1

REPORT ON THE BUDGETARY AND FINANCIAL MANAGEMENT

2018

Ref. Ares(2019)2105881 - 26/03/2019

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Table of Contents INTRODUCTION ..................................................................................................................................... 3

1. OVERVIEW OF THE BUDGET ........................................................................................................ 4

1.1 Initial budget, amending budgets and final budget ............................................................ 4

1.2 Budget Implementation....................................................................................................... 7

1.3 Main highlights of 2018 budget execution ....................................................................... 8

2. MULTI-ANNUAL OVERVIEW ........................................................................................................ 12

2.1 Overall FP7 budget implementation ............................................................................... 12

2.2 Overall H2020 budget implementation .......................................................................... 13

2.4 Operational budget implementation .............................................................................. 14

3. REVENUE ...................................................................................................................................... 15

4. BUDGET RESULT 2018 ................................................................................................................ 18

5. FINANCIAL MANAGEMENT .......................................................................................................... 19

5.1 Ex-ante controls ................................................................................................................. 19

5.2 Ex-post controls .................................................................................................................. 19

5.3 Administrative payments .................................................................................................. 20

5.4 Amendments ....................................................................................................................... 21

5.5 Procurement ....................................................................................................................... 21

6. GLOSSARY .................................................................................................................................... 22

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INTRODUCTION

The present report is drawn in accordance with Article 17.3 of the Annex (Statutes of the

Fuel Cells and Hydrogen 2 Joint Undertaking) of the Council Regulation (EU) No 559/2014

establishing the Fuel Cells and Hydrogen 2 Joint Undertaking and with Article 39 of the

Financial Rules of the Fuel Cells and Hydrogen 2 Joint Undertaking and based on the

Guidelines for EU bodies on the Report on Budgetary and Financial management issued by

the European Commission on 20/12/2016.

It presents information on the budgetary and financial management by the FCH 2 JU for

the financial year 2018.

The report includes information on the list of amending budgets and transfers, assigned

revenues, reactivations of appropriations and multi-annual programme implementation for

FP7 and H2020.

The FCH 2 JU budget consists of the revenue and expenditure side. On the expenditure

side, the budget is divided in 3 titles:

Title 1 covers staff expenditure such as salaries, training, costs associated with

recruitment procedure, missions, medical expenses and representation costs;

Title 2 covers the cost associated with functioning of the FCH 2 JU such as renting

of premises, IT needs, expenses related to external communication, expert fees

and costs of ex-post audits;

Title 3 covers operational activities of FCH 2 JU.

FCH 2 JU uses the following 4 fund sources for its budgetary management through the

ABAC system. A short explanation of each fund source is provided below:

C1: represents the EU budget subsidy received from the European Commission and the

Members’ contribution for the current financial year

C2: this represents the cancelled appropriations from the previous year(s) carried over to

the next financial year. In FCH 2 JU, these can be used up to the following 3 financial

years.

C4: this represents the appropriations which can be used again as a result of debit notes

issued by the JU (otherwise known as internal assigned revenue)

C8: this represents the appropriations which are automatically carried forward to meet

obligations arising from previous years. Since 2015, only commitment appropriations are

automatically carried forward.

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1. OVERVIEW OF THE BUDGET

1.1 Initial budget, amending budgets and final budget

The Governing Board (GB) approved the 2018 budget on 14 December 2017 for the global

amount of EUR 82.4 M in commitment appropriations (CA) and EUR 126.4 M for payment

appropriations (PA).

At the end of the year -and after 2 amendments, 4 budget transfers and the internal

assigned revenues cashed in 2018- the final appropriations reached EUR 85.5 M in terms of

CA and EUR 126.5 M in terms of PA. Both CA and PA showed a significant decrease

compared to 2017 (by 33% and 36% respectively). Regarding payment appropriations, it is

reminded that the pre-financings for 2 calls (call 2016 and partly 2017) were paid in 2017

(instead of 1 in 2018) which explains the drop in 2018 payment appropriations.

The 1st amendment was adopted by the Decision of the Governing Board of 4 April 2018

and introduced administrative and operational commitments and payments carried over

from 2017. The 2nd amendment was approved by the Governing Board on 20 December

2018 following the decrease in operational payment appropriations as accepted in the

context of the Global Transfer procedure of the European Commission.

In addition, 4 budget transfers took place between different budget lines without any

impact on either the voted or the amended budgets.

The table in the next page shows the budget evolution from the initial to the final

including all changes (amendments, transfers and assigned revenues).

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Table 1: Initial budget, amending budgets and final budget 2018 (in EUR)

VOTED BUDGET (December

2017) AMENDMENTS/TRANSFERS ASSIGNED REVENUE FINAL BUDGET

Title Heading

CA PA CA PA CA PA CA PA Chapter

1 1 Staff in active employment

3,352,600

3,352,600 - 26,000

30,188

23

23

3,326,623

3,382,811

1 2 Expenditure related to recruitment

46,400

46,400

2,000

46,400

48,400

1 3 Missions and travel

137,700

137,700

31,246

650

650

138,350

169,596

1 4 Sociomedical infrastructure

40,000

40,000

5,000

19,036

45,000

59,036

1 5 Entertainment and representation expenses

5,600

5,600

2,649

5,600

8,249

Total Title 1 Staff expenditure

3,582,300

3,582,300 -21,000

85,120

673

673

3,561,973

3,668,093

2 0 Investments in immovable property, rental of buildings and associated cost

370,400

370,400 - 16,600

3,834

1,117

1,117

354,917

375,352

2 1 Information technology

209,200

209,200

145,600

248,395

6,123

6,123

360,923

463,718

2 2 Movable property and associated costs

5,000

5,000

8,000

8,000

13,000

13,000

2 3 Current administrative expenditure

7,000

7,000

529

7,000

7,529

2 4 Correspondence, postage and telecommunications

12,000

12,000

8,738

12,000

20,738

2 5 Expenditure on formal and other meetings

90,000

90,000

14,436

4,662

4,662

94,662

109,098

2 6 Communication costs

440,000

440,000

87,136

421,182

527,136

861,182

2 7 Service contracts

282,000

282,000

90,000

233,917

372,000

515,917

2 8 Expert contracts and meetings

464,000

464,000 - 93,136 - 24,034

370,864

439,966

Total Title 2 Infrastructure

1,879,600

1,879,600

221,000

914,997

11,902

11,902

2,112,502

2,806,499

Total Titles 1+2 Administrative expenditure

5,461,900

5,461,900

200,000

1,000,116

12,575

12,575

5,674,475

6,474,592

3 0 0 1 Implementing research agenda of FCH JU: FP7

25,686,390

367,891 - 446,543

1,668,887

1,668,887

2,036,778

26,908,734

3 0 0 2 Implementing research agenda of FCH JU: H2020

76,946,740

95,296,147

272,609 - 2,726,720

573,554

573,554

77,792,903

93,142,981

Total Title 3 Operational expenditure

76,946,740

120,982,537

640,499 - 3,173,263

2,242,441

2,242,441

79,829,681

120,051,715

Total Titles 1+2+3

82,408,640

126,444,437

840,499 - 2,173,147

2,255,017

2,255,017

85,504,157

126,526,307

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The following two tables list the amendments and the transfers of the year.

Table 2: List of amending budgets adopted by the Governing Board

Amendment Number

Date of adoption

Main subject Description

Impact on Commitment appropriations (in EUR)

Impact on Payment appropriations (in EUR)

1 04/04/2018

Reactivation of payment appropriations for open administrative commitments from 2017, reactivation of commitment and payment appropriations for operational expenses from 2017

840,500

21,126,854

2 20/12/2018

Reduction of FP7 and H2020 payment appropriations as the outcome of Global Transfer procedure of the European Commission

0

- 23,300,000

Table 3: List of transfers adopted by the Executive Director (no impact on overall

commitment and payment appropriations)

Transfer Number

Date of adoption Total amount of transfer (in

EUR) Main subject Description

1 07/05/2018 20,000 Transfer from service contracts to IT costs and movable property and associated costs office equipment

2 05/09/2018 111,000

Transfer from staff in active employment, service contracts and experts contracts and meetings to sociomedical infrastructure, information technology, movable property and associated costs and communication costs

3 18/09/2018 30,000 Transfer from staff in active employment and expert contracts and meetings to communication costs

4 18/11/2018 65,000 Transfer from communication costs and expert contracts and meetings to information technology

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1.2 Budget Implementation

In 2018 FCH achieved the second highest budget execution since 2015 in terms of

commitment appropriations (93%). The lower rate, as compared to 2017, was due to the

outcome of the call where 1 topic (Hydrogen admixtures) was not covered and to the

delay in the procurement plan.

In terms of payment appropriations, the budget utilisation reached 83%, 6 percentage

points lower than in 2017. This came because of the non-allocation of 2 major pre-

financing payments, totalling EUR 9.2 M and related to 2 grant agreements (Wind2Hyrail

and H2Haul) for which the preparation was delayed at the consortium request following

complex issues still under discussion at year end.

The following chart presents the total budget execution for commitments and payments

since 2015.

Chart 1: Budget execution 2015-2018

The following charts depict the budget execution in terms of commitment and payment

appropriations for operational and administrative costs.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Commitment Payment

87% 83%

78% 84%

96% 89%

93%

83%

Total budget execution

2015 2016 2017 2018

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Commitment Payment

84%

75%

87%

74%

92%

78%

91%

77%

Administrative budget

Chart 2: Execution of administrative and operational costs (commitments and payments)

2015-2018

1.3 Main highlights of 2018 budget execution

Administrative expenditure

Administrative expenses reached an execution rate of 90.7% in terms of commitments and

77% in terms of payments. Non-used appropriations observed mainly in staff costs, due to

the fact that two positions remained vacant for a period of time. One position was filled in

as of May (as opposed to the assumption that it would be filled in as of January) and the

other became vacant in March and filled in in June. Departures of interim staff also added

to the unused appropriations. In other cost categories, 85% of the budget for

communication was used as the scope for certain PR activities was reduced due to the

inability of the contractor to offer services as FCH requested.

Unused appropriations from 2018 appropriations amount to EUR 530,300 and together with

the unused appropriations coming from previous years1 that amount to EUR 132,080 will be

reactivated in 2020 budget.

Operational expenditure

H2020 commitment appropriations for operational expenses intended to cover for the call

2018, studies as included in the AWP 2018, the work of JRC and the European Hydrogen

Safety Panel. Recoveries of pre-financing cashed in 2018 following finalisation of projects

(were not the entire pre-financing was cleared) were also added in the budget. The H2020

commitment execution rate reached 95.8%. The total unused appropriations come from

1 Coming from decommitments made in 2018

Commitment Payment

88% 84%

77%

84%

96% 90%

93%

83%

Operational budget

2015

2016

2017

2018

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the non-coverage of 1 topic from call 2018 (Hydrogen admixtures), the delays in

procurement plan where only 2 studies (from the 5 as included in CA 2018) were

contracted as well as revenues from recovery of pre-financing from a terminated project;

these revenues were not committed. The biggest part of these unused appropriations were

already reactivated in 2019 budget whereas the balance (EUR 263,606) will be re-

activated either in 2019 or in 2020 according to the needs.

The execution rate for H2020 payments (84.4%) was lower than 2017 as 2 demo projects

from call 2018 did not conclude the Grant Agreement Preparation phase before

31.12.2018, consequently a pre-financing of EUR 9.2 M stayed in the FCH 2 accounts. In

addition, the pre-financing of 1 project from call 2018 is planned to be paid in 2019. The

unused payment appropriations EUR 14,503,671 will be re-entered in the 2019 and 2020

budget according to the payment needs.

Regarding FP7 operational costs, the execution rate on the payment appropriations

reached 79.6%, which constitutes an improvement from 2017 performance. The unused

payment appropriations of EUR 5,478,239 are due to delays in submission of periodic

reports and underspendings and will be re-entered in the 2019 and 2020 budget according

to the payment needs.

The following table presents in more details the implementation of the final budget.

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Table 4: Budget implementation per budget line

Title Chapter Article Item

Heading

Commitment Payment

Commitment appropriations (in

EUR)

Committed (in EUR)

% execution Payment

appropriations (in EUR)

Paid (in EUR) %

execution

1 1 0 0 Staff in active employment

3,326,623 3,031,153 91.1% 3,382,811 2,936,862 86.8%

1 2 0 0 Expenditure related to recruitment

46,400 18,102 39.0% 48,400 19,839 41.0%

1 3 0 0 Missions and travel 138,350 137,700 99.5% 169,596 155,380 91.6%

1 4 0 0 Sociomedical infrastructure

45,000 38,533 85.6% 59,036 46,837 79.3%

1 5 0 0 Entertainment and representation expenses

5,600 3,568 63.7% 8,249 4,989 60.5%

Total Title 1

Staff expenditure 3,561,973 3,229,056 90.7% 3,668,093 3,163,907 86.3%

2 0 0 0

Investments in immovable property, rental of buildings and associated cost

354,917 325,060 91.6% 375,352 300,704 80.1%

2 1 0 0 Information technology 360,923 328,482 91.0% 463,718 206,340 44.5%

2 2 0 0 Movable property and associated costs

13,000 12,593 96.9% 13,000 12,593 96.9%

2 3 0 0 Current administrative expenditure

7,000 5,328 76.1% 7,529 4,635 61.6%

2 4 0 0 Correspondence, postage and telecommunications

12,000 10,650 88.8% 20,738 9,271 44.7%

2 5 0 0 Expenditure on formal and other meetings

94,662 76,895 81.2% 109,098 77,656 71.2%

2 6 0 0 Communication costs 527,136 445,620 84.5% 861,182 528,358 61.4%

2 7 0 0 Service contracts 372,000 371,993 100.0% 515,917 336,885 65.3%

2 8 0 0 Expert contracts and meetings

370,864 338,499 91.3% 439,966 357,517 81.3%

Total Title 2

Infrastructure 2,112,502 1,915,120 90.7% 2,806,499 1,833,960 65.3%

Total Title 1+2

Administrative expenditure

5,674,475 5,144,175 90.7% 6,474,592 4,997,867 77.2%

3 0 0 1 Implementing the research agenda of FCH JU: FP7

2,036,778 86,953 4.3% 26,908,734 21,430,496 79.6%

3 0 0 2 Implementing the research agenda of FCH JU: H2020

77,792,903 74,545,919 95.8% 93,142,981 78,639,310 84.4%

Total Title 3

Operational expenditure 79,829,681 74,632,872 93.5% 120,051,715 100,069,805 83.4%

Total budget implementation 85,504,157 79,777,047 93.3% 126,526,307 105,067,672 83.0%

The following table shows that the budget implementation complied with FCH 2 JU

priority rules for the use of fund sources (C2→C1→C4). C2 fund source was fully

committed (with the exception of FP7 operational where however there was a need only

for 1 re-commitment). From Title 2 there were only EUR 7,032 left from the budget line

for service contracts, in which no C1 commitments were done.

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Table 5: Budget implementation per fund source

Commitment appropriations (in EUR)

Committed (in EUR)

% committed Payment appropriations (in EUR)

Paid (in EUR) % paid

C1

Title 1 2,783,247.08 2,451,002.62 88.06% 2,783,247.08 2,279,734.35 81.91%

Title 2 1,900,600.00 1,711,521.96 90.05% 1,900,600.00 946,994.82 49.83%

Subtotal 4,683,847.08 4,162,524.58 88.87% 4,683,847.08 3,226,729.17 68.89%

Title 3 (FP7) - - 0% 15,586,389.63 11,777,038.16 75.56%

Title 3 (H2020) 75,099,696.31 72,426,266.23 96.44% 82,096,147.07 68,166,029.86 83.03%

Total C1 79,783,543.39 76,588,790.81 96.00% 102,366,383.78 83,169,797.19 81.25%

C2

Title 1 778,053.00 778,053.00 100.00% 884,172.78 884,172.78 100.00%

Title 2 200,000.00 200,000.00 100.00% 893,996.69 886,964.89 99.21%

Subtotal 978,053.00 978,053.00 100.00% 1,778,169.47 1,771,137.67 99.60%

Title 3 (FP7) 367,890.78 86,952.83 23.64% 9,653,457.34 9,653,457.34 100.00%

Title 3 (H2020) 2,119,652.78 2,119,652.78 100.00% 10,473,279.65 10,473,279.65 100.00%

Total C2 3,465,596.56 3,184,658.61 91.89% 21,904,906.46 21,897,874.66 99.97%

C4

Title 1 673.00 - 0% 673.00 0.00%

Title 2 11,902.43 3,597.84 30.23% 11,902.43 0 0.00%

Subtotal 12,575.43 3,597.84 28.61% 12,575.43 0.00 0.00%

Title 3 (FP7) 1,668,887.20 0.00% 1,668,887.20 0.00%

Title 3 (H2020) 573,554.15 0.00% 573,554.15 0.00%

Total C4 2,255,016.78 3,597.84 0.16% 2,255,016.78 0.00 0.00%

C8

Title 1 106,119.78 74,369.53 70.08% - - 0%

Title 2 693,996.69 593,667.17 85.54% - - 0%

Subtotal 800,116.47 668,036.70 83.49% 0.00 0.00 0%

Title 3 (FP7) 62,796,575.78 62,686,753.38 99.83% 0%

Title 3 (H2020) 183,367,362.45 182,821,519.50 99.70% 0%

Total C8 246,964,054.70 246,176,309.58 99.68% 0.00 0.00 0%

TOTAL 332,468,211.43 325,953,356.84 98.04% 126,526,307.02 105,067,671.85 83.04%

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2. MULTI-ANNUAL OVERVIEW

The following tables provide an overview of the overall Programme implementation until

31 December 2018, with a split between FP7 and H2020, as well as a schedule of payments

due in subsequent years.

2.1 Overall FP7 budget implementation

Regarding FP7 operational costs, the overall execution rate until 31/12/2018 reaches

90.8%. In the summary table below it should be noted that operational commitments refer

to individual commitments. The amounts showed in 2018 and subsequent years represent

the remaining obligations under the open Grant Agreements. From the total 155 grant

agreements signed, 1 project was cancelled, 5 terminated before their end date, for 138

the final payment was done and 11 remain open. Final payments were done for 23

projects in 2018. In addition, 12 operational studies were conducted.

With regards to administrative costs, all committed amounts were paid out by the end of

2018.

Table 6: Implementation of FP7 appropriations (in EUR)

Type Execution until

31/12/2018 Subsequent years Total

Commitments (operational costs) 450,851,384

450,851,384

Payments (operational costs) 409,508,173 18,081,522 427,589,695

Cumulative execution (operational costs)

90.8% 94.8% 94.8%

Commitments (administrative costs)

30,658,610

30,658,610

Payments (administrative costs) 30,658,610

30,658,610

Cumulative execution (administrative costs)

100.0% 100.0% 100.0%

Overall FP7 execution 91.4% 95.2% 95.2%

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2.2 Overall H2020 budget implementation

Regarding H2020 operational costs, the amount committed at the end of 2018 refers to the

90 individual commitments under the H2020 calls, 15 studies contracted, 1 commitment

for the European Hydrogen Safety Panel and 3 commitments for the annual work of JRC.

The payments refer to 89 pre-financings (1 project was signed in 2018 but the pre-

financing will be paid in 2019), interim and final payments for H2020 reports, payments to

studies, JRC and experts in the European Hydrogen Safety Panel.

With regards to administrative costs, the cumulative payments at the end of 2018 were by

EUR 814,345 less than the commitments made at the same period. This difference is due

to open commitments from previous years for which payments will be due in 2019.

Table 7: Implementation of H2020 appropriations (in EUR)

Type Execution

until 31/12/2018

Subsequent years Total

Commitments (operational costs) 455,916,038 190,083,962 646,000,000

Payments (operational costs) 301,187,079 344,812,921 646,000,000

Cumulative execution (operational costs)

66.1% 100.0% 100.0%

Commitments (administrative costs)

6,343,012 31,656,988 38,000,000

Payments (administrative costs) 5,528,667 32,471,333 38,000,000

Cumulative execution (administrative costs)

87.2% 100.0% 100.0%

Overall H2020 execution 66.4% 100.0% 100.0%

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2.4 Operational budget implementation

The following table presents an overview of the commitments and payments executed for operational expenses (calls, studies, contribution to

JRC annual work plan) until 31 December 2018.

It should be noted that it refers to individual commitments done, so it excludes the balances of the global commitments for the call 2018.

Table 8: Overview of calls and studies financial implementation (in EUR)

FP7

PAYMENTS PER YEAR Total paid Outstanding amount

Call Amount

Committed 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2008 27,308,579 17,298,820 553,941 2,077,918 1,419,710 508,154 2,526,053 973,118 0 0 25,357,714 1,950,865

2009 72,616,486 39,340,166 3,308,584 3,461,450 4,738,071 6,542,048 5,474,876 0 6,139,482 69,004,676 3,611,810

2010 80,584,946 47,755,812 563,652 3,825,816 7,639,985 2,964,797 4,147,126 1,688,961 78,523 68,664,673 11,920,273

2011 114,693,516 44,782,934 2,927,385 11,493,273 14,689,648 17,206,770 8,021,999 7,235,431 106,357,440 8,336,076

2012 67,981,819 28,151,279 2,210,121 12,443,874 9,481,543 5,217,509 4,388,382 61,892,709 6,089,110

2013 82,276,365 35,358,776 7619684 14,075,000 6,059,670 9,728,160 72,841,289 9,435,076

Total FP7 call 445,461,712 17,298,820 39,894,107 53,142,314 50,227,746 40,150,706 65,770,255 44,165,997 44,910,439 27,127,621 21,430,496 404,118,501 41,343,211

Studies Amount

Committed 2009 2010 2011 2012 2013 2014 2015 2016 2017

2010-2013 5,389,672 120,888 1,215,150 541,076 3,034,330 478,228 0 0

5,389,672 0

Total FP7 (call + studies) 450,851,384 17,298,820 39,894,107 53,263,202 51,442,896 40,691,782 68,804,585 44,644,225 44,910,439 27,127,621 409,508,173 41,343,211

H2020

PAYMENTS PER YEAR Total paid Outstanding amount

Call Amount

Committed 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2014 81,075,125 29,447,633

24,300,509 6,701,094 60,449,236 20,625,889

2015 109,904,751

46,824,892 8,407,993 26,086,520 81,319,405 28,585,346

2016 93,978,023

49,734,575 7,702,732 57,437,307 36,540,716

2017 114,318,293

61,104,629 5,804,169 66,908,798 47,409,495

2018 48,610,139

29,966,235 29,966,235 18,643,904

Total H2020 calls 447,886,330 0 0 0 0 0 0 29,447,633 46,824,892 143,547,705 76,260,749 296,080,980 151,805,351

Studies Amount

Committed 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total paid

AWP 2014 98,500 98,500 98,500 0

AWP 2015 1,226,615 90,000 526,558 496,558 113,500 1,113,115 113,500

AWP 2017 2,744,314 498,510 1,359,825 498,510 2,245,804

AWP 2018 1,547,910

90,000 0 1,547,910

JRC Amount

Committed 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total paid

2016 517,542

306,250 211,292

517,542 0

2017 798,497

499,872 298,625 499,872 298,625

2018 900,000

450,000 0 900,000

European Hydrogen Safety Panel

Amount Committed

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total paid

2018 196,331

66,611 0 196,331

Total H2020 455,916,038 0 0 0 0 0 0 29,636,133 47,657,699 145,253,936 78,639,310 298,808,518 157,107,520

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3. REVENUE

In 2018 the main sources of revenue are identified as follows:

Union contribution

This refers to the subsidy that the JU receives from the European Commission. This

amounts to 470 M € in total (450 M € for the operational and 20 M € for the administrative

needs) for the first mandate of FCH JU2 and 665 M € in total (646 M € for the operational

and 19 M € for the administrative needs) for FCH 2 JU3.

The 2018 annual contribution of the Union was:

Administrative costs: EUR 2,341,923 (50% of the H2020 part of 2018 administrative costs) Operational costs: EUR 97,682,537 in total, with the following split:

o FP7: EUR 15,586,390 o H2020: EUR 82,096,147

Members other than the Union’s contribution

These Members, namely Hydrogen Europe (HE-formerly known as Industry Grouping) and

Hydrogen Europe Research (HER-formerly known as Research Grouping), contribute in cash

to administrative costs4. Each year, the JU sends out debit notes to these Members to

receive their respective contributions to the administrative costs of the JU.

The 2018 annual contribution of these Members to cover the administrative needs of the

JU were:

HE: EUR 2,014,054 (43% of the H2020 part of 2018 administrative needs)

HER: EUR 327,869 (7% of the H2020 part of 2018 administrative needs) The members other than the Union also contribute in-kind.

Recoveries following ex-post audit results and recoveries of prefinancing

In 2018, the JU closed a number of ex-post audits launched. A consequence of the audits is

to recover the non-justified contribution paid to the beneficiaries following the detection

of errors during the ex-post audit. The JU implements these audit findings either by

offsetting with a payment due or by issuing debit notes, both accounted for revenues

received.

In addition, in 2018 there were recoveries of prefinancings not cleared following projects’

termination/finalisation.

2 As foreseen in Article 5 and Article 21 of the Statutes of the Council Regulation (EC) No 521/2008 of 30 May 2008 setting up the Fuel Cells and Hydrogen Joint Undertaking 3 As foreseen in Article 3 and Article 13 of the Statutes of the Council regulation (EU) No 559/2014 of 6 May 2014 establishing the Fuel Cells and Hydrogen 2 Joint Undertaking 4 As specified in Article 4.2(a) and Articles 13(2) and point (b) of article 13(3) of the Statutes of the Council regulation (EU) No 559/2014 of 6 May 2014 establishing the Fuel Cells and Hydrogen 2 Joint Undertaking

16

Finally, as of 31.12.2018 there were 6 outstanding recovery orders amounting to EUR

424,116.9245.

The following table summarises the sources of revenue whereas table 11 provides a

breakdown of the other recoveries:

Table 9: Revenue breakdown (in EUR)

Heading

Income appropriation

(budgeted) Cashed

Operational expenditure, Union

97,682,537 97,682,537

Administrative expenditure, Union

2,341,923 2,341,923

Administrative expenditure, HE

2,014,054 2,014,054

Administrative expenditure, HER

327,869 327,869

Recoveries

2,265,498

TOTAL 102,366,383 104,631,881

Table 10: Breakdown of recoveries other than Members’ contributions (in EUR)

Heading Amount

Unjustified contribution to projects (ex-post audits)

342,465

Liquidated damages, bank account interests and other interests

275,943

Recovery from supplier (administrative costs)

13,796

Recoveries of pre-financing following project/beneficiaires finalisation

1,633,294

Total 2,265,498

5 Requirement specified in Article 29.2 of the FCH 2 JU financial rules

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The following chart illustrates the contributions to the 2018 revenue Chart 3: Breakdown of revenue by contributor

94%

2% 2%

0%

2%

Operational expenditure, Union Administrative expenditure, Union

Administrative expenditure, IG Administrative expenditure, RG

Recoveries

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4. BUDGET RESULT 2018 The budget result for the financial year corresponds to the total revenues cashed during

the year deducting the total payments made during the year, adding the exchange rate

differences. It does not take into account previous years’ balances.

For 2018, there is a budget deficit of EUR 435,092.

Table 11: 2018 Budget result (in EUR)

2018 2017

Revenue

European Union Contribution 100,024,460 176,912,966

Hydrogen Europe Contribution 2,014,054 2,058,391

Hydrogen Europe Research Contribution

327,869 342,877

Other revenue 2,265,498 694,664

Total revenue (1) 104,631,881 179,963,898

Expenditure

Staff expenditure - Title 1 (3,163,907) (3,015,930)

Administrative expenses - Title 2 (1,833,960) (1,751,254)

Operational expenses - Title 3 (100,069,805) (172,381,558)

Total expenditure (2) (105,067,672) (177,148,742)

Exchange rate differences (3) 699 1,961

Budget result (4)=(1)-(2)+(3) (435,092) 2,817,117

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5. FINANCIAL MANAGEMENT

5.1 Ex-ante controls

FCH 2 JU has developed an ex-ante control system consisting of desk reviews (performed

by FCH 2 JU project and finance officers), mid-term reviews carried out by external

experts and ad-hoc technical reviews (when deemed necessary).

In 2018 the FCH 2 JU Programme Office validated in total 63 periodic reports (72 in 2017

and 76 in 2016). The overall Time-To-Pay (TTP)6 reached 70 days, at the same level as in

2017 (68) and 2016 (71). The gross time to pay (including suspensions due to clarifications

and amendments) improved by 41% compared to 2017 as the suspension time decreased

significantly by nearly 60%. This is largely due to the H2020 reports for which the

suspension time is at 18% of the FP7 time, reflecting the more targeted checks and

therefore faster responses from the consortia.

Only 1 report (same as in 2017 whereas there were 6 in 2016) was late assessment without

any interest generated.

29 FP7 reports (23 final and 6 interim) were validated. The average TTP of these reports

reached 64 days whereas the gross time (that includes suspensions) 164, showing an

improvement by 17% compared to 2017.

34 H2020 reports (33 interim and 1 final) were paid in an average TTP of 76 days, whereas

the gross time reached 95 days, improved by 4% compared to 2017 times.

The FCH 2 JU has developed and continued to apply the procedures developed to define

the controls to be performed by project and finance officers for every cost claim, invoice,

commitment and payment, taking into account risk-based and cost-effectiveness

considerations.

Moreover, in March 2018 the Programme Office organised the 3rd financial workshop on

H2020 financial rules and prevention of the errors, focusing on the specificities and

business models that are pertinent for the FCH 2 JU projects.

5.2 Ex-post controls

In 2018, the Programme Office launched the 11h batch for FP7 including 5 representative

and 3 risk-based audits that will be carried out by 1 external firm. In parallel, under H2020

Programme, audits to 15 beneficiaires were launched. In addition, it continued with the

implementation of ex-post audit results.

6 As defined in Article 111 of the Rules of Application of the Financial Regulation, the net time to pay shall be

understood that includes validation, authorisation and payment of expenditure, shall begin to run from the date on which a payment request is received and shall not take into account suspension periods

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5.3 Administrative payments

In 2018, the Programme Office processed 924 administrative invoices (from

suppliers/contractors) and reimbursement of claims (from experts and from staff mainly

for their missions), 94.8% of which were within the time limit of 30 days (96% in 2017 and

92% in 2016). The average time to pay was 18 days.

The chart below shows the significant improvement in limiting the number of late

payments since 2015.

Chart 4: Evolution of late payments (2015-2018)

The majority of late payments (without any financial impact) refer to the reimbursement

of mission performers. In the beginning of 2018, a new electronic tool for monitoring

mission orders and reimbursements was introduced and there was an adaptation period

during which most of these late payments occurred.

2018 marked the year with the highest number of administrative payments (924)

surpassing by more than 10% the second highest year (2015 with 837).

105 63

27 48

732

717 727

876

0

100

200

300

400

500

600

700

800

900

1000

2015 2016 2017 2018

Late payments Within Time Limit

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5.4 Amendments

FCH financial management also includes the processing of project amendments.

In 2018, the Executive Director signed 7 FP7 amendments and 26 H2020 ones.

5.5 Procurement

The tender and contract management is simplified as far as possible by joining inter-

institutional procurement procedures launched by the Commission and by using the

resulting multiannual framework contracts. FCH 2 JU also cooperates with other Joint

Undertakings in tendering needs in order to minimise administrative effort. These

framework contracts have been concluded mainly in the field of IT services and interim

staff provision.

In 2018 FCH 2 JU signed 14 contracts with a value above 15,000 €. Half of them were

specific contracts implementing framework ones, the most significant of these (in volume

terms) were in operational studies, the organisation of the Stakeholder Forum and

Programme Review Day, audit and IT services.

In addition, FCH concluded procedures by signing 2 framework contracts (one for

operational study and the other for PR relations and 5 direct contracts (4 for operational

study and one for supply of goods).

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6. GLOSSARY

Definitions, explanations, abbreviations and acronyms used in the report are provided in

the table below.

Term Definition

ABAC

This is the name given to the Commission’s accounting system, which since 2005 has been enriched by accrual accounting rules. Apart from the cash-based budget accounts, the Commission produces accrual-based accounts which recognise revenue when earned, rather than when collected. Expenses are recognised when incurred rather than when paid. This contrasts with cash basis budgetary accounting that recognises transactions and other events only when cash is received or paid.

Amending budget Decision adopted during the budget year to amend (increase, decrease, transfer) aspects of the adopted budget of that year.

Appropriations

Budget funding. The budget forecasts both commitments (legal pledges to provide finance, provided that certain conditions are fulfilled) and payments (cash or bank transfers to the beneficiaries). Appropriations for commitments and payments often differ — differentiated appropriations — because multiannual programmes and projects are usually fully committed in the year they are decided and are paid over the years as the implementation of the programme and project progresses. Non-differentiated appropriations apply to administrative expenditure, for agricultural market support and direct payments and commitment appropriations equal payment appropriations.

Assigned revenue External/Internal

Dedicated revenue received to finance specific items of expenditure. Main sources of external assigned revenue are financial contributions from third countries to programmes financed by the Union. Main sources of internal assigned revenue is revenue from third parties in respect of goods, services or work supplied at their request; revenue arising from the repayment of amounts wrongly paid The complete list of items constituting assigned revenue is given in the Financial Regulation Art. 21(2).

Budget Annual financial plan, drawn up according to budgetary principles, that provides forecasts and authorises, for each financial year, an estimate of future costs and revenue and expenditures and their detailed description and justification, the latter included in budgetary remarks.

Budget result The difference between income received and amounts paid, including adjustments for carry-overs, cancellations and exchange rate differences. The resulting amount will have to be reimbursed to the funding authority as provided in the Financial Regulation for Agencies.

Budget implementation

Consumption of the budget through expenditure and revenue operations.

Budget line

As far as the budget structure is concerned, revenue and expenditure are shown in the budget in accordance with a binding nomenclature which reflects the nature and purpose of each item, as imposed by the budgetary authority. The individual headings (title, chapter, article or item) provide a formal description of the nomenclature.

Budgetary commitment

A budgetary commitment is a reservation of appropriations to cover for subsequent expenses.

Carryover of appropriations

Exception to the principle of annuality in so far as appropriations that could not be used in a given budget year may, under strict conditions, be exceptionally carried over for use during the following year(s).

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Commitment appropriations (CA)

Commitment appropriations cover the total cost of legal obligations (contracts, grant agreements/decisions) that could be signed in the current financial year. Art. 7 FR: Commitment appropriations cover the total cost in the current financial year of legal obligations (contracts, grant agreements/decisions) entered into for operations extending over more than one year.

Economic result Impact on the balance sheet of expenditure and revenue based on accrual accounting rules.

Term Definition

Exchange rate difference

The difference resulting from currency exchange rates applied to the transactions concerning countries outside the euro area, or from the revaluation of assets and liabilities in foreign currency at the closure.

Expenditure Term used to describe spending the budget from all types of funds sources.

Financial regulation (FR)

Adopted through the ordinary legislative procedure after consulting the European Court of Auditors, this regulation lays down the rules for the establishment and implementation of the general budget of the European Union. (OJ L 298, 26.10.2012, p. 1)

Funds Source Type of appropriations in ABAC; FCH uses C1, C2, C4 and C8

Grants

Direct financial contributions, by way of donation, from the budget in order to finance either an action intended to help achieve an objective part of an EU policy or the functioning of a body which pursues an aim of general European interest or has an objective forming part of an EU policy.

Implementation Cf. Budget implementation

Income Cf. Revenue

Joint Undertakings (JUs)

A legal EU-body established under the TFEU. The term can be used to describe any collaborative structure proposed for the "efficient execution of Union research, technological development and demonstration programmes".

Liquidated damages

Liquidated damages are due where a beneficiary has overstated costs and has in consequence received unjustified EU contribution (meaning actual payment and clearing of the pre-financing). The legal basis for their claim in projects under FP7 is Article II.24 of the FP7 Model GA.

Operational appropriations

Operational appropriations finance the different policies, mainly in the form of grants or procurement.

Outstanding commitment

Legal commitments having not fully given rise to liquidation by payments. Cf. RAL.

Outturn Cf. Budget result

Payment A payment is a cash disbursement to honour legal obligations.

Payment appropriations (PA)

Payment appropriations cover expenditure due in the current year, arising from legal commitments entered in the current year and/or earlier years (Art. 7 FR).

Recovery

The recovery order is the procedure by which the Authorising officer (AO) registers an entitlement by the Commission in order to retrieve the amount which is due. The entitlement is the right that the Commission has to claim the sum which is due by a debtor, usually a beneficiary.

Result Cf. Outturn

Revenue Term used to describe income from all sources financing the budget.

Surplus Positive difference between revenue and expenditure (see Budget result) which has to be returned to the funding authority as provided in the Financial Regulation.

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Transfer

Transfers between budget lines imply the relocation of appropriations from one budget line to another, in the course of the financial year, and thereby they constitute an exception to the budgetary principle of specification. They are, however, expressly authorised by the Treaty on the Functioning of the European Union under the conditions laid down in the Financial Regulation. The FR identifies different types of transfers depending on whether they are between or within budget titles, chapters, articles or headings and require different levels of authorization.