Program 2018 iktva Supplier Workshop – First Time Filers ءافتكإ 1 Saudi Aramco: Company General Use
iktva Overview iktva will work with Saudi Aramco vision is to enable a iktva is a Saudi Aramco iktva is a program, suppliers in a new Strategic Imperative globally competitive Saudi not a metric way for success Industrial Base 2021 TARGETS ARE: 70% Local Content Thousands of Jobs 30% Exports 2 Saudi Aramco: Company General Use
Four Enablers Required to Achieve 70% iktva by 2021 Local Workforce SME Development Ecosystem Major Suppliers Development 1 2 3 4 • • • Develop local Workforce needed Increase local content • Casting & Forging supply-base for localization through direct spend • Steel Plate (indirect spend) • Industrial Parks 3 Saudi Aramco: Company General Use
4 The Kingdom’s Vision and Saudi Aramco’s Role “A thriving economy provides opportunity for all… we will develop our investment tools to unlock our promising economic sectors, diversify our economy and create job opportunities .” HRH Deputy Crown Prince Mohammed bin Salman • Enable the growth & diversification of the Kingdom’s economy • Double manufacturing and industrial services sectors 70% Saudi Content • Develop a strong, high-skilled Saudi workforce Saudi Jobs 30% Exports The iktva program is our value creating contribution to Vision 2030 4 Saudi Aramco: Company General Use
iktva Development Timeline iktva CONCEPTUALIZATION AND PROTOTYPING WITH SUPPLIERS 2014 TESTING iktva Survey WITH THE TOP 30 SUPPLIERS 2015 LAUNCHING iktva PROGRAM HOSTED BY HRH PRINCE OF EP iktva IS WIRED INTO CONTRACTS AND PROCUREMENT PROCESS 2016 iktva AWARD FOR THE BEST iktva SCORE BY SUPPLIER HOSTED BY HRH PRINCE OF EP 2017 DEPRECIATION AND R&D ARE ADDED TO FORMULA EXPORT FACTOR INTRODUCED INTO FORMULA 2018 ENHANCEMENTS TO DEPRECIATION AND EXPAT COMPENSATION INTRODUCED 2019 6 Saudi Aramco: Company General Use
7 Saudi Aramco: Company General Use
iktva within Saudi Aramco Policy “The Company has a long term commercial interest in developing local supply chain capabilities and supporting industries. Therefore, the Company encourages the development of a strong local supplier community in its areas of operations. To meet this objective, value- adding Saudi Arabian supply sources will be used preferentially when technically and commercially viable. ” 8 Saudi Aramco: Company General Use
iktva in Procurement Process 1. No Change in technical evaluation process 2. An iktva evaluation step has been established 3. No change in commercial evaluation process 9 Saudi Aramco: Company General Use
iktva in Action 1 st Timer Baseline 5 Year Survey iktva % Plan 70 % Local Monitor Future Content Progress Surveys 10 10 Saudi Aramco: Company General Use
iktva Formula The objective is to drive key activities towards localization and job creation, which will be assessed against the following metrics: A. Localized goods and services ($) B. Salaries paid to Saudis ($) C. Training & Development of Saudis ($) E. In relation to revenue D. Supplier Development Spend ($) r. Local Research and Development ($) X. Export Revenue Factor (%) Supplier iktva Formula 𝑩+𝑪+𝑫+𝑬+𝒔 + 𝒀 % iktva = DEFINITION 𝑭 The iktva program drives, measures and monitors the “added - 𝑭𝒚𝒒𝒑𝒔𝒖 𝑺𝒇𝒘𝒇𝒐𝒗𝒇 𝒃𝒕 𝒃 % 𝒑𝒈 𝑼𝒑𝒖𝒃𝒎 𝑺𝒇𝒘𝒇𝒐𝒗𝒇 value” brought to the X = * 10% points (max of 10%) 𝟒𝟏% 𝑭𝒚𝒒𝒑𝒔𝒖 𝑼𝒃𝒔𝒉𝒇𝒖 Kingdom by a supplier. 11 Saudi Aramco: Company General Use
iktva Survey Worksheet • iktva is a Saudi Aramo 3 years provided to create baseline Strategic Imperative • Report both Saudi Aramco and Total KSA (including Saudi Aramco) 12 Saudi Aramco: Company General Use
General Instructions 1. All financial amounts should be reported in USD. 2. Amounts reported should correspond to the company’s fiscal year end . 3. Assumptions and calculation methodologies utilized should be consistent with prior years and with recognized accounting standards. 4. Amounts should not be double counted. For example, if Training Costs are listed, these costs should not also be included in Goods and Services or Payroll. 5. For JVs and subsidiaries, incorporate Parent’s share of operations into their own iktva calculation – in general one consolidated submission per parent company • Talk to us if you have questions or want to submit individually • Intercompany transactions should be eliminated 6. Reports will be submitted annually 7. Create supporting documentations similar to that used in financial audits. 8. Use the right survey tool • First time filer survey • Repeat filers 13 Saudi Aramco: Company General Use
Company Information iktva is a Saudi Aramo Strategic Imperative Affiliates Types of G&S Included iktva Progress Operating Locations 14 Saudi Aramco: Company General Use
Page 1: Questions 2 & 3 Long-winded responses Best to be short and concise Instead 15 Saudi Aramco: Company General Use
Category E – Section 1.0: Revenue Page 2 Includes revenue from Aramco Revenue Ratio $20 mil / $50 mil = 40% • Includes company-wide revenue including affiliates • IK sourced • OOK sourced • For partially owned entities of the company, partial credit is given • Saudi Aramco Revenue: • Includes indirect revenue through agents and EPC revenue • Excludes partially owned subsidiaries and JVs • Saudi Aramco revenue amounts should be confirmed with Saudi Aramco through iktvaSurveyinfo@aramco.com 16 Saudi Aramco: Company General Use
Category A – Section 2.0 – Goods and Services Page 2 Goods & Services = IK COGS/COS + Goods & Services ≠ COGS or COS SG&A + R&D 17 Saudi Aramco: Company General Use
IK Goods and Services Allowed Costs Excluded Costs o Materials and supplies o Zakat and taxes (income, VAT, withholding) o Transportation/logistics o Penalties o Selling, general and administrative o Expat visa, iqama, and dependent fees o Professional services o Customs, duties and other government o Catering fees o Equipment/vehicle/facility rental o Intercompany costs o Utilities o Capital expenditures o Temporary manpower o Allowances and provisions (bad debt, o Insurance and financing costs uncollectible AR) o Travel and accommodations o Costs reported in other sections of the o Security services survey including expat benefits o Custom clearance services 18 Saudi Aramco: Company General Use
Section 8.0 – Top in-Kingdom Suppliers Page 3 > 70 % 19 Saudi Aramco: Company General Use
Category A – Section 2.0 – Goods and Services Page 2 Page 3 20 Saudi Aramco: Company General Use
Category A – Section 2.0 – Goods and Services Page 2 is Page 6 21 Saudi Aramco: Company General Use
Category A – Section 2.0 – Goods and Services Page 2 is Page 4 Section 9.0 - Labor 22 Saudi Aramco: Company General Use
Category A – Section 2.0 – Goods and Services Page 2 Revenue Ratio (40%) iktva is a Saudi Aramo Strategic Imperative Unless otherwise justifiable, Saudi Aramco Goods & Services is to be estimated using a simple ratio. Challenges: • Inventory fluctuations • Length of supplier table 23 Saudi Aramco: Company General Use
Category B – Section 3.0 - Saudi Payroll Page 2 Year End GOSI iktva is a Saudi Aramo Strategic Imperative Revenue Ratio (40%) Can include Saudi Expat Unless otherwise justifiable, Saudi Aramco headcount and compensation is to compensation and be estimated using the revenue ratio. headcount 24 Saudi Aramco: Company General Use
Section 9.0- Labor Page 4 25 Saudi Aramco: Company General Use
Category B – Section 3.0 - Saudi Payroll Page 2 Page 4 26 Saudi Aramco: Company General Use
Section 9.0 - Labor Page 4 Page 2 Page 2 27 Saudi Aramco: Company General Use
Category C – Section 4.0 - Training & Development Page 2 iktva is a Saudi Aramo Strategic Imperative Can include IK and OOK costs if related to Training & Development of Saudis: • Training fees • Travel and accommodation • Expats and outside consultants costs 28 Saudi Aramco: Company General Use
Category D – Section 5.0 – Supplier Development Page 2 iktva is a Saudi Aramo Strategic Imperative • Can include customer training & development costs related to skills/capabilities improvements • Does not include installation, commissioning and other contract required development activities • Does not include sales and marketing costs • Can also include OOK cost 29 Saudi Aramco: Company General Use
Category R - Section 6.0 – Research & Development Page 2 • Research is original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding. • Development is the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production or use. 30 Saudi Aramco: Company General Use
Section 10.0 – Capital Expenditures Page 5 Can be completed going back 10 years at supplier’s option 31 Saudi Aramco: Company General Use
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