report on the budgetary and financial ... on budgetary...1 report on the budgetary and financial...

1

REPORT ON THE BUDGETARY AND FINANCIAL MANAGEMENT 2016

31 March 2017

In accordance with Article 20 of the Statutes of the S2R JU annexed to Council

Regulation (EU) No 642/2014 and with Article 20 and 39 of the Financial Rules

of the S2R JU.

The report on budgetary and financial management will be made available to

the European Parliament, the Council and the Court of Auditors.

2

Contents

Contents .................................................................................................................................................. 2

INTRODUCTION ....................................................................................................................................... 3

Legal framework .................................................................................................................................. 3

Driving Innovation on railways ............................................................................................................ 4

1 OVERVIEW OF THE BUDGET ............................................................................................................ 7

1.1 Initial budget, amending budgets and final budget ................................................................ 9

1.2 Budget Implementation Expenditure .................................................................................... 12

2 MULTI –ANNUAL OVERVIEW ......................................................................................................... 19

2.1 Operational Expenditure ....................................................................................................... 19

3 REVENUE........................................................................................................................................ 23

3.1 Nature of Budgeted Revenue ................................................................................................ 23

3.2 In-kind contributions ............................................................................................................. 24

3.3 Overview per contributors .................................................................................................... 26

GLOSSARY OF TERMS ............................................................................................................................ 28

3

INTRODUCTION

Legal framework

The Shift2Rail Joint Undertaking (hereinafter “S2R JU”) was established on 7 July 2014, under Article 187 of the Treaty on the Functioning of the European Union, by Council Regulation (EU) No 642/2014 of 16 June 20141 (hereinafter the “S2R Regulation” and, Annexe I, the “S2R Statutes”). The S2R JU Regulation entrusted the Joint Undertaking with tasks under the Horizon 2020 Framework Programme for Research and Innovation for the period up to 31 December 2024. The S2R JU is an autonomous body with its own legal personality; the seat is located in Brussels, Belgium. The S2R JU is a public-private partnership under the Horizon 2020 Framework Programme2 managing all rail-focused research and innovation actions co-funded by the Union. This innovative concept provides a platform for the rail sector as a whole to work together with a view to driving innovation in the years to come. In addition to the Union, S2R JU has eight other Founding Members and nineteen Associated Members (hereinafter referred to as “Other Members”). The Founding Members were set as part of the S2R JU Regulation whereas the Associated Members were selected in 2015 following a call for expression of interest to become associated member of the S2R JU.

The S2R JU is specifically entrusted to execute the S2R Programme for an overall value of EUR 920 million, out of which EUR 893 million correspond to Research and Innovation activities (hereinafter “R&I) to be performed by the Other Members and through additional open calls. EUR 27 million correspond to the JU’s running costs.

The Union contribution amounts to a maximum of EUR 450 million, including EUR 52 million related to the so called “Lighthouse Projects” awarded by the Commission before the financial autonomy of the JU and EUR 13.5 million related to 50% of the JU running costs.

Article 4(2) of the S2R Regulation establishes that the total contribution to be provided by the Other Members and totalling EUR 470 million shall consist of:

IKOP (in-kind operational): at least EUR 350 million, including at least EUR 200 million from the founding members other than the Union and their affiliated entities, and at least EUR 150 million from associated members and their affiliated entities. In accordance with Article 16(3)b of the S2R Statutes, IKOP consists “of the costs incurred by them [the Other Members] in implementing indirect actions less the contribution of the S2RJU and any other Union contribution to those costs”.

IKAA (in-kind other activities): of at least EUR 120 million, of which at least EUR 70 million from the founding members other than the Union and their affiliated entities, and at least EUR 50 million from associated members and their affiliated entities. These contributions shall consist of the costs incurred by them in implementing additional activities outside the work plan of the S2R Joint Undertaking, which are complementary to this work plan and contribute to the objectives of the S2R Master Plan. Other Union funding programmes may support those costs in compliance with the applicable rules and

1 http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0642&from=EN 2 Council Decision (EU) No 2013/743/EU of 3 December 2013 establishing the specific programme

implementing Horizon 2020 (2014-2020), OJ L 347, 20.12.2013, p. 965.

http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0642&from=EN

4

procedures. In such cases, Union financing shall not substitute for the in-kind contributions from the members other than the Union or their affiliated entities.

The aforementioned In-Kind Contributions are in addition to the cash contribution of the Other Members to the 50% of the running costs of the JU.

The following picture summarize the different types of contributions (EUR million):

Driving Innovation on railways

Rising traffic demand, congestion, security of energy supply, and climate change are some of the major issues that the European Union and the wider world are facing. Tackling these challenges will call for the railway sector to take on a larger share of transport demand in the next few decades.

The European Commission is working towards the creation of a Single European Railway Area (SERA), and has promoted a modal shift from road to rail in order to achieve a more competitive and resource-efficient European transport system. However, rail’s share in the European freight and passenger transport markets is still not satisfactory. EU research and innovation (R&I) must therefore help rail play a new, broader role in global transport markets, both by addressing pressing short-term problems that drain rail business operations, and by helping the sector to gain a stronger market position.

Transparency, clarity and simplification of procedures are three essential characteristics of the S2R JU approach. R&I continues to be the key factor shaping the railway sector. Significant investment has been made in the past on research related to the three main constituents of the railway system i.e. infrastructure, rolling stock and operations. While this has been positive, the evolving needs of society e.g. end users, industry, citizens demand a more targeted and integrated effort. The risk sharing financial contribution is instrumental not only to improve efficiency levels across the components of the system (e.g. rails, vehicle parts) overcoming technical barriers (development and transition) but

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

1,000.0

Founding Members AssociatedMembers

Open Calls Running costs Programme Dec2024

S2R co-funding IKOP IKAA

Total R&I EUR

366.9

Total R&I EUR 131.0

S2R Programme920.0

Total R&I EUR

275.2

EUR 27.0

5

ensure that the final outcome, available for the market, will be user centric to deliver mobility as a service. This is expected to become the driver for a more competitive and attractive Railway mobility system, leveraging the know-how and excellence of the European industry to compete at plain-field level with other parts of the word.

The possibilities that the railway offers and what it can become are encapsulated in a vision were users are recognised as individuals with on demand personalised information related to their travel or goods, using a railway system that is comfortable, efficient, flexible, safe and reliable. Intelligent fully autonomous trains can adapt to each other’s dynamic conditions maximising the use of existing infrastructure assets in high traffic, high volume vital corridors linking the main nodes of mobility networks seamlessly. Novel vehicles concepts are introduced to enhance the connectivity of less used parts of the network using approaches common to other sectors e.g. lightweight aircraft structures, ultra-efficient automotive drives and propulsion systems removing the need of expensive electrification investment.

The S2R JU contributes to:

• Enhancing the strengths of the railway system to become a core provider of mobility and logistics services in partnership with other stakeholders beyond the sector;

• A zero-emission railway system that is energy efficient placing energy conservation at its core; • A traffic management system that is fully automated, intelligent, dynamic and demand-responsive; • A fast, efficient and cost-effective process to take ideas and products from concept to service in

competitive time scales learning from methods successfully implemented in other sectors e.g. advanced manufacturing processes;

• Creating, adopting and supporting technology advancement that will unlock the deployment of novel concepts in all parts of the system;

• Implementing the efficient transition to a fully digitalised railway system.

The S2R JU encapsulates this first integrated approach towards the achievement of these goals by actively performing in partnership the R&I necessary to place railway systems as the spine of all European intra-nodal and inter-nodal door-to-door travel. This applies for both passenger and freight aspects and requires essential integration in the form of suitable outward looking connections of our system with other transport modes to deliver door-to-door services. This collaborative nature highlights the need for radical change in the sector.

To meet these expectations, the S2R JU through its membership and with the key contribution of the sector, runs a R&I Programme, implemented through several thematic areas of the railway system.

Specifically, the S2R Programme added-value arises from the following:

• A pioneering approach that is seeing for the first time defragmentation and coordination of R&I investments across and beyond the sector;

• A focus on taking closer to market uptake of R&I concepts with an already high TRL; • Applying a whole systems lens to the railways to shape the future of mobility, avoiding the problem

of sub-optimisation whereby optimising parts of the whole may miss crucial interactions between sub-systems leading to a non-optimal overall system performance (system architecture sector led).

The S2R JU contributes to the introduction of better trains to the market (quieter, more comfortable, more dependable, etc.), which will operate on an innovative rail network infrastructure reliably from the first day of service introduction, at a lower life-cycle cost, with more capacity to cope with growing passenger and freight mobility demand. All this will be developed by European companies, thereby increasing their competitiveness in the global marketplace.

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It also contributes to the paradigm for the modal shift of attract users to rail. For EU passengers, this represents more travel options, more comfort and improved punctuality. For freight forwarder/shippers, rail freight will offer a more cost-effective, punctual and traceable shipment option.

The S2R JU shall deliver innovative solutions which will achieve cost efficiency by targeting 50% reduction of life-cycle costs of the railway system, capacity by targeting 100% increase in capacity and operational Efficiency by targeting into 50% increase in reliability and punctuality.

50 % reduction of the life-cycle cost of the railway transport system

100 % increase in the capacity of the railway transport system

50 % increase in the reliability and punctuality of rail services

S2R JU Main Targets

7

1 OVERVIEW OF THE BUDGET

The 2016 Initial Budget was approved by the Governing Board on 11 December 2015. This Budget was established on the basis of linear distribution of the resources available for the running costs of S2R JU. The global amount in the initial Budget was EUR 48.5 million in commitment appropriation and EUR 28.1 million in Payment Appropriations.

Soon after S2R JU reached its financial autonomy on 24 May, it proposed the first amendment to the Budget. In Amendment No 1, the S2R JU addressed the specific needs of the JU to assure the adequate ramp-up of the activities:

- On the Administrative budget, the S2R JU recognised and balanced the un-collected Payment and Commitment Appropriations due in relation to the previous budgetary years. In accordance with Article 16.2 of the S2R Regulation Annex I, the administrative costs of the S2R JU are covered through financial contributions divided equally between the Union and the Other Members. After the EC management of the JU prior to its autonomy, the contributions towards the JU were balanced and recoveries towards the due amounts were established.

- On the Operational Budget, the S2R JU increased the amount of Payment Appropriations by EUR

22.4 million. In fact, the grant agreements resulting from the 2015 Commitment Appropriations were signed in 2016 (EUR 45.3 million) and the relative pre-financing paid within the same year. As a result the increase of the Payment Appropriations in the Budget 2016 recognised the required appropriations to execute these payments within the year.

- S2R JU activated Title 4, Un-used appropriation not required in Current Year, to its budget. This

Title supports more transparent reporting in future years when using the so called n+3 rule. The S2R JU assigned the appropriations foreseen unused, such as the collected amounts in relation to previous budgetary years, under this title as part of the amendment.

Later in the year, on 16 December 2016, Amendment 2 was adopted by the Governing Board of the S2R JU. This amendment increased the amount of Payment Appropriations under the operational expenditure, Title 3. This additional Payment Appropriations will allow meeting the interim payments planned in early 2017 for the 2015/2016 Projects which will be subject to review With the adoption of this amendment, the final global amount of the Budget 2016 was EUR 50.2 million in commitment appropriation and EUR 52.3 million in Payment Appropriations.

8

Budget 2016: Budget Amendments

EUR '000

Amendment Number

Date of adoption

Main subject Description Impact on Commitment Appropriations (in EUR)

Impact on Payment Appropriations (in EUR)

1 12/09/2016 Un-collected Administrative expenditure and increase of Payment Appropriations on operational expenditure

1,742 22,394

2 16/12/2016 Increase of Payment Appropriations in Operational Expenditure

- 1,800

In addition to the budget amendments which had an impact to the global budget amounts, in accordance with the S2R JU Financial rules, internal transfers were made on the basis of Executive Director Decision. These transfers were made by transferring credits from one budget line to another within one title. This meant that none of the transfers had an impact to the total amount assigned to one title nor to the global budget. The transfers were made in order to better allocate the resources needed for the running costs.

9

1.1 Initial budget, amending budgets and final budget

Budget 2016: Breakdown & changes in commitment and Payment Appropriations

EUR '000

Item Voted Budget (Dec. N-1) Amendments Transfers Final Budget

Title Heading

Commitment Appropriations (in

EUR)

Payment Appropriations (in

EUR)


EUR)


EUR)


EUR)


EUR)


EUR)


EUR) Chapter

STATEMENT OF REVENUE

CONTRIBUTION FROM THE EUROPEAN UNION

46,870

26,509

-

22,574

46,870

49,084

9 0 0 Administrative Budget

1,621

1,621

-

371.46

1,621

1,992

9 0 1 Operational Budget

45,249

24,888

-

22,203.02

45,249

47,092

CONTRIBUTION FROM OTHER MEMBERS

9 0 2 Administrative Budget

1,621

1,621

732.42

732.42

2,353

2,353

UN-USED APPROPRIATIONS PREVIOUS YEARS

9 3 0 Un-used appropriations

previous years

1,009

887

1,009

887

TOTAL GLOBAL REVENUE

48,490

28,130

1,742

24,194

-

-

50,232

52,324

STATEMENT OF EXPENDITURE

10


EUR '000


Title Heading


EUR)


EUR)


EUR)


EUR)


EUR)


EUR)


EUR)


EUR) Chapter

Title 1: Staff Expenditure

1 1 Salaries and allowances 1,049 1,049 36 36 6 6 1,091 1,091

110 Establishment Plan Posts 439 439 0 0 (83) (83) 356 356

111 External Personnel 610 610 36 36 89 89 735 735

1 3 Mission Expenses 92 92 0 0 (47) (47) 45 45

1 5 Training 34 34 0 0 (17) (17) 17 17

1 9 Other Staff related expenditure

79 79 0 54 58 58 137 191

TOTAL Title 1 (T1)

1,254

1,254

36

90

-

-

1,290

1,344

Title 2: Administrative Expenditure

2 0 Rental of Buildings and Associated Costs

357 357 (37) (37) 25 25 345 345

2 1 Information and Communication Technology

137 137 263 307 194 194 594 637

2 2 Movable Property and Associated Costs

33 33 5 24 (7) 20 31 77

2 3 Current Administrative Expenditure

56 56 (1) 1 (31) (31) 24 26

2 4 Postage and Telecommunications

25 25 0 0 (17) (17) 8 8

2 5 Meeting Expenses 90 90 (10) (6) (54) (54) 26 30

2 6 Running Costs in connection with operational activ

424 424 26 26 54 54 504 504

2 7 Information and Publishing

444 444 (202) (93) 34 7 276 358

2 9 Other Infrastructure and operating expenditure

422 422 (22) (3) (198) (198) 202 221

11


EUR '000


Title Heading


EUR)


EUR)


EUR)


EUR)


EUR)


EUR)


EUR)


EUR) Chapter

TOTAL Title 2 (T2)

1,987

1,987

23

219

-

-

2,010

2,206

TOTAL Administrative Budget (T1 &T2)

3,241

3,241

59

308

-

-

3,300

3,550

Title 3: Operational Expenditure

3 0 Operational Expenditure 45,249 24,888 (1,149) 22,203 0 0 44,100 47,092

TOTAL Title 3 (T3)

45,249

24,888

(1,149)

22,203

-

-

44,100

47,092

TOTAL Administrative and Operational Budget (T1+T2+T3)

48,490

28,130

(1,090)

22,511

-

-

47,400

50,641

Title 4: Unused appropriations not required in Current year

4 0 Administrative Budget 0 0 1,683 1,683 0 0 1,683 1,683

4 1 Operational Budget 0 0 1,149 0 0 0 1,149 0

TOTAL Title 4 (T4)

-

-

2,832

1,683

-

-

2,832

1,683

TOTAL GLOBAL EXPENDITURE

48,490

28,130

1,742

24,194

-

-

50,232

52,324

12

1.2 Budget Implementation Expenditure

The main highlights of the 2016 Budget implementation are

*excludes appropriations foreseen as un-used (Title 4)

Title 1 Staff Expenditure & Title 2 Administrative Expenditure

Title 1 and Title 2 of the S2R Budget was executed up to 98.6% in Commitment Appropriations, demonstrating a reliable budgetary planning.

Chapter 1.1 - Staff Expenditure was mainly used for the statutory staff of the JU. 17 posts were filled in as of 31 December 2016, representing 100% of the planned positions of the Establishment Plan. During the year, the JU made recourse to external support, to fill the gaps during the recruitment process and to cope with the important workload resulting from ramp up phase of the activities (under Chapters 1.1 and 2.6).

The execution rate of the Payment Appropriations was 53.7%; this execution rate is lower than Commitment Appropriations due to payments for some of the contractual services becoming due in 2017 and afterwards. This was the case particularly in expenditure on budget lines 210 and 290 under which S2R JU recorded multiannual contracts and services which the payments were foreseen only in following or future years. This applied also when services were delivered already in 2016.

Title 3 Operational costs Title 3 of the S2R Budget constitutes the JU’s Operational Budget. In terms of Commitment Appropriations, Title 3 represents 87.8% of the overall S2R Budget, including Title 4. The execution rate of the Operational budget in both Commitment and Payment Appropriations was respectively 100%

Revenue

- Entitlements established for 100%

- 96% cashed in 2016

Commitments

- 99.9% of the Commitment Appropriations used *

( 98.6 % ADMIN / 100% OP)

Payments

- 84.3% payment execution

(53.7% ADMIN / 86.6% OP)

* Excluding the foreseen un-used

3%4%

93%

Breakdown by the type of expenditure

Committed from total budget*

Staff Expenditure (3%)

AdministrativeExpenditure (4%)

Operational Expenditure(93%)

13

and 86.6%. The Payment appropriation were used for the pre-financing of the Grants resulting from the 2015 and 2016 Calls for Proposals.

T4 Unused appropriations Un-used Appropriations not required in current year, to its use. This Title has been used to record any Appropriation which S2R recognised during the re-assessment of its budgetary needs available for future budgetary years by applying the so called n+3 rule.

The amount included under Title 4 – Administrative Budget for EUR 1.6 million is due to S2R collecting the contribution from its Other Members related to the financial years 2014 – 2015 which were not initially foreseen in the Budget 2016.

The amount included under Title 4 – Operational Budget (EUR 1.1 million) represents mostly the value initially reserved for Call S2R_OC_IP1_01_2016 under Annual Work Plan 2016 to which S2R did not receive any eligible proposals.

Global Budget

In terms of Payment Appropriations, the unused appropriations amount at EUR 9.6 million. Nevertheless, it should be noted that this amount does not correspond to any cash available in the JU or available funds for reallocation. In fact, following a decision of the S2R Governing Board, the Treasury of the JU – as well as the Accounting Officer function – is performed by the Commission Accounting Officer. As a result, the unused Payment Appropriations are an accounting amount of the Payment Appropriations available to face the initial payments at the beginning of 2017.

2.6% 4.0%

87.8%

5.6%

The portion of Titles in budget (Commitment Appropriations)

T1 Staff Expenditure (2.6%)

T2 Administrative Expenditure (4.0%)

T3 Operational Expenditure (87.8%)

T4 Unused appropriations not required in Current year(5.6%)

2.6% 4.2%

90.0%

3.2%

The portion of Titles in budget (Payment Appropriations)

T1 Staff Expenditure (2.6%)

T2 Administrative Expenditure (4.2%)

T3 Operational Expenditure (90.0%)

T4 Unused appropriations not required in Current year(3.2%)

3% 2%

96%

Breakdown by the type of expenditure Paid from the

total budget*

Staff Expenditure

Administrative Expenditure

Operational Expenditure

* Excluding the foreseen un-used

14

Shift2Rail Joint Undertaking

Budget 2016: Implementation of commitment and Payment Appropriations

EUR '000

Item Total Appropriations Available Executed Budget DG MOVE

(01.01-23.05.2016) Executed Budget S2R (24.05.-31.12.2016)

Executed Budget Total (01.01.-31.12.2016)

%

Title

Heading

Commitment Appropriation

s (in EUR)

Payment Appropriation

s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)

Ch 1 2 3 4 5 6 7=3+5 8=4+6 9=7/1 10=8/2


1 1 Salaries and allowances

1,091.4 1,091.4 248.1 248.1 837.9 680.4 1,086.0 928.6 100% 85%

110 Establishment Plan

Posts 356.3 356 147 147 209 209 356 356 100% 100%

111 External Personnel 735.1 735 101 101 629 472 730 572 99% 78%

1 3 Mission Expenses 45.0 45 6 6 39 30 45 36 100% 79%

1 5 Training 16.6 17 0 0 17 0 17 0 100% 0%

1 9 Other Staff related expenditure

137.0 191 12 30 118 91 130 121 95% 63%

TOTAL

Title 1 (T1)

1,290

1,344

266

284

1,012

801

1,278

1,085 99% 81%



345 345 137 137 208 136 345 273 100% 79%


594 637 0 43 588 32 588 75 99% 12%


31 77 1 29 25 21 26 50 82% 65%


24 26 0 2 18 13 18 15 73% 56%

15



EUR '000




%

Title

Heading


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)

Ch 1 2 3 4 5 6 7=3+5 8=4+6 9=7/1 10=8/2


8 8 0 0 6 2 7 2 81% 27%

2 5 Meeting Expenses 26 30 8 10 16 7 24 18 92% 59%


504 504 3 3 498 191 501 194 99% 38%


276 358 1 50 272 136 272 186 99% 52%


202 221 10 10 185 0 195 10 97% 5%

TOTAL

Title 2 (T2)

2,010

2,206

160

285

1,815

538

1,975

822 98% 37%

TOTAL

Administrative Budget (T1 &T2)

3,300

3,550

426

569

2,827

1,339

3,253

1,908

99% 54%


3 0 Operational Expenditure

44,100 47,092 0 0 44,100 40,798 44,100 40,798 100% 87%

TOTAL

Title 3 (T3)

44,100

47,092

-

-

44,100

40,798

44,100

40,798 100% 87%

TOTAL

Administrative and Operational Budget (T1+T2+T3)

47,400

50,641

426

569

46,927

42,137

47,353

42,706

100% 84%


4 0 Administrative Budget

1,683 1,683 0 0 0 0 0 0 0% 0%

4 1 Operational Budget 1,149 0 0 0 0 0 0 0 0% 0%

16



EUR '000




%

Title

Heading


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)


s (in EUR)

Ch 1 2 3 4 5 6 7=3+5 8=4+6 9=7/1 10=8/2

TOTAL

Title 4 (T4)

2,832

1,683

-

-

-

-

-

- 0% 0%

TOTAL

GLOBAL 50,232 52,324 426 569 46,927 42,137 47,353 42,706 94% 82%


Budget 2016: Commitments outstanding

EUR '000

Item

Commitments outstanding at the end of previous year Commitments of the year

Total commit.

outstanding at year-end

Comm. carried forward

from prev. year

Decom./ Rev./

Cancel.

Payments Executed

by DG MOVE

Payments executed

by S2R Total

Comm. made

during the year DG MOVE (01.01-

23.05.2016)

Comm. made

during the year S2R (24.05.-

31.12.2016)

Payment DG MOVE

(01.01-23.05.2016)

Payment S2R

(24.05.-31.12.2016)

Cancellation of comm.

which cannot be

carried forward

Commit. outstanding at year-end

1 2 3 4 5=1+2-

3-4 6 7 8 9 10

11=6+7-8-9-10

12=5+11


1 1 Salaries and allowances 0 0 0 0 0 248 838 248 680 0 157 157

110 Establishment Plan Posts 0 0 0 0 0 147 209 147 209 0 0 0

17



EUR '000

Item


Total commit.



from prev. year

Decom./ Rev./

Cancel.

Payments Executed

by DG MOVE

Payments executed

by S2R Total

Comm. made


23.05.2016)

Comm. made


31.12.2016)

Payment DG MOVE

(01.01-23.05.2016)

Payment S2R

(24.05.-31.12.2016)


which cannot be

carried forward


1 2 3 4 5=1+2-

3-4 6 7 8 9 10

11=6+7-8-9-10

12=5+11

111 External Personnel 0 0 0 0 0 101 629 101 472 0 157 157

1 3 Mission Expenses 0 0 0 0 0 6 39 6 30 0 9 9

1 5 Training 0 0 0 0 0 0 17 0 0 0 17 17

1 9 Other Staff related expenditure 54 (15) 18

18 4 12 118 12 74 0 45 48

TOTAL Title 1 (T1) 54 (15) 18 18 4 266 1,012 266 784 0 228

232



0 0 0 0 0 137 208 137 136 0 72 72


47

(3) 43

1

(0) 0 588 0 31 0 556 556


62 0 28 16 18 1 25 1 5 0 20 37


2

(0) 2 0 0 0 18 0 13 0 5 5


0 0 0 0 0 0 6 0 2 0 4 4

2 5 Meeting Expenses

4

(1) 2 0 0 8 16 8 7 0 9 9


0 0 0 0 0 3 498 3 191 0 307 307


82

0 49

32

0 1 272 1 104 0 168 168

18



EUR '000

Item


Total commit.



from prev. year

Decom./ Rev./

Cancel.

Payments Executed

by DG MOVE

Payments executed

by S2R Total

Comm. made


23.05.2016)

Comm. made


31.12.2016)

Payment DG MOVE

(01.01-23.05.2016)

Payment S2R

(24.05.-31.12.2016)


which cannot be

carried forward


1 2 3 4 5=1+2-

3-4 6 7 8 9 10

11=6+7-8-9-10

12=5+11


0 0 0 0 0 10 185 10 0 0 185 185

TOTAL Title 2 (T2)

196 (5)

125

49

18

160

1,815

160

489

-

1,326

1,344

TOTAL Administrative Budget (T1 +T2)

250

(19) 142

66

21

426

2,826

426

1,272

-

1,554

1,576


3 0 Operational Expenditure 45,334 (465) 0

20,419 24,450 0 44,100 0 20,379 0 23,721 48,171

TOTAL Title 3 (T3)

45,334 (465)

-

20,419

24,450

-

44,100

-

20,379

-

23,721

48,171

TOTAL Administrative and Operational Budget (T1+T2+T3)

45,584

(485)

142

20,486

24,471

426

46,926

426

21,652

-

25,275

49,746


4 0 Administrative Budget 0 - 0 0 0 0 0 0 0 0 0 0

4 1 Operational Budget 0 - 0 0 0 0 0 0 0 0 0 0

TOTAL Title 4 (T4)

- -

-

-

-

-

-

-

-

-

-

-

TOTAL 45,584 (485) 142 20,486 24,471 426

46,926

426

21,652

-

25,275

49,746

19

2 MULTI –ANNUAL OVERVIEW

The S2R JU applies differentiated budget appropriations in its Administrative and Operational Budget. This means that the Commitment Appropriations cover, for the current financial year, the total cost of the legal obligations entered into for operations whose implementation extends over more than one financial year. Whereas majority of the contracts under the Administrative budget are paid within one year, the legal obligations under the operational expenditure are implemented over multiple years.

2.1 Operational Expenditure

The S2R Programme is implemented through multi-annual Projects (Grant Agreements) which are combined in a structured interdependent manner to fulfil the R&I activities planned in the S2R MAAP. This structured interdependence of S2R Projects reflects the Technological Demonstrators (TD) and Work Areas (WA) approach set within the Programme and each IP and CCA. In 2016, S2R JU signed 27 Grant Agreements resulting from Work Plans 2015 and 2016. The following table summarises the amounts and topics available under the different types of the 2015/2016 calls:

Call Type Estimated S2R JU funding Number of topics

H2020-S2RJU-2015-01 CFM 34.6 M€ 9

OC 10.0 M€ 10

H2020-S2RJU-2016-01 CFM 29.1 M€ 4

OC 16.1 M€ 5

The total number of proposals received in response to both calls for proposals was 57:

Call Type Number of proposals received Number of topics

H2020-S2RJU-2015-01 CFM 10 9

OC 33 10

H2020-S2RJU-2016-01 CFM 4 4

OC 10 5

The total S2R JU contribution requested by all the submitted proposals amounted to EUR 167.9 million compared to EUR 89.8 million available for funding:

Call

Type Requested S2R JU funding Estimated S2R JU funding

available

H2020-S2RJU-2015-01 CFM 59.3 M€ 34.6 M€

OC 37.5 M€ 10.0 M€

H2020-S2RJU-2016-01 CFM 29.0 M€ 29.1 M€

OC 42.1 M€ 16.1 M€

20

The S2R JU Other Members submitted project proposals to cover all 13 call topics open to them. The value of activities to be performed by the S2R JU Other Members during the next three years amounts to EUR 142.4 million that will be co-funded by the S2R JU up to EUR 63.3 million. These projects, which started on the 1st September are well on their ramp up phase. The applicants to the Open call for proposals for non-JU Members covered 14 out of 15 topics open to them. The value of the activities to be performed by the awarded consortia amounts to EUR 25.0 million and will be financed by the S2R JU up to 100% of the eligible costs. The Governing Board at its meeting on 9 June 2016 approved the list of actions selected for funding proposed by the Executive Director; evaluation result letters were sent to all applicants on 17 June 2016. In line with the available budget, one proposal from each call topic was retained for funding, the first in the ranking list of the evaluation outcome.

21

Call topics open to S2R JU Other Members and awarded projects

TOPIC ACRONYM TITLEProject

ValueGrant

Inkind

contr.

STARTING

DATEEND DATE

20.0 25.0

S2R-CFM-IP5-01-

2015FR8RAIL

Development of functional requirements

for sustainable and attractive European

rail freigh

7.9 3.5 4.4 01/09/2016 31/08/2019

1.6 2.0

1.3 1.6

3.5 4.4

2.2 2.8

S2R-CFM-IP5-03-

2015FFL4E Freight propulsion concepts 3.4 1.5 1.9 01/09/2016 31/05/2019

S2R-CFM-CCA-01-

2015IMPACT-1

Start-up activities for System Platform

Demonstrator Integrated Assessment

and socio-economic effects

0.7 0.3 0.4 01/09/2016 28/02/2018

S2R-CFM-CCA-03-

2015PLASA

Integrated Mobility and Safety

Management 0.80.4 0.4 01/09/2016 31/08/2018

S2R-CFM-IP1-02-

2016CONNECTA

Development of new technological

concepts, standard specifications and

architectures for train control and

monitoring, with specific applications in

train-to-ground communications and high

safety electronic control of brakes

13.3 5.9 7.4 01/09/2016 31/08/2018

S2R-CFM-IP3-02-

2016IN2SMART

Intelligent maintenance systems and

strategies16.4 7.3 9.1 01/09/2016 31/08/2019

S2R-CFM-IP3-01-

2016IN2TRACK

Research into enhanced track and

switch and crossing system6.3 2.8 3.5 01/09/2016 28/02/2019

S2R-CFM-IP1-01-

2016PINTA

Development of concepts towards the

next generation of traction systems and

management of wheel/rail adhesion

29.2 13.0 16.2 01/09/2016 30/11/2018

TOTAL 142.4 63.3 79.1

31/12/2018

X2Rail-1 01/09/2016 31/08/2019

31/08/2019

31/08/2019

Co-Active

ARCC 01/09/2016

Travel companion and tracking services 5.0

01/09/2016

FINE 1 01/09/2016

31/12/2018

S2R-CFM-IP2-01-

2015

S2R-CFM-IP5-02-

2015S2R-CFM-CCA-02-

2015

S2R-CFM-IP4-01-

2015

S2R-CFM-IP4-02-

2015

Shopping, booking and ticketing of

multimodal travel solutions 7.9

Start-up activities for Advanced Signalling

and Automation System

45.0

Start-up activities for freight automation 3.6

Energy and sustainability, including noise

and vibrations baselines assessment2.9

01/09/2016ATTRACkTI

VE

22

Open calls topics for S2R JU non-Members and awarded projects

* to be noted EUR 0.3 of activities performed by a CH entity not eligible for Union funding

For the members’ projects, the respective grant agreements were signed in August and all the activities started on 1 September. The last project from the open call started activities on 1 November. In addition to the Grant Agreements, S2R launched tender procedures under its operational expenditure. For the Other Members’ projects, the respective grant agreements were signed in August and all the activities started on 1 September. The last project from the open call started activities on 1 November. All pre-financing payments in relation to these Grant Agreements were executed in 2016.

Budget 2016: Payments towards the operational budget

EUR '000

Year Commitments Paid 2016 Outstanding Amount

1 2 3 =1 - 2

2015 44,869 20,419 24,450

2016 44,100 20,379 23,721

Total 88,969 40,798 48,171

TOPIC ACRONYM TITLEProject

ValueGrant

Inkind

contr.

STARTING

DATEEND DATE

S2R-OC-IP2-01-

2015CYRail

Threat detection and profile protection

definition for cyber-security assessment 1.51.5 01/10/2016 30/09/2018

S2R-OC-IP2-03-

2015MISTRAL

Technical specifications for a new

Adaptable Communication system for all

Railways.

0.5 0.5 01/11/2016 31/10/2018

S2R-OC-IP5-01- SMART Freight Automation on lines and in yards 1.0 1.0 01/10/2016 30/09/2019

S2R-OC-CCA-02-

2015OPEUS

Energy usage, generation and saving

approaches0.8 0.8 01/11/2016 30/04/2019

S2R-OC-CCA-03-

2015DESTINATE Noise reduction methodologies 1.0 1.0 01/11/2016 31/10/2018

S2R-OC-IP2-02-

2015VITE IT virtualisation of testing environment

1.01.0 01/10/2016 30/09/2018

S2R-OC-IP5-02- DYNAFREIG Improved vehicle/train dynamics 1.0 1.0 01/11/2016 30/06/2018

S2R-OC-IP5-03-

2015INNOWAG

Intelligent freight wagon with predictive

maintenance1.5 1.5 01/11/2016 30/04/2019

S2R-OC-CCA-01-

2015NEAR2050

Long-term needs of different actors in the

railway sector0.4 0.4 01/10/2016 31/03/2018

S2R-OC-CCA-04-

2015

GoSAFE

RAIL

Safer infrastructure – improved object

detection and prevention of safety critical

events and integrated mobility

1.3 1.3 01/10/2016 30/09/2019

S2R-OC-IP3-01-

2016S-CODE

Research into new radical ways of

changing trains between tracks5.0 5.0 01/11/2016 31/10/2019

S2R-OC-IP4-01-

2016GoF4R

Interoperability Framework governance,

ensuring its market uptake and

sustainability

2.0 2.0 01/11/2016 31/10/2018

S2R-OC-IP4-02- ST4RT Interoperability Framework Converters 1.0 1.0 01/11/2016 31/10/2018

S2R-OC-IP1-02-

2016SAFE4RAIL

Technology feasibility studies supporting

the development of next generation

TCMS, and safe control for brakes

6.7 6.7 01/10/2016 30/09/2018

TOTAL 24.7 24.7

23

3 REVENUE

3.1 Nature of Budgeted Revenue

In the Budget 2016, the S2R JU foresaw a total revenue of EUR 52.3 million. A majority of this related to the payments towards the S2R Operational Expenditure. Contribution from the Union to the Administrative Costs

In accordance with Article 16.2 of the S2R Statutes, the Administrative Costs of the S2R JU are covered through financial contributions divided equally between the Union and the Other Members. This contribution corresponds to 50% of the administrative costs of the S2R JU which shall not exceed EUR 27 million up to 2024.

In accordance with the S2R Regulation, the S2R JU shall request an equal amount of Commitment and Payment Appropriations towards its administrative expenditure. However, in Amendment 1 to budget 2016, the JU requested an increase to the Administrative Payment Appropriations from the Union to collect from the Union the necessary fund to make the payments towards the legal commitments before its financial autonomy.

Contribution from the Union to the Operational Costs

This refers to the Union contribution towards the Operational Activities of the S2R JU, as indicated in the Introduction. In the budget 2016, the S2R JU used the Union contribution to ensure the pre-financing payments in relation to the Grant Agreements signed in the same year, for an amount of EUR 40.8 million (out of a Union revenue contribution of EUR 47.1 million) against a legal commitment in terms of R&I of the Other Members and additional Open Calls of EUR 167.3 million.

Contribution from the Other Members to the Administrative Costs

As already indicated for the Union, each year, the JU shall send out debit notes to its Other Members to receive their respective contributions to the 50% of its running costs. After the financial autonomy, the contributions towards the JU were balanced and recoveries towards the due amounts were established.

Un-used Appropriation from previous years

In accordance with the Article 6 of the S2R JU Financial Rules: “Given the needs of S2R JU, the unused appropriations may be entered in the estimate of revenue and expenditure of up to the following three financial years. These appropriations must be used first”. The appropriations recorded in this paragraph represent the contribution received form the Other Members in relation to the Budget 2015 and re-activated appropriations from the Union contribution.

24

Item

Income appropriations

Entitlements established

Cashed Revenue

Initial budget

Final budget

Current year DG MOVE (01.01-23.05.2016)

S2R (24.05.-

31.12.2016) Total % Outstand.

1 2 3 4 5 6=4+5 7=6/2 8=2-6

Chapter 90-0: CONTRIBUTION FROM EU ADMINISTRATIVE

90-0 CONTRIBUTION FROM EU ADMINISTRATIVE

1,621 1,992 1,992 569 1,423 1,992 100.% 0

Total chapter 90-0 1,621 1,992 1,992 569 1,423 1,992 100.% 0

Chapter 90-1: CONTRIBUTION FROM EU OPERATIONAL

90-1 CONTRIBUTION FROM EU OPERATIONAL

24,888 47,092 47,092 0 47,092 47,092 100.% 0

Total chapter 90-1 24,888 47,092 47,092 0 47,092 47,092 100.% 0

Total Title 90-1 24,888 47,092 47,092 0 47,092 47,092 100.% 0

Chapter 90-2: CONTRIBUTION FROM THE OTHER MEMBERS

90-2 CONTRIBUTION FROM THE OTHER MEMBERS

1,621 2,353 2,353 0 328 328 14.% 2,025

Total chapter 90-2 1,621 2,353 2,353 0 328 328 14.% 2,025

Total Title 90-2 1,621 2,353 2,353 0 328 328 14.% 2,025

Chapter 91-3: RECOVERIES OTHER

91-3 RECOVERIES OTHER 0 0 0 0 0 0 0.% 0

Total chapter 91-3 0 0 0 0 0 0 0.% 0

Chapter 93-0: UNUSED APPROPRIATIONS FROM PREVIOUS YEARS

93-0

UNUSED APPROPRIATIONS FROM PREVIOUS YEARS

0 887 887 0 887 887 100.% 0

Total chapter 93-0 0 887 887 0 887 887 100.% 0

Total Title 93-0 0 887 887 0 887 887 100.% 0

TOTAL 28,130 52,324 52,325 569 49,731 50,300 47.% 2,025

The S2R JU has raised recovery orders to complete amount realised in 2016, which were due by early 2017. As a consequence, at year-end, the total amount of EUR 2.0 million was outstanding.

3.2 In-kind contributions

As already mentioned in the Introduction, the total value of the S2R Programme amounts to EUR 920 million in accordance with the S2R Regulations and it is realized by R&I activities performed by the Other Members and through additional Open Calls.

Other Members’ contributions - reporting for 2016 The Other Members of S2R submitted their reporting on IKOP and IKAA to the JU by 2 February 2017 and some updated their report by 10 February. Only one Member did not provide any reporting in line with the fact that its involvement in the R&I activities will start not before 2017 in accordance with the MAAP and its implementation.

25

This is the first reporting of the Other Members’ and the following shall be duly considered:

- the JU reached the financial autonomy on 24 May 2016, - the agreements related to the first S2R JU direct grants launched only at the beginning of 2016

were signed by the end of August 2016. The related R&I activities started on 1 September 2016; consequently this first report covers the initial months of the ramp-up phase of the Programme activities from their real beginning,

- the Lighthouse Projects are excluded from this reporting as assimilated to open calls and within the administrative management of the European Commission.

As a result, this first report covers only IKOP related to 4 months of R&I activities; while in terms of IKAA the activities are considered eligible as from the date of acceptance by the Other Members of the S2R JU Statutes, by means of their respective letters of endorsement. In accordance with Article 4(4) of the S2R Regulation, the Other Members shall have the costs related to IKOP and IKAA certified by an independent external auditor appointed by the entity concerned. By the deadline of 31 January, none of the Other Members was in the position to have its costs related to IKOP and IKAA certified. Nonetheless, this is in line with Commission position communicated officially in July 2016, which clarifies that the certification of costs (based on which IKOP is calculated) should be annual and it should be transmitted to the relevant JU by its members by 30 April. 2016 IKOP As already indicated, the 2016 IKOP by the Other Members corresponds to the activities performed in the ramp-up phase of the Programme. In this respect, the progress and acceleration realized in few months is well in line with the usual Programme Management S-Curve. As indicated under the definition of IKOP, these costs represent the difference between the Total Project Value and the S2R JU co-funding (or estimated). The 2016 IKOP is the results of the 2015/2016 activities awarded by the S2R JU to the Other Members:

EUR million Call

2015/2016 2016 IKOP reporting %

Total Value of R&I 142.4 7.4 5.2%

S2R co-funding 63.2 3.1 5.0%

IKOP 79.1 4.2 5.4%

In order to allow the S2R JU to be in the position to sign the relevant grant agreements, the Union provided the necessary Commitment Appropriations to match the S2R co-funding of EUR 63.2 million above (excluding OC), against the Other Members’ commitment of EUR 142.4 million. In terms of Union Payment Appropriations, they were used to provide the pre-financing up to 45% of the estimated co-funding in accordance with the relevant provisions of the grant agreements.

26

It should be noted that the estimated requested co-funding included in the 2016 Other Members’ declarations is within the limits of the provision of the relevant Membership Agreements. In fact, Article 2.2 of each Other Member’s Membership Agreement signed with the S2R JU establishes that “the Member agrees to limit its reimbursement request in each indirect action funded under Article 3.1(a) of the S2R JU Regulation to an amount not exceeding 44.44% of the Member's total costs in implementing that indirect action. The minimum financial contribution to the S2R JU referred to in Article 4.2(a) of the S2R JU Regulation shall thus be respected”. The percentage resulting from the declarations of 2016 is 42.59%, in line with the 44.44% expected at the end of the Programme. 2016 IKAA In terms of IKAA, the total expected contribution by the end of the S2R Programme is estimated at EUR 163 million (minimum EUR 120 million in accordance with the S2R Regulation). It should be highlighted that the IKAA declared in this updated 2016 report amount to EUR 51.0 million, corresponding already to 31.3% of the total Programme estimated value.

3.3 Overview per contributors

In terms of Revenues per Contributors, the S2R JU was in the position to recognize only the cash revenue received, while the In-Kind Contributions are subject to the recognition procedures in accordance with the IAAS principles.

The table below summarises the contribution received from the members towards the JU taking into account the previous years. The figures here below should be interpreted taking into account that:

- contrary to other situations, the S2R JU model is based on the concept that no co-funding can be paid unless the Other Members deliver the planned R&I activities under the provisions of their respective Membership Agreements.. As already mentioned, in fact, IKOP is not a top up of the activities eligible for co-funding under H2020, but it consists of the difference between the Total Value of the R&I activities realized and the co-funding received from S2R by the Other Members. In accordance with each respective Membership Agreement, the Other Members agreed to perform R&I activities limiting their request of co-funding up to 44.44% of their value;

98%

1%0% 2%

Revenue received 2016

CONTRIBUTION FROM EU (98%)

CONTRIBUTION FROM THE INDUSTRY (1%)

RECOVERIES OTHER (0%)

UNUSED APPROPRIATIONS FROM PREVIOUS YEARS (2%)

27

- the revenue in terms of commitments and payment appropriations provided by the Union were used to meet the pre-financing payment obligations against the legal commitment of the Other Members and additional Open Calls in terms of R&I. It remains property of the JU until the balance payment is realized;

- in this respect, the Union Revenue Appropriations provided to the S2R JU in the Budget 2016 amounts to EUR 47.1 million (out of which EUR 40.8 million were used to provide pre-financing) against Other Members and additional Open Calls legal commitments of EUR 167.3 million (corresponding to 28.1%).

Contributions from the S23R Members (Revenue Appropriations)

EUR '000

EU Other Members Total

Cash In-kind Cash In-kind Cash In-kind

A. Running Costs

Previous years under DG MOVE 1,2483 0 887 2,135

Current year under DG MOVE 5694 0 569

Current year S2R 1,423 0 2,353 3,776

Total Running Cost 3,240 3,240 6,480

B. Operational costs (R&D Projects)

Previous years 0 0

Current year 47,092 0 05 47,092

Adjustments 0 0

Total operational 47,092 47,092

Contribution reported at 31.12.2016 50,332 0 3,240 0 53,572 0

3 Event prior to the autonomy. Not included in the Annual Accounts of S2R JU 4 Event prior to the autonomy. Not included in the Annual Accounts of S2R JU 5 Amount of EUR 4,242K pending validation

28

GLOSSARY OF TERMS

S2R JU Shift2Rail Joint Undertaking

S2R Regulation Council Regulation (EU) No 642/2014 of 16 June 2014 establishing the Shift2Rail Joint Undertaking

C1: This represents the EU budget subsidy received from the European Commission and the member contribution to the running cost for the current financial year.

C2: This represents the cancelled appropriations from the previous year(s) re-entered to the next financial year. In S2R 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 recovery orders issued by the JU (otherwise known as internal assigned revenue) and received (cashed) within the same year.

C8: This represents the appropriations which are automatically carried forward to meet obligations arising from previous years. For administrative expenditure and operational expenditure, only Commitment Appropriations can be carried forward and used until they are no longer needed for payment purposes. Any difference between what is carried forward and paid shall be de-committed and converted into C2 fund source for the JU (see above).

Date of extraction

The implementation data is the data serving as a basis for the provisional accounts at end February 2017.

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