The document discusses various topics related to ThyssenKrupp Elevator Qatar's business, including categories of employees, costs related to employees, differences between balance sheets and profit/loss statements, interpreting items on a P/L statement such as order intake and sales, and factors that affect the elevator industry in Qatar like the construction industry and economic/political stability.

1. ThyssenKrupp Elevator Qatar
Qatar, 18th
Aug 2011

2.  Category of People in ThyssenKrupp
 Related Cost and Expenses of an Employee
Difference between Balance Sheet & Profit and Loss
Difference between Cost and Expense
 Interpretation of P&L:
- Order Intake
- Sales
- Gross Margin
- Operating Expenses
- EBIT
- Financial Result
- Meaning of Order Backlog(CV)
Content

3.  Make up Sheet
 Profit and Loss Sheet
 Factors affecting the Elevator Industry in Qatar
Content

4.  Category of People in ThyssenKrupp
 Related Cost and Expenses of an Employee
Difference between Balance Sheet & Profit and Loss
Difference between Cost and Expense
 Interpretation of P&L:
- Order Intake
- Sales
- Gross Margin
- Operating Expenses
- EBIT
- Financial Result
- Selling and G&A Expenses
- Meaning of Order Backlog(CV)
Content

5. Categories of People in ThyssenKrupp
The Employees in TKEQ are divided into:
 White Collar:
Salaried professionals who perform administrative, office and sales coordination
techniques
Blue Collar
Salaried professionals who perform administrative, office and sales coordination
techniques

6. White Collar
Financial department:
Accountant- Senior Accountant- Cost controller- Financial Manager
Sales Department:
Sales support- Sales executive- Sales support engineer- Sales engineer- Sales manager
Human Resources Department:
HR executive-PRO- HR assistant- Administrative officer- Procurement officer
Small Projects Department:
Installation engineer- Project manager
Quality Control/ Quality Assurance:
QA/QC manager- QA/QC
Maintenance and Services teams:
Service sales engineer- Field service manager- Service manager
HSE:
HSE coordinator
T&C:
Testing and commissioning engineer
Administration:
Administrator- Office boy

7. Blue Collar
Technicians
Senior Technicians
Supervisors

8.  Category of People in ThyssenKrupp
 Related Cost and Expenses of an Employee
Difference between Balance Sheet & Profit and Loss
Difference between Cost and Expense
 Interpretation of P&L:
- Order Intake
- Sales
- Gross Margin
- Operating Expenses
- EBIT
- Financial Result
- Selling and G&A Expenses
- Meaning of Order Backlog(CV)
Content

9. Employees Related Costs
The employees related costs include the following:
Recruiting expenses
Basic Salary
Employment taxes
Benefits: life insurance, health coverage, car, phone, traveling tickets
Equipment: software, high tech computers and devices, etc..
Professional Management Program: Local or abroad trainings, seminars, workshops, etc..

10.  Category of People in ThyssenKrupp
 Related Cost and Expenses of an Employee
Difference between Balance Sheet & Profit and
Loss
Difference between Cost and Expense
 Interpretation of P&L:
- Order Intake
- Sales
- Gross Margin
- Operating Expenses
- EBIT
- Financial Result
- Selling and G&A Expenses
- Meaning of Order Backlog(CV)
Content

11. Balance Sheet
The Balance Sheet is divided into:
- Assets
- Liabilities
- Equity
where the main accounting equation is maintained:
Assets = Liabilities + Equity
Objective: The main objectives of preparing a Balance Sheet is to ascertain the financial
position of the business on a particular date. While ascertaining the financial position, one can
also obtain the following additional information:
- Nature and Value of the assets
- Nature and extent of liabilities and actual capital
- Solvency of the business

12. Profit & Loss
 The Profit and Loss statement indicates how the revenue is
transformed into net income.
 It displays the revenues recognized for a specific period, and the cost
and expenses charged against these revenues.
Objective:
To show managers and investors whether the company made or lost
money during the period being reported.
Conclusion :
The important thing to remember about an income statement is that it
represents a period of time. This contrasts with the balance sheet,
which represents a single moment in time.

13.  Category of People in ThyssenKrupp
 Related Cost and Expenses of an Employee
Difference between Balance Sheet & Profit and Loss
Difference between Cost and Expense
 Interpretation of P&L:
- Order Intake
- Sales
- Gross Margin
- Operating Expenses
- EBIT
- Financial Result
- Selling and G&A Expenses
- Meaning of Order Backlog(CV)
Content

14. Cost vs. Expense
A cost incurred can be either an asset, or an expense or both depending on
the timing of accounting transactions.
Expense is the cost that was used up while a company is doing its main
revenue-generating activities.
Example: Advanced Insurance

15.  Category of People in ThyssenKrupp
 Related Cost and Expenses of an Employee
Difference between Balance Sheet & Profit and Loss
Difference between Cost and Expense
 Interpretation of P&L:
- Order Intake
- Sales
- Gross Margin
- Operating Expenses
- EBIT
- Financial Result
- Selling and G&A Expenses
- Meaning of Order Backlog(CV)
Content

16. Order Intake
Definition: All orders which were legally concluded during the respective accounting
period under review and have also come into effect.
New Installation 104739
Modernization 1500
Service 8117
Order Intake 114356

17. Sales
Definition: Revenue recognized during an accounting period (related to GM)
New Installation 147,296
Modernization 1,500
Service 8,117
Sales 156,913

18. Analysis
As one can notice:
Modernization(OI) = Modernization(Sales)
Service(OI) = Service(Sales)
New Installation(OI) ≠ New Installation(Sales)
The difference between the New Installation of OI and Sales can be seen in the
following equation:
Sales-OI = Order Backlog(OV)-Order Backlog(CV)
156,913 – 114,356 = 223,987 – 181,430 = 42,557

19. Gross Margin
GM total = GM NI + GM MO + GM SER
= 18,427 + 450 + 2,522
= 21,399
where
GM NI = 12.5% of Sales NI = 0.125 × 147,296 = 18,412
GM MO = 30% of Sales MO = 0.3 × 1,500 = 450
GM SER = 31.1% of Sales SER = 0.311 × 8,117 = 2,524

20. Operating Expenses (General)
 Operating Expenses=
Selling expenses + G&A + Other Operating Income(+)/Expenses(-)
Selling Expenses 2,955
G&A Expenses 9,529
O.O.I.EE 190
Operating Expenses 12,674

21. Operating Expenses (Specific)
7 .9% : SG&A+O.O.I.E NI / Sales NI = 11,679 / 147,296 = 0.079
4.1% : SG&A+O.O.I.E MO / Sales MO = 61 / 1,500 = 0.041
11.5% : SG&A+O.O.I.E SER / Sales SER = 934 /8,117= 0.115

22. EBIT
EBIT total= GM total – OE total
= 21,399 – 12,674
= 8,725
EBIT NI= GM NI – OE NI
= 18,427 – 11,679
= 6,748
EBIT MO= GM MO – OE NO
= 450 - 61
= 389
EBIT SER= GM SER – OE SER
= 2,522 - 934
= 1,588

23. EBIT(%)
EBIT %= EBIT total/ Sales Total
= 8,725 / 156,913
= 0.056 ( 5.6%)
EBIT %NI= EBIT NI/ Sales NI
= 6,748 / 147,296
= 0.0458 ( 4.58%)
EBIT %= EBIT MO/ Sales MO
= 389 / 1,500
= 0.259 ( 25.9%)
EBIT %= EBIT SR/ Sales SR
= 1,588 / 8,117
= 0.1956 ( 19.56%)

24. Financial Result
It is the difference between EBT and EBIT :
Financial Result = EBT – EBIT
Negative value indicates that borrowing interest dominates the income interest
Positive value indicates that income interest dominates the borrowing interest

25. Selling and G&A Expenses
Selling Expenses:
Represent expenses needed to sell products
-Sales Commission
-Advertising
-Travel Expenses
-Freight
-Shipping
-Rent of the warehouse
-Salaries of sales personnel
-Depreciation of sales store buildings and equipment
G&A Expenses
Represent expenses to manage the business:
-Salaries of officers and executives
-Legal and professional fees
-Utilities
-Insurance
-Depreciation of office building and equipment
-Office rents
-Office supplies

26. Order Backlog Closing Value
Order Backlog(CV) 2007= Order Backlog(OV) 2007 + Order Intake 2007 – Sales 2007
= 223,987 + 114,356 – 156,913
= 181,430
One can indicate from the value of the Order Backlog(CV) the amount of sales not
recognized at a certain point of time.

27. Budgeting
Nº DESCRIPTION
ELEVATOR
S
ESCALATOR
S
Moving
Walks
Total Budgeted Cost Total Budget
Total Units 250 100 50
1 TOTAL COST (QAR) 81,279,500 68,394,000 55,660,500 205,334,000 215,600,700
1.1
Equipment CIF(cost of insurance and
freight) Price 64,000,000
54,000,000 44,000,000
162,000,000 170,100,000
1.2 Custom Charges 3,250,000 2,250,000 1,250,000 6,750,000 7,087,500
1.3 Clearence Charges(Containers) 312,500 212,000 112,000 636,500 668,325
1.4 Bank Transfer Charges 17,000 7,000 3,500 27,500 28,875
1.5 Currency Fluctuation Rate 0 0 0
1.6 Local Materials 2,090,000 1,750,000 150,000 3,990,000 4,189,500
1.7 Installation 3,000,000 4,000,000 3,500,000 10,500,000 11,025,000
1.8 Cranes & Forklift 1,000,000 400,000 220,000 1,620,000 1,701,000
1.9 Storage 500,000 400,000 200,000 1,100,000 1,155,000
1.10 Tools 50,000 50,000 50,000 150,000 157,500
1.11 Factory Visit ( Accomodation & Flights) 50,000 50,000 50,000 150,000 157,500
1.12 Project Management 5,000,000 5,000,000 5,000,000 15,000,000 15,750,000
1.13 Bank Guarantee & Provisions 260,000 175,000 125,000 560,000 588,000
1.14 Warranty Maintenance 1,750,000 100,000 1,000,000 2,850,000 2,992,500
TOTAL COST 81,279,500 68,394,000 55,660,500 205,334,000 215,600,700

28.  Make up Sheet
 Profit and Loss Sheet
 How to build a budget
 Factors affecting the Elevator Industry in Qatar
Content

29. Factors affecting Elevator Business in Qatar
 Booming of the construction industry, especially the high rise buildings, which will increase the number of
installation units, whether escalators or elevators, in the future along with higher chances for acquiring
maintenance services.
 Political and security conditions in the region are always threats to any industry in Qatar
 Safety measures not properly applied on sites resulting in both incidents and death accidents will decrease
future contacts between main contractors and ThyssenKrupp Elevator Qatar.
 Performance of long existing competitors will affect the number of contracts signed by new market entries
such as ThyssenKrupp Elevator.

30. Factors affecting Elevator Business in Qatar
 Performance/Reputation of the company in previous projects will affect the acquiring of future
contracts.
 Qatar’s economy is driven by revenues from natural gas and oil resources. Any instability in this
industry will affect the liquidity provided for the construction industry and thus reducing new
installations.
The modular architecture of competitor systems to which the flexibility of TKEQ maintenance
programs will be easily penetrated vs. the integral architecture of TKEQ systems to which the persistence
of competitor systems cannot be easily penetrated.