FIPCO announces the Consolidated Interim Financial results for the period ended Jun. 30, 2020 (Six Months)
| ELEMENT LIST | EXPLANATION |
|---|---|
| Increase (Decrease) in Net Profit for Current Quarter Compared to the Same Quarter of the Previous Year is Attributed to | The reasons lie behind decreasing net loss for this quarter compared to net loss for the corresponding quarter of 2019 is mainly due to: 1- The sales of the subsidiary (FPC) is higher of 385% during this quarter based on higher demand of its products. 2- The general and administrative expenses are lower because of FPC expenses for the 2nd quarter of 2019 were classified under the G&A in accordance with IFRS, as well as there was unutilized capacity in FPC, as the commercial operation has gradually commenced in the 2nd quarter of 2019. 3-Zakat expenses also decreased as a result of FIPCO acquisition of minority stakes in its subsidiary (FPC) announced on Tadawul website on March 2, 2020. 4- 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. These results achieved in spite of: 1- Decrease in gross profit due to variation in product mix in FIPCO & FPC as well as deceased selling prices for some FPC products, for the purpose of attractive marketing activities, having a considerable market share and penetrating new markets. 2- The other income was also decreased from the reversal of the provision for impairment of capital assets sold for low economic viability, during Q2 of 2019. |
| Increase (Decrease) in Net Profit for Current Quarter Compared to the Previous Quarter is Attributed to | The reasons lie behind the net loss achieved for this quarter compared to net profits for Q1 of 2020 is mainly due to:
1- Decrease in gross profit as a result of decreased sales due to variation in product mix in FIPCO & FPC, and using the provisions to reduce the cost of goods sold in FPC during Q1of 2020. 2- 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 during Q1of 2020. 3- Increase in other expenses resulted from FPC unutilized capacity as a result of the change in the actual costing mechanism. 4- Increase in Zakat expenses.
However 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, has positively reflected to decrease the banking charges. |
| Increase (Decrease) in Net Profit for Current Period Compared to the Similar Period of the Previous Year is Attributed to | FIPCO achieved the net profit of SR 0.825 million for six months in 2020 compared to net losses Attributable to Shareholders of SR 7.3 million for the corresponding period of 2019, because of the following: 1- Increase in gross profit as a result of increased sales in FIPCO & FPC, based on higher demand of its products, as the commercial operation has commenced starting from Q2 of 2019. 2- The general and administrative expenses are higher because of FPC expenses for the six months of 2019 were classified under the G&A in accordance with IFRS, as the commercial operation has gradually commenced in the 2nd quarter of 2019. 3- 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. 4- Zakat expenses is also decreased as a result of FIPCO acquisition of minority stakes in its subsidiary (FPC) announced on Tadawul website on March 2, 2020. These results achieved in spite of: 1- Decrease in other income resulted from reversing of the provision for impairment of capital assets sold for low economic viability, during the six months of 2019. 2- Increase in banking charges arising from loan interest non-capitalization after launching the commercial operation in the 2nd quarter of 2019. |
| Basis of the External Auditor’s Opinion | Unmodified opinion |
| Reclassification of Comparison Items | Certain Comparative figures have been reclassified to be consistent with the presentation of the current period presentation. |
| Additional Information | – It is worth to mention that the balance of the projects in progress has increased by SR 11.7 million, resulted from buying new and high-tech. machines for FIPCO (currently under Installation) for the purpose of raising the production capacity in cement bags from 54 million bags to 108 million bags annually, in addition to extruding machines and looms aiming to raise production capacity, improve quality, and enhance production efficiency. – 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 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. |