Filling & Packing Materials MFG. Co. (FIPCO) announces the Consolidated Interim Financial results for the period ended Mar. 31, 2020 (Three Months)
|Increase (Decrease) in Net Profit for Current Quarter Compared to the Same Quarter of the Previous Year is Attributed to||The reasons lie behind achieving net profit for the first quarter of 2020 compared to net loss for the corresponding quarter of 2019 is mainly due to:
1- The sales is higher of 31.6% during this quarter based on higher demand of FIPCO products as well as increased sales of the subsidiary (FPC).
2- 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.
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- 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.
These results achieved in spite of:
1- Increase in selling and marketing expenses which were classified under the G&A in the 1st quarter of 2019 because of the commercial operation not yet commenced at that time.
2- Increase in banking charges arising from loan interest non-capitalization after launching the commercial operation, while is used to be capitalized in the 1st quarter of 2019.
3- The other income was also decreased as a result of refunding the labor governmental fees in the 1st quarter of 2019.
|Increase (Decrease) in Net Profit for Current Quarter Compared to the Previous Quarter is Attributed to||FIPCO has achieved net profit for the 1st quarter of 2020 amounted to SR 4.2 million compared to net loss of SR 12.8 million for the 4th quarter of the fiscal year 2019, due to the following:
1-Increase in gross profit resulted from increased sales achieved during this quarter based on higher demand of FIPCO & FPC products during the 1st quarter of 2020.
2- Cost of goods sold is lower for both companies because of improved product mix.
3- Decrease in selling and marketing expenses as well as G&A expenses as a result of taking some provisions for the 4th quarter of 2019 in accordance with IFRS.
|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 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 aiming to raise production capacity, improve quality, and enhance production efficiency.
– Effective from 1st of Jan. 2019, FIPCO has adopted IFRS 16 using the retrospective application methodology with cumulative effect of the initial application as an adjustment to the opening balance of retained earnings of SAR 554 thousand, in addition to some other adjustments which are clarified in the disclosure No. 24 in the annual consolidated financial statements for the fiscal year ended in Dec. 31, 2019, that also reflected to decrease the G&A expenses by SR 0.3 million during the 1st quarter of 2019.
– It’s noteworthy that, FIPCO has announced on Monday Apr. 27, 2020 on Tadawul website, completion of all regulatory procedures related to acquisition of full minority shareholding in its subsidiary (FPC Industries Co.).
More information about the disclosures related to the acquisition can be found by referring to the annual report of the Board of Directors attached to this announcement.
Shareholders can have a look to the activities of FPC and the nature of its business and products by clicking on the following link: