Instance.

(2) Three companies have lodged appeals against the judgment 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 2003.

2.4. Interest subsidies to be recovered

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

31 December 2003

31 December 2002

(EUR)

Subsidies to be repaid

Value adjustments

2 307 429

– 1 965 926

Net amount

341 503

2 666 527

– 2 454 855

211 672

C 122/26

EN

Official Journal of the European Union

30.4.2004

3. Bonds and other fixed-income securities

3.1. Composition

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

Net change in value
adjustments

31 December 2003

31 December 2002

(EUR)

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 securi-
ties:

Gross value

Value adjustments

Net value

927 466 782

1 089 374 949

– 1 822 923

– 61 225 798

– 63 048 721

866 240 984

1 026 326 228

622 441 469

526 241 560

1 665 212

– 2 776 246

– 1 111 034

619 665 223

525 130 526

1 549 908 251

1 615 616 509

– 157 711

– 64 002 044

– 64 159 755

1 485 906 207

1 551 456 754

The net change of EUR – 157 711 in value adjustments between 1 January and 31 December 2003 breaks
down as follows:

— exchange difference

— allocation to value adjustments:

— withdrawal from value adjustments:

4 677 268

821 336

3 301 779

– 157 711

3.2. Maturities in 2004

Securities in the portfolio reaching final maturity in the course of 2004 represent the following amounts
(EUR):

— Issued by public bodies:

— Issued by other borrowers:

222 348 066

10 945 000

Total

233 293 066

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 2003, 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 2003 amounted to
EUR 56 032 457 (EUR 60 709 724 at 31 December 2002).

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Official Journal of the European Union

C 122/27

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 counter-
party (1).

The return on investment, including the variation in the market value of bonds (calculated by the Modified
Dietz Method) was 3,56 % for the year 2003. This compares with a reference rate for the ECSC in liquida-
tion of 3,1 %.

3.5. Structure of the portfolio by maturity date and rating (2)

(a) Time to maturity less than one year

(EUR million)

AAA

AA1

AA2

AA3

A1

15,0

(b) Time to maturity between one and three years

Rating

110,4

20,0

69,4

—

34,5

234,3

31 December 2003

302,5

—

60,6

33,0

15,0

411,1

AAA

AA1

AA2

AA3

A1

A2

Rating

31 December 2003

31 December 2002

213,8

34,2

55,7

34,8

20,0

—

Subtotal

358,5

250,0

39,2

82,0

38,8

—

53,7

463,7

(c) Time to maturity between three and five years

Rating

31 December 2003

31 December 2002

AAA

AA1

AA2

AA3

170,2

58,3

60,0

18,4

306,9

Subtotal

163,3

32,9

45,1

38,4

279,7

(d) Time to maturity between 5 and 7 years

Rating

31 December 2003

31 December 2002

AAA

AA1

AA2

AA3

204,8

0,0

53,7

10,0

268,5

Subtotal

99,0

15,5

35,1

15,1

164,7

(1) See paragraph 3 of the Annex to Council Decision 2003/77/EC of 1 February 2003 (OJ L 29, 1.2.2003, p. 26).
(2) Valued at average acquisition price or market value (EUR million), whichever is lower — except for financial fixed

assets (time to maturity more than seven years) totalling EUR 141,5 million.

C 122/28

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Official Journal of the European Union

30.4.2004

(e) Time to maturity more than seven years

Rating

31 December 2003

31 December 2002

AAA

Sub total

317,7

317,7

232,3

232,3

(f) Total per category

AAA

AA1

AA2

AA3

A1

A2

31 December 2003

31 December 2002

1 016,9

112,5

238,8

63,2

54,5

—

Total

1 485,9

1 047,1

87,6

222,8

125,3

15,0

53,7

1 551,5

4. Shares and other variable-income securities

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

Net change in value
adjustments

31 December 2003

31 December 2002

(EUR)

Gross value

Value adjustments

2 797 595

40 728 758

– 24 980 333

40 950 784

– 22 182 738

Net value

15 748 425

18 768 046

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

The net change of EUR 2 797 595 in value adjustments between 1 January and 31 December 2003 breaks
down as follows:

— Exchange difference

— Allocation to value adjustments

– 144 953

2 942 548

2 797 595

5. Intangible fixed assets

Developments with regard to intangible fixed assets were as follows:

Balance at 31 December
2002

Value adjustments

Balance at 31 December
2003

(EUR)

Intangible fixed assets

2 850

– 950

1 900

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

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Official Journal of the European Union

C 122/29

6. Tangible fixed assets

Developments with regard to tangible fixed assets were as follows:

Balance at 31 December
2002

Value adjustments

Balance at 31 December
2003

(EUR)

Tangible fixed assets

14 094

– 4 698

9 396

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 taxes and VAT to be reclaimed

Loans to officials

Miscellaneous

31 December 2003

31 December 2002

(EUR)

128

115 637

3 239 963

83 051

—

117 017

3 251 715

86 415

Value adjustments

– 154 848

– 156 227

Subtotal

3 438 779

3 455 147

Total

3 283 931

3 298 920

8. Prepayments and accrued income

The repayments and accrued income break down as follows:

31 December 2003

31 December 2002

(EUR)

Interest on loans and swaps

24 470 852

Interest on deposits and securities portfolio securities

31 987 046

Miscellaneous

—

38 425 745

39 949 750

5 475

Cumulative value adjustments

—

– 5 336 277

Subtotal

56 457 898

78 380 970

Total

56 457 898

73 044 693

The value adjustment of EUR 5 336 277 at 31 December 2002 was calculated with regard to the accrued
interest for a defaulting debtor. The claim concerned was relinquished in the course of January 2003.

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Official Journal of the European Union

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9. Amounts owed to credit institutions

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

31 December 2003

31 December 2002

(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

1 124 378

1 098 766

6 541 098

—

4 622 846

7 753 878

8 493 768

270 473

Total

8 764 242

21 140 965

10. Debts evidenced by certificates

This item comprises loan securities issued by the ECSC.

At 31 December 2003, no debt evidenced by a certificate had a remaining time to maturity of less than
one year (EUR 228 673 526 at 31 December 2002).

11. Other liabilities

The other liabilities break down as follows:

31 December 2003

31 December 2002

(EUR)

Current account, ECSC operating budget
(see Note 7)

Early loan repayment

Other

—

2 529 713

633 945

11 356

720 649

697 540

Total

3 163 658

1 429 545

12. Accruals and deferred income

The accruals and deferred income break down as follows:

31 December 2003

31 December 2002

(EUR)

Interest on borrowings and credit lines

31 284 706

45 574 490

Commissions on loans

Miscellaneous

Deferred positive exchange differences

2 386

12 854

2 967 424

Total

34 267 370

2 982

5 536

4 183 050

49 766 058

The deferred positive exchange differences include amounts relating to currency and interest-rate swap
operations (see Note 24).

30.4.2004

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Official Journal of the European Union

C 122/31

13. Outstanding commitments under the ECSC operating budget

During the period from 1 January to 31 December 2003, the changes in the item for the ECSC operating
budget were as follows:

Amounts at 31
December 2002

Payments

Cancellations

(EUR)

Amounts at 31
December 2003

Commitments

Redeployment

Research

Interest subsidies Article 56

Social measures: coal (Rechar)

121 238 825

158 711 869

16 044 579

46 562 452

35 127 481

56 145 090

197 428

6 499 153

10 351 074

3 459 355

4 640 707

3 671 873

75 760 270

99 107 424

11 206 444

36 391 426

Total

342 557 725

97 969 152

22 123 009

222 465 564

14. Provisions for liabilities and charges

14.1. Guarantee fund

The Guarantee Fund is intended to cover lending and borrowing operations. After a withdrawal of
EUR 254 million, the Guarantee Fund stood at EUR 243 million at 31 December 2003.

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 repayments over the period from 1 January to 31 December 2003 of loans not guaranteed
by a Member State, it was possible to reduce the Guarantee Fund.

The changes in the Guarantee Fund were as follows:

(EUR)

31 December 2002

497 000 000

Withdrawal

254 000 000

31 December 2003

243 000 000

14.2. Other provisions

The changes in other provisions were as follows:

31 December
2002

Change over the period from 1 January to 31
December 2003

Allocation

Withdrawal

Balance-sheet
movements
(utilisation)

(EUR)

31 December
2003

300 000

—

—

—

300 000

53 728 649

199 473

– 42 255 636

– 11 672 486

—

costs
Provision
relating to banking activities (1)

special

for

Provision for
Decision 94/215/ECSC (2)

appeals

against

Provision for
Decision 98/247/ECSC (3)

appeals

against

Other

3 712 606

81 784

—

55 649

—

—

—

—

3 794 390

55 649

Total

57 741 255

336 906

– 42 255 636

– 11 672 486

4 150 039

(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 for its operations the ECSC has less recourse to national agents who bear all expenditure relating to loan operations.
(2) This provision was created from the fines and accrued interest paid since these payments pursuant to Decision 94/215/ECSC of 16
February 1994 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 11 March 1999. The Court of Justice handed
down its judgment on 2 October 2003.

(3) This provision was created from the fines and accrued interest paid 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.

C 122/32

EN

Official Journal of the European Union

30.4.2004

15. Budget for financing coal and steel research

This item breaks down as follows:

31 December 2003

31 December 2002

(EUR)

Commitments, 2003 coal research budget

16 132 752

Commitments, 2003 steel research budget

43 676 856

Future commitments, coal research budget

187 248

Future commitments, steel research budget

3 144

—

—

—

—

Provision for research in 2003

—

60 000 000

Provision for research in 2004

60 000 000

60 000 000

Provision for research in 2005

56 500 000

—

Provision for smoothing

116 500 000

120 000 000

Total

293 000 000

240 000 000

In view of the expiry of the ECSC Treaty on 23 July 2002 and the winding-up of the ECSC, it was decided
that all ECSC assets at the time of the expiry of the Treaty would be managed by the European Commis-
sion with effect from 24 July 2002 (1). 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 income gener-
ated 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 a 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. In order to reduce fluctuations in research funding resulting from move-
ments on the financial markets, a smoothing formula will be applied in accordance with the procedures
approved by the Member States. This smoothing formula has been applied for the first time to the results
for the 2003 financial year and will serve to determine the allocation for research in 2005.

The net surplus on the management of assets in 2003 amounts to EUR 53 million (see Note C.17.2), and
the allocation for research in 2004 has been set at EUR 60 million. Applying the smoothing formula, the
allocation for research in 2005 will amount to EUR 56 500 000. This amount will be broken down
between coal research (27,2 % = EUR 15 368 000) and steel research (72,8 % = EUR 41 132 000) in
accordance with Article 4 of the abovementioned Decision.

(1) Decision 2003/76/EC.

30.4.2004

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Official Journal of the European Union

C 122/33

16. Reserves and surpluses

Situation at 31
December
2002 before
allocation

Allocation at
23 July
2002 (1)

Allocation at
31 December
2002 (2)

Situation at 31
December
2002 after allo-
cation

Movements at
31 December
2003

Situation at 31
December
2003 before
allocation

Allocation at
31 December
2003 (3)

Special reserve

103 800 000

Former
Fund

Pension

34 000 000

—

—

—

—

103 800 000

– 15 700 000

88 100 000

34 000 000

– 4 000 000

30 000 000

—

—

(EUR)

Situation at 31
December
2003 after allo-
cation

88 100 000

30 000 000

of

the
and Steel

Assets
Coal
Research Fund

120 200 000

158 300 000

71 370 762

349 870 762

19 700 000

369 570 762

337 878 472 707 449 234

Profit deferred

161 918 722 – 158 300 000

– 3 618 722

—

for

the
Surplus
period from 24
July
31
to
December 2002

for

Surplus
the
period from 1
January
to 31
December 2003

67 752 040

—

– 67 752 040

—

—

Total

487 670 762

—

—

—

—

—

337 878 472

337 878 472 – 337 878 472

—

487 670 762

337 878 472

825 549 234

—

825 549 234

—

—

(1) Commission Decision of 7 January 2003 (Written procedure E/2698/2002).
(2) Commission Decision of 30 September 2003 (Written procedure E/1661/2003).
(3) Proposal to the Commission.

The Special Reserve is used to grant loans from the own funds of the ECSC in liquidation to finance subsi-
dised housing. At 31 December 2002, the amount outstanding corresponding to the loans granted was
EUR 88,1 million (EUR 103,8 million at 31 December 2002). Consequently, it was possible to release
EUR 15,7 million, which was transferred to the free reserves.

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 Commu-
nities. At 31 December 2003, the amount outstanding corresponding to the loans granted was EUR 30
million (EUR 34 million at 31 December 2002). Consequently, it was possible to release EUR 4 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 C.15), 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 finan-
cial operations, the net return on investments, the funding of coal and steel research and administrative
costs.

1 January to 31 December
2003

24 July to 31 December 2002

(EUR)

Winding up financial operations (see Note 17.1)

Net investment income (see Note 17.2)

Funding of coal and steel research (Note 17.3)

338 114 826

53 043 920

– 53 000 000

42 051 133

27 156 523

—

Administrative overheads (see Note 17.4)

– 280 274

– 1 455 616

Total

337 878 472

67 752 040

C 122/34

EN

Official Journal of the European Union

30.4.2004

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

Result

1 January to 31 December
2003

24 July to 31 December 2002

(EUR)

(a)

Lending/borrowing activities

Net interest

Miscellaneous charges/income

Net change in value adjustments

Withdrawal from Guarantee Fund

6 970 990

– 41 633

2 102 720

254 000 000

(b) Winding up commitments under operating budget

Subtotal

263 032 077

3 627 099

– 66 523

– 2 355 829

32 000 000

33 204 747

22 123 009

11 269 047

Subtotal

– 3 191 456

Total

338 114 826

42 051 133

1 January to 31 December
2003

24 July to 31 December 2002

(EUR)

(cancellations)

(c) Winding-up — other activities

Levy, fines, interest subsidies

Research

Other

(d)

Exchange-rate differences and changes
value

Subtotal

in market

Exchange-rate differences

Securities market

Other

55 457 334

594 431

99 431

56 151 196

4 276 296

– 7 462 105

– 5 647

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

Charges

Debit interest on nostro account

Losses on sales of portfolio

Bank and portfolio transaction charges

Total charges

Difference = net income

Rounded to nearest million

From 2003 onwards, net income is made available to the
general budget of
financing
research projects (see Notes A and C.15)

the European Union for

78 571

1 010 128

53 491 215

4 118 985

Total income

58 698 899

242

5 450 344

204 393

5 654 979

53 043 920

53 000 000

437 104

119 190

– 764 061

– 207 767

246 938

1 962 307

5 649

2 214 894

65 573

581 393

24 857 191

2 604 116

28 108 273

2 903

862 608

86 239

951 750

27 156 523

27 000 000

30.4.2004

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Official Journal of the European Union

C 122/35

17.3. Application of Decision 2003/76/EC

Allocation for 2005

Provision for smoothing

Income

Charges

(EUR)

3 500 000

3 500 000

Total

Net

56 500 000

56 500 000

53 000 000

Pursuant to Article 4 of Decision 2003/76/EC, the net income from investment of EUR 53 000 000 (see
Note C.17.2) constitutes revenue in the general budget of the European Union. Article 5 of that Decision
lays down that in order to reduce as far as possible fluctuations in research funding due to movements on
the financial markets, the smoothing formulae detailed in the Annex to the Decision are to be applied.

In 2003, on the basis of these calculations, EUR 3 500 000 needed to be withdrawn from the provision
for smoothing in order to raise the allocation for research in 2005 to EUR 56 500 000.

17.4. Administrative overheads

Pursuant to Decision 2002/234/ECSC (Annex 1, point 6) of the Representatives of the Governments of the
Members States meeting within the Council (see Note A), the administrative expenditure of the ECSC in
liquidation is to be met by the Commission from a lump-sum payment of EUR 3,3 million per year pro
rata temporis transferred to the general budget of the European Union during the period of the Commis-
sion's mandate (see Note A).

The lump-sum payment for the period from 1 January to 31 January 2003 amounts pro rata temporis to
EUR 280 274 (EUR 1 455 616 for the period from 24 July to 31 December 2002). With the entry into
force of the Treaty of Nice on 1 February 2003, all the ECSC's assets were transferred to the European
Community, and the obligation to pay a lump sum to the budget of the European Union lapsed on that
date.

18. Interest and similar charges

1 January to 31
December 2003

24 July to 31 December
2002

1 January to 23 July
2002

(EUR)

Interest on loans and swaps

57 938 644

32 983 575

52 182 248

Bank interest

Issuing costs and redemption premiums

242

—

2 903

—

30 200

868 747

Total

57 938 886

32 986 478

53 081 195

19. Other operating charges

1 January to 31
December 2003

24 July to 31 December
2002

1 January to 23 July
2002

(EUR)

Borrowing costs

SWIFT/Reuters charges

Loss on loans and advances

Other

11 523

8 153

3 435 455

15 049

27 904

76 766

82 870

884

Total

3 470 180

188 424

78 123

132 483

441 587

63 715

715 908

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

C 122/36

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Official Journal of the European Union

30.4.2004

20. Interest received and other income

1 January to 31
December 2003

24 July to 31 December
2002

1 January to 23 July
2002

(EUR)

Interest on loans and swaps

51 752 113

30 364 393

50 010 165

Payment and redemption premiums

517

—

867 660

Bank interest

1 088 700

646 966

2 796 887

Interest on bonds and other
securities

fixed-income

66 350 532

31 103 471

37 750 603

Total

119 191 862

62 114 830

91 425 315

21. Withdrawal of value adjustments for loans and advances

Loans

Levies

Fines

1 January to 31
December 2003

24 July to 31 December
2002

1 January to 23 July
2002

2 102 720

1 690 839

21 545 422

(EUR)

377 792

117 449

466 131

15 531 886

—

—

—

—

Interest rate rebates

488 929

98 774

Research (ECSC operating budget)

225 887

—

Total

18 727 214

1 907 062

22 011 553

22. Withdrawal from other provisions for liabilities and charges

1 January to 31
December 2003

24 July to 31 December
2002

1 January to 23 July
2002

(EUR)

Withdrawal
risk

from provision for interest-rate

—

Provision
94/215/ECSC (see Note C.14.2)

appeals

for

against Decision

42 255 636

Total

42 255 636

—

—

—

51 371 610

—

51 371 610

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Official Journal of the European Union

C 122/37

23. Other operating/liquidation income

1 January to 31
December 2003

24 July to 31 December
2002

1 January to 23 July
2002

(EUR)

Other operating/liquidation income

Other income from lending and treasury activ-
ities

Lapsed coupons and bonds

Income from fines

68

14 520

962 362

41 961

38 442

656 956

Income from levies, subsidies, research and
redeployment

492 143

656 091

Cancellation of legal commitments ECSC oper-
ating budget

22 123 009

11 269 048

7 678 149

1 404

—

—

—

Miscellaneous

84 911

186

343 332

Subtotal I

23 677 013

12 662 684

8 022 885

Income relating to the ECSC operating
budget (before 24 July 2002)

Fines

Cancellation of legal commitments

Repayment of subsidies

Other matters

4 600 000

15 421 811

370 492

272 872

Subtotal II

—

—

20 665 175

Total

23 677 013

12 662 684

28 688 060

Until 23 July 2002 the income from fines, subsidies, the cancellation of legal commitments in the ECSC
operating budgets, etc., was booked in the ‘Income relating to the ECSC operating budget’ account.

Following the expiry of the ECSC Treaty and the end of ECSC operating budgets, this income is booked
under ‘Other operating/liquidation income’.

24. Off-balance-sheet commitments

The capital commitments relating to interest-rate and currency swaps arise from the following operations:

Interest-rate swaps

Commitments received

Commitments entered into

Maturity

USD 100 million, 6,375 %

USD 100 million, 12,0770 %

26 March 2008

GBP 60 million, 11,875 %

GBP 60 million, Libor three months
-31 b.p.

13 March 2009

C 122/38

EN

Official Journal of the European Union

30.4.2004

Interest-rate and currency swaps

Commitments received

Commitments entered into

Maturity

GBP 60 million, Libor three months -
31 b.p.

EUR 88 095 042 million, Libor
three months -31 b.p.

13 March 2009

24.1. Commitments received

Commitments arising from swaps

31 December 2003

31 December 2002

(EUR)

— Notional capital commitments relating to interest-rate

swaps

164 307 097

187 592 896

— Capital commitments

relating to interest-rate and

currency swaps

85 130 533

92 236 741

Total

249 437 630

279 829 637

24.2. Commitments entered into

(a) Commitments arising from swaps

31 December 2003

31 December 2002

(EUR)

— Notional capital commitments relating to interest-

rate swaps

164 307 097

187 592 896

— Capital commitments relating to interest-rate and

currency swaps

88 085 042

88 085 042

(b)

Loans granted to Community officials but not yet
disbursed

(c) Administrative overheads (1)

176 992

—

649 324

280 274

Total

252 569 131

276 607 536

(1) Pursuant to Decision 2002/234/ECSC (Annex 1, point 6) of the Representatives of the Governments of the Members States meeting
within the Council (see Note A), the administrative expenditure of the ECSC in liquidation is to be met by the Commission from a
lump-sum payment of EUR 3,3 million per year pro rata temporis transferred to the general budget of the European Union during
the period of the Commission's mandate (see Note A).
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.
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 Com-
munity, and the obligation to pay a lump sum to the budget of the European Union lapses.

30.4.2004

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Official Journal of the European Union

C 122/39

25. Financial situation for the period ending 31 December 2003

Period from 1 January
to 31 December 2003

Period from 24 July to
31 December 2002

Period from 1 January
to 23 July 2002

(EUR million)

Origin of funds

Balance of profit-and-loss account

Items not involving movements of funds

— Amortisation of issuing costs and redemp-

tion 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

— Increase (decrease) in accruals and deferred
costs/redemption
issuing

and

income
premiums

— Increase (decrease) in other liabilities

— Increase in other assets

— Allocation to (withdrawal from) the provi-

sions for liabilities and charges

— Allocation to (withdrawal from) the provi-

sion for major exposures

— Exchange-rate adjustments in respect of

borrowings and loans

— Allocation to (withdrawal from) the Guar-

antee Fund/Special Reserve

Total funds

Other resources

— Loan repayments

— Decreases in bank balances and securities

portfolio

Total resources

Use of funds

— Loan disbursements/increase in loans and

advances

— Redemption of borrowings

Total uses

337,9

—

2,6

– 9,1

– 120,1

53,0

– 15,5

21,9

1,7

—

– 53,6

—

– 13,6

– 254,0

– 48,8

266,2

23,9

241,3

0,3

241,0

241,3

67,8

—

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

158,7

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