Policies and Procedures Manual For Partial Balance Sheet (PBS)

SABIC Corporate Finance

Data Quality & Reporting

Approval and Version History

Identify changes to the document.

Version Date Name Description

Document Approvals
TBD [Name] Signature TBD [Name] Signature TBD [Name] Signature [Email] [Telephone] Date [Email] [Telephone] Date [Email] [Telephone] Date

Confidential

Page 2 of 13

SABIC Corporate Finance

Data Quality & Reporting

1 2 3 4

Manual purpose and scope ............................................................................................. 4 Reference model/framework .......................................................................................... 5 Definitions ...................................................................................................................... 6 Manual contents ............................................................................................................ 7

4.1 Chapter 1 PBS Governance and Administration .................................................. 7 4.1.1. Introduction ...................................................................................................... 7 4.1.2. Policy ................................................................................................................ 7 4.1.3. Procedure ......................................................................................................... 9 4.1.4. Responsibility.................................................................................................... 9 4.1.5. References ........................................................................................................ 9 4.2. Chapter 2 PBS execution and presentation ....................................................... 10 4.2.1. Introduction .................................................................................................... 10 4.2.2. Policy .............................................................................................................. 10 4.2.3. Procedure ....................................................................................................... 10 4.2.4. Responsibility.................................................................................................. 11 4.2.5. References ...................................................................................................... 11

5
5.1 5.2

RACI Matrix .................................................................................................................. 12

Master data creation and update ........................................................................ 12 PBS execution and presentation .......................................................................... 12

Confidential

Page 3 of 13

SABIC Corporate Finance

Data Quality & Reporting

1 Manual purpose and scope

The purpose of the policies and procedures presented below is to establish guidelines for the activities by which, Partial Balance Sheet (PBS) practice is conducted. PBS policies and procedures are the specific principles, bases, conventions and rules adopted by SABIC to govern and record its PBS activities and transactions as per SBU. The main objectives from having the PBS are: PBS combined with P&L data provides a more comprehensive financial view and supports better decision making for business In highly capital intensive industries, it is essential that capital is managed to maximize returns PBS adds additional dimension to SBUs responsibility and becomes a tool for safeguarding corporate assets Enhance reporting at the product level for each SBU by adding further KPIs that can provide better vision and decision making in SABIC.

The scope of this manual covers SABICs corporate finance function (Global Management Reporting & Decision Support (GMR&DS)), Economics & Business Support (E&BS) function under each SBU and the financial and business development management functions under the SABIC innovative plastics SBU.

Confidential

Page 4 of 13

SABIC Corporate Finance

Data Quality & Reporting

2 Reference model/framework
The PBS frame work contain six pillars, four of them are defined as main operational ones (validation, allocation, elimination, consolidation). The other two pillars are the secondary ones which they cater for defining the rules on how to operate and maintain the PBS process and how to represent the output.

Based on the above, the manual content was developed in two chapters covering the following: Chapter one, policies and procedures related to PBS governance and administration Chapter two, policies and procedures related to the execution steps for the PBS process

Confidential

Page 5 of 13

SABIC Corporate Finance

Data Quality & Reporting

3 Definitions

Term

Definition Financial statement that summarizes a SABIC's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give an idea as to what the company owns and owes, as well as the amount invested by the shareholders. Balance sheet featuring some of a SABIC's assets and liabilities -- or some selected accounts -- but not all. Partial balance sheets are useful for showing the concerned stakeholders only the elements they fully control without overwhelming them with pages of financial data.

Total Balance Sheet (TBS)

Partial Balance Sheet (PBS)

Group of general ledger accounts captured from different GLs Financial Statements Items under one grouping caption. (FSI) The amount assigned to the manufacturer after deducting distribution expenses, marketing fees and other deductible expenses for SABIC corporate from the actual sales price to the customer. Any information that is considered to act as a key role in the core steps of generating the PBS.

Netback revenue,

Master data

Confidential

Page 6 of 13

SABIC Corporate Finance

Data Quality & Reporting

4 Manual contents
4.1 Chapter 1 PBS Governance and Administration 4.1.1. Introduction The chapter presents the governance, identification, and recognition of PBS, also the guidelines to administer and maintain the PBS. 4.1.2. Policy Governance policies 1. The PBS should be prepared on a monthly basis once period end closing is announced. 2. Yearly PBS calendar should be developed stating the time frames for each of the required activities and tasks in the PBS process as well as PBS release dates. This should be aligned with the period end closing policies and procedures calendar. Identification policies 3. The input to the PBS process should be based on the following: Using SBUs Balance Sheet Data in FANAR Using SBUs Balance Sheet Data in RFD format Recognition policies 4. The following balance sheet reporting elements are considered the only ones that need to be maintained in the PBS process: Accounts receivable Accounts payable Inventory Fixed assets Assigned equity 5. Accounts receivable and accounts payable elements should include the intercompany transactions between SBUs, BUs. and Third Party 6. Finished & Semi-Finished Product, raw material & spare parts are considered part of the inventory element. 7. Assets under construction (AUC) should not be part of the fixed assets element. 8. The following allocation keys should be considered for each balance sheet element: Netback revenue for accounts receivable Manufacturing costs for inventory Depreciation costs for fixed assets Manufacturing costs for accounts payable

Confidential

Page 7 of 13

SABIC Corporate Finance

Data Quality & Reporting

Administration and maintenance policies Administration policies 9. The following master data tables are considered the repository hub for maintaining the PBS master data: Partial Balance Sheet (PBS) classes Receivers profit centers by SBU Total balance sheet (TBS) classes Consolidation groups structure Missing financial statement items (FSI) First Level Key SBU Specific in TBS classes Second Level Key SBU General Included companies Third Level Key Non-SBU New FSIs in corporate TBS Class with missing FSIs Senders receivers relationship

Maintenance policies 10. The GMR&DS function should be hold responsible for maintaining the PBS master data. 11. Activation, deactivation and modification on PBS master data should be approved by GMR&DS management. 12. All supporting documents related to the PBS master data maintenance should be properly controlled and filed. 13. PBS master data tables must be reviewed and maintained on a monthly basis. New values and Inactive values should be considered, if any.

Confidential

Page 8 of 13

SABIC Corporate Finance

Data Quality & Reporting

4.1.3. Procedure
# Task Responsibility Documents

Master Data creation and update 1.0

Receive request from the SBUs to update the PBS master data, if any.

Global management reporting & decision support (GMR&DS) analyst / Economics & business support analyst GMR&DS analyst

PBS master data update request

2.0

Send PBS update request to section head

3.0

Review the PBS update request and assess its effect.

GMR&DS section head

Reviewed PBS master data update request First approval PBS master data update request 2nd approval PBS master data update request

4.0

If the request is accepted, approve it and send it to GMR&DS manager or 2nd approval

GMR&DS section head

5.0 6.0 7.0

Review PBS update request and provide comments (if any), then approve it Update the PBS master data table based on the approved request Process ends with filing process documents elaborated above

GMR&DS manager GMR&DS analyst GMR&DS analyst

4.1.4. Responsibility The main stakeholders for the above procedure are: Global Management Reporting & Decision Support analyst to suggest any updates and maintain any updates on the master data Global Management Reporting & Decision Support section head for review any updates on the master data Global Management Reporting & Decision Support Manager for review and approval of any updates on the master data SBUs Economics And Business Support unit to suggest any updates on the master data

4.1.5. References SABIC Accounting Manual (SAM) for period end closing
Confidential Page 9 of 13

SABIC Corporate Finance

Data Quality & Reporting

4.2.

Chapter 2 PBS execution and presentation

4.2.1. Introduction The purpose of the execution and presentation chapter is to demonstrate the policies and procedures related to PBS execution and presentation. 4.2.2. Policy PBS execution process start once the GMR&DS function receives a confirmation from the SUBs that the period end closing process is finalized. The GMR&DS function should maintain and update the structure and layout for PBS in case for any changes happened during the period. Changes to the PBS could include (but not limited to): 1. PBS Reports Structure (Presentation) 2. PBS reporting elements (Accounts) PBS report should be prepared using pre-defined and standardized mapping sheets on MS Excel and Access, until an appropriate reporting tool is installed to automate the generation of PBS report. 4.2.3. Procedure
# 1.0 Task Responsibility Documents

2.0 3.0 4.0

PBS execution GMR&DS analyst Confirm the receipt of the Shared Financial Services email on the completion of the period end closing Perform allocation activities for the product GMR&DS analyst specific allocable profit centers (products) Perform allocation activities for SBUs general GMR&DS analyst profit centers (products) Perform allocation activities for non SBUs GMR&DS analyst general profit centers (products)

Template and timetable Reviewed

Combined allocation results in the application

5.0 6.0 7.0 8.0

Perform elimination activities by eliminating GMR&DS analyst intercompany payables and receivables Update results with assigned equity GMR&DS analyst Perform consolidation between results and GMR&DS analyst legal and generate PBS report Review PBS report and provide comments if GMR&DS section any head Generated PBS report

Confidential

Page 10 of 13

SABIC Corporate Finance

Data Quality & Reporting

Task

Responsibility

Documents

1.0 2.0 3.0 4.0 4.1 5.0 6.0 7.0 8.0 9.0

PBS Presentation Prepare PBS monthly report as an output from the PBS execution procedures Submit report to the Global Reporting & Decision Support section head for review Receive and review reports Approved? No, go to step 4.1 Yes, go to step 5.0 Apply corrective actions and, go to step 3.0 Submit to GMR&DS Manager for approval. Receive & Review report Approved? No, go to step 4.1 Yes, go to step 8.0 Printout Approved PBS Report & Submit to SBUs Receive & Review report and provide comments if any

GMR&DS analyst GMR&DS analyst GMR&DS section head GMR&DS section head GMR&DS analyst GMR&DS section head GMR&DS Manager GMR&DS Manager GMR&DS Manager SBUs economics & business support function leads Approved PBS report

4.2.4. Responsibility The main stakeholders for the above procedure are: Global Management Reporting & Decision Support analyst to perform allocation, elimination and consolidation activities, also responsible on preparing the PBS report for presentation. Global Management Reporting & Decision Support section head for reviewing excision results and providing comments, also to review the final presentation report and approve Global Management Reporting & Decision Support Manager for reviewing the final report and approving SBUs Economics And Business Support unit to review and provide comments on the final report.

4.2.5. References SABIC Accounting Manual (SAM) for period end closing

Confidential

Page 11 of 13

SABIC Corporate Finance

Data Quality & Reporting

5 RACI Matrix
5.1 Master data creation and update

Master Data creation and update

Request from SBU to update master data tables

SBUs /Business support analyst GMR&DS analyst

GMR&DS analyst GMR&DS section head GMR&DS analyst SBUs /Business support analyst SBUs /Business support analyst

Review the request and approve

Load the data in PBS tables

GMR&DS analyst

5.2 PBS execution and presentation

PBS execution and presentation

Perform allocation activities Perform elimination activities Perform consolidation activities Review PBS report and provide comments Prepare PBS monthly report

GMR&DS analyst GMR&DS analyst GMR&DS analyst GMR&DS section head

GMR&DS section head GMR&DS section head GMR&DS section head

GMR&DS analyst

Confidential

Page 12 of 13

SABIC Corporate Finance

Data Quality & Reporting

Review and provide feedback

Present PBS report

GMR&DS Manager

GMR&DS section head GMR&DS Manager SBUs economics & business support function leads

Confidential

Page 13 of 13