Basic principles of budget preparationb

1. Budget process 2012

2. Why we are here ? Not to discuss how it used to be, but how it would be!!! We need a Change ! Just to be on one page on structure of budget process. To give you understanding of your participation into budget

3. Reasons to have a budget in the company. Budget is a very useful tool to estimate financial needs Budget can help us to compare “What we would like to have” vs “What we actually have” Budget will help all of us to rise the company’s effectiveness Budget is for improving quality of management’s decisions

4. Sad but true… or a couple of words on theory

5. Center of financial responsibility (CFR) CFR – A division or unit of an organization for which a manager is held responsible. There are 3 different kinds of CFRs: Cost centre - a division or unit of an organization that is responsible for controlling costs. Profit centre - a division or unit of an organization that is responsible for achieving profit targets. Investment centre - a division or unit of an organization that is responsible for achieving an adequate return onthe capital invested in the division or unit.

6. We are a management team Profit center Investment center Costs center Operations department; Purchases department; Central Lab , Existing stores Biz Development,New stores All departments

7. Process of management Targets Planning Execution Control / regulation Motivation

11. Profit and Losses statement & Cash Flow P&L is a combination of 2 parts: P&L stores 2. Other company costs and revenues

12. Net sales own stores Operations dep,COO end of June P&L of store Direct material costs Operations dep, purchase dep,COO end of June Other direct material costs Central Lab end of June retail occupancy Operations dep, finance department, Legal dep,CEO,COO middle of July retail personnel salary Operations dep, COO middle of July advertising net Marketing dep, CEO middle of July other store expenses Operations dep,COO middle of July other operational costs CEO, finance dep middle of July

13. Other company costs and revenues All administration departments Till the end of July

14. Inventory Opening Balance + Purchases - Direct material costs (including plan for obsolescence provision) = Closing Balance

15. CAPEX preparation CapEx & IA Till the end of July Office CapEx StoreCapEx Central Lab CapEx Central Lab IT-dep ((IT equipment, Software) Lab-technical department (medical equipment) Operations (repairs, low-value assets for existing stores) All administration departments

16. P&L Structure of budget pack Deadline for Company is 17.10.2011 01.07.2011 Cash Flow Balance Sheet Narrative paper Budget presentation 17.10.2011

17. Questions ?