Download - PDD - Enterprise Structure v2-5
Enterprise StructureProcess Definition Document
Document number: PDD051
Author: A. R. Hardie
Document Approval Log:Version
Date Document Status Approver Role
V1.0 15/11/2006 Initial draft – Financial Organisation A. R. Hardie BPOV1.1 27/11/2006 Initial draft – expanded to include full enterprise
structureA. R. Hardie BPO
V1.2 06/12/2006 Initial draft- updated use of Distribution Channel A. R. Hardie BPO
V1.3 02/01/2007 Uploaded to Solution Manager T. McLellan Project Administration
V1.4 09/01/2007 Updated to reflect revised sales organisation and company numbers, and the addition of Profit Centre, Functional Areas and Cost Centres
A. R. Hardie BPO
V1.5 14/03/2007 Updated to reflect restriction of distribution channels to “trade” and “inter co” only (not country specific)
A. R. Hardie BPO
V1.6 2/05/2007 Updated to reflect acquisition of Programma and use of parallel ledgers
A. R. Hardie BPO
V1.7 25/10/2007 Updated to reflect roll out to USA (including change to re-sale and to holding company)
A. R. Hardie BPO
V1.8 10/02/2008 US Adjustment changes and format changes A Goggin Project Manager
V1.9 01/05/2008 Further US Adjustments A Goggin Project Manager
V2.0 13/07/2009 Update to reflect roll out to India A Goggin Project Manager
V2.1 03/02/2010 Update to reflect changes in UK, Germany and Canada
A Goggin Project Manager
V2.2. 21/04/2010 Update to reflect changes in UK L Dyer BPO
V2.3 18/05/2011 Update to reflect addition of Megger SARL A Goggin Project Manager
V2.4 31/05/2011 Update to reflect split of US Mfg & US Sales A Goggin Project Manager
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Megger Group Limited Enterprise Structure
Index:
1. PROCESS SUMMARY..................................................................................................................... 3
2. KEY MASTER DATA....................................................................................................................... 4
3. SAP PROCESS / CONCEPT / DESIGN...........................................................................................5
3.1. Ledgers.................................................................................................................................... 53.2. Operating Concern................................................................................................................... 53.3. Controlling Area...................................................................................................................... 53.4. Company.................................................................................................................................. 63.4.1. Primary Manufacturing & Sales Operations.........................................................................63.4.2. Sales & Distribution Companies...........................................................................................73.4.3. Inter Company Eliminations.................................................................................................83.4.4. Planning Adjustments...........................................................................................................83.5. Credit Control Area................................................................................................................. 93.6. Sales Organisation................................................................................................................... 93.7. Distribution Channel................................................................................................................ 93.8. Division.................................................................................................................................... 93.9. Laboratory / Design Office.....................................................................................................103.10. Sales Area.......................................................................................................................... 103.10.1. UK...................................................................................................................................... 103.10.2. US and Sales Companies....................................................................................................103.11. Sales Office........................................................................................................................ 113.12. Plant.................................................................................................................................. 113.13. Purchasing Organisation....................................................................................................123.14. Storage Location................................................................................................................ 123.15. Shipping Point.................................................................................................................... 123.16. Transport Planning Point...................................................................................................123.17. Profit Centres..................................................................................................................... 123.18. Functional Areas................................................................................................................ 133.19. Cost Centres....................................................................................................................... 13
4. ASSOCIATED DOCUMENTS........................................................................................................14
4.1. Company Legal Structure.......................................................................................................144.2. SAP Organisation................................................................................................................... 14
5. ASSUMPTIONS / OPTIONS CONSIDERED................................................................................15
5.1. Business Changes................................................................................................................... 155.2. Outstanding Issues / Actions...................................................................................................15
6. APPENDIX 1 – COMPANY LEGAL STRUCTURE.....................................................................16
7. APPENDIX 2 – SAP ORGANISATION.........................................................................................17
8. GAAP Adjustments.................................................................................................................... 38
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Megger Group Limited Enterprise Structure
1. Process SummaryMegger Group exists as a UK registered legal entity with a number of subsidiaries within various jurisdictions around the world. Within the US, however, the legal identities of the individual companies are blurred, for whilst the factories operate independently the sales organisations and credit control operations act as if it were a single entity and “do business as” Megger (a formally recognised concept) presenting a single face to the outside world.
This blurring of the legal organisation is carried over into the management structure, whereby Megger’s core philosophy of Profit Centres both divides legal entities and cuts across them, with manufacturing and selling responsibilities split (resulting in trading between profit centres).
In the UK however, the profit centre management structure has, to a large extent, been replicated in the legal entity structure with Megger Limited (sales company) and Megger Instruments Limited (manufacturing company). The change in legal structure was made in 2010 and differs from the single legal entity which existed in 2007 when SAP was first implemented. This will almost entirely eliminate the need for inter profit centre trading transactions, replaced by normal inter-company trading. There are a few minor exceptions, for example where the sales company sell to CSA/Iberia sales territory.
Financial reporting to Megger’s parent (TBG) is in US$ under IFRS, but Group accounts have to be filed in Sterling under UK GAAP. Additionally all local entities have to report in their own currencies under their own accounting conventions (and the UK operating company uses different UK GAAP principles to those employed by Megger Group Limited).
From an operational point of view, although the SAP implementation will eventually be Group wide, it is intended that each operation can use the system to suite its local requirements and not have a Group wide detailed solution imposed upon them.
This document details the organisational structure to be used in Megger’s implementation.
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Megger Group Limited Enterprise Structure
2. Key Master DataThe purpose of this PDD is to document the Enterprise Structure within SAP and Master Data is therefore not relevant (although all master data records will use elements from this structure).
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Megg
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Enterprise
Structure -
Appen
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Megger Group LimitedAppendix 2.10 – US Cost Centres
3. SAP Process / Concept / DesignThe Megger organisation has to be replicated within SAP by defining the Enterprise Structure – the framework within which all the SAP process and reporting will take place. The definition of this structure is done as IMG configuration and master data maintenance by Megger IT staff, and has to enable financial reporting, operational control and localisation of procedures within a Group wide implementation.
SAP has a number of organisational building blocks that create this environment.
Operating Concern
Controlling Area
Company
Credit Control Area
Sales Organisation
Distribution Channel
Division
Lab / Design Office
Sales Area
Sales Office
Plant
Purchasing Organisation
Storage Location
Shipping Point
Transport Planning Point
This is illustrated graphically at Appendix 1
In addition to the Enterprise structure above, organisational elements used by SAP include Profit Centres, Functional Areas, and Cost Centres. This document has been extended to cover these additional organisational elements
3.1. LedgersSAP has the ability to maintain three parallel ledgers in which transactions are recorded (OL, Y1, and Y2). All sales, purchase, inventory etc transactions are automatically posted to all three of these ledgers. However although Journal Entries would normally be posted to all three, they can be restricted to just one or two of them if required.
This selective posting of journals can be used to create entries that reflect differing accounting principles and this functionality will therefore be used by Megger to maintain the accounting records in the required different GAAPs:
OL (Leading Ledger) – used for group reporting (IFRS)
Ledger Y1 – used for local GAAP
Ledger Y2 – used for Megger Group Limited UK GAAP (note Megger Limited and Megger Instruments Limited use of UK GAAP differs from Megger Group’s use)
Megger’s initial proposal was to replicate the solution deployed in the Group’s COGNOS consolidation system and use “dummy” companies / cost centres to create these differences (see Appendix 4), but changed to this solution because SAP recommend against creating additional companies because of the overhead involved.
Despite this recommendation, Megger may revert to this initial dummy company / cost centre proposal because initial experience has shown that maintaining 3 ledgers in parallel is difficult.
3.2. Operating ConcernThe operating concern exists as the environment for Profitability Analysis. Megger’s group wide profitability requirements dictate that only a single Operating Concern is required, and as AIOSE comes pre-configured with one Operating Concern (1000), this will be utilised.
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Megger Group LimitedAppendix 2.10 – US Cost Centres
3.3. Controlling AreaThe Controlling Area is the environment for management accounting and Profit Centres. Again, therefore, Megger’s group wide profit centre and consolidation requirements dictate that only a single Controlling Area is required, and as AIOSE comes pre-configured with one Controlling Area (1000), this will be utilised.
3.4. CompanyCompanies represent individual legal entities for which full profit & loss and balance sheet reporting are required and are therefore normally used to represent each of the lowest level of legal entities within the organisation. The Company numbering convention Megger will use within SAP will be
1000 to 1999 for UK companies 2000 to 4999 spare (for “overseas” acquisitions) 5000 to 5999 for US companies 6000 to 6999 for European companies 7000 to 8999 for Sales & Distribution companies, with 2nd digit denoting country 9000 to 9999 spare
3.4.1. Primary Manufacturing & Sales OperationsUK
AOISE comes with three pre-configured UK companies - numbers 1000, 1100 (both with logistics) and 1200 (purely financial). This will be modified so that all UK companies are configured with logistics.
Megger Instruments Limited is a full manufacturing, with inter-company sales only to other Megger companies - company 1000 to be used. Prior to May 2010, Megger Instruments Limited was known as Megger Limited.
Megger Group Limited although essentially a holding company, does have purchasing and sales (all be it very limited) – company 1100 to be used
Megger Limited is a sales company with purchasing and finance – company 1200 to be used. Prior to May 2010, Megger Limited was known as AVO Limited.
USA
The US operations largely “Do Business As” Megger and act as a single entity as far as customers and suppliers are concerned with a single Accounts Receivable and a single Accounts Payable covering all operating companies, and also share common sales tax, federal tax, prepayments, etc.
SAP Companies cannot replicate this “mixed” situation and as this organisation structure is a necessary part of the Group’s operations. This is replicated in SAP as 2 companies – 1 for sales functions and 1 for manufacturing operations.
In addition, the US operations are responsible for the sale of Dover manufactured product and non-Megger Product into the USA, Latin America and North Asia Historically the sales into the US have been part of the James G Biddle (Valley Forge) operation, whilst the sales into Latin America and North Asia have been part of the Multi-Amp (Bronze Way, Dallas) operation (although this distinction has become more blurred in recent times). More recently the sales of Taby products into the USA have become the responsibility of the Multi-Amp (Bronze Way, Dallas) operation. From a management perspective it is desirable to segregate resale operations from manufacturing operations and traditionally this was achieved by using separate organisations within the PRMS system.
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Megger Group LimitedAppendix 2.10 – US Cost Centres
However, SAP’s reporting flexibility can provide this separation without the need to expand the organisation structure, and so these operations will be part of the Bronze Way and Valley Forge plants.
The local currency is US Dollars (USD).
SWEDEN
Megger Sweden AB was acquired by Megger on 4 th June 2007 and was immediately transitioned onto SAP (having been operating with an integrated ORACLE implementation within GE).
The company is a full design, manufacturing service/repair and sales facility, and as such will be set up as company 6000. Commissions are paid by Sweden to Germany and Switzerland for sales made directly from Sweden into these areas.
The local currency is Swedish Kroner (SEK).
3.4.2. Sales & Distribution Companies
INDIAMegger India Private Limited exists as a legal entity and essentially is compatible with an SAP Company. To allow for future expansion and not utilise leading numbers to denote every company, a leading 8 in the company number will be used for Sales and Distribution companies with the second digit denoting the country. 8600 will therefore be used for Megger India Private Limited.
The local currency is Indian Rupees (INR).
FRANCEMegger SARL exists as a legal entity and essentially is compatible with an SAP Company. To allow for future expansion and not utilise leading numbers to denote every company, a leading 8 in the company number will be used for Sales and Distribution companies with the second digit denoting the country. 8300 will therefore be used for Megger SARL. The local currency will be Euros.
There are however 2 requirements that need to be addressed over and above this simple one company solution
French legal requirements
Under the French legal/tax framework all accounting entries must go against the year to which they relate – prior year adjustments are not allowed.
From Megger’s perspective in reporting to TBG, the accounts for any year are finalised and closed before the end of December and except under special circumstances posting to that year are not allowed after the end of December – any such entries are posted to the P&L in the subsequent year.
The solution to this problem, had initially been the use of dummy companies, but in accordance with SAP policy, this was changed, and parallel ledgers will be used in stead, with the “prior year adjustments
Only being posted to ledger Y1 in the old year
Being posted to ledgers OL and Y2 in the new year.
AUSTRALIAMegger PTY Limited exists as a legal entity and essentially is compatible with an SAP Company. To allow for future expansion and not utilise leading numbers to denote every company, a leading 8 in the company
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Megger Group LimitedAppendix 2.10 – US Cost Centres
number will be used for Sales and Distribution companies with the second digit denoting the country. 8500 will therefore be used for Megger PTY Limited.
The local currency is Australian Dollars (AUD).
CANADAMegger Limited exists as a legal entity and essentially is compatible with an SAP Company. To allow for future expansion and not utilise leading numbers to denote every company, a leading 8 in the company number will be used for Sales and Distribution companies with the second digit denoting the country. 8100 will therefore be used for Megger Limited.
The local currency is Canadian Dollars (CAD).
GERMANYMegger GmbH exists as a legal entity and essentially is compatible with an SAP Company. To allow for future expansion and not utilise leading numbers to denote every company, a leading 8 in the company number will be used for Sales and Distribution companies with the second digit denoting the country. 8700 will therefore be used for Megger GmbH.
The local currency is Euros (EUR).
SWITZERLANDMegger AG exists as a legal entity and essentially is compatible with an SAP Company. To allow for future expansion and not utilise leading numbers to denote every company, a leading 8 in the company number will be used for Sales and Distribution companies with the second digit denoting the country. 8900 will therefore be used for Megger AG.
The local currency is Swiss Francs (CHF).
3.4.3. Inter Company Eliminations
US$ EliminationsOver and above the minor inter-company issues outlined for the Sales & Distribution companies, there is a significant volume of inter company trading of product within Megger, (the SAP inter-company facility is to be used for this). When consolidating the Group results these inter company sales and purchases must be eliminated.
The original proposal was to achieve this by use of a dummy company (9000 – 9900 range to be utilised). Instead however it has been proposed that the SAP inter company elimination facility be used. This solution has yet to be piloted and so the decision on the best solution remains outstanding.
Sterling Eliminations
Within the UK accounts there are a number of investment items and acquisition valuation adjustments that need to be eliminated on consolidation (share capital of the individual entities, holding company investments in subsidiaries etc.). Again the dummy company solution was the initial proposal but a final decision on this has still to be made (Note: a similar situation now also exist within Megger Sweden AB with the ownership of the share capital of Megger AG)
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Megger Group LimitedAppendix 2.10 – US Cost Centres
3.4.4. Planning AdjustmentsDuring the planning process it is normal for the individual profit centre managers to produce plans that when consolidated together create a more optimistic plan than the Megger Group Board’s top down view supports. This situation is resolved by maintaining the individual Profit Centre plans and creating an offsetting contingency / reserve.
In COGNOS these plan reserves are held centrally in a dummy company - final SAP solution to be determined
3.5. Credit Control AreaCredit control is organised at the company level, with the India, France, Germany, Canada, Australia and Switzerland each providing their own credit control function, whilst there is a single credit control in the US and UK.
There are very few occasions where a customer is invoiced by more than one Megger entity (taking the US as a single entity) so the need for Group wide control is limited and is currently handled manually.
It is therefore logical to have one credit control area for each country, using that country’s currency, with the number used for each Credit Control Area corresponding to the associated Company code.
3.6. Sales OrganisationThe SAP Sales Organisation represents the selling unit as a legal entity - each business transaction is carried out within a Sales Organisation. One sales organisation can therefore only be associated with one company (although one company can have many Sales Organisations. Additional flexibility is then provided by sub-dividing the sales organisation into several Distribution Channels (routes to market) and Divisions (product groupings). Each combination of these three organisational units is a Sales Area.
As with Credit Control Area, commercial (as opposed to sales) functions within Megger are country based and a single Sales Organisation per SAP legal entity is appropriate.
3.7. Distribution ChannelThe Distribution Channel within SAP is designed to represent the channel through which saleable materials or services reach customers. It also provides the ability to apply different prices, rebates, minimum quantities, delivering plant etc to the same customer.
At the initial enterprise workshop it was agreed to use a traditional SAP type analysis of Direct, Distribution, and Other (including internet).
However, following many discussions on the automation of Profit Centre transactions and the volume of master data maintenance that would be involved in some solutions, it was agreed that Distribution Channel would be used to distinguish between sales to third parties and sales to other Megger entities (both true inter-company transactions and profit centre transfers generated by the customer iBlock on profit centres). To provide full flexibility and ease of reporting and profit centre definition, each SAP company will have its own trade sales distribution Channel and its own inter-company / inter-profit centre distribution channel.
This solution is only possible because, for Profit Centre identification purposes, it can be used in conjunction with both
Sales Office (Sales Office had previously been designated for territory identification, but a better
solution was found for this) and
Division (Division had been designated to identify products, accessories instruments etc. but this was
“because it was available” and an alternative solution in product grouping will be utilised instead).
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Megger Group LimitedAppendix 2.10 – US Cost Centres
3.8. DivisionDivision is used as a Product Group identifier within the sales process. It allows not just pricing, delivery etc differentiation within a customer it also allows statistical analyses and separation of marketing procedures.
Megger require the ability to analyse sales orders and revenues by the source factory of the products ie which Megger factory etc originally manufactured the product (based on the assumption that any product is only manufactured by one site and there is no duplication of manufacture). In addition to reporting requirements this “source factory” code is also required in the definition of inter profit centre transfer transactions. Division provides the ideal vehicle for providing this analysis as it is attached to the material master and applies across the whole implementation (Megger currently has problems with consistency of coding in this regard where a product is sold by a factory other than the one that manufactured it).
In general terms any sales organisation can sell products from all sites so there is no restriction of division within the general sales structure. The only exception to this is in the case of service and repair carried out by the Sales and Distribution companies (Canada France and Australia) where only that company can sell its own service and repair, and Training where it is unlikely that any company other than US will sell Training Plant products to another Megger Site. However for simplicity it will be assumed that all Companies and Distribution Channel can sell all Divisions products (note: appendix 3.3 shows the Sales Areas that will actually be used as opposed to the All/All configuration)
It had originally been agreed that, Division in Megger’s implementation would be used to aid statistical analysis by being the means of distinguishing between Product, Accessory etc. (currently identified in BPCS by a “P” or an “A” suffix on the Product sub-
group code). As above, however, this statistical analysis is now being provided through product group coding
Any individual sales order can contain items from more than one factory, but “Division” is a required field at order entry stage, in the order header. However, all subsequent sales analysis picks up Division from the material Master and not from the Order Header. A default of “00” will therefore also be set up for all customers for use in order entry to avoid confusion with “real” Divisions
3.9. Laboratory / Design OfficeLab/Office is used to identify the “design authority” for a material. Generally this will be the same as the Division (ie the manufacturing site), but in the case of products factored from a third party it will designate the Megger site responsible for design and safety approval.
3.10. Sales AreaSales Areas identify each combination of Sales Organisation, Distribution Channel and Division, and each customer has to be set up for each sales area it will use. It is the need to minimise this master data maintenance requirement that has dictated the structure that Megger has decided to utilise.
3.10.1.UK In the UK, the sales areas are as follows.
Megger Limited (Sales) – A total of 9 trade sales areas (where the distribution channel is 10). Although only a small number of sales will be made inter-company, because of the sales made to CAS/Iberia, each of the trade sales areas need to be replication to inter-company so 9 inter-company sales areas will exist (where the distribution channel is 40). With the exception of Megger companies in CSA/Iberia companies, customers will only need exist in trade sales areas.
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Megger Group LimitedAppendix 2.10 – US Cost Centres
Megger Instruments Limited (Manufacturing) – Only 3 sales areas will exist in the manufacturing company for the purposes of inter-company trading of Dover and some Factored product.
.
3.10.2.US and Sales CompaniesThe US has 17 Sales Areas, and each of the sales companies has 18. However similar considerations apply here as the do in the UK, (although the number of Sales Areas per customer will generally be higher than in the UK). By excluding the inter company and non-revenue items from the vast majority of customers, the potential sales areas required are more than halved with further narrowing down according to individual circumstances
3.11. Sales OfficeA Sales Office in SAP is normally used to identify the physical location (branch office etc.) responsible for the sale. However as this is a field that is available in PA it has been decided that Megger will use this for Profit Centre identification.
For data selection purposes in reporting, Sales Offices will be split into three ranges to identify
Trade sales Inter company sales Profit Centre transfers – only used by the automated routine being developed for
inter profit centre sales
Selecting Trade sales and Inter Company sales will allow the reporting of statutory sales, whilst selecting Inter Company and Profit Centre transfers will give profit centre sales
3.12. PlantIn Logistics a plant is an organizational unit for dividing an enterprise according to production, procurement, maintenance, and materials planning and is a place where materials are produced, or goods and services are provided. A plant is unique to a Company and every “trading” company has to have at least one Plant (but could have multiple) if it is going to purchase anything. It is the level at which ATP works.
With the exception of the “umbrella” US operating company each “real” Megger company will have just one plant as there are no requirements for different operating procedures, different stock valuations, etc within any of those companies. If “dummy” adjusting companies are adopted, they do not require plants as they will have no operational requirements - just GL journal entries.
In the US however where an “umbrella” company is required to support the “dba Megger” method of operation, Plants will be used to represent the legal entities / separate operations rather than Companies. Generally the Plant number will be the same as its associated Company number. In the US however the 4 digit number will be derived from the first three digits of the existing PRMS organisation codes with a trailing zero. This creates a structured approach such that ranges can be used to identify organisations
5100 to 5199 represents Dallas with
5110 being Bronze Way operations
5140 being PowerDB
5150 being States Products
5160 being the AVO Training Institute -
5200 to 5299 represents Valley Forge (including resale operations)
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Megger Group LimitedAppendix 2.10 – US Cost Centres
5400 to 5499 represents College Station
5800 to 5899 represents Megger US Sales Operations
5900 represents the US holding company (ABE)
As can be seen, in order to fully implement this philosophy it is necessary to use 5140 for PowerDB rather than 5400 and 5160 for the AVO Training Institute rather than 5500 so that they falls within the Dallas sequence
3.13. Purchasing OrganisationA Purchasing Organisation negotiates contracts and terms with vendors, procures materials and services etc. It can range from being Group wide to plant specific (and combinations in between).
Megger does not have a Group purchasing function. Although commonality of components (cases etc) is becoming more of a feature, this is not enough to drive centralisation – in fact localisation of decision making is the theme within the Group. Each location has its own purchasing team and it is appropriate to replicate this within SAP.
Within the US therefore, each operating plant will have its own purchasing organisation (except Valley Forge where Resale and Manufacturing will have a common one), and elsewhere each operating Company will have its own purchasing organisation. These operating company/plant purchasing organisations will also be used to cover any central functions based at the relevant facility.
Generally the operating plant number in the US and the operating company number in the UK will be used as the Purchasing Organisation identifier.
3.14. Storage LocationEach plant will have multiple storage locations which hold inventory. Definitions and details of these are contained within the appropriate inventory and manufacturing PPD’s.
3.15. Shipping PointShipping Points represent the physical location from which items will be shipped – responsible for scheduling and processing deliveries. Each of Megger’s locations has a single shipping area and so each plant within SAP will have a single Shipping Point (Plant number used as identifier) with the exception of the UK. In this instance the UK manufacturing will share shipping point 1200 for the purpose of trade sales made by the sales company where material exists in both plants.
3.16. Transport Planning PointThe Transport Planning Point is the function within a Company (not Plant) responsible for transportation activities. Megger will have one Transport Planning Point per operating Company (operations are not big enough to split this responsibility). Company code number will also be used as the Transport Planning Point identifier.
3.17. Profit CentresProfit Centres as emphasised throughout this document are core to Megger’s philosophy and define its managerial organisation structure. Each profit centre manager has full P&L and Balance Sheet responsibility for his/her operation.
Essentially for the Instruments part of Megger, 3 manufacturing sites (product based) plus a software house sell their products to 3 geographic sales organisations. For sales reporting purposes two of these sales profit centres are each sub-divided into 2 geographic regions, although this level of detail is not yet carried into the P&L. This
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Megger Group LimitedAppendix 2.10 – US Cost Centres
does therefore dictate the need for a third profit centre within each of these sales organisations that will collect the overhead costs for that selling channel.
Megger then has two additional, largely self contained, businesses – States and Training. These businesses have their own sales organisation in the US but utilise the Instruments Sales Organisations for sales outside the US. For consistency and to reduce the number of “exceptions” in automated transactions these two profit centres will each be split between manufacturing and sales with a third profit centre for inter-company elimination on consolidation and overhead collection.
Profit Centre Hierarchy will be used to combine the various sub-divisions of profit centre outlined above, whilst Profit Centre Groups will be use for grouping Manufacturing Profit Centres and Selling Profit Centres for reporting purposes
3.18. Functional AreasMegger’s standard Profit and Loss reporting is based around functions rather than expenditure types, and SAP’s functional area provides the vehicle by which this can be achieved. The Functional Areas will replicate Megger’s profit reporting requirements.
3.19. Cost CentresMegger makes extensive use of cost centres in its existing systems and this will be carried over into SAP, with the same numbering being used where possible. However whereas currently only one cost centre is used for any particular (say) production area (with functional P&L analysis being achieved by other means), the association of Functional Areas with Cost Centres in SAP means that multiple cost centres will be required (one for COGS, one for direct labour, one for overhead etc).
Cost Centres in SAP are not Company specific but go across the whole Controlling Area. It is therefore necessary to come up with a structure that ensures uniqueness across the system and range definition for reporting purposes. To this end a 7 digit cost centre number will be used
The first digit will be the same as the country identifier in the Company number (ie 1 for the UK) – this will bring UK cost centre number lengths in line with the US which already mainly begin with a 5 and are 6 characters long
The next 5 digits will be the same as the existing cost centre numbers The 7 digit will distinguish between the various functional areas
Cost Centre Groups will then be used to group the functional sub-divisions of current cost centres, and then to provide a business function hierarchy within each company and within the Group.
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Megger Group LimitedAppendix 2.10 – US Cost Centres
Associated documents
3.20. Company Legal StructureThe Company legal structure is outlined in Appendix 1.
3.21. SAP OrganisationThe SAP Organisation is outlined in Appendix 2.
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Megger Group LimitedAppendix 2.10 – US Cost Centres
4. Assumptions / Options ConsideredA number of assumptions and options were considered at various points during the implementation and subsequent roll out projects. These have been updated to reflect the current situation.
Megger had intended to include financial consolidation reporting in phase one as well, but…
All-In-One’s initial inability to consolidate in more than one currency (this facility was introduced only 3 weeks before the phase 1 go-live date)
The time required to manually process the Trial balances of all other operations into SAP means that this has had to be postponed),
It was initially decided that the holding company - AVO International inc (aka ABE) – could be represented by a separate Company within SAP as it is independent of the mixed operational environment. However after further consideration it was agreed that this segregation was not necessary and so as not to add the system overhead of an additional company ABE is identified by a plant within this US umbrella company
It was initially decided that a single additional plant would be used for all resale products, but it subsequently became clear that the same objective could be achieved through the profit centre process and an additional plant with its associated system overhead was unnecessary
Many different combinations of Sales Organisations were been considered for ease of sales reporting and profit centre identification, but in the end the simplistic approach agreed upon is the most appropriate to minimise master data maintenance)
Group wide credit control is not a requirement and the volume of common customers will remain small enough for manual co-ordination to be appropriate
Purchasing will remain a local function
Group Consolidation will be carried on within SAP
No product is manufactured in more than one location
4.1. Business ChangesBusiness changes have previously been noted on Business Process Documents.
4.2. Outstanding Issues / ActionsThere are no outstanding issues.
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5. Appendix 1 – Company Legal Structure
Megger Group Limited Appendix 2.01 – Companies & Plants
6. Appendix 2 – SAP Organisation
Operating Concern
Controlling Area
Company (Country) Local Currency
Plant
1000 1000 1000
1100
1200
Megger Instruments Ltd (UK Mfg)
Megger Group Ltd (Holding Company)
Megger Ltd (UK Sales Company)
GBP
GBP
GBP
1000
1100
1200
Dover Mfg
Group
Dover Sales
5000 Megger US (US Phantom) US$ 5110
5150
5160
5200
Bronze Way
States Products
AVO Training
Valley Forge
5800 Megger US (US Sales) US$ 5810
5820
Megger NAFTA
Megger US Dist
6000 Megger Sweden AB (Sweden) SEK 6000 Taby
8100
8300
8500
8600
8700
8900
Megger Limited (Toronto)
Megger SARL (France)
Megger PTY Limited (Australia)
Megger India PTY Limited (India)
Megger GmbH (Germany)
Megger AG (Switzerland)
CA$
EUR
AU$
INR
EUR
SFR
8100
8300
8500
8600
8700
8900
Canada
France
Australia
India
Germany
Switzerland
9500 Plan Contingencies US$
Megger Group Ltd Page 18 of 41
Megger Group Limited Appendix 2.02 – Sales Orgs, Divisions, Dist.Channels
SAP Sales Organisations SAP Distribution Channels1000 Dover Manufacturing 10 Trade1100 Group Sales 40 Inter Co / Profit Centre Transfer1200 Dover Sales5000 US Operations Sales5150 States Products Sales5160 AVO Training Sales5810 Megger NAFTA US5820 Megger US Distribution6000 Swedish Sales8100 Canada Sales8300 France Sales8500 Australia Sales8600 India Sales8700 Germany Sales SAP Divisions8900 Switzerland Sales 01 Order Entry Default
10 Bronze WayLab/Office 15 Valley Forge
10 Bronze Way 16 PAX15 Valley Forge 17 Täby17 Täby 20 Dover20 Dover Manufacturing 25 Factored Products21 Dover Sales 30 College Station30 College Station 50 Canadian Sales Office Service & Repair50 Canadian Sales Office Service & Repair 55 French Sales Office Service & Repair55 French Sales Office Service & Repair 60 Australian Sales Office Service & Repair60 Australian Sales Office Service & Repair 63 Indian Sales Office Service & Repair63 Indian Sales Office Service & Repair 65 German Office Service & Repair65 German Office Service & Repair 67 Swiss Office Service & Repair67 Swiss Office Service & Repair 80 States80 States 85 Training85 Training 99 Non-Revenue
Megger Group Ltd Page 20 of 41
Megger Group Limited Appendix 2.03 – Sales Areas
Company Credit Control Area Sales Organization Distribution Channel Sales Office
1000Megger Instruments Ltd 1000 UK 1000 Dover Mfg Sales 40 Inter Co / Profit Centre Transfer 42 Inter Co to Dover Sales
43 Inter Co to Dallas (NAFTA)
44 Inter Co to VF (US Distribution)
45 Inter Co to Taby
51 Inter Co to Canada
53 Inter Co to France
55 Inter Co to Australia
56 Inter-Co to India
57 Inter Co to Germany
59 Inter Co to Switzerland
99 Non Revenue 99 Non Revenue
1100Megger Group Limited 1000 UK 1100 Group Sales 99 Non Revenue 99 Non Revenue
1200 Megger Limited 1000 UK 1200 Dover Sales 10 Trade 11 International – UK
13 International – ROW
23 US Distribution – CSA/Iberia
40 Inter Co / Profit Centre Transfer 41 Inter Co to Dover Mfg
43 Inter Co to Dallas (NAFTA)
44 Inter Co to VF (US Distribution)
45 Inter Co to Taby
51 Inter Co to Canada
53 Inter Co to France
55 Inter Co to Australia
56 Inter-Co to India
57 Inter Co to Germany
59 Inter Co to Switzerland
99 Non Revenue
5000 Megger US 5000 Megger US 5000 Megger US 10 Trade 27 College Station Sales
99 Non Revenue
40 Inter Co / Profit Centre Transfer 41 Inter Co to Dover Mfg
42 Inter Co to Dover Sales
43 Inter Co to Dallas (NAFTA)
44 Inter Co to VF (US Distribution)
45 Inter Co to Täby
51 Inter Co to Canada
53 Inter Co to France
55 Inter Co to Australia
56 Inter-Co to India
57 Inter Co to Germany
59 Inter Co to Switzerland
5150States Products Sales 40 Inter Co / Profit Centre Transfer 41 Inter Co to Dover Mfg
42 Inter Co to Dover Sales
43 Inter Co to Dallas (NAFTA)
44 Inter Co to VF (US Distribution)
45 Inter Co to Täby
51 Inter Co to Canada
53 Inter Co to France
55 Inter Co to Australia
56 Inter-Co to India
57 Inter Co to Germany
59 Inter Co to Switzerland
99 Non Revenue 99 Non Revenue
5160 AVO Training Sales 10 Trade 35 AVO Training Sales
Megger Group Ltd Page 21 of 41
99 Non Revenue 99 Non Revenue
Company Credit Control Area Sales Organization Distribution Channel Sales Office
5800 5000 5810 Megger NAFTA 10 Trade 17 NAFTA
19 Mexico
5820 Megger US Dist 10 Trade 21 US Distribution
23 US Distribution – CSA/Iberia
5830 International – ROW 10 Trade 33 States
5890 States Sales 10 Trade 13 International – ROW
6000 Megger Sweden 6000 Sweden 6000 Täby Sales 10 Trade 11 International – UK
13 International – ROW
17 NAFTA
23 US Distribution – CSA/Iberia
40 Inter Co / Profit Centre Transfer 41 Inter Co to Dover Mfg
42 Inter Co to Dover Sales
43 Inter Co to Dallas (NAFTA)
44 Inter Co to VF (US Distribution)
51 Inter Co to Canada
53 Inter Co to France
55 Inter Co to Australia
56 Inter Co to India
57 Inter Co to Germany
59 Inter Co to Switzerland
8100 Megger Limited 8100 Canada 8100 Canada Sales 10 Trade 17 NAFTA
8300 Megger SARL 8300 France 8300 France Sales 10 Trade 13 International – ROW
8500 Megger PTY Ltd 8500 Australia 8500 Australia Sales 10 Trade 13 International – ROW
8600 Megger India 8600 India 8600 India Sales 10 Trade 13 International – ROW
40 Inter Co / Profit Centre Transfer 42 Inter Co to Dover Sales
43 Inter Co to US
45 Inter Co to Taby
55 Inter Co to Australia
8700 Megger GmbH 8700 Germany 8700 Germany Sales 10 Trade 13 International – ROW
40 Inter Co / Profit Centre Transfer 42 Inter Co to Dover Sales
43 Inter Co to US
45 Inter Co to Taby
8900 Megger AG 8900 Switzerland 8900 Switzerland Sales 10 Trade 13 International – ROW
Megger Group Limited Appendix 2.04 – Sales & Plants
Associated Plants
Sales Organisation Distribution Channel
Dov
er M
fg
Dov
er S
ales
Gro
up
Bro
nze
Way
Val
ley
For
ge
Col
lege
S
tatio
n
Sta
tes
Tra
inin
g
Tab
y
Can
ada
Fra
nce
Aus
tral
ia
Indi
a
Ger
man
y
Sw
iss
1000
1100
1200
5000
5150
5160
5810
5820
5830
5850
6000
8100
8300
8500
8600
8700
8900
Dover Mfg
Group
Dover Sales
Megger US
States
Training
NAFTA
US Distr.
US Intern’l
States Sls
Sweden
Canada
France
Australia
India
Germany
Switzerland
1040
99
1040
1040
1040
10
10
10
10
10
1040
10
10
10
10
10
10
TradeInter Co / PC Transfer
Non Revenue
TradeInter Co / PC Transfer
TradeInter Co / PC Transfer
TradeInter Co / PC Transfer
Trade
Trade
Trade
Trade
Trade
TradeInter Co / PC Transfer
Trade
Trade
Trade
Trade
Trade
Trade
XXX
XX
X
XX
XX
XX
XX
XX
XX
X
X
X
X
X
X
Megger Group Ltd Page 24 of 41
Megger Group Limited Appendix 2.05 - Purchasing, Shipping and Transport
Company Plant Purchase Org Shipping Point Transport Planning Point
1000
1100
1200
Megger Instruments Ltd
Megger Group Ltd
Megger Limited
1000
1100
1200
Dover Mfg
Group
Dover Sales
1000
1100
1200
Dover Mfg
Group
Dover Sales
1000
1100
1000
1200
Dover Mfg
Group
Dover Mfg
Dover Sales
1000
1100
1200
Dover Mfg
Group
Dover Sales
5000 Megger (US) 5110
5150
5160
5200
Bronze Way
States
AVO Training
Valley Forge
5110
5150
5160
5200
Bronze Way
States
AVO Training
Valley Forge
5110
5150
5160
5200
Bronze Way
States
AVO Training
Valley Forge
5000 US
5800 Megger US Sales 5810
5820
5830
5850
NAFTA
US Distr’n
US Intern’l
States Sales
5810
5820
5830
5850
NAFTA
US Distr’n
US Intern’l
States Sales
5810
5820
5830
5850
NAFTA
US Distribution
US International
States Sales
5800 US Sales
6000 Megger Sweden AB 6000 Taby 6000 Taby 6000 Taby 6000 Taby
8100
8300
8500
8600
8700
8900
Megger Limited (Canada)
Megger SARL (France)
Megger PTY Ltd (Australia)
Megger India PVT Ltd
Megger GmbH (Germany)
Megger AG (Switzerland)
8100
8300
8500
8600
8700
8900
Canada
France
Australia
India
Germany
Switzerland
8100
8300
8500
8600
8700
8900
Canada
France
Australia
India
Germany
Switzerland
8100
8300
8500
8600
8700
8900
Canada
France
Australia
India
Germany
Switzerland
8100
8300
8500
8600
8700
8900
Canada
France
Australia
India
Germany
Switzerland
9500
Megger Group Ltd Page 25 of 41
Megger Group Limited Appendix 2.06 - Profit Centres
1. Profit Centre Hierarchy in SAP 2. Profit Centre Groups
P0001 Megger Group 210022002300
25003100
4100
4200
4400
5100
5200
8100
95009900
Bronze WayValley ForgeDover
TäbyCollege Station
International Sales
NAFTA
Americas Distribution
States
Training
Group & Unallocated
ReserveUnallocated
23102350
31103120319041104120419042104290441044204490511051205190521052908110812081508180
Dover MfgUS Telco
College Station EngineeringCollege Station SalesUnallocatedUK & EireROWInternational Sales GeneralNAFTANAFTA GeneralUS Distribution SalesCSA / IberiaDistribution GeneralStates ManufacturingStatesStates GeneralTrainingTraining GeneralMegger GroupUS GroupAbcOther
1000
2000
3000
Megger Group Reporting
Manufacturing & Service
Trade Sales
2100220023002500310041004200440051005200810095009900
21002200230031105110
312041004200440051205200
Bronze WayValley ForgeDoverTäbyCollege StationInternational SalesNAFTAAmericas DistributionStatesTrainingGroup & UnallocatedReserveUnallocated
Bronze WayValley ForgeDoverCollege Station EngineeringStates Manufacturing
College Station SalesInternational SalesNAFTAAmericas DistributionStatesTraining
Megger Group Ltd Page 26 of 41
Megger Group Limited Appendix 2.07 – Functional Areas
Z100 COGSZ110 Direct LabourZ200 CommisionsZ300 Manufacturing OverheadZ400 Sales & MarketingZ500 General &AdministrationZ505 TBG Management ChargesZ600 Engineering SpendZ700 Enginering CapitalisationZ800 GoodwillZ900 Other Income & ExpenditureZ905 Interest ReceivedZ906 Interest paidZ909 Taxation
Megger Group Ltd Page 27 of 41
StandardHierarchy
CostCentre
Functional Area ProfitCentre
160 Dover R&D Spend
110850611086061108706110890611089071109306
Dover R&D Comms ProductsDover R&D Power ProductsDover R&D Contractor ToolsDover R&D AdministrationDover R&D CapitalisationDover R&D Engineering Services
Z600Z600Z600Z600Z600Z600
Engineering SpendEngineering SpendEngineering SpendEngineering SpendEngineering SpendEngineering Spend
231023102310231023102310
Dover MfgDover MfgDover MfgDover MfgDover MfgDover Mfg
150 Dover Administration
101010510104051010505101090510113051011405
Dover Admin ManagementDover Admin FinanceDover Admin Computer ServicesDover Admin CanteenDover Admin Human ResourcesDover Admin Training
Z500Z500Z500Z500Z500Z500
General & Admin OhdsGeneral & Admin OhdsGeneral & Admin OhdsGeneral & Admin OhdsGeneral & Admin OhdsGeneral & Admin Ohds
231023102310231023102310
Dover MfgDover MfgDover MfgDover MfgDover MfgDover Mfg
100 Dover General 100000010000031000004100000910000101000011100001210000131010409
Dover GeneralDover General Man OheadDover General rework (prod orders only)Dover General-OtherDover General Interest recdDover - Interest PaidDover General taxationDover General-Group CostsDover - Discount Received
Z100Z300Z300Z900Z905Z906Z909Z900Z900
COGSManufacturing OverheadManufacturing OverheadOther Inc & ExpenditureInterest ReceivedInterest PaidTaxationOther Inc & ExpenditureOther Inc & Expenditure
231023102310231023102310231023102310
Dover MfgDover MfgDover MfgDover MfgDover MfgDover MfgDover MfgDover MfgDover Mfg
130 Dover Manufacturing
112950312021031201703
Dover Mfg Test Gear Dover Mfg Purchasing Dover Mfg management
Z300Z300Z300
Manufacturing OverheadManufacturing OverheadManufacturing Overhead
231023102310
Dover MfgDover MfgDover Mfg
130-12016 Site Svs & Establishment
12022031201603
Dover Mfg EstablishmentDover Mfg Works Engineering
Z300Z300
Manufacturing OverheadManufacturing Overhead
23102310
Dover MfgDover Mfg
130 - 12046 Dover Manufacturing
Contractor Tools
120460012046011204603
Dover Mfg Contractors Tool COGSDover Mfg Contractors Tool Direct LabourDover Mfg Assy contractors tool Overheads
Z100Z110Z300
COGSDirect LabourManufacturing Overhead
231023102310
Dover MfgDover MfgDover Mfg
130 - 12048 Dover Mfg Power
120480012048011204803
Dover Mfg Power Products COGSDover Mfg - Main Assy ESI - Direct LabourDover Mfg Assy Power Products Overheads
Z100Z110Z300
COGSDirect LabourManufacturing Overhead
231023102310
Dover MfgDover MfgDover Mfg
StandardHierarchy
CostCentre
Functional Area ProfitCentre
130 - 12049 Dover Manufacturing PCB Assy
120490012049011204903
Dover Mfg PCB Assy COGSDover Mfg PCB Assy Direct LabourDover Mfg Assy PCB Assy
Z100Z110Z300
COGS Direct LabourManufacturing Overhead
231023102310
Dover MfgDover MfgDover Mfg
130 - 12060 Dover Manufacturing PCB Test
120600012060011206003
Dover Mfg PCB test COGSDover Mfg PCB Test Direct LabourDover Mfg PCB Test
Z100Z110Z300
COGSDirect LabourManufacturing Overhead
231023102310
Dover MfgDover MfgDover Mfg
130 - 12062 Dover Manufacturing Production Svs
120620012062011206203
Dover Mfg production svs COGSDover Mfg Production Svs Direct LabourDover Mfg - Production Services - OH
Z100Z110Z300
COGSDirect LabourManufacturing Overhead
231023102310
Dover MfgDover MfgDover Mfg
130 - 12025 Dover Manufacturing Warehouse
12025031202501
Dover Mfg Despatch OverheadsDover Mfg Despatch Direct Labour
Z300Z110
Manufacturing OverheadDirect Labour
23102310
Dover MfgDover Mfg
130 - 12031 Dover Manufacturing Service & Repair
12031011203103
Dover Mfg Service Direct LabourDover Mfg Service & repairs
Z110Z300
Direct LabourManufacturing Overhead
23102310
Dover MfgDover Mfg
130 - 12078 Dover Manufacturing QA
12078011207803
Dover Mfg QA Direct LabourDover Mfg Assy Quality Assurance
Z110Z300
Direct LabourManufacturing Overhead
23102310
Dover MfgDover Mfg
141 International Sales 12010021200000100012710001281000129121010512216031257304125740412576041257704125790412580041258104125820412583041258404
International Sales Dist CommissionsInternational Sales GeneralMegger Ltd interest receivedMegger Ltd interest paidMegger Ltd taxationMegger Limited AdministrationMegger Limited Site ServicesSoftware SupportFactored ProductsDover Sales UK PowerDover Sales EuropeDover Sales Applications & supportDover Sales managementDover Sales Marcomms CostsDover Sales UK Distribution & wholesalerDover Sales InternationalDover S&M Commercial
Z200Z400Z905Z906Z909Z500Z300Z400Z400Z400Z400Z400Z400Z400Z400Z400Z400
CommissionsSales & MarketingInterest RecdInterest PaidTaxationGeneral & Admin OhdsManufacturing OverheadSales & MarketingSales & MarketingSales & MarketingSales & MarketingSales & MarketingSales & MarketingSales & MarketingSales & MarketingSales & MarketingSales & Marketing
41904190419041904190419041904190419041904190419041904190419041904190
Intl Sales GeneralIntl Sales GeneralIntl Sales GeneralIntl Sales GeneralIntl Sales GeneralIntl Sales GeneralIntl Sales GeneralIntl Sales GeneralIntl Sales GeneralIntl Sales GeneralIntl Sales GeneralIntl Sales GeneralIntl Sales GeneralIntl Sales GeneralIntl Sales GeneralIntl Sales GeneralIntl Sales General
142 NAFTA Sales 1204004 CSA/Iberia Distribution costs Z400 Sales & Marketing 4420 CSA / Iberia Sales190 Aycliffe Business
Centre19999531999959
Aycliffe Business Centre CostsAycliffe Business Centre Income
Z300Z900
Manufacturing OverheadOther Inc & Expenditure
81508150
ABCABC
999 Group & Unallocated 100011510001161000119100012010001221000125
1000115 Megger Group Administration1000116 Megger Group TBG Management Fees1000119 Megger Group-Other1000120 Megger Group Interest Received1000122 Megger Group Interest Paid1000125 Megger Group taxation
Z500Z505Z900Z905Z906Z909
General & Admin OhdsTBG Management ChargesOther Inc & ExpenditureInterest ReceivedInterest PaidTaxation
811081108110811081108110
Megger GroupMegger GroupMegger GroupMegger GroupMegger GroupMegger Group
StandardHierarchy
CostCentre
Functional Area ProfitCentre
600 Taby General 6000000600000960000106000011600001260001166010409
Taby GeneralTaby General OHDTaby General Interest ReceivedTaby General Interest PaidTaby General TaxationTaby General TBG Mgmt FeesTaby Discount Received
Z100Z900Z900Z900Z900Z500Z900
COGS Other Income & Exp.Other Income & Exp.Other Income & Exp.Other Income & Exp.General Admin OhdsOther Income & Exp.
2500250025002500250025002500
Taby MfgTaby MfgTaby MfgTaby MfgTaby MfgTaby MfgTaby Mfg
630 Taby Supply Chain/QA
620160362017036202103620250362048016204803
Taby Logistics ManagerTaby Supply Chain ManagementTaby SourcingTaby Shipping/ReceivingTaby Production - Direct LabourTaby Production Overheads
Z300Z300Z300Z300Z110Z300
Manufacturing OverheadManufacturing OverheadManufacturing OverheadManufacturing OverheadDirect LabourManufacturing Overhead
250025002500250025002500
Taby MfgTaby MfgTaby MfgTaby MfgTaby MfgTaby Mfg
640 Taby Supply Chain Mgmt
6058404605750460576046057704605820460583046059002
Taby Order/Export Coordinators Taby Sales Europe Taby Nordic Sales Taby Commercial Director Taby MarketingTaby Sales Support Commission payable
Z400Z400Z400Z400Z400Z400Z200
Sales & MarketingSales & MarketingSales & MarketingSales & MarketingSales & MarketingSales & MarketingCommissions
4120412041204120412025004120
Int Sales ROWInt Sales ROWInt Sales ROWInt Sales ROWInt Sales ROWTaby MfgInt Sales ROW
641 Taby Customer Service
600100960578046057904605800460581046058504620310362031016206203
Taby International SalesTaby Support SpecialistsTaby Sales Applications & support Taby Customer Service Manager Taby Technical EditorTaby Site Product Management Taby Rep Service & RepairsTaby Rep Service Direct Labour Taby Training and Services – OH
Z400Z400Z400Z400Z400Z400Z300Z110Z300
Sales & MarketingSales & MarketingSales & MarketingSales & MarketingSales & MarketingSales & MarketingManufacturing OverheadDirect LabourManufacturing Overhead
250025002500250025002500250025002500
Taby MfgTaby MfgTaby MfgTaby MfgTaby MfgTaby MfgTaby MfgTaby MfgTaby Mfg
650 Taby Administration 6010105601040560105056011305
Taby Admin ManagementTaby Admin Finance Taby Admin Infrastructure Taby Admin Human Resources
Z500Z500Z500Z500
General & Adms OhdsGeneral & Adms OhdsGeneral & Adms OhdsGeneral & Adms Ohds
2500250025002500
Taby MfgTaby MfgTaby MfgTaby Mfg
660 Taby Engineering 6108906610890761090066109007
Taby EngineeringTaby Eng CapitalisationPax Engineering CostPax Engineering Capitalisation
Z600Z700Z600Z700
Engineering SpendEngineering CapitalisationEngineering SpendEngineering Capitalisation
2500250022002200
Taby MfgTaby MfgValley Forge MfgValley Forge Mfg
StandardHierarchy
CostCentre
Functional Area ProfitCentre
50261 US Regions NAFTA
50264045026402
NAFTA US Regions Overhead NAFTA US Regions Commissions
Z400Z200
Sales & MarketingCommissions
42004200
NAFTANAFTA
50262 NAFTA East 50264145026412
NAFTA EAST OverheadNAFTA East Commissions
Z400Z200
Sales & MarketingCommissions
42004200
NAFTANAFTA
50263 NAFTA South 50264245026422
NAFTA South AdministrationNAFTA South Commissions
Z400Z200
Sales & MarketingCommissions
42004200
NAFTANAFTA
50264 NAFTA Central 50264325026434
NAFTA Central CommissionsNAFTA Central Overhead
Z400Z200
Sales & MarketingCommissions
42004200
NAFTANAFTA
50265 NAFTA West 50264425026444
NAFTA West CommissionsNAFTA West Admin
Z200Z400
Commissions Sales & Marketing
42004200
NAFTANAFTA
50266 NAFTA Open 50264525026454
NAFTA Open Commissions NAFTA Open Administration
Z200Z400
Commissions Sales & Marketing
42004200
NAFTANAFTA
50241 NAFTA Inside Sales
50265545026552
NAFTA Inside Administration NAFTA Inside Commissions
Z400Z200
Sales & MarketingCommissions
42004200
NAFTANAFTA
50242 NAFTA TSG 50265825026584
NAFTA TSG CommissionsNAFTA TSG Administration
Z200Z400
Commissions Sales & Marketing
42004200
NAFTANAFTA
50243 NAFTA Cust. Support
50265925026594
NAFTA Customer Support CommissionsNAFTA Customer Support Administration
Z200Z400
Commissions Sales & Marketing
42004200
NAFTANAFTA
5027 Mexico 50263045026302
NAFTA Mexico OverheadNAFTA Mexico Commissions
Z400Z200
Sales & MarketingCommissions
42004200
NAFTANAFTA
5028 NAFTA General 50279955026994502699250262045026202500200050282005028100
NAFTA Administration AllocationNAFTA Sales AllocationNAFTA Commissions AllocationNAFTA Admin OverheadNAFTA Admin CommissionsNAFTANAFTA Other ExpenseNAFTA Other Income
Z500Z400Z200Z400Z200Z100Z900Z900
General & Admin OHeadsSales & MarketingCommissionsSales & MarketingCommissionsCOGSOther Inc/Expenditure Other Inc/Expenditure
42004200420042004200420042004200
NAFTANAFTANAFTANAFTANAFTANAFTANAFTANAFTA
StandardHierarchy
CostCentre
Functional Area ProfitCentre
5110 Bronze Way 5110000 BW General Manufacturing Z100 COGS 2100 BW Manufacturing5119 BW Rework 5000004
5000005Rework Bronze wayRework BW MPRT
Z300Z300
Manufacturing OverheadManufacturing Overhead
21002100
BW ManufacturingBW Manufacturing
51141 Bronze Way Production
51140235114021
BW MANUFACTURING – OHBW MANUFACTURING - DL
Z300Z110
Manufacturing OverheadDirect Labour
21002100
BW ManufacturingBW Manufacturing
51142 MPRT Assy 51141015114103
BW MANUF. MPRT – DLBW MANUF. MPRT - OH
Z110Z300
Direct LabourManufacturing Overhead
21002100
BW ManufacturingBW Manufacturing
51143 MPRT Test 51141115114113
BW MANUF. MPRT TEST – DLBW MANUF. MPRT TEST - OH
Z110Z300
Direct LabourManufacturing Overhead
21002100
BW ManufacturingBW Manufacturing
51144 BW Other Assy 51142035114201
BW OTHER ASSEMBLY - OHBW OTHER ASSEMBLY - DL
Z300Z110
Manufacturing OverheadDirect Labour
21002100
BW ManufacturingBW Manufacturing
51145 BW Other Test 51142135114211
BW OTHER TEST - OHBW OTHER TEST - DL
Z300Z110
Manufacturing OverheadDirect Labour
21002100
BW ManufacturingBW Manufacturing
51146 BW SRO 51143115114313
BW OTHER SRO - DLBW SRO - OH
Z110Z300
Direct LabourManufacturing Overhead
21002100
BW ManufacturingBW Manufacturing
5112 Bronze Way Manufacturing Overhead
511441351144235114433511451351146135114913
BW MATERIAL MGT OHBW MATERIAL STORAGE OHBW ORDER MGT & LOG OH BW QUALITY OHBW MFG ENG OHBW BUILDING MAINTENANCE
Z300Z300Z300Z300Z300Z300
Manufacturing OverheadManufacturing OverheadManufacturing OverheadManufacturing OverheadManufacturing OverheadManufacturing Overhead
210021002100210021002100
BW ManufacturingBW ManufacturingBW ManufacturingBW ManufacturingBW ManufacturingBW Manufacturing
5115 Bronze Way Engineering
511510651151465115996
BW ENGINEERING BW AVTS ENGINEERING BW ENGINEERING ALLOCATIONS
Z600Z600Z600
Engineering SpendEngineering SpendEngineering Spend
210021002100
BW ManufacturingBW ManufacturingBW Manufacturing
5116 Bronze Way Management
511699451161345116114
BW PM ALLOCATIONSBW PRODUCT MGT OH BW INDUSTRY SPEC OH
Z400Z400Z400
Sales & MarketingSales & MarketingSales & Marketing
210021002100
BW ManufacturingBW ManufacturingBW Manufacturing
5117 Bronze Way Admin
511799551179055117805511740551172055117105
BW ADMIN ALLOCATIONSBW ADMIN OTHERBW EXECUTIVE OFFICEBW HUMAN RESOURCES BW IT/MISBW ACCOUNTING
Z500Z500Z500Z500Z500Z500
General & Admin OHeadsGeneral & Admin OHeadsGeneral & Admin OHeadsGeneral & Admin OHeadsGeneral & Admin OHeadsGeneral & Admin OHeads
210021002100210021002100
BW ManufacturingBW ManufacturingBW ManufacturingBW ManufacturingBW ManufacturingBW Manufacturing
5118 BW Other Inc /Expense
51182005118100
BW OTHER EXPENSE BW OTHER INCOME
Z900Z900
Other Inc.&ExpOther Inc.&Exp
21002100
BW ManufacturingBW Manufacturing
StandardHierarchy
CostCentre
Functional Area ProfitCentre
5150 States 51579955150000
States Admin AllocationStates General Manufacturing
Z500Z100
General & Admin O/HeadsCOGS
51205110
States SellingStates Mfg
5154 States Manufacturing
51542015154203
States Manufacturing Direct LaborStates Manufacturing Overhead
Z110Z300
Direct LabourManufacturing Overhead
51105110
States MfgStates Mfg
5156 States Sales 515629251562945156994
States Sales Commissions States Sales Overhead States Sales Allocations
Z200Z400Z400
CommissionsSales & MarketingSales & Marketing
512051205120
States SellingStates SellingStates Selling
5158 States Other Inc/Exp
51581005158200
States Other IncomeStates Other Expense
Z900Z900
Other Inc / ExpOther Inc / Exp
51205120
States SellingStates Selling
StandardHierarchy
CostCentre
Functional Area ProfitCentre
5200 Valley Forge 5200000 Valley Forge General Manufacturing Z100 COGS 2200 VF Mfg52043 VF Mfg O/head 5204513
52046135204913520441352044235204433
VF Quality OHVF MFG Engineering OHVF Bldg Maintenance OHVF Material Management - OHVF Material Storge OHVF Order Management Logistics OH
Z300Z300Z300Z300Z300Z300
Manufacturing OverheadManufacturing OverheadManufacturing OverheadManufacturing OverheadManufacturing OverheadManufacturing Overhead
220022002200220022002200
VF MfgVF MfgVF MfgVF MfgVF MfgVF Mfg
52042 VF SRO 52043115204313
VF SRO - Direct LaborVF SRO - Overhead
Z110Z300
Direct LabourManufacturing Overhead
22002200
VF MfgVF Mfg
52041 VF Production 52040235204021
VF Manufactured Products – OverheadVF Manufactured Products - Direct Labor
Z300Z110
Manufacturing OverheadDirect Labour
22002200
VF MfgVF Mfg
5205 VF Engineering 520514652051665205996
VF Engineering PAX Engineering VF Engineering Allocations
Z600Z600Z600
Engineering SpendEngineering SpendEngineering Spend
220022002200
VF MfgVF MfgVF Mfg
5206 VF Sales Support
52061545206164
VF Customer Support VF Marketing
Z400Z400
Sales & MarketingSales & marketing
22002200
VF MfgVF Mfg
5203 VF Product Management
52062245206994
VF Product Management VF PM Allocations
Z400Z400
Sales & MarketingSales & Marketing
22002200
VF MfgVF Mfg
5207 VF Admin 52071055207205520740552078055207995
VF Accounting VF IT/MIS VF Human Resources VF Executive Office VF Admin Allocations
Z500Z500Z500Z500Z500
General & Admin O/HeadGeneral & Admin O/HeadGeneral & Admin O/HeadGeneral & Admin O/HeadGeneral & Admin O/Head
22002200220022002200
VF MfgVF MfgVF MfgVF MfgVF Mfg
5208 VF Other Inc/Exp
52082005208100
VF Other ExpenseVF Other Income
Z900Z900
Other Inc/ExpOther Inc/Exp
22002200
VF MfgVF Mfg
StandardHierarchy
CostCentre
Functional Area ProfitCentre
5400 College Station 540799554069945400000
College Station Admin Rollup College Station Sales & Mkt Rollup College Station Cost of Sales
Z500Z400Z100
General & Admin O/HeadsSales & MarketingCOGS
311031203110
College Station EngCollege Station SalesCollege Station Eng
5405 College Station Engineering
54059965405106
College Station Engineering Allocations College Station Engineering
Z600Z600
Engineering SpendEngineering Spend
31103110
College Station EngCollege Station Eng
5408 College Station Other Inc /exp
54081005408200
College Station Engineer Other Income College Station Engineer Other Expense
Z900Z900
Other Inc/ExpOther Inc/Exp
31103110
College Station EngCollege Station Eng
StandardHierarchy
CostCentre
Functional Area ProfitCentre
5500 Training 55000005505996
Training Revenue and Expense SummaryTraining Engineering Rollup
Z100Z600
COGSEngineering Spend
52105210
Training ServicesTraining Services
55041 Training Courses 55042615504263
Training Direct LaborTraining OH
Z100Z300
Direct LabourManufacturing Overhead
52105210
Training ServicesTraining Services
55042 Engineering svs 55042735504271
EES OverheadEES Direct Labor
Z100Z300
Direct LabourManufacturing Overhead
52105210
Training ServicesTraining Services
55043 Bookstore 55042835504281
Bookstore OHBookstore DL
Z300Z100
Manufacturing OverheadDirect Labour
52105210
Training ServicesTraining Services
5506 Training Sales 550626255062645506994
Training Sales CommssionsTraining Sales OverheadTraining Sales Allocations
Z200Z400Z400
CommissionsSales & MarketingSales & Marketing
521052105210
Training ServicesTraining ServicesTraining Services
5507 Training Admin 55079955507985
Training Admin AllocationsTraining Admin
Z500Z500
General & Admin O/HeadsGeneral & Admin O/Heads
52105210
Training ServicesTraining Services
5508 Training Other Inc/Exp
55081005508200
Training Other IncomeTraining Other Expense
Z900Z900
Other Inc / ExpOther Inc / Exp
52105210
Training ServicesTraining Services
StandardHierarchy
CostCentre
Functional Area ProfitCentre
5700 US Central Costs
57078455707805
Group Software Management Group Management
Z500Z500
General & Admin O/HeadsGeneral & Admin O/Heads
81208120
US GroupUS Group
5706 US Marketing 5706102570610457069925706994
Group Marketing CommissionsGroup Marketing OverheadGroup Sales Allocations CommissionsGroup Sales Allocations Overhead
Z200Z400Z200Z400
CommissionsSales & marketingCommissionsSales & Marketing
8120812081208120
US GroupUS GroupUS GroupUS Group
5707 US IT 57072055707115
Group IT VFGroup IT Dallas
Z500Z500
General & Admin O/HeadsGeneral & Admin O/Heads
81208120
US GroupUS Group
5708 US Other Inc/Exp
57082005708100
Dallas Other Expense Dallas Other Income
Z900Z900
Other Inc / ExpOther Inc / Exp
81208120
US GroupUS Group
StandardHierarchy
CostCentre
Functional Area ProfitCentre
5750 USA Comms 5757995 US Comms Admin Allocations Z500 General & Admin O/Heads 2350 US Telco5755 US Comms
Engineering575599657551365755126
US Comms Eng AllocationsUS Comms Eng Tennessee US Comms Eng Dallas
Z600Z600Z600
Engineering SpendEngineering SpendEngineering Spend
235023502350
US TelcoUS TelcoUS Telco
5756 US Comms product Mgmt
57569945756134
US Comms Product Management US Comms Product Management
Z400Z400
Sales & MarketingSales & Marketing
23502350
US TelcoUS Telco
5758 US Comms Other Inc/Exp
57581005758200
US Comms Other IncomeUS Comms Other Expense
Z900Z900
Other Inc / ExpOther Inc / Exp
23502350
US TelcoUS Telco
StandardHierarchy
CostCentre
Functional Area ProfitCentre
5046 CSA 50467225046724
CSA Latin America CommissionsCSA Latin America Admin
Z200Z400
CommissionsSales & Marketing
44204420
CSA / Iberia SalesCSA / Iberia Sales
5048 US Distribution 50467525046754
US Distributor CommissionsUS Distributor Admin
Z200Z400
CommissionsSales & Marketing
44204420
CSA / Iberia SalesCSA / Iberia Sales
5047 Americas Distribution General
504820050481005047995504699450469925004000
CSA Other ExpenseCSA Other IncomeCSA Admin AllocationCSA Alloc OverheadCSA Alloc CommissionsAmericas Distribution Sales
Z900Z900Z500Z400Z200Z100
Other Inc / ExpOther Inc / ExpGeneral & Admin O/HeadSales & MarketingCommissionsCOGS
442044204420442044204420
CSA / Iberia SalesCSA / Iberia SalesCSA / Iberia SalesCSA / Iberia SalesCSA / Iberia SalesCSA / Iberia Sales
GAAP Adjustments
Consolidating adjustments are required within the system as a result of the use of IFRS for reporting to TBG and the use of UK GAAP for statutory accounting. There are three areas of difference
Capitalisation of R&D
IFRS requires product development expenditure to be capitalised and then amortised to the P&L over several years following product launch. Under UK GAAP whilst such capitalisation is permitted is not mandated. Within Megger Group the consolidated statutory accounts include the capitalisation of R&D, whereas the Megger Limited statutory accounts do not. This anomaly arises because when the Group introduced R&D capitalisation in 2002, there was a concern that if it was adopted for Megger Limited statutory accounts it could have adverse tax consequences whereas Group consolidations have no tax implications it is preferable to keep this as closely in line with TBG reporting as possible.
Goodwill Accounting
Unlike UK GAAP, IFRS does not amortise goodwill, rather it utilise an annual impairment test and the balance sheet values and P&L charges under the two systems are very different
Pension Scheme accounting
IFRS partially recognises pension scheme funding on the balance sheet and uses an actuarial calculation for the P&L, whilst UK GAAP has historically excluded these items (showing them only as notes to the accounts) and using actual contributions to the scheme as the P&L charge. With effect 2006 UK GAAP now also recognises pension scheme funding positions on the balances sheet, but the calculation of the surplus/deficit is different to that used under IFRS, and an accounting difference therefore still exists
Generally local accounts are required by Megger to be produced under UK GAAP, with any adjustments to local requirements being treated separately. The company records outlined above will therefore be in accordance with IFRS, and Group consolidation can be achieved for management reporting by taking all companies within the range 1000 to 9799. UK statutory reporting however requires adjustment from this, and this will be achieved by extending the consolidation to cover all companies in the range 1000 to 9899
US Adjustments to Group AccountsThe US capitalises R&D which is compatible under both accounting conventions so this is not an issue and nor is Goodwill as it has been fully written off under both accounting conventions. Pensions are however an issue as the US has two pension schemes and these require adjustment from IFRS too UK GAAP. These adjusting entries will be made in company 9850 using US$ as local currency (it is in the range 9800 to 9899 which is the range used for GAAP adjustments and 5 is the leading company character denoting the US
UK Adjustments to Group AccountsThe UK capitalises R&D in its IFRS books which is compatible under both accounting conventions so this is not an issue. Goodwill however does create a problem (whilst it has been fully written off under UK GAAP it retains a significance asset value under IFRS), as does the significant pension scheme deficit.
These adjusting entries to convert Goodwill and pensions to UK GAAP will be made in company 9810 using Sterling as local currency (it is in the range 9800 to 9899 which is the range used for GAAP adjustments and 1 is the leading company character denoting the UK)
UK Adjustments to Company Accounts Whilst the UK adjustments to Group Accounts allow Megger Group consolidated reporting in the UK they do not convert the Megger Limited accounts to its individual statutory reporting as in its statutory accounts it does not capitalise R&D. There is therefore a requirement for a separate UK adjusting company that not only adjusts goodwill and pensions, but also eliminates capitalised R&D. This will be Company 9910 (in the range 9900 to 9999 which are exclude from all consolidation reporting, and 1 is the leading company character denoting the UK)
By adding company 1000 and company 9910 together accounts will be produce for Megger Limited under its own UK GAAP requirements.
Megger SARL Adjustment to French Requirements
Under the French legal/tax framework all accounting entries must go against the year to which they relate – prior year adjustments are not allowed. However from Megger’s perspective in reporting to TBG, the accounts for any year are finalised and closed before the end of December and except under special circumstances posting to that year are not allowed after the end of December – any such entries are posted to the P&L in the subsequent year.
The solution to this problem is to use a dummy company to hold the adjustments from French GAAP to Megger reporting
Megger Sweden AB Adjustments to Group AccountsThe books of Megger Sweden include a pre-acquisition $6.4 mln purchase of intellectual property from GE. In the Swedish GAAP books this has been capitalised and is being amortised over 5 years. In the Group’s consolidated accounts however this purchase is treated as having been written off in tye P&L. The adjusting entries to switch between capitalised and non-capitalised IPR will be made in company 9860 using Swedish Krona as local currency (it is in the range 9800 to 9899 which is the range used for GAAP adjustments and 6 is the leading company character denoting the Sweden)