Listed Companies' Announcement
FEDERAL INTERNATIONAL (2000) LTD
FEDERAL INTERNATIONAL AND ITS STRATEGIC PARTNER, PT GUNANUSA UTAMA FABRICATORS SECURE US$48 MILLION (S$86 MILLION) CONTRACT FOR TOTALFINAELF E & P INDONESIE'S PECIKO FIELD DEVELOPMENT PROJECT PHASE 4
October 8, 2002, Singapore – SGX Mainboard-listed Federal International (2000) Ltd ("Federal"), an integrated engineering and procurement specialist supporting the energy and infrastructure sectors in the region, announced today that its strategic partner, PT Gunanusa Utama Fabricators ("Gunanusa") has secured an EPC (engineering, procurement and construction) contract from Totalfinaelf E & P Indonesie, amounting to US$48 million (S$86 million). Of this amount, Gunanusa has awarded a procurement contract worth US$29.2 million (S$52.3 million) to Federal Hardware Engineering Co Pte Ltd ("FHE"), a subsidiary of Federal.
Gunanusa has appointed FHE to be the procurement agent with regard to its Peciko Field Development Project Phase 4 for Totalfinaelf E & P Indonesie. Under the terms of the contract, Federal will supply all flowline control products, piping materials and structural steels for two satellite wellhead platforms. This contract runs for 20 months from October 2002 to June 2004.
"This latest contract win further reflects the strong growth prospects of the regional energy sector as well as Federal's leading position in the profitable EPC sector. We are delighted to partner with Gunanusa to take advantage of the numerous business opportunities in the oil and gas industry in Indonesia," said Mr. K. K. Koh, Federal's Executive Chairman and CEO.
"The deal also strengthens the transformation of our business model from one which is solely driven by trading and distribution business to an integrated global business supported by three strong business pillars – trading, R & D, engineering and manufacturing operations, and EPC projects," added Mr. Koh
This contract is expected to have a positive material impact on the profitability and earnings per share of Federal for the financial years ending 31 December 2002 and 2003 as 95% of the material will be delivered by end of FY2003. In addition to the transaction profit and subject to the completion of the necessary legal documentation to increase by 10% of its interests in Gunanusa, Federal will equity account for the 20% profit in Gunanusa as at 31 December 2002. The contract is also expected to have a favourable material impact on Federal's consolidated net tangible assets per share for the financial year ended 31 December 2003 but not for the current financial year.
About Federal International
Federal is principally involved in the distribution of flowline control products (including valves, structural steel, steel flanges/ connectors and pipe fittings) to the oil and gas, power, chemical and pharmaceutical industries. By moving upstream into the design and manufacture of specialised valves and related products, Federal aims to be an integrated service provider and procurement specialist in the energy and infrastructure industries offering a complete one-stop service package.
For the first six months ended June 30, 2002, Federal posted a healthy net profit of $1.5 million on a turnover of $51.04 million.
About PT Gunanusa Utama Fabricators
PT Gunanusa Utama Fabricators is a leading Indonesian fabrication yard involved in executing large turnkey projects in offshore platform projects, container cranes, boilers and pressure vessels. PT Gunanusa is a key customer and Federal also has 10% equity interests in PT Gunanusa.
Mr. Iman Taufik, one of the substantial shareholders of PT Gunanusa, is also a non-executive director of Federal. The transaction is an Interested Person Transaction pursuant to Chapter 9 of the Listing Manual whereby shareholders mandate was obtained on 21 August 2000 and was subsequently renewed during our AGM held on 23 May 2002.
The Audit Committee of Federal is of the view that the terms of the Transaction are on normal commercial terms and not prejudicial to the interests of Federal's shareholders.
Save as disclosed above, none of the Director or substantial shareholders of Federal has any interest, direct or indirect, in the above said transaction.
We refer to your fax of 7 October 2002. Save as disclosed, the Directors are not aware of any material information or circumstances which could have led to the share increase in the trading volume of the company's shares on the Exchange on 7 October 2002.
Issued on behalf of Federal International (2000) Ltd
by Stratagem Consultants Pte Ltd
For further information, please contact:
Ms Gwen Ling/ Ms Tham Moon Yee
Tel: 6227 0502 Fax: 6227 5663
October 8, 2002
Submitted by Chng Geok, Company Secretary on 08/10/2002 to the SGX