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Giken Sakata's FY14 net profit up, expects Indonesian oil business to start contributing

GIKEN Sakata posted on Wednesday higher net profits for the fiscal full year ended Aug 31, 2014, despite the discontinuation of a turn-key project in March.

Net profit was S$2.1 million or 0.78 cents a share, up from S$445,000 or 0.34 cent a share a year ago.

Revenue slipped 45.5 per cent to S$69.02 million due to the discontinuation of the turn-key project.

The precision-engineering company said a change in product mix resulted in 23.8 per cent growth in gross profit to S$11.7 million for FY2014, up from S$9.5 million a year ago. As a result, its gross profit margin rose to 17 per cent for FY2014, from 7.5 per cent for FY2013.

The group utilised a net cash outflow of S$974,000 from its operating activities during the financial year, compared to the S$2.75 million generated a year ago. Net cash and cash equivalents position on Aug 31, 2014 stood at S$4.44 million.

On May 31, 2014, Giken Sakata entered into a sale-and-purchase agreement with Java Petral Energy Pte Ltd to buy 624,079 Cepu Sakti Energy's (CSE) shares, representing a 53.68 per cent stake, for S$48 million. The payment was satisfied by S$25.2 million in cash and S$22.8 million by the issue of 76 million new shares. The acquisition of the Indonesia-based oil-and-gas services business was completed on Sept 10, 2014.

Looking ahead, CSE is expected to start contributing to the group's earnings from the first quarter of FY2015.

Sydney Yeung, the group CEO, said: "As CSE already has oil producing in its oil fields, its first financial contribution to the group will be recorded in the first quarter of FY2015. Going forward, we will continue to increase our average daily oil production levels and build up our reserve portfolio."

As of Sept 2014, CSE was producing 880 barrels of crude oil per day from 15 oil wells located in two of its five oil fields. CSE has access to more than 300 oil wells under its portfolio of operating licences in Indonesia.