Explanatory note to budget and annual contributions for ESS ERIC Financial years 2013 to 2017

1. The ESS ERIC financial year will run from 1 June to 31 May. U.K.

2. The budget presented has been set for the first 4 years of the operation of the ESS ERIC. The ESS ERIC Steering Committee has been aiming to provide a budget of EUR 2,3 million per annum for Core Scientific activities. A smaller budget will be available if, in the interim, not all countries which have expressed strong interest can join the ERIC in time for the start of operations in June 2013. Annual increases will allow for inflation of 3 per cent per annum on the total budget. U.K.

3. Based on the expected number of signatories a budget of EUR 2,2 million in the initial year is foreseen (which will be reduced if not all listed countries provide the required signature to join the ERIC). If further countries join, the budget will be increased up to EUR 2,3 million with contributions for existing Members staying fixed (new joiners will have their contribution calculated alongside those of existing Members, one country at a time, to determine their required contribution. The amount required from founder Members will remain fixed). Once the target is reached any additional countries joining will lead to lower contributions for all Members and Observers paying more than the basic participation fee (unless agreed otherwise by the General Assembly). U.K.

4. The annual contributions have been calculated following the procedures outlined in Article 17 of these Statutes, with the following specifications: U.K.

(a)

the basic participation fee has been set at EUR 20 000 in the initial year and will be updated by 3 % inflation for the subsequent 3 years;

(b)

as the host country, the UK will pay an enhanced contribution, agreed at EUR 1 000 000 for the first 2 years, then reverting to the original pledge of EUR 700 000 per year adjusted for inflation;

(c)

a contribution from Members of the balance required calculated according to their relative GDPs, based on GDP 2009 World Bank data. This only applies to Members who would have to make a contribution of EUR 20 000 or more (rounded to the nearest EUR 100);

(d)

an inflation rate of 3 per cent per annum (composite) applies from the second year, except for the UK’s enhanced contributions for the first 2 years (meaning that increases for countries other than the UK are a little over 3 %);

(e)

at this stage, Swiss and Norwegian law does not permit them to join the ERIC with Member status. These two countries will participate as Observers and they will comply with the requested annual contribution as indicated in this note.