SUBMITTED BY:

1. SYED WASIF AHMED (ERP ID: 21423)

2. MUHAMMAD MOSHIN KHAN (ERP ID: 21422)
3. SYED ABDULLAH IDREES (ERP ID: 21443)

SUBMITTED TO: MS. TEHSEEN VALJEE

COURSE: FAIS (MON/WED) | CLASS ID: 50456 – Spring 2021

"By submitting this report, we affirm that this work is our own, except for where the words or ideas
of others are specifically acknowledged. We also affirm that this work did not exist before the
beginning of this course; and that neither we nor anyone else has submitted or will submit this
report (or one substantially consisting of the same information) for credit for this or any other
course."
EXECUTIVE SUMMARY OF COMPANY:

FUTURE PIPE INDUSTRIES LLC (FPI) is the world’s largest fiberglass pipe manufacturer,
established in 1984, with an annual turnover of over 1 billion USD. The company is headquartered in
Dubai, U.A.E. and has 12 factories and over 20 sales offices worldwide. The company designs and
manufactures innovative pipe solutions that have 20 years of Design Life and are widely being used in
projects across Oil, Gas, Water, Sewerage and Petrochemical Industries.

The South Asian Regional Office is situated in DHA Phase 01, Karachi Pakistan where one of our
members is employed and we, therefore had access to confidential data which is not to be reproduced.

ASSETS & SITUATION ANALYSIS

The Lebanese owned Future Pipe Group has tangible assets of property, plant and equipment. With 14
factories, 53 Production Lines and 681,000 square meters of built-up area owned by FPI, the group also
has a list of intangible assets include goodwill, and sales contracts obtained through acquisition,
software costs and trademarks.

The Property, plant and equipment related to the pipe production activities are in principle depreciated
on a unit-of-production basis, applying the straight-line method. However, for certain assets involved in
the production processes, other approaches are applied to determine the depreciation, such as forecasting
and expectations of future raw material and oil prices.

Property, plant and equipment and intangible assets are recorded at historical costs, however they are
depreciated or amortized on a straight-line basis over their estimated useful lives, except for goodwill.
For plants, the useful life is generally 20-25 years, for the Head Office and Sales Offices being owned
by FPI, the useful life is 15 years, while for plant equipment like mandrels and winding machines, it is
30 years. For miscellaneous and related inspection costs, the depreciation over the estimated period
before the next planned major inspection is 04 years.
FINANCIAL STATEMENT OVERVIEW (FY2015 – FY2018)
Summary of Depreciation Average Useful 2018 2017
Life (years)

Property, plant and equipment 25 37,281 38,976

Accumulated Depreciation 2,247 2,558.00

Depreciation Expense 1,491.24 1,559.04

*based on estimation from true data from EY FS2015-2018 (attached) and generic LLC records

COMPARISON WITH GLOBAL PIPE MANUFACTURERS

Companies like Aminatit, Amiblu and Enbridge also follow the tenets of GAAP and deploy the
matching principles of straight-line depreciation.
They have past depreciation expenses accumulated on the balance sheet but choose not to show this
contra asset account on the balance sheet they present to shareholders. Instead, they simply show a
single item. In this case, the only item likely to be shown on the balance sheet is Property, Plant, and
Equipment - Net. This is the cost of the company's property, plant, and equipment (asset account) minus
the accumulated depreciation (the contra asset account). It means the company's assets cost $150
million, the company has reported $120 million in depreciation expense over the years, and the company
is now reporting the assets have a book value of $30 million.

REFERENCES

i. EY - INDEPENDENT AUDITORS REPORT

ii. Global Energy Outlook 2017
iii. OPEA 2018 FORECAST
iv. Taurus Securities Research (Oil Companies Advisory Council)