1- The gross profit is higher by 42% because of increased sales of the subsidiary (FPC) and decrease in the production expenses based on decreased governmental fees resulted from reduction of the labor fees for the industrial sector.

2- Selling and marketing expenses are slightly decreased emerging from the company’s decreased participation in exhibitions as well as restructuring some jobs conforming to COVID-19 related impacts.

3- The general and administrative expenses are lower because of FPC expenses for the 1st quarter of 2019 were classified under the G&A in accordance with IFRS, as the commercial operation has commenced in the 2nd quarter of 2019, in addition to decreased unutilized capacity in the subsidiary (FPC) as a result of increased production volume, as well as adequate inventory provisions due to enhancing quality levels.

4- Reversing of the credit losses provision due to the absence of its purpose, as main due amounts were collected and the credit relationships was redesigned with some clients, and there is no need for taking more provisions.

5- Decrease in banking charges as a result of the governmental initiatives (represented by SAMA) in order to minimize the impact of the coronavirus outbreak (Covid-19), particularly the initiative of deferred payment program related to postpone the due payment with no interest, however capitalization of the subsidiary financial costs was stopped after commencing the commercial production during the 2nd quarter of 2019.

6- Zakat expenses also decreased as a result of FIPCO acquisition of minority stakes in FPC announced on Tadawul website on March 2, 2020.

Despite the Decrease in other income arising mainly from the reversal of the provision for impairment of capital assets sold for low economic viability during the fiscal year 2019.

– The main reason lies behind decrease in total shareholders’ equity (after deducting minority equity) a difference in the acquisition of the Non – Controlling interest announced on Tadawul website on March 2, 2020, which led to potential liability amounted to SR 20 million based on the study of potential liability evaluation prepared by end of fiscal year 2020.

In accordance with the related IFRS and in light of market fluctuation and the achieved actual results, this potential liability shall be re-evaluated on annual basis.

– Fipco is pleased to clarify for their shareholders the reasons for variances between the income statements for the fiscal year 2020 compared to the fiscal year 2019 as follows:

1- some expenses has been reclassified to be included in cost of goods sold and financing charges instead of G&A expenses, which reflected on the gross profit, as clarified in details in the disclosure No. 32 of the consolidated financial statement for the fiscal year 2020. Meantime some figures in the income statement has been reclassified to consider the other income and other expenses included in operating income.

2- The balance of non-controlling interest has been adjusted as of the P&L of FPC after reclassification of financing gains in FPC to cope up with the IFRS, which reflected on The Consolidated losses Attributable to Shareholders, total shareholders’ equity and the earning per share, as clarified in details in the disclosure No. 32 of the consolidated financial statement for the fiscal year 2020.

– FIPCO is carefully monitoring the developments related to Covid-19 pandemic and also implemented all precautionary measures to safeguard the safety and well-being of its employees, customers and community to continue running a business as usual basis, in the context of the ongoing pandemic.

The pandemic impact has extended to include the operations delays for some time as a result of taking the precautionary measures directed by the governmental authorities, which were mainly represented in the isolation of influential labors suspected of being infected and the application of legal procedures related to travel and movement restrictions.

COVID 19 is also affected the selling prices of some products, and reflected on supply chain and exports in light of taken precautionary measures.

As the extent and duration of these impacts are still not certain and depend on future developments that cannot be accurately predicted at the present time, FIPCO will continue to monitor the situation in the Kingdom and all surrounding geographical areas with the purpose of reviewing and dividing the potential risks

FIPCO also monitors all governmental support initiatives provided by the government of the Custodian of the Two Holy Mosques to mitigate the effects of Corona virus implications, and studying its benefits to support the sustainable activities and business continuity.