Enterprise Structure Process Definition Document

Document number: Author: Document Approval Log:

Version V1.0 V1.1 Date 15/11/2006 27/11/2006 Document Status Initial draft Financial Organisation Initial draft expanded to include full enterprise structure Initial draft- updated use of Distribution Channel Approver A. R. Hardie A. R. Hardie Role BPO BPO

PDD051 A. R. Hardie

V1.2

06/12/2006

A. R. Hardie

BPO

V1.3

02/01/2007

Uploaded to Solution Manager

T. McLellan

Project Administration BPO

V1.4

09/01/2007

V1.5

14/03/2007

Updated to reflect revised sales organisation and company numbers, and the addition of Profit Centre, Functional Areas and Cost Centres Updated to reflect restriction of distribution channels to trade and inter co only (not country specific) Updated to reflect acquisition of Programma and use of parallel ledgers Updated to reflect roll out to USA (including change to re-sale and to holding company) US Adjustment changes and format changes

A. R. Hardie

A. R. Hardie

BPO

V1.6

2/05/2007

A. R. Hardie

BPO

V1.7

25/10/2007

A. R. Hardie

BPO

V1.8

10/02/2008

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 Update to reflect changes in UK

A Goggin

Project Manager

V2.2.

21/04/2010

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:
PROCESS SUMMARY....................................................................................................................................3 KEY MASTER DATA......................................................................................................................................4 SAP PROCESS / CONCEPT / DESIGN........................................................................................................5 Ledgers........................................................................................................................................................5 Operating Concern.....................................................................................................................................6 Controlling Area.........................................................................................................................................6 Company.....................................................................................................................................................6 Primary Manufacturing & Sales Operations.............................................................................................6 Sales & Distribution Companies................................................................................................................7 Inter Company Eliminations.......................................................................................................................8 Planning Adjustments.................................................................................................................................9 Credit Control Area....................................................................................................................................9 Sales Organisation......................................................................................................................................9 Distribution Channel..................................................................................................................................9 Division.....................................................................................................................................................10 Laboratory / Design Office.......................................................................................................................11 Sales Area.................................................................................................................................................11 UK ............................................................................................................................................................11 US and Sales Companies..........................................................................................................................11 Sales Office...............................................................................................................................................11 Plant..........................................................................................................................................................11 Purchasing Organisation..........................................................................................................................12 Storage Location.......................................................................................................................................12 Shipping Point...........................................................................................................................................12 Transport Planning Point.........................................................................................................................13 Profit Centres............................................................................................................................................13 Functional Areas......................................................................................................................................13 Cost Centres..............................................................................................................................................13 ASSOCIATED DOCUMENTS......................................................................................................................15 Company Legal Structure.........................................................................................................................15 SAP Organisation.....................................................................................................................................15 ASSUMPTIONS / OPTIONS CONSIDERED.............................................................................................16 Business Changes......................................................................................................................................16 Outstanding Issues / Actions.....................................................................................................................16 1.APPENDIX 1 COMPANY LEGAL STRUCTURE..............................................................................17 2.APPENDIX 2 SAP ORGANISATION....................................................................................................18 GAAP Adjustments....................................................................................................................................39

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Megger Group Limited

Enterprise Structure

Process Summary
Megger 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 Meggers 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 Meggers 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 Meggers implementation.

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Megger Group Limited

Enterprise Structure

Key Master Data

The 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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M e g g er G ro u p Li m it e d E nt er pr is e St ru ct ur e A p p e n di ce s

SAP Process / Concept / Design

The 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 Point Planning

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

Ledgers
SAP has the ability to maintain three parallel ledgers in which transactions are recorded (OL, Y1, and Y2). All sales, purchase, inventory etc transactions are

Megger Group Limited Appendix 2.10 US Cost Centres 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 Groups use)

Meggers initial proposal was to replicate the solution deployed in the Groups 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.

Operating Concern
The operating concern exists as the environment for Profitability Analysis. Meggers 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.

Controlling Area
The Controlling Area is the environment for management accounting and Profit Centres. Again, therefore, Meggers 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.

Company
Companies 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

Primary Manufacturing & Sales Operations

UK
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 intercompany 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

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Megger Group Limited Appendix 2.10 US Cost Centres 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 Groups 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. However, SAPs 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 4th 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).

Sales & Distribution Companies

INDIA
Megger 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).

FRANCE
Megger 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.

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Megger Group Limited Appendix 2.10 US Cost Centres 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 Meggers 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.

AUSTRALIA
Megger 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 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).

CANADA
Megger 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).

GERMANY
Megger 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).

SWITZERLAND
Megger 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).

Inter Company Eliminations

US$ Eliminations

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Megger Group Limited Appendix 2.10 US Cost Centres Over 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)

Planning Adjustments
During 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 Boards 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

Credit Control Area

Credit 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 countrys currency, with the number used for each Credit Control Area corresponding to the associated Company code.

Sales Organisation

The 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.

Distribution Channel
The 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.

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Megger Group Limited Appendix 2.10 US Cost Centres 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).

Division
Division 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 Meggers 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 subgroup 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

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Megger Group Limited Appendix 2.10 US Cost Centres

Laboratory / Design Office

Lab/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.

Sales Area
Sales 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.

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. 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.

US and Sales Companies

The 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 nonrevenue items from the vast majority of customers, the potential sales areas required are more than halved with further narrowing down according to individual circumstances

Sales Office
A 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

Plant
In 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.

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Megger Group Limited Appendix 2.10 US Cost Centres 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) 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

Purchasing Organisation
A 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.

Storage Location
Each plant will have multiple storage locations which hold inventory. Definitions and details of these are contained within the appropriate inventory and manufacturing PPDs.

Shipping Point
Shipping Points represent the physical location from which items will be shipped responsible for scheduling and processing deliveries. Each of Meggers locations has a single shipping area and so each plant within SAP will have a single Shipping Point

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Megger Group Limited Appendix 2.10 US Cost Centres (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.

Transport Planning Point

The 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.

Profit Centres
Profit Centres as emphasised throughout this document are core to Meggers 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 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 intercompany 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

Functional Areas
Meggers standard Profit and Loss reporting is based around functions rather than expenditure types, and SAPs functional area provides the vehicle by which this can be achieved. The Functional Areas will replicate Meggers profit reporting requirements.

Cost Centres
Megger 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

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Megger Group Limited Appendix 2.10 US Cost Centres 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 Limited Appendix 2.10 US Cost Centres

Associated documents
Company Legal Structure
The Company legal structure is outlined in Appendix 1.

SAP Organisation
The SAP Organisation is outlined in Appendix 2.

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Megger Group Limited Appendix 2.10 US Cost Centres

Assumptions / Options Considered

A 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-Ones 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

Business Changes
Business changes have previously been noted on Business Process Documents.

Outstanding Issues / Actions

There are no outstanding issues.

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1. Appendix 1 Company Legal Structure

Megger Group Limited

AVO International Inc

Megger Instruments Ltd

Megger Limited

Megger Sweden AB

Megger Limited

Megger Inc

James G Biddle (Valley Forge)

AVO Multi -Amp (Dallas)

Megger AG (Switzerland)

Megger GmbH (Germany)

Biddle Instruments

AVO Training Inst (Dallas)

Megger SARL (France)

Megger PVT Ltd (India)

Biddle Instruments Financial Corp

Power DB (College Station)

Megger PVT Ltd (Australia )

AVO M3

Local Employees (China)

Dormants USA UK (and ROW) SWEDEN CANADA

Megger Group Limited

Appendix 2.01 Companies & Plants

2. Appendix 2 SAP Organisation

Operating Concern 1000 Controlling Area 1000 1000 1100 1200 5000 Company (Country) Megger Instruments Ltd (UK Mfg) Megger Group Ltd (Holding Company) Megger Ltd (UK Sales Company) Megger US (US Phantom) Local Currency GBP GBP GBP US$ 1000 1100 1200 5110 5150 5160 5200 5800 Megger US (US Sales) US$ 5810 5820 6000 8100 8300 8500 8600 8700 8900 9500 Megger Sweden AB (Sweden) Megger Limited (Toronto) Megger SARL (France) Megger PTY Limited (Australia) Megger India PTY Limited (India) Megger GmbH (Germany) Megger AG (Switzerland) Plan Contingencies SEK CA$ EUR AU$ INR EUR SFR US$ 6000 8100 8300 8500 8600 8700 8900 Plant Dover Mfg Group Dover Sales Bronze Way States Products AVO Training Valley Forge Megger NAFTA Megger US Dist Taby Canada France Australia India Germany Switzerland

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Megger Group Limited

Appendix 2.02 Sales Orgs, Divisions, Dist.Channels

SAP Sales Organisations 1000 Dover Manufacturing 1100 Group Sales 1200 Dover Sales 5000 US Operations Sales 5150 States Products Sales 5160 AVO Training Sales 5810 Megger NAFTA US 5820 Megger US Distribution 6000 Swedish Sales 8100 Canada Sales 8300 France Sales 8500 Australia Sales 8600 India Sales 8700 Germany Sales 8900 Switzerland Sales Lab/Office 10 Bronze Way 15 Valley Forge 17 Tby 20 Dover Manufacturing 21 Dover Sales 30 College Station 50 Canadian Sales Office Service & Repair 55 French Sales Office Service & Repair 60 Australian Sales Office Service & Repair 63 Indian Sales Office Service & Repair 65 German Office Service & Repair 67 Swiss Office Service & Repair 80 States 85 Training

SAP Distribution Channels 10 Trade 40 Inter Co / Profit Centre Transfer

SAP Divisions 01 Order Entry Default 10 Bronze Way 15 Valley Forge 16 PAX 17 Tby 20 Dover 25 Factored Products 30 College Station 50 Canadian Sales Office Service & Repair 55 French Sales Office Service & Repair 60 Australian Sales Office Service & Repair 63 Indian Sales Office Service & Repair 65 German Office Service & Repair 67 Swiss Office Service & Repair 80 States 85 Training 99 Non-Revenue

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Megger Group Limited

Company Megger Instruments Ltd Credit Control Area 1000 UK 1000 Sales Organization Dover Mfg Sales 40 Distribution Channel Inter Co / Profit Centre Transfer 42 43 44 45 51 53 55 56 57 59 99 99 11 13 23 41 43 44 45 51 53 55 56 57 59 99 27 99 41 42 43 44 45 51 53 55 56 57 59 41 42 43 44 45 51 53 55 56 57 59 99 35 99

Appendix 2.03 Sales Areas

Sales Office Inter Co to Dover Sales Inter Co to Dallas (NAFTA) Inter Co to VF (US Distribution) Inter Co to Taby Inter Co to Canada Inter Co to France Inter Co to Australia Inter-Co to India Inter Co to Germany Inter Co to Switzerland Non Revenue Non Revenue International UK International ROW US Distribution CSA/Iberia Inter Co to Dover Mfg Inter Co to Dallas (NAFTA) Inter Co to VF (US Distribution) Inter Co to Taby Inter Co to Canada Inter Co to France Inter Co to Australia Inter-Co to India Inter Co to Germany Inter Co to Switzerland Non Revenue College Station Sales Non Revenue Inter Co to Dover Mfg Inter Co to Dover Sales Inter Co to Dallas (NAFTA) Inter Co to VF (US Distribution) Inter Co to Tby Inter Co to Canada Inter Co to France Inter Co to Australia Inter-Co to India Inter Co to Germany Inter Co to Switzerland Inter Co to Dover Mfg Inter Co to Dover Sales Inter Co to Dallas (NAFTA) Inter Co to VF (US Distribution) Inter Co to Tby Inter Co to Canada Inter Co to France Inter Co to Australia Inter-Co to India Inter Co to Germany Inter Co to Switzerland Non Revenue AVO Training Sales Non Revenue

1000

1100 1200

Megger Group Limited Megger Limited

1000 1000

UK UK

1100 1200

Group Sales Dover Sales

99 99 10

Non Revenue Non Revenue Trade

40

Inter Co / Profit Centre Transfer

5000

Megger US

5000

Megger US

5000

Megger US

10 40

Trade Inter Co / Profit Centre Transfer

5150

States Products Sales

40

Inter Co / Profit Centre Transfer

5160

AVO Training Sales

99 10 99

Non Revenue Trade Non Revenue

Megger Group Ltd

Page 21 of 40

Company 5800

Credit Control Area 5000

5810 5820 5830 5890 6000

Sales Organization Megger NAFTA Megger US Dist International ROW States Sales Tby Sales

10 10 10 10 10

Distribution Channel Trade Trade Trade Trade Trade

6000

Megger Sweden

6000

Sweden

40

Inter Co / Profit Centre Transfer

8100 8300 8500 8600

Megger Megger Megger Megger

Limited SARL PTY Ltd India

8100 8300 8500 8600

Canada France Australia India

8100 8300 8500 8600

Canada Sales France Sales Australia Sales India Sales

10 10 10 10 40

Trade Trade Trade Trade Inter Co / Profit Centre Transfer

8700

Megger GmbH

8700

Germany

8700

Germany Sales

10 40

Trade Inter Co / Profit Centre Transfer

8900

Megger AG

8900

Switzerland

8900

Switzerland Sales

10

Trade

17 19 21 23 33 13 11 13 17 23 41 42 43 44 51 53 55 56 57 59 17 13 13 13 42 43 45 55 13 42 43 45 13

Sales Office NAFTA Mexico US Distribution US Distribution CSA/Iberia States International ROW International UK International ROW NAFTA US Distribution CSA/Iberia Inter Co to Dover Mfg Inter Co to Dover Sales Inter Co to Dallas (NAFTA) Inter Co to VF (US Distribution) Inter Co to Canada Inter Co to France Inter Co to Australia Inter Co to India Inter Co to Germany Inter Co to Switzerland NAFTA International ROW International ROW International ROW Inter Co to Dover Sales Inter Co to US Inter Co to Taby Inter Co to Australia International ROW Inter Co to Dover Sales Inter Co to US Inter Co to Taby International ROW

Megger Group Limited 2.04 Sales & Plants

Appendix

Associated Plants Dover Mfg Valley Forge College Station Training Canada Group Dover Sales France Bronze Way Australia States Taby India Germany X X Sales Organisation Distribution Channel Swiss

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 Internl States Sls Sweden Canada France Australia India Germany Switzerland

10 40 99 10 40 10 40 10 40 10 10 10 10 10 10 40 10 10 10 10 10 10

Trade Inter Co / PC Transfer Non Revenue Trade Inter Co / PC Transfer Trade Inter Co / PC Transfer Trade Inter Co / PC Transfer Trade Trade Trade Trade Trade Trade Inter Co / PC Transfer Trade Trade Trade Trade Trade Trade

X X X X X

X X

X X

X X X X X X X X X X X X

Megger Group Ltd

Page 23 of 40

Megger Group Limited 2.05 - Purchasing, Shipping and Transport

Appendix

Company 1000 1100 1200 Megger Instruments Ltd Megger Group Ltd Megger Limited 1000 1100 1200

Plant Dover Mfg Group Dover Sales 1000 1100 1200

Purchase Org Dover Mfg Group Dover Sales 1000 1100 1000 1200

Shipping Point Dover Mfg Group Dover Mfg Dover Sales Bronze Way States AVO Training Valley Forge NAFTA US Distribution US International States Sales Taby Canada France Australia India Germany Switzerland 6000 8100 8300 8500 8600 8700 8900 5800 5000 1000 1100 1200

Transport Planning Point Dover Mfg Group Dover Sales

5000

Megger (US)

5110 5150 5160 5200

Bronze Way States AVO Training Valley Forge NAFTA US Distrn US Internl States Sales Taby Canada France Australia India Germany Switzerland

5110 5150 5160 5200 5810 5820 5830 5850 6000 8100 8300 8500 8600 8700 8900

Bronze Way States AVO Training Valley Forge NAFTA US Distrn US Internl States Sales Taby Canada France Australia India Germany Switzerland

5110 5150 5160 5200 5810 5820 5830 5850 6000 8100 8300 8500 8600 8700 8900

US

5800

Megger US Sales

5810 5820 5830 5850

US Sales

6000 8100 8300 8500 8600 8700 8900 9500

Megger Sweden AB Megger Limited (Canada) Megger SARL (France) Megger PTY Ltd (Australia) Megger India PVT Ltd Megger GmbH (Germany) Megger AG (Switzerland)

6000 8100 8300 8500 8600 8700 8900

Taby Canada France Australia India Germany Switzerland

Megger Group Ltd

Page 24 of 40

Megger Group Limited 2.06 - Profit Centres

Appendix

1. Profit Centre Hierarchy in SAP P0001 Megger Group 2100 2200 2300 2500 3100 4100 4200 4400 5100 5200 8100 Bronze Way Valley Forge Dover Tby College Station International Sales NAFTA Americas Distribution States Training Group & Unallocated

2. Profit Centre Groups 1000 2310 2350 3110 3120 3190 4110 4120 4190 4210 4290 4410 4420 4490 5110 5120 5190 5210 5290 8110 8120 8150 8180 Dover Mfg US Telco College Station Engineering College Station Sales Unallocated UK & Eire ROW International Sales General NAFTA NAFTA General US Distribution Sales CSA / Iberia Distribution General States Manufacturing States States General Training Training General Megger Group US Group Abc Other Megger Group Reporting 2100 2200 2300 2500 3100 4100 4200 4400 5100 5200 8100 9500 9900 2100 2200 2300 3110 5110 3120 4100 4200 4400 5120 5200 Bronze Way Valley Forge Dover Tby College Station International Sales NAFTA Americas Distribution States Training Group & Unallocated Reserve Unallocated Bronze Way Valley Forge Dover College Station Engineering States Manufacturing College Station Sales International Sales NAFTA Americas Distribution States Training

2000

Manufacturing & Service

3000

Trade Sales

9500 9900

Reserve Unallocated

Megger Group Ltd

Page 25 of 40

Megger Group Limited 2.07 Functional Areas

Appendix

Z100 Z110 Z200 Z300 Z400 Z500 Z505 Z600 Z700 Z800 Z900 Z905 Z906 Z909

COGS Direct Labour Commisions Manufacturing Overhead Sales & Marketing General &Administration TBG Management Charges Engineering Spend Enginering Capitalisation Goodwill Other Income & Expenditure Interest Received Interest paid Taxation

Megger Group Ltd

Page 26 of 40

Standard Hierarchy
160 Dover R&D Spend 1108506 1108606 1108706 1108906 1108907 1109306 1010105 1010405 1010505 1010905 1011305 1011405 1000000 1000003 1000004 1000009 1000010 1000011 1000012 1000013 1010409 1129503 1202103 1201703 1202203 1201603 1204600 1204601 1204603 1204800 1204801 1204803

Cost Centre
Dover R&D Comms Products Dover R&D Power Products Dover R&D Contractor Tools Dover R&D Administration Dover R&D Capitalisation Dover R&D Engineering Services Dover Admin Management Dover Admin Finance Dover Admin Computer Services Dover Admin Canteen Dover Admin Human Resources Dover Admin Training Dover General Dover General Man Ohead Dover General rework (prod orders only) Dover General-Other Dover General Interest recd Dover - Interest Paid Dover General taxation Dover General-Group Costs Dover - Discount Received Dover Mfg Test Gear Dover Mfg Purchasing Dover Mfg management Dover Mfg Establishment Dover Mfg Works Engineering Dover Mfg Contractors Tool COGS Dover Mfg Contractors Tool Direct Labour Dover Mfg Assy contractors tool Overheads Dover Mfg Power Products COGS Dover Mfg - Main Assy ESI - Direct Labour Dover Mfg Assy Power Products Overheads Z600 Z600 Z600 Z600 Z600 Z600 Z500 Z500 Z500 Z500 Z500 Z500 Z100 Z300 Z300 Z900 Z905 Z906 Z909 Z900 Z900 Z300 Z300 Z300 Z300 Z300 Z100 Z110 Z300 Z100 Z110 Z300

Functional Area
Engineering Spend Engineering Spend Engineering Spend Engineering Spend Engineering Spend Engineering Spend General & Admin Ohds General & Admin Ohds General & Admin Ohds General & Admin Ohds General & Admin Ohds General & Admin Ohds COGS Manufacturing Overhead Manufacturing Overhead Other Inc & Expenditure Interest Received Interest Paid Taxation Other Inc & Expenditure Other Inc & Expenditure Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead COGS Direct Labour Manufacturing Overhead COGS Direct Labour Manufacturing Overhead 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310

Profit Centre
Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg

150

Dover Administration

100

Dover General

130 130-12016 130 - 12046 130 - 12048

Dover Manufacturing Site Svs & Establishment Dover Manufacturing Contractor Tools Dover Mfg Power

Standard Hierarchy 130 - 12049 Dover Manufacturing PCB Assy 130 - 12060 130 - 12062 130 - 12025 130 - 12031 130 - 12078 141 Dover Manufacturing PCB Test Dover Manufacturing Production Svs Dover Manufacturing Warehouse Dover Manufacturing Service & Repair Dover Manufacturing QA International Sales

142 190 999

NAFTA Sales Aycliffe Business Centre Group & Unallocated

1204900 1204901 1204903 1206000 1206001 1206003 1206200 1206201 1206203 1202503 1202501 1203101 1203103 1207801 1207803 1201002 1200000 1000127 1000128 1000129 1210105 1221603 1257304 1257404 1257604 1257704 1257904 1258004 1258104 1258204 1258304 1258404 1204004 1999953 1999959 1000115 1000116 1000119 1000120 1000122 1000125

Cost Centre Dover Mfg PCB Assy COGS Dover Mfg PCB Assy Direct Labour Dover Mfg Assy PCB Assy Dover Mfg PCB test COGS Dover Mfg PCB Test Direct Labour Dover Mfg PCB Test Dover Mfg production svs COGS Dover Mfg Production Svs Direct Labour Dover Mfg - Production Services - OH Dover Mfg Despatch Overheads Dover Mfg Despatch Direct Labour Dover Mfg Service Direct Labour Dover Mfg Service & repairs Dover Mfg QA Direct Labour Dover Mfg Assy Quality Assurance International Sales Dist Commissions International Sales General Megger Ltd interest received Megger Ltd interest paid Megger Ltd taxation Megger Limited Administration Megger Limited Site Services Software Support Factored Products Dover Sales UK Power Dover Sales Europe Dover Sales Applications & support Dover Sales management Dover Sales Marcomms Costs Dover Sales UK Distribution & wholesaler Dover Sales International Dover S&M Commercial CSA/Iberia Distribution costs Aycliffe Business Centre Costs Aycliffe Business Centre Income 1000115 Megger Group Administration 1000116 Megger Group TBG Management Fees 1000119 Megger Group-Other 1000120 Megger Group Interest Received 1000122 Megger Group Interest Paid 1000125 Megger Group taxation

Functional Area Z100 Z110 Z300 Z100 Z110 Z300 Z100 Z110 Z300 Z300 Z110 Z110 Z300 Z110 Z300 Z200 Z400 Z905 Z906 Z909 Z500 Z300 Z400 Z400 Z400 Z400 Z400 Z400 Z400 Z400 Z400 Z400 Z400 Z300 Z900 Z500 Z505 Z900 Z905 Z906 Z909 COGS Direct Labour Manufacturing Overhead COGS Direct Labour Manufacturing Overhead COGS Direct Labour Manufacturing Overhead Manufacturing Overhead Direct Labour Direct Labour Manufacturing Overhead Direct Labour Manufacturing Overhead Commissions Sales & Marketing Interest Recd Interest Paid Taxation General & Admin Ohds Manufacturing Overhead Sales & Marketing Sales & Marketing Sales & Marketing Sales & Marketing Sales & Marketing Sales & Marketing Sales & Marketing Sales & Marketing Sales & Marketing Sales & Marketing Sales & Marketing Manufacturing Overhead Other Inc & Expenditure General & Admin Ohds TBG Management Charges Other Inc & Expenditure Interest Received Interest Paid Taxation 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 2310 4190 4190 4190 4190 4190 4190 4190 4190 4190 4190 4190 4190 4190 4190 4190 4190 4190 4420 8150 8150 8110 8110 8110 8110 8110 8110

Profit Centre Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Dover Mfg Intl Sales General Intl Sales General Intl Sales General Intl Sales General Intl Sales General Intl Sales General Intl Sales General Intl Sales General Intl Sales General Intl Sales General Intl Sales General Intl Sales General Intl Sales General Intl Sales General Intl Sales General Intl Sales General Intl Sales General CSA / Iberia Sales ABC ABC Megger Group Megger Group Megger Group Megger Group Megger Group Megger Group

600

Standard Hierarchy Taby General

630

Taby Supply Chain/QA

640

Taby Supply Chain Mgmt

641

Taby Customer Service

650

Taby Administration

660

Taby Engineering

6000000 6000009 6000010 6000011 6000012 6000116 6010409 6201603 6201703 6202103 6202503 6204801 6204803 6058404 6057504 6057604 6057704 6058204 6058304 6059002 6001009 6057804 6057904 6058004 6058104 6058504 6203103 6203101 6206203 6010105 6010405 6010505 6011305 6108906 6108907 6109006 6109007

Cost Centre Taby General Taby General OHD Taby General Interest Received Taby General Interest Paid Taby General Taxation Taby General TBG Mgmt Fees Taby Discount Received Taby Logistics Manager Taby Supply Chain Management Taby Sourcing Taby Shipping/Receiving Taby Production - Direct Labour Taby Production Overheads Taby Order/Export Coordinators Taby Sales Europe Taby Nordic Sales Taby Commercial Director Taby Marketing Taby Sales Support Commission payable Taby International Sales Taby Support Specialists Taby Sales Applications & support Taby Customer Service Manager Taby Technical Editor Taby Site Product Management Taby Rep Service & Repairs Taby Rep Service Direct Labour Taby Training and Services OH Taby Admin Management Taby Admin Finance Taby Admin Infrastructure Taby Admin Human Resources Taby Engineering Taby Eng Capitalisation Pax Engineering Cost Pax Engineering Capitalisation

Functional Area Z100 Z900 Z900 Z900 Z900 Z500 Z900 Z300 Z300 Z300 Z300 Z110 Z300 Z400 Z400 Z400 Z400 Z400 Z400 Z200 Z400 Z400 Z400 Z400 Z400 Z400 Z300 Z110 Z300 Z500 Z500 Z500 Z500 Z600 Z700 Z600 Z700 COGS Other Income & Exp. Other Income & Exp. Other Income & Exp. Other Income & Exp. General Admin Ohds Other Income & Exp. Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead Direct Labour Manufacturing Overhead Sales & Marketing Sales & Marketing Sales & Marketing Sales & Marketing Sales & Marketing Sales & Marketing Commissions Sales & Marketing Sales & Marketing Sales & Marketing Sales & Marketing Sales & Marketing Sales & Marketing Manufacturing Overhead Direct Labour Manufacturing Overhead General & Adms Ohds General & Adms Ohds General & Adms Ohds General & Adms Ohds Engineering Spend Engineering Capitalisation Engineering Spend Engineering Capitalisation 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 4120 4120 4120 4120 4120 2500 4120 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2500 2200 2200

Profit Centre Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Int Sales ROW Int Sales ROW Int Sales ROW Int Sales ROW Int Sales ROW Taby Mfg Int Sales ROW Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Taby Mfg Valley Forge Mfg Valley Forge Mfg

Standard Hierarchy 50261 US Regions NAFTA 50262 NAFTA East 50263 50264 50265 50266 50241 50242 50243 5027 5028 NAFTA South NAFTA Central NAFTA West NAFTA Open NAFTA Inside Sales NAFTA TSG NAFTA Cust. Support Mexico NAFTA General

5026404 5026402 5026414 5026412 5026424 5026422 5026432 5026434 5026442 5026444 5026452 5026454 5026554 5026552 5026582 5026584 5026592 5026594 5026304 5026302 5027995 5026994 5026992 5026204 5026202 5002000 5028200 5028100

Cost Centre NAFTA US Regions Overhead NAFTA US Regions Commissions NAFTA EAST Overhead NAFTA East Commissions NAFTA South Administration NAFTA South Commissions NAFTA Central Commissions NAFTA Central Overhead NAFTA West Commissions NAFTA West Admin NAFTA Open Commissions NAFTA Open Administration NAFTA Inside Administration NAFTA Inside Commissions NAFTA TSG Commissions NAFTA TSG Administration NAFTA Customer Support Commissions NAFTA Customer Support Administration NAFTA Mexico Overhead NAFTA Mexico Commissions NAFTA Administration Allocation NAFTA Sales Allocation NAFTA Commissions Allocation NAFTA Admin Overhead NAFTA Admin Commissions NAFTA NAFTA Other Expense NAFTA Other Income

Functional Area Z400 Z200 Z400 Z200 Z400 Z200 Z400 Z200 Z200 Z400 Z200 Z400 Z400 Z200 Z200 Z400 Z200 Z400 Z400 Z200 Z500 Z400 Z200 Z400 Z200 Z100 Z900 Z900 Sales & Marketing Commissions Sales & Marketing Commissions Sales & Marketing Commissions Sales & Marketing Commissions Commissions Sales & Marketing Commissions Sales & Marketing Sales & Marketing Commissions Commissions Sales & Marketing Commissions Sales & Marketing Sales & Marketing Commissions General & Admin OHeads Sales & Marketing Commissions Sales & Marketing Commissions COGS Other Inc/Expenditure Other Inc/Expenditure 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200 4200

Profit Centre NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA NAFTA

5110 5119 51141 51142 51143 51144 51145 51146 5112

Standard Hierarchy Bronze Way BW Rework Bronze Way Production MPRT Assy MPRT Test BW Other Assy BW Other Test BW SRO Bronze Way Manufacturing Overhead

5115 5116 5117

Bronze Way Engineering Bronze Way Management Bronze Way Admin

5118

BW Other Inc /Expense

5110000 5000004 5000005 5114023 5114021 5114101 5114103 5114111 5114113 5114203 5114201 5114213 5114211 5114311 5114313 5114413 5114423 5114433 5114513 5114613 5114913 5115106 5115146 5115996 5116994 5116134 5116114 5117995 5117905 5117805 5117405 5117205 5117105 5118200 5118100

Cost Centre BW General Manufacturing Rework Bronze way Rework BW MPRT BW MANUFACTURING OH BW MANUFACTURING - DL BW MANUF. MPRT DL BW MANUF. MPRT - OH BW MANUF. MPRT TEST DL BW MANUF. MPRT TEST - OH BW OTHER ASSEMBLY - OH BW OTHER ASSEMBLY - DL BW OTHER TEST - OH BW OTHER TEST - DL BW OTHER SRO - DL BW SRO - OH BW MATERIAL MGT OH BW MATERIAL STORAGE OH BW ORDER MGT & LOG OH BW QUALITY OH BW MFG ENG OH BW BUILDING MAINTENANCE BW ENGINEERING BW AVTS ENGINEERING BW ENGINEERING ALLOCATIONS BW PM ALLOCATIONS BW PRODUCT MGT OH BW INDUSTRY SPEC OH BW ADMIN ALLOCATIONS BW ADMIN OTHER BW EXECUTIVE OFFICE BW HUMAN RESOURCES BW IT/MIS BW ACCOUNTING BW OTHER EXPENSE BW OTHER INCOME

Functional Area Z100 Z300 Z300 Z300 Z110 Z110 Z300 Z110 Z300 Z300 Z110 Z300 Z110 Z110 Z300 Z300 Z300 Z300 Z300 Z300 Z300 Z600 Z600 Z600 Z400 Z400 Z400 Z500 Z500 Z500 Z500 Z500 Z500 Z900 Z900 COGS Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead Direct Labour Direct Labour Manufacturing Overhead Direct Labour Manufacturing Overhead Manufacturing Overhead Direct Labour Manufacturing Overhead Direct Labour Direct Labour Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead Engineering Spend Engineering Spend Engineering Spend Sales & Marketing Sales & Marketing Sales & Marketing General & Admin OHeads General & Admin OHeads General & Admin OHeads General & Admin OHeads General & Admin OHeads General & Admin OHeads Other Inc.&Exp Other Inc.&Exp 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100 2100

Profit Centre BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing BW Manufacturing

5150 5154 5156 5158

Standard Hierarchy States States Manufacturing States Sales States Other Inc/Exp

5157995 5150000 5154201 5154203 5156292 5156294 5156994 5158100 5158200

Cost Centre States Admin Allocation States General Manufacturing States Manufacturing Direct Labor States Manufacturing Overhead States Sales Commissions States Sales Overhead States Sales Allocations States Other Income States Other Expense

Functional Area Z500 Z100 Z110 Z300 Z200 Z400 Z400 Z900 Z900 General & Admin O/Heads COGS Direct Labour Manufacturing Overhead Commissions Sales & Marketing Sales & Marketing Other Inc / Exp Other Inc / Exp 5120 5110 5110 5110 5120 5120 5120 5120 5120

Profit Centre States Selling States Mfg States Mfg States Mfg States Selling States Selling States Selling States Selling States Selling

Standard Hierarchy 5200 Valley Forge 52043 VF Mfg O/head

52042 52041 5205 5206 5203 5207

VF SRO VF Production VF Engineering VF Sales Support VF Product Management VF Admin

5208

VF Other Inc/Exp

5200000 5204513 5204613 5204913 5204413 5204423 5204433 5204311 5204313 5204023 5204021 5205146 5205166 5205996 5206154 5206164 5206224 5206994 5207105 5207205 5207405 5207805 5207995 5208200 5208100

Cost Centre Valley Forge General Manufacturing VF Quality OH VF MFG Engineering OH VF Bldg Maintenance OH VF Material Management - OH VF Material Storge OH VF Order Management Logistics OH VF SRO - Direct Labor VF SRO - Overhead VF Manufactured Products Overhead VF Manufactured Products - Direct Labor VF Engineering PAX Engineering VF Engineering Allocations VF Customer Support VF Marketing VF Product Management VF PM Allocations VF Accounting VF IT/MIS VF Human Resources VF Executive Office VF Admin Allocations VF Other Expense VF Other Income

Functional Area Z100 Z300 Z300 Z300 Z300 Z300 Z300 Z110 Z300 Z300 Z110 Z600 Z600 Z600 Z400 Z400 Z400 Z400 Z500 Z500 Z500 Z500 Z500 Z900 Z900 COGS Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead Manufacturing Overhead Direct Labour Manufacturing Overhead Manufacturing Overhead Direct Labour Engineering Spend Engineering Spend Engineering Spend Sales & Marketing Sales & marketing Sales & Marketing Sales & Marketing General & Admin O/Head General & Admin O/Head General & Admin O/Head General & Admin O/Head General & Admin O/Head Other Inc/Exp Other Inc/Exp 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200 2200

Profit Centre VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg VF Mfg

5400 5405 5408

Standard Hierarchy College Station College Station Engineering College Station Other Inc /exp

5407995 5406994 5400000 5405996 5405106 5408100 5408200

Cost Centre College Station Admin Rollup College Station Sales & Mkt Rollup College Station Cost of Sales College Station Engineering Allocations College Station Engineering College Station Engineer Other Income College Station Engineer Other Expense

Functional Area Z500 Z400 Z100 Z600 Z600 Z900 Z900 General & Admin O/Heads Sales & Marketing COGS Engineering Spend Engineering Spend Other Inc/Exp Other Inc/Exp 3110 3120 3110 3110 3110 3110 3110

Profit Centre College Station Eng College Station Sales College Station Eng College Station Eng College Station Eng College Station Eng College Station Eng

5500 55041 55042 55043 5506 5507 5508

Standard Hierarchy Training Training Courses Engineering svs Bookstore Training Sales Training Admin Training Other Inc/Exp

5500000 5505996 5504261 5504263 5504273 5504271 5504283 5504281 5506262 5506264 5506994 5507995 5507985 5508100 5508200

Cost Centre Training Revenue and Expense Summary Training Engineering Rollup Training Direct Labor Training OH EES Overhead EES Direct Labor Bookstore OH Bookstore DL Training Sales Commssions Training Sales Overhead Training Sales Allocations Training Admin Allocations Training Admin Training Other Income Training Other Expense

Functional Area Z100 Z600 Z100 Z300 Z100 Z300 Z300 Z100 Z200 Z400 Z400 Z500 Z500 Z900 Z900 COGS Engineering Spend Direct Labour Manufacturing Overhead Direct Labour Manufacturing Overhead Manufacturing Overhead Direct Labour Commissions Sales & Marketing Sales & Marketing General & Admin O/Heads General & Admin O/Heads Other Inc / Exp Other Inc / Exp 5210 5210 5210 5210 5210 5210 5210 5210 5210 5210 5210 5210 5210 5210 5210

Profit Centre Training Services Training Services Training Services Training Services Training Services Training Services Training Services Training Services Training Services Training Services Training Services Training Services Training Services Training Services Training Services

5700 5706

Standard Hierarchy US Central Costs US Marketing

5707 5708

US IT US Other Inc/Exp

5707845 5707805 5706102 5706104 5706992 5706994 5707205 5707115 5708200 5708100

Cost Centre Group Software Management Group Management Group Marketing Commissions Group Marketing Overhead Group Sales Allocations Commissions Group Sales Allocations Overhead Group IT VF Group IT Dallas Dallas Other Expense Dallas Other Income

Functional Area Z500 Z500 Z200 Z400 Z200 Z400 Z500 Z500 Z900 Z900 General & Admin O/Heads General & Admin O/Heads Commissions Sales & marketing Commissions Sales & Marketing General & Admin O/Heads General & Admin O/Heads Other Inc / Exp Other Inc / Exp 8120 8120 8120 8120 8120 8120 8120 8120 8120 8120

Profit Centre US Group US Group US Group US Group US Group US Group US Group US Group US Group US Group

5750 5755 5756 5758

Standard Hierarchy USA Comms US Comms Engineering US Comms product Mgmt US Comms Other Inc/Exp

5757995 5755996 5755136 5755126 5756994 5756134 5758100 5758200

Cost Centre US Comms Admin Allocations US Comms Eng Allocations US Comms Eng Tennessee US Comms Eng Dallas US Comms Product Management US Comms Product Management US Comms Other Income US Comms Other Expense

Functional Area Z500 Z600 Z600 Z600 Z400 Z400 Z900 Z900 General & Admin O/Heads Engineering Spend Engineering Spend Engineering Spend Sales & Marketing Sales & Marketing Other Inc / Exp Other Inc / Exp 2350 2350 2350 2350 2350 2350 2350 2350

Profit Centre US Telco US Telco US Telco US Telco US Telco US Telco US Telco US Telco

5046 5048 5047

Standard Hierarchy CSA US Distribution Americas Distribution General

5046722 5046724 5046752 5046754 5048200 5048100 5047995 5046994 5046992 5004000

Cost Centre CSA Latin America Commissions CSA Latin America Admin US Distributor Commissions US Distributor Admin CSA Other Expense CSA Other Income CSA Admin Allocation CSA Alloc Overhead CSA Alloc Commissions Americas Distribution Sales

Functional Area Z200 Z400 Z200 Z400 Z900 Z900 Z500 Z400 Z200 Z100 Commissions Sales & Marketing Commissions Sales & Marketing Other Inc / Exp Other Inc / Exp General & Admin O/Head Sales & Marketing Commissions COGS 4420 4420 4420 4420 4420 4420 4420 4420 4420 4420

Profit Centre CSA / Iberia Sales CSA / Iberia Sales CSA / Iberia Sales CSA / Iberia Sales CSA / Iberia Sales CSA / Iberia Sales CSA / Iberia Sales CSA / Iberia Sales CSA / Iberia Sales CSA / 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 Accounts The 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 Accounts The 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 Meggers 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 Accounts The 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 Groups 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)