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1 Saudi Aramco: Company General Use
2018 iktva Supplier Workshop – First Time Filers
Program
إكتفاء
2 Saudi Aramco: Company General Use
iktva Overview
2021 TARGETS ARE:
iktva is a program,not a metric
iktva will work with suppliers in a new way for success
iktva is a Saudi Aramco Strategic Imperative
Saudi Aramco vision is to enable a globally competitive Saudi Industrial Base
70% Local Content Thousands of Jobs 30% Exports
3 Saudi Aramco: Company General Use
Four Enablers Required to Achieve 70% iktva by 2021
• Increase local content through direct spend
• Develop local supply-base (indirect spend)
• Workforce needed for localization
1 2 3 4
Major Suppliers SME Development EcosystemLocal Workforce
Development
• Casting & Forging• Steel Plate• Industrial Parks
4 Saudi Aramco: Company General Use
“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
The Kingdom’s Vision and Saudi Aramco’s Role
• Enable the growth & diversification of the Kingdom’s economy
• Double manufacturing and industrial services sectors
• Develop a strong, high-skilled Saudi workforce
Saudi Jobs
70% Saudi Content
30% Exports
4
The iktva program is our value creating contribution to Vision 2030
6 Saudi Aramco: Company General Use
iktva Development Timeline
iktva CONCEPTUALIZATION AND PROTOTYPING WITH SUPPLIERS2014
2015
2016
TESTING iktva Survey WITH THE TOP 30 SUPPLIERS LAUNCHING iktva PROGRAM HOSTED BY HRH PRINCE OF EP
iktva IS WIRED INTO CONTRACTS AND PROCUREMENT PROCESS
iktva AWARD FOR THE BEST iktva SCORE BY SUPPLIER HOSTED BY HRH PRINCE OF EP
2017
2018
DEPRECIATION AND R&D ARE ADDED TO FORMULA
EXPORT FACTOR INTRODUCED INTO FORMULA
2019 ENHANCEMENTS TO DEPRECIATION AND EXPAT COMPENSATION INTRODUCED
7 Saudi Aramco: Company General Use
8 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.”
9 Saudi Aramco: Company General Use
iktva in Procurement Process
3. No change in commercial evaluation process
1. No Change in technical evaluation process
2. An iktva evaluation step has been established
10 Saudi Aramco: Company General Use
iktva in Action
10
1st Timer Survey
Baseline iktva %
5 Year Plan
Future Surveys
Monitor Progress
70 % Local Content
11 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 ($)D. Supplier Development Spend ($)r. Local Research and Development ($)X. Export Revenue Factor (%)
E. In relation to revenue
Supplier iktva Formula
% iktva = 𝑨+𝑩+𝑪+𝑫+𝒓
𝑬+ 𝑿
X = 𝑬𝒙𝒑𝒐𝒓𝒕 𝑹𝒆𝒗𝒆𝒏𝒖𝒆 𝒂𝒔 𝒂 % 𝒐𝒇 𝑻𝒐𝒕𝒂𝒍 𝑹𝒆𝒗𝒆𝒏𝒖𝒆
𝟑𝟎% 𝑬𝒙𝒑𝒐𝒓𝒕 𝑻𝒂𝒓𝒈𝒆𝒕* 10% points (max of 10%)
DEFINITIONThe iktva program
drives, measures and monitors the “added-value” brought to the Kingdom by a supplier.
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iktva Survey Worksheet
iktva is a Saudi Aramo Strategic Imperative
• 3 years provided to create baseline
• Report both Saudi Aramco and Total KSA (including Saudi Aramco)
13 Saudi Aramco: Company General Use
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
General Instructions
14 Saudi Aramco: Company General Use
Company Information
iktva is a Saudi Aramo Strategic Imperative
Operating Locations
Affiliates Included Types of G&S
iktva Progress
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Page 1: Questions 2 & 3
Long-winded responses Best to be short and conciseInstead
16 Saudi Aramco: Company General Use
Category E – Section 1.0: Revenue
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 [email protected]
Includes revenue from Aramco
Page 2
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Category A – Section 2.0 – Goods and Services
Goods & Services = IK COGS/COS + SG&A + R&DGoods & Services ≠ COGS or COS
Page 2
18 Saudi Aramco: Company General Use
IK Goods and Services
Allowed Costso Materials and supplieso Transportation/logisticso Selling, general and administrativeo Professional serviceso Cateringo Equipment/vehicle/facility rentalo Utilitieso Temporary manpowero Insurance and financing costso Travel and accommodationso Security serviceso Custom clearance services
Excluded Costso Zakat and taxes (income, VAT,
withholding)o Penaltieso Expat visa, iqama, and dependent feeso Customs, duties and other government
feeso Intercompany costso Capital expenditureso Allowances and provisions (bad debt,
uncollectible AR)o Costs reported in other sections of the
survey including expat benefits
19 Saudi Aramco: Company General Use
Section 8.0 – Top in-Kingdom Suppliers
> 70%
Page 3
20 Saudi Aramco: Company General Use
Category A – Section 2.0 – Goods and Services
Page 2
Page 3
21 Saudi Aramco: Company General Use
Category A – Section 2.0 – Goods and Services
is
Page 2
Page 6
22 Saudi Aramco: Company General Use
Category A – Section 2.0 – Goods and Services
is
Section 9.0 - Labor
Page 2
Page 4
23 Saudi Aramco: Company General Use
Category A – Section 2.0 – Goods and Services
iktva is a Saudi Aramo Strategic Imperative
Revenue Ratio (40%)
Unless otherwise justifiable, Saudi Aramco Goods & Services is to be estimated using a simple ratio.
Challenges:• Inventory fluctuations• Length of supplier table
Page 2
24 Saudi Aramco: Company General Use
Category B – Section 3.0 - Saudi Payroll
iktva is a Saudi Aramo Strategic Imperative
Unless otherwise justifiable, Saudi Aramco headcount and compensation is to be estimated using the revenue ratio.
Can include Saudi Expat compensation and
headcount
Year End GOSI
Revenue Ratio (40%)
Page 2
25 Saudi Aramco: Company General Use
Section 9.0- Labor
Page 4
26 Saudi Aramco: Company General Use
Category B – Section 3.0 - Saudi Payroll
Page 4
Page 2
27 Saudi Aramco: Company General Use
Section 9.0 - Labor
Page 4
Page 2Page 2
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Category C – Section 4.0 - Training & Development
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
Page 2
29 Saudi Aramco: Company General Use
Category D – Section 5.0 – Supplier Development
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
Page 2
30 Saudi Aramco: Company General Use
Category R - Section 6.0 – Research & Development
• 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.
Page 2
31 Saudi Aramco: Company General Use
Section 10.0 – Capital Expenditures
Can be completed going back 10 years at supplier’s option
Page 5
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Section 7.0- In-Kingdom Investment
Page 2
Page 5
33 Saudi Aramco: Company General Use
Section 11.0 – Asset Depreciation & Amortization
Page 5
Page 6
34 Saudi Aramco: Company General Use
Section 11.0 – Asset Depreciation & Amortization
10 Years
Section 2.0 Goods, Services, Depreciation and Amortization
Page 6
35 Saudi Aramco: Company General Use
Category A – Section 2.0 – Goods and Services
is
Page 6
Page 2
36 Saudi Aramco: Company General Use
Section 12.0 – Supplier and Customer Development
Page 2
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37 Saudi Aramco: Company General Use
Section 13.0 – Female Employment
Page 8
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Page 9 – Reconciliation Table
Page 9
39 Saudi Aramco: Company General Use
Page 9 – Reconciliation Table
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40 Saudi Aramco: Company General Use
Page 9 – Reconciliation Table
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41 Saudi Aramco: Company General Use
Page 9 – Reconciliation Table
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42 Saudi Aramco: Company General Use
Page 9 – Reconciliation Table
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43 Saudi Aramco: Company General Use
Page 9 – Reconciliation Table
Page 3
44 Saudi Aramco: Company General Use
Sau
di A
ram
co ik
tva
Ce
rtif
icat
ion
Un
itSu
pp
liers
3rd
Par
ty
Ce
rtif
ier
Prepare Survey and Select Certification
Firm
Submit Survey to Saudi Aramco
Prepare Certification Report
Review Online Tools and Download
Templates
Review and Certify Survey
Provide Management Representation
Letter
Confirm Revenue/Entities
Review Survey and Prep Questions
Receive Final iktva Score
Respond to Enquiries
Finalize and Prepare Executive Summary
iktva Survey Certification Process
46 Saudi Aramco: Company General Use
Approved Auditors
47 Saudi Aramco: Company General Use
Supplier Training and Support for iktva Certification
1
iktva presentations2
iktva survey template3
Iktva survey guidelines4
www.iktva.sa
48 Saudi Aramco: Company General Use
Thank you
Contact Information
