Listed Companies' Announcement

FEDERAL INTERNATIONAL (2000) LTD

FEDERAL INTERNATIONAL POSTS A 19% RISE IN NET PROFIT OF S$1.50 MILLION AT HALF-TIME
- Federal records turnover growth of 32% to reach S$51 million for 1H FY02


SINGAPORE, 19 September 2002 Mainboard-listed Federal (International) 2000 Ltd ("the Company"), an established flowline control products distributor and service provider supporting the oil and gas and related industries in the region, today reported a set of results that despite the uncertain global economy and the volatile conditions in the region. It posted a healthy net profit of S$1.50 million for the six months ended June 30, 2002, an increase of 19.0% compared to the same period last year (net profit: S$1.26 million). EBITDA was S$3.41 million, an increase of 57.1% from S$2.17 million for the corresponding period last year. On the back of this strong rise in net profit, the Group's EPS (earnings per share) rose 18.1% from 0.72 cents to 0.85 cents in the same period. NTA backing per share was 24.3 cents.

Group turnover rose 32.3% to S$51.04 million for the first half of FY2002 from S$38.59 million in the previous corresponding period. The improvement in turnover is attributable to the strong turnover growth from the Group's flowline control products & services business as well as its oilfield drilling equipment business, which saw increases of 32.9% and 55.5% respectively.

The Group experienced positive sales growth in its major overseas markets, namely China, Indonesia and Malaysia, which rose 119.6%, 66.4% and 86.7% respectively. The China market recorded sales of S$10.0 million, accounting for 19.6% of Group turnover while Indonesia and Malaysia registered sales of S$18.8 million and S$8.1 million, accounting for 36.9% and 15.9% of total Group turnover respectively.

The Group profit before interest and tax (PBIT) increased by 50.0% from S$1.8m to S$2.7m. It was mainly due to its strong performance in markets such as Indonesia, Malaysia and Singapore, with an increase in PBIT of 177.6%, 70.3% and 23.5% respectively. Group profit before tax for the period increased by 53.3%, from S$1.5m to S$2.3m. The net profit after tax and after deducting minority interest was S$1.5m representing an increase of 19.2% over the previous corresponding period.

The increase in group profit before tax for the period is in line with the increase in turnover and better margin. The rate of increase in Group profit was reduced by an increase in operating expenses of S$0.9m, amortization of goodwill in acquiring KVC (UK) Ltd. and KVC Co. Ltd. of S$211K and foreign exchange losses of S$233K.

The increase in operating expenses is mainly due to operating expenses of new subsidiaries like KVC (UK) Ltd. and Federal Korea, which were acquired in the 2nd half of 2001 and set up in 2002 respectively.

Commenting on the results, Mr K K Koh, Executive Chairman and CEO of Federal said: "The Group performed well despite the challenging market conditions in the first half of FY2002. This performance bears strong testimony to our strategic focus on developing our regional markets. As demonstrated, we are now a regional player with our overseas markets contributing 82% of our turnover and 67% of our profit before interest and tax. Moving ahead, we will focus on building our core businesses and at the same time, grow the strategic investments that we have undertaken in the past months, including HP&T in the US, KVC in Japan and the UK, and PT Gunanusa. These investments we believe will bring us new revenue and earnings streams in time to come."

Added Mr Koh, "The global outlook for the year 2002 seems to be brighter. Notwithstanding the economic volatility in the region, we expect to be performing well in the near term. We are confident that our business model and strategic directions will enable us to weather the tough economic conditions and remain profitable for the second half of FY2002."



About Federal (International) 2000 Ltd

Federal is a value-added distributor and provider of turnkey EPC (engineering procurement & construction) solutions for the energy & infrastructure industries. Currently, the group is principally involved in the distribution of flowline control products (e.g. valves, structural steel, steel flanges/connectors and pipe fittings) for the oil and gas, power, chemical and pharmaceutical industries.

Federal has incorporated HP & T Products, Inc. (a Houston-based company) and acquired strategic stakes in KVC Co. Ltd (Japan) and KVC (UK) Ltd, companies which are involved in upstream activities such as research & development and, manufacturing of valves and valve-related equipment. 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.


Issued on behalf of Federal (International) 2000 Ltd
For further information, please contact:
Stratagem Consultants Pte Ltd
Gwen Ling/Tham Moon Yee/Florence Tan
Tel: 6227 0502/ Fax: 62275663
Email : florence@stratagemconsultants.com; gwen_ling@stratagemconsultants.com

Submitted by Koh Kian Kiong, Director & Chief Executive Officer on 19/09/2002 to the SGX