Europäische Patentorganisation. European Patent Organisation. Organisation européenne des brevets

Transcription

1 Europäische Patentorganisation European Patent Organisation Organisation européenne des brevets Verwaltungsrat Administrative Council Conseil d administration

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3 1 TABLE OF CONTENTS Subject Page A. ORIENTATIONS B. PLANNING PRINCIPLES AND ASSUMPTIONS C. BUDGET RESULTS D. PLAN FINANCIAL STATEMENTS UNDER IFRS E. ANNEXES 1. Authorisation Budget (Organisation) 2. Authorisation Budget (Office) Authorisation Budget (Pension and Social Security Schemes) Authorisation Budget (Office and Pension and Social Security Schemes consolidated) 3. IFRS Results Table of Posts

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5 3 EXPLANATORY MEMORANDUM A. ORIENTATIONS Authorisation Budget and IFRS The point of departure for the IFRS calculations is the Authorisation Budget. Of prime concern, however, is the Operating Result of the Organisation under IFRS. The IFRS forecasts are determined in compliance with the IFRS regulations adopted in full by the Office as from 1 January The IFRS forecast assumes a flat discount rate of 5% for employee benefits, identical to the one used for forecasting purpose in previous budgets. The use of a flat discount rate has the merit of assessing the liabilities and the equity on a consistent basis for the time period, allowing for comparison from year to year. In addition, this approach is aligned with the one retained for the determination of the actuals for the standardised operating result and the Unit Cost, which are comparable with the forecast values under IFRS. Framework for Strategic Orientations The main strategic orientations for the Office were unanimously approved by the Council in June 2011 and revised in June By implementing the adopted "Efficiency/Quality Policy", the Office pursues its operational improvements, while maintaining the capacity to finance all necessary investments in the medium term.

6 4 Strategic Roadmaps and other Initiatives General context In order to implement the Strategic Orientations, Roadmaps for IT, Buildings, Co-operation, Quality and HR were submitted to the Administrative Council in October/December 2011 and their update and plans in June The budgetary assumptions are aligned with the progress in the implementation of the different Roadmaps, whereas especially the IT Roadmap and the Building Roadmap have major investment needs which have to be considered for the 2017 Budget. IT Roadmap and General IT costs The IT Roadmap will remain one major area of investment. As a production-oriented organisation, the quality, efficiency and productivity of patent granting procedures are directly correlated to the performance of the IT systems. The total costs for IM amount to 126m for 2017 which includes 1m for IT related costs for the new BOA building. The IT infrastructure budget amounts to 105,5m in The set-up of the IT security roadmap is still on-going with the strong aim to reinforce Cybersecurity by adapting the technical environment to the new threats which are appearing. The IT related activities already initiated in the areas of Reengineering Patent Grant Process, Search Tools and Information Management, through their projects of transformation, improvement and transition, are within the approved budget envelope. The current estimated project costs for IT Roadmap amount to 20,5m for Building Roadmap In its June 2014 meeting, the Administrative Council (AC), having taken note of the current status of the projects defined in the Building Roadmap, unanimously approved the approach for further work. After the detailed design and planning phase the construction of the New Main building in The Hague started in The current planning foresees delivery of the New Main in the late part of 2017 and completion of the site, including demolition of the Tower and landscaping, in early The total contract value amounts to 205m. For 2017, 89m are expected to incur for Capital Investments. The 2017 budget caters for the possibility that there might be a shift of a part of the instalments from 2016 to The overall cost of the project remains however unchanged.

7 5 HR Roadmap The Office will pursue in 2017 the implementation of the various projects included in the HR Roadmap. In the framework of the adopted strategic direction, the Office will continue to maintain the overall staff number within the same limitations of the Table of permanent Posts in force since 2010, at posts. The implementation of two of the main initiatives in the HR Roadmap is described below: Implementation of the new career system/performance management Following the approval by the Administrative Council on 11 December 2014, the New Career System entered into force on 1 January The transposition of staff into the Job Groups of the New Career System was done effective 1 July The mid-term financial impact of the new career system have been included in the Financial Estimates and its long-term financial impact is one of the issues under consideration in the Financial Study carried out by an independent consultant. A positive effect in terms of a better control of both the staff costs and the future liabilities is expected by the Office. Examiner Career: Team Managers and Senior Expert Examiners Managing long term careers whilst keeping up motivation and performance is one of the challenges the EPO is facing. Within the framework of the HR Roadmap and more notably within the New Career System, the EPO has defined future career paths, in particular for examiners, such as the managerial career and the technical expert career. After extensive preparation and testing, the EPO is now implementing progressively these new career opportunities, i.e. the Team Manager and the Senior Expert Examiner positions. Healthcare insurance scheme Switching to self-insurance Since the setting up of the Office, the risk related to the healthcare insurance scheme has been covered by an insurance contract with a consortium of European insurance companies, with Cigna (previously Vanbreda) acting as intermediary and third-party administrator. On the basis of the opinion of an independent actuarial consulting firm as well as the Actuarial Advisory Group, and in line with Cigna's recommendation, the Office concluded that it could cover this risk more economically by self-insurance, as it is already done with all other EPO social security and pension schemes. Moreover, the healthcare insurance scheme of most large international organisations is selfinsured. The self-insurance scheme of the EPO will enter into force on 1 January The administration of the scheme (claims handling) will still remain with Cigna, under a new contract, as approved by the Administrative Council in June. Physical Security Programme 2016 to 2018 As the general threat level in Europe has increased since 2015, the Office has started revising its physical security concept for staff and assets, put in place in order to better safeguard its staff and its business from perceived threats. In this context, the Office needs to put in place enhanced physical access security installations which add up to an amount of some 3m in Operating Expenditure and 6m in Capital Expenditure for For 2018, credits in the amount of 2m in Operating Expenditure and 6m in Capital Expenditure have been considered for the Physical Security Programme.

8 6 Early Certainty in Patent Granting Procedure The EPO strives to provide high quality products, which withstand potential post-grant proceedings and create legal certainty. To be equally beneficial for the applicants and the public, legal certainty needs to be delivered in a timely manner. On 1 July 2014, Early Certainty from Search (ECfS) was implemented. Under ECfS, the EPO reprioritised its search and examination workload in order to provide certainty, as early as possible in the patent granting process. With ECfS, the first office action - the search report accompanied by a preliminary opinion on patentability - is given the highest priority and is delivered, at the latest, 6 months after receipt of the file by the search division. As ECfS has brought the expected results in terms of search timeliness, the EPO is now extending this concept of Early Certainty to the whole patent granting process. The EPO is aiming at finishing examination on average within a year from receipt of a valid request for examination. A streamlined opposition procedure will enable opposition decisions within 15 months, for most of the cases. The budgetary provisions for the Budget 2017, as well as the Estimates , reflect the implementation of the Early Certainty objectives. Reform of the Boards of Appeal (BOA) The Administrative Council decided to reform the EPO Boards of Appeal (BOA) within the framework of the European Patent Convention. The structural reform of the BOA aims to increase their organisational and managerial autonomy, the perception of their independence and also their efficiency, in order to respect the principle of effective legal protection within the current legal framework of the European Patent Convention (EPC). Aligning the organisation and functioning of the BOA with national, European and international developments in the judiciary requires a comprehensive reform covering five main elements: a new institutional framework, a specific career system, the regulation of potential conflicts of interest, the allocation of a separate building, and the improvement of the cost coverage of the appeal system. As a result of this reform, the current BOA will be restructured into a Boards of Appeal Unit within the EPO, which will be managed by a President of the Boards of Appeal - a new position -, who will be solely responsible to the Administrative Council and hierarchically independent of the EPO President. A newly created subsidiary committee of the Administrative Council, the Boards of Appeal Committee (BOAC), will create a link between the BOA and the Administrative Council and advise the President of the Boards of Appeal on managerial and organisational issues, including general guidance on performance of the BOA. Specific budgetary provisions have been included in the 2017 Budget, in the context of the structural reform of the EPO Boards of Appeal. These budgetary provisions mainly relate to the identification of the budgetary credits necessary for the operation of the BOA. They relate among others to the staff expenditure, and to the costs involved in the relocation of the BOA to a separate building in Munich, notably the rental and removal costs. A new fee policy for appeals to increase its financial autonomy and to improve the cost coverage of the BOA, is also foreseen in the long run. The total number of posts in the Appeals Area amounts to 237 permanent posts in 2017 (171 permanent posts for members and chairmen of BOA, 66 permanent posts in the administrative area).

9 The implementation of the provisions regarding the new budget procedure foresees that the President of the BOA prepares a substantiated budget request for submission to the President of the Office along with the BOAC opinion. Waiting for the further implementation of the reform and in particular for the nomination of the President of the BOA and the BOAC members, the 2017 Budget for the Office including the BOA has been prepared as it has been done in the previous years. Unitary Patent Protection (UPP) Under a proviso of strict budget neutrality, it is foreseen that the Unitary Patent will be fully financed by its own generated revenues. Concerning the Unitary Patent and the Unified Patent Court, the Office expects that the UK and the participating Member States will find a solution as soon as possible which will allow for a full implementation of these so-long awaited improvements. In order to facilitate the possible implementation of the UPP during 2017, the necessary budget chapters relating to the introduction of the UPP have been created pro memoria (p.m.) without assignment of any specific amount. In due time and depending on the progress of this project, it is foreseen to submit to the Select Committee a UPP Budget including all necessary provisions for the implementation of the Unitary Patent as well as the necessary details regarding Income and Expenditure to be attributed to it. 7

10 8 B. PLANNING PRINCIPLES AND ASSUMPTIONS The 2017 Budget and the Estimates as well as the Plan Financial Statements under IFRS are presented in Euro ( ) and all values are rounded to the nearest thousand ( 000) unless otherwise indicated. The following main assumptions were used to prepare the 2017 Budget and the Estimates Income Volume assumptions Current income estimates are based on total filings in 2017, compared to an estimate of filings in the 2016 Budget. In 2015, filings were recorded. The ratio of direct Eurodirect applications to International PCT applications for 2017 is assumed to remain constant in comparison to 2016, at 21 : 79. On the basis of this total filings development, the Office forecasts Euro-direct applications and PCT applications entering the regional phase during 2017 ( in the 2016 budget). In comparison to the past budget estimates, and taking into account the production of the Office the forecast number of published patents has been increased to in 2017 (there were forecasted in the 2016 budget while the actual previsions for patents to be published in 2016 amounts to ca ). Minimum amount for national renewal fees The minimum amounts for national renewal fees (for the 3rd to 20th year) provided for in Article 39 EPC are to be fixed for the periods 2017 and 2018, in accordance with the procedure approved by the Administrative Council in Return on RFPSS plan assets The return on the Reserve Funds for Pensions and Social Security (RFPSS) plan assets, maintained again at 3,75% on top of German inflation, will serve for planning purposes and is in line with the current long-term performance objective of the RFPSS.

11 9 Expenditure Planning Assumptions for Staff Costs Following the decision of the Council, the adjustments with effect from 1 July 2016 of salary and other elements of the remuneration of permanent employees of the Office represent +1,8% in the basic salary scale applicable for Germany, +1,8% in the Netherlands and +1,6% in Austria. The expected salary adjustments as at 1 July 2017 and beyond have provisionally been assumed at 2%. For 2017 an amount of 22,5m (3% of the basic salaries) has been reserved for step increases/promotions/bonuses, to be allocated in accordance with the provisions of the career/performance management system (3% was also reserved in 2016). The contribution rates for the social schemes (Pensions, Healthcare insurance and Long Term Care) are unchanged in 2017 compared to The next actuarial evaluation is expected to be made in 2017 as at , in order to reassess the necessary level of contributions in light of the financial position of the schemes. Staff Continued maximum ceiling of staff posts In the framework of the "Efficiency/Quality Policy", the Table of Posts will continue to be limited to permanent posts. In this context, the Office will maintain its policy applied since 2010 of re-allocating staff resources from support areas towards the patent grant area. Examining Staff The number of examiner posts is planned to be increased by 86 new posts (+2%) from up to examiner posts in 2017, which includes the newly created Senior Experts, within the technical career path of examiners. The Office plans to increase the number of Senior Expert posts by 40 in 2017 (in addition to the existing 80 posts). Additional 240 examiner posts are to be added over the rest of the planning period ( ) to reach a total of funded examiner posts by 2021.

12 10 Non-Examining Staff In the context of the Office's efficiency efforts, it is necessary to re-allocate staff resources both within the administration and support areas and towards the patent grant area. The Office maintains the principle that any new post within the Office needs to be compensated by a corresponding deletion, so as to ensure the respect of the limit on the table of posts, at any time. The figure of 782 funded posts in Patent Administration reflects the upper limit of funded posts needed at the beginning of With the delivery of automation benefits, further savings in view of compensating for new examiner posts are to be expected. Posts foreseen for The Hague Out of the posts, posts are foreseen to be located in The Hague in the 2017 Budget, which represents an increase of 1 post compared to the 2016 Budget and is in full respect with the provisions of the Protocol on the Staff Complement of the European Patent Office at The Hague (Protocol on Staff Complement) of 29 November 2000.

13 11 C. BUDGET RESULTS 2017 MAIN BUDGET AND ESTIMATES a) Budget Operating Income (in m) Other (in m) Actual Budget Estimates % 2018 % 2019 % 2020 % 2021 % Group Other TOTAL The forecasted Income for Filing and Search (Groups ) increases by 20m for 2017 compared to the Budget Income from Examination, Grant and Opposition (Groups ) increases by 62m for 2017 compared to 2016, due to a higher amount in grants as well as a higher number of fee cases in Examination and Opposition. Income from Designation and Renewal Fees (Group ) for 2017 is expected to remain globally stable compared to the Budget The ongoing productivity efforts of the Office are expected to contribute to reduce the pending stock and further quality/timeliness efforts will reduce the average pendency period of applications and rejuvenate the application stock pending with the EPO. Consequently, during 2017 the renewal fees for applications are currently foreseen to decrease by 35m, whereas the higher number of grants shall materialise in higher revenues for renewal fees for granted patents for a similar amount, thereby, offsetting the reduction in renewal fees for applications. It is worth stressing that the forecasts for the Operating Income are based on an extrapolation of applicant's behaviour as currently observed.

14 12 At this stage and lacking better information, no specific provision has been made for Income relating to the Unitary Patent. In any case, in the context of the overall budget, these amounts are considered to be immaterial for the first year of its introduction. Furthermore, it is also likely that, in global budgetary terms, Income relating to Unitary Patent would be compensated by decreases in Renewal Fees for granted patents to be received by the Office.

15 13 b) Budget Operating Expenditure (in m) /33/ /37/38 (in m) Actual Budget Estimates % 2018 % 2019 % 2020 % 2021 % Chapter /33/ /37/ TOTAL In comparison with the 2016 Budget, the total Operating Expenditure increases by 64m equivalent to 4%. Staff costs show a moderate increase (+ 16m, +1,1% compared to 2016). The development of staff costs is determined by the following aspects: - firstly, the inflation adjustment, resulting from the application of the salary method, assumed at 2% as of July 1, 2017; - secondly, the effect of the career progression and bonuses, which is budgeted for 22,5m for 2017 ( 22m in 2016); - thirdly, the residual variation in the staff costs, being mainly the result of the difference in the salary between the newcomers and the retirees and of the variation of the remaining components of the staff costs. The remaining increase of 48m for all other Operating Expenditure relate to the following items: - 20m are foreseen for removal and other operating costs relating to Project New Main (The Hague), - 14m relate to data processing and standardization services for patent applications that extend the scope of the Optical Character Recognition (OCR) activities, - 3,4m relate to Security Measures reflected as Operating Expenditure in 2017, - 4,5m relate to the relocation of the BOA to a separate building in Munich, - 6,1m relate to other items reflected as General Operating Expenditure.

16 14 c) Budget Operating Result (in m) Operating income Operating expenditure Operating result (in m) Operating income Operating expenditure Operating result Actual Budget Estimates The Operating Result is the difference between the Operating Income and the Operating Expenditure. The Operating Result for 2017 is expected to increase by 17m in comparison to 2016.

17 15 d) Budget Capital Income and Expenditure (in m) Ch. 65 Ch.41 Ch. 42 Ch. 45 (in m) Actual Budget Estimates % 2018 % 2019 % 2020 % 2021 % Capital income Ch Capital expenditure Ch Ch Ch TOTAL Capital result Capital Income (Ch. 65) includes only home loans repayments by staff, which are equal to the expected amount of home loans to be granted (Capital Expenditure, Ch. 45). Capital Expenditure are budgeted for 147m for 2017, an increase of 2m. Ch. 41 mainly contains investment needs for the new building in The Hague amounting to 89m in 2017, fitting out and fixed technical installations for the relocation of the BOA to a separate building of 7m and Security related measures of 6m. As regards the implementation of the IT Roadmap in 2017, an amount of 9m has been included under the heading Ch. 42.

18 16 e) Total Authorisation Budget Results of the Office and of the Organisation The overall budget result for the period is as follows: (in m) Office Operating Section Office Capital Section Result Office PSSS Result Organisation (in m) Actual Budget Estimates Office Operating Section Office Capital Section Result Office PSSS Result Organisation The planned 2017 Result of the Organisation amounts to 165m despite considerable investments in buildings. During the further planning period and once having finalised the New Main Building, the expected investments would decrease. The further implementation of Early Certainty in Patent Granting Procedure is expected to lead to a decrease in renewal fees for applications which reduces the expected Result of the Organisation during the Planning Period (mid-term perspective). The decrease in renewal fees for applications is being offset by an increase in renewal fees for granted patents (long-term perspective).

19 f) Authorisation Budget of the Organisation (Operating Section) The basis for the transition from the Authorisation Budget to IFRS presentation of the results is the Total Authorisation Budget result of the Organisation which is adjusted by the capital transactions that are not relevant for IFRS, in order to calculate the Budgetary Operating Result (Organisation). 17 (in m) Result Organisation (Authorisation view) Office Capital Section Budgetary operating result (Organisation) Basis for transition from Authorisation Budget to IFRS (in m) Actual Budget Estimates Result Organisation (Authorisation view) Elimination of capital transactions Office - Office Capital Section Budgetary operating result (Organisation)

20 18 D. PLAN FINANCIAL STATEMENTS UNDER IFRS a) Statement of Comprehensive Income Operating Result The Plan Statement of Comprehensive Income is derived from the Authorisation Budget of the Organisation (Operating Result) in which the following adjustments are being made: - Employee Benefits: Contributions to PSSS are replaced by the current and past service cost on DBOs and service cost for SSP. Further adjustments relate to differences in benefits paid as well as changes in provisions for leave not taken and personnel expenses for home loans; - Depreciation and amortisation for fixed assets are introduced; - Other adjustments relate to timing difference in revenue recognition for procedural fees (Prepaid Fees difference between opening and closing balance), recognition of internally developed intangible assets, finance lease adjustments and reallocations of Income and Expenditure within Operational and Financial Result which are treated differently between the Authorization Budget and IFRS. (in m) Budgetary operating result (Organisation) Employee Benefits Depreciation/Amortisation Other adjustments IFRS Operating Result for the year Transition from Authorisation Budget to IFRS (in m) Budget Estimates Budgetary operating result (Organisation) Employee Benefits Depreciation/Amortisation Other adjustments IFRS Operating Result for the year

21 The IFRS Operating Result comprises of the following items: 19 (in m) Budget Estimates Revenue Other operating income Work performed and capitalized Employee benefit expenses Depreciation and amortisation expenses Other operating expenses IFRS Operating Result for the year The revenue for 2017 is expected to grow by an amount of 129m, in comparison with Budget 2016, due to the expected growth in filings and production. As it was done in previous years, the International Service for Remunerations and Pensions (ISRP) of the OECD has provided estimates on the Defined Benefit Obligations (DBOs). The Office has continued to retain for the 2017 Budget and Estimates the flat 5% forecast discount rate, already used in the budgets since The increase of Other operating expenses amounts to 53m and corresponds to the increases described in section D above. The Operating Result for 2017 is positive at 145m, an improvement of 83m compared to the budgeted Operating Result for 2016.

22 20 Financial Result The forecast IFRS results of the Organisation are shown below, with a breakdown between the Organisation's Operating and Financial results. (in m) IFRS Operating Result IFRS Financial Result Total Comprehensive Income for the year (in m) Budget Estimates IFRS Operating Result IFRS Financial Result IFRS profit / loss of the year Other Comprehensive Income for the year Total Comprehensive Income for the year It must be noted that due to the underlying uncertainty of interest rate changes, no Other Comprehensive Income can be planned. The Financial Result is mainly triggered by the return on the expected level of assets of the RFPSS netted by the interest cost of the Defined Benefit Obligation (DBO). In comparison with the Budget 2016, it is expected to improve by 13m, but it is still negative at -73m. The Financial Result remains highly volatile, as being dependent on the evolution of the financial markets in both the interest rates and the returns on RFPSS assets. IFRS Profit/ Loss of the year The expected IFRS Profit for the year 2017 amounts to 72m, an improvement of 96m compared to Budget Since the Other Comprehensive Income for the year is primarily driven by fluctuations on the financial market, no forecast value is considered here. The Total Comprehensive Income for the year is therefore identical to the projected Profit under IFRS.

23 b) Statement of Financial Position under IFRS 21 (in m) Budget Estimates Fixed Assets RFPSS Net Assets Liquidity Other Assets TOTAL ASSETS Equity DBO Prepaid Fees Other Liabilities TOTAL EQUITY AND LIABILITIES Assets Fixed Assets The fixed assets of the EPO (property, plant, equipment and intangible assets) are forecasted to increase in 2017, following building investments for the new building in The Hague and the capitalisation of intangible assets related to the IT Roadmap. RFPSS Net Assets The RFPSS assets are expected to grow albeit at a slightly decreasing rate (5,7% on average p.a.) reaching 9 306m in The decreasing growth rate is caused by a declining net balance between contributions, expected returns and disbursements between 2017 and Liquidity The liquidity is made up of the current and non-current bonds, other financial assets as well as cash and cash equivalents as defined under IFRS. The liquidity is expected to increase over the period, allowing a full financing with own resources of the investments planned, mainly the new building in The Hague. Other Assets Other Assets are planned to increase between 2017 and 2021 following the growth in trade and other receivables as well as in Salary Savings Plan Assets.

24 22 Equity and Liabilities Equity The expected (negative) equity between 2017 and 2021 reduces progressively between m and m. It should be noted that the expected negative equity at the beginning of 2017 ( m) is significantly lower than the one as at end of the latest closed accounting period ( : m). The variation is primarily caused by the difference between the assumed discount rate of 5% for the DBO (comprising pensions as most important item) and the actual discount rate at the year-end closure 2015 (e.g. 2,6% for pensions). The volatility of the discount rate, combined with the high sensitivity of the assessment of the liabilities to changes in the discount rate, can lead, at least in the short term, to extreme fluctuations in the actual values of the liabilities and consequently of the negative equity. The development of the Equity shown in the table before is therefore meant to illustrate primarily its expected evolution from year-to-year when computed on a comparable basis, rather than to allow for comparison between forecasts and actuals. Defined Benefit Obligations (DBO) Throughout the planning period, a standardized discount rate of 5% has been applied. The Defined Benefit Obligations are planned to grow on average by 5,2% p.a., a slightly lower percentage than the RFPSS assets, reaching m in Prepaid Fees The prepaid fees (current and non-current), show a decrease of 3,1% on average p.a., corresponding to the planned evolution of prepaid fees for pending applications in Early Certainty. Other Liabilities Other liabilities (current and non-current) mainly increase due to higher trade and other payables as well as Salary Savings Plan Obligations. The weight of the Salary Savings Plan in both assets and liabilities is still low throughout the planning period, and amounts to 209m or 1,6% of the DBO by the end of 2021.

25 Future renewal fees for European patents and costs for work not completed in the excess of prepaid fees received 23 (in m) Budget Estimates NPV of renewal fees Costs for work not completed in excess of prepaid fees received The net present value (NPV) of future renewal fees for European patents payable under Art. 39 EPC is not recognized as an asset in the Organisation's Statements of Financial Position, because there is no obligation on the part of the patentees to renew their patents each year. These fees are therefore excluded from the Statement of Financial Position under IFRS, but are included as a note to the Financial Statements, for information purposes only. Another element that is not recognized in the Statement of Financial Position under IFRS relates to costs for work not completed in excess of prepaid fees. It is possible that income from procedural and renewal fees for pending applications will not cover its remaining costs in granting the patent. As such future operating losses do not meet the criteria of a liability, no provision is recognized. While the amount of prepaid fees for work not yet completed is included as a liability, the true cost of performing this work in excess of those fees received is not. The amount of costs for work not completed in excess of prepaid fees decreases over the period caused by two aspects: - firstly, the prepaid fees balance for pending applications is expected to decrease going along with the Early Certainty objectives, - secondly, the expected productivity increases lead to a reduction of the expected costs not covered by the procedural fees. The table above shows the respective figures of these two elements. When considering these amounts, however, it should be borne in mind that they relate to two different portfolios: namely granted patents and pending applications. Furthermore, they also have different cash flow patterns. Therefore, they are, as such, not directly comparable with each other. Furthermore, they do not fully represent the future development of costs and revenues. Also they do not take account of future renewal fees on pending applications.

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27 25 E. ANNEXES

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29 27 1. Authorisation Budget (Organisation)

30 28 SUMMARY OF INCOME AND EXPENDITURE (PARTS I AND II OF THE BUDGET) in '000 INCOME EXPENDITURE PART I MAIN BUDGET PART II PENSION AND SOCIAL SECURITY SCHEMES TOTAL Adjustment for transferrals within the budget: PART I MAIN BUDGET Section 1: Operating section Office contributions to pension and social security schemes (Articles 3002/3) Transfer of operating result Section 2: Capital section Transfer of operating result (Article 6000) PART II PENSION AND SOCIAL SECURITY SCHEMES Section 1: Operating section Office contributions to pension and social security schemes (Articles ) Transfer of operating results Section 2: Capital section Transfer of operating results (Article 6600) NET TOTAL

31 2. Authorisation Budget - Office - Pension and Social Security Schemes - Office and Pension and Social Security Schemes consolidated 29

32 30 AUTHORISATION BUDGET UNDER ARTICLE 25(1)a) FINREGS - OFFICE in '000 Chap. Accounts Budget Estimates E X P E N D I T U R E Art Section 1: Operating section 30 Staff Property and equipment maintenance EDP equipment maintenance Co-operation and meetings Patent information and communication General operating expenditure Project expenditure funded by third parties Financial expenditure Sub-total Transfer to Section 2 Operating section, surplus TOTAL operating section Section 2: Capital section 410 Land and buildings Furniture and equipment EDP tangible and intangible assets Loans and advances to third parties Authorisation budget, surplus TOTAL capital section

33 31 AUTHORISATION BUDGET UNDER ARTICLE 25(1)a) FINREGS - OFFICE in '000 Chap. Accounts Budget Estimates I N C O M E Art Section 1: Operating section 500 Income from filing and search (EPC) Income from filing and search (PCT) Income from other search work Income from examination, grant and opposition (EPC) Income from examination (PCT) Appeal fees Designation and renewal fees (EPC) Renewal fees (UPP) - - p.m. p.m. p.m. p.m. p.m. 535 Extension and validation fees Patent information products General operating income Third-party project funding Financial income Sub-total Operating section, deficit TOTAL operating section Section 2: Capital section 60 Operating section, surplus Repayment of staff home loans Authorisation budget, deficit TOTAL capital section

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35 33 AUTHORISATION BUDGET UNDER ARTICLE 25(1)a) FINREGS PENSION AND SOCIAL SECURITY SCHEMES in '000 Art. E X P E N D I T U R E Section 1: Operating section Accounts Budget Estimates Pension payments Salary Savings Plan (SSP) Healthcare Long-term care Death Sub-total Transfer to Section 2 Operating section, surplus TOTAL operating section Chap. 46 Section 2: Capital section Transfer of pension and social security scheme surpluses to reserve funds/balance sheet Deficit death insurance TOTAL capital section Art. I N C O M E Section 1: Operating section 5600 Pension contributions Salary Savings Plan (SSP) Healthcare Long-term care insurance Death insurance TOTAL operating section Chap. Section 2: Capital section 66 Net income pension and social security schemes TOTAL capital section

36 34 AUTHORISATION BUDGET UNDER ARTICLE 25(1)a) FINREGS OFFICE / PENSION AND SOCIAL SECURITY SCHEMES (consolidated, adjusted for transferrals within the budget) in '000 Chap. Accounts Budget E X P E N D I T U R E Section 1: Operating section 30 Staff Property and equipment maintenance EDP equipment maintenance Co-operation and meetings Patent information and communication General operating expenditure Pension and Social Security Schemes Project expenditure funded by third parties Financial expenditure Sub-total Operating section, surplus TOTAL operating section Section 2: Capital section 410 Land and buildings Furniture and equipment EDP tangible and intangible assets Loans and advances to third parties Consolidated surplus TOTAL capital section

37 35 AUTHORISATION BUDGET UNDER ARTICLE 25(1)a) FINREGS OFFICE / PENSION AND SOCIAL SECURITY SCHEMES (consolidated, adjusted for transferrals within the budget) in '000 Chap. Accounts Budget I N C O M E Gr Section 1: Operating section 500 Income from filing and search (EPC) Income from filing and search (PCT) Income from other search work Income from examination, grant and opposition (EPC) Income from examination (PCT) Appeal fees Designation and renewal fees (EPC) Renewal fees (UPP) - - p.m. p.m. p.m. p.m. p.m. 535 Extension and validation fees Patent information products General operating income Pension and Social Security Schemes Third-party project funding Financial income TOTAL operating income Section 2: Capital section 60/66 Operating section, surplus Repayment of staff home loans TOTAL capital section

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39 37 3. IFRS Results

40 38 Transition from budget estimate to Plan IFRS Statement of Comprehensive Income European Patent Organisation 2017 Budget IFRS Adjustments IFRS Plan in '000 REVENUE Revenue from patent and procedural fees Ch. 50 Filing and search Examination, grant and opposition Appeal Designation, renewal, extension and validation Other revenue Other operating income Ch. 55 General operating income Pension and social security scheme income Third party project funding Work performed and capitalised Total EXPENSES Employee benefit expenses Ch. 30 Staff/Personnel expenses Depreciation and amortisation expenses Ch. 39 Depreciation Other operating expenses Ch. 31 Property and equipment maintenance EDP equipment maintenance Co-operation and meetings Patent information and public relations General operating expenditure PSSS expenditure Project expenditure funded by third parties Total OPERATING RESULT Finance revenue Ch. 58 Finance income Finance costs Ch. 38 Finance expenditure FINANCIAL RESULT Total PROFIT/(LOSS) FOR THE YEAR Other Comprehensive Income TOTAL COMPREHENSIVE INCOME FOR THE YEAR

41 39 Explanatory Notes 2017 Reclassification Adjustments TOTAL IFRS * adjustments Ch. 50 Prepaid fees - Filing and search Ch. 51 Prepaid fees - Examination, grant and opposition Ch. 52 Prepaid fees - Appeal Revenue from patent and procedural fees Searches for national office Administrative fees Other revenue EPO-related Administrative fees Income from revaluation of insurance assets Income from internal tax Profits on exchange Ch. 55 General operating income Work performed and capitalised Ch. 56 Pension and social security scheme income Current and past service cost on DBOs Service cost -SSP Benefits paid Change in provision for leave not taken / home leave Netting of contributions Netting of internal tax Personnel expenses for home loans Ch. 30 Staff/Personnel expenses Ch. 32 EDP equipment maintenance (Finance lease) Losses on exchange Provisions for general expenditure Ch. 35 General operating expenditure Ch. 36 PSSS expenditure Ch. 39 Depreciation and amortisation expenses Expected return on RFPSS assets Interest adjustment IFRS home loans Real return on SSP assets Profits on exchange Ch. 58 Finance income Interest cost on DBOs Financial lease and other finance cost Revaluation of SSP liabilities Losses on exchange Ch. 38 Finance expenditure Other Comprehensive Income Total IFRS adjustments (*) For further explanations, please refer to the explanatory memorandum above

42 40 Transition from budget estimate to Plan IFRS Statement of Comprehensive Income European Patent Organisation 2018 Budget IFRS Adjustments IFRS Plan in '000 REVENUE Revenue from patent and procedural fees Ch. 50 Filing and search Examination, grant and opposition Appeal Designation, renewal, extension and validation Other revenue Other operating income Ch. 55 General operating income Pension and social security scheme income Third party project funding Work performed and capitalised Total EXPENSES Employee benefit expenses Ch. 30 Staff/Personnel expenses Depreciation and amortisation expenses Ch. 39 Depreciation Other operating expenses Ch. 31 Property and equipment maintenance EDP equipment maintenance Co-operation and meetings Patent information and public relations General operating expenditure PSSS expenditure Project expenditure funded by third parties Total OPERATING RESULT Finance revenue Ch. 58 Finance income Finance costs Ch. 38 Finance expenditure FINANCIAL RESULT Total PROFIT/(LOSS) FOR THE YEAR Other Comprehensive Income TOTAL COMPREHENSIVE INCOME FOR THE YEAR