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CHINA AVIATION OIL (SINGAPORE) CORPORATION LTD
(Company Registration No. 199303293Z) Half Year Financial Statement For The Period Ended 30 June 2021
A. Condensed interim consolidated statement of profit or loss and other comprehensive income
Note 1H 2021 1H 2020 Variance US$'000 US$'000 + / - Revenue 4 8,683,255 5,373,405 61.60% Cost of sales (8,667,553) (5,350,534) 61.99% Gross Profit 15,702 22,871 -31.35%
Other operating income 719 3,342 -78.49% Administrative expenses (3,742) (5,019) -25.44% Other operating expenses (1,423) 586 NM Finance costs (805) (477) 68.76% Operating Profit 10,451 21,303 -50.94% Share of results of associates (net of tax) 16,098 3,889 313.94% Profit before tax 5 26,549 25,192 5.39% Tax expense 6 (2,262) (1,621) 39.54% Profit for the period 24,287 23,571 3.04%
Consolidated Statement of Profit or Loss
Consolidated statement of other comprehensive income
1H 2021 1H 2020 Variance US$'000 US$'000 + / - PROFIT FOR THE PERIOD 24,287 23,571 3.04%
Other comprehensive income/(loss): Items that may be reclassified to profit or loss in subsequent periods (net of tax) : Currency translation differences on consolidation of foreign entities (net) (note (a)) (^) 1,083 (6,783) NM Total other comprehensive income for the period 1,083 (6,783) NM TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (^) 25,370 16,788 51.12%
Profit attributable to: Owners of the Company 24,287 23,571 3.04%
Total comprehensive income attributable to: Owners of the Company 25,370 16,788 51.12%
Earnings per share for profit for the period attributable to the owners of the Company during the period: Basic (USD in cent) 2.82 2.74 2.92% Diluted (USD in cent) 2.82 2.74 2.92%
Consolidated Statement of Other Comprehensive Income
Note (a): Compared to the end of December 2020, the RMB appreciated approximately 1% against the US Dollar during the six months ended 30 June 2021 giving rise to the translation gain on foreign associates. Korean Won depreciated by approximately 3.26% against US Dollar in the same period this year. RMB and Korean Won both depreciated by 1.46% and 4.60% respectively against the US Dollar in the same period last year.
In the event of the disposal of foreign associates or loss of significant influence over foreign associates, all of the accumulated translation differences in respect of the foreign associates will be reclassified to profit or loss.
NM denotes “not meaningful”
C. Condensed interim statements of changes in equity
Foreign currency Share Retained Treasury translation Statutory Total capital earnings shares reserve reserve equity THE GROUP US$'000 US$'000 US$'000 US$'000 US$'000 US$'
As at 1 January 2020 215,573 589,294 (5,482) (990) 36,564 834, Total comprehensive income for the year (^) - 23,571 - (6,783) - 16, Share of associates' accumulated profits transferred to statutory reserve (^) - 2 - - (2) - Dividend paid in respect of 2019, representing total transactions with shareholders recognised directly in equity -^ (28,826)^ -^ -^ -^ (28,826) As at 30 June 2020 215,573^ 584,041^ (5,482)^ (7,773)^ 36,562^ 822,
As at 1 January 2021 (^) 215,573 616,139 (5,482) 13,563 37,086 876, Total comprehensive income for the year - 24,287 - 1,083 - 25, Share of associates' accumulated profits transferred to statutory reserve -^ (48)^ -^ -^48 - Dividend paid in respect of 2020, representing total transactions with shareholders recognised directly in equity -^ (16,756)^ -^ -^ -^ (16,756) As at 30 June 2021 215,573^ 623,622^ (5,482)^ 14,646^ 37,134^ 885,
Consolidated Statement of Changes in Equity
Foreign Currency Share Retained Treasury translation Statutory Total capital earnings shares reserve reserve equity THE COMPANY US$'000 US$'000 US$'000 US$'000 US$'000 US$' As at 1 January 2020 215,573 575,652 (5,482) (975) 36,564 821, Total comprehensive income for the year - 38,583 - (6,783) - 31, Share of associates' accumulated profits transferred to statutory reserve -^2 -^ -^ (2)^ - Dividend paid in respect of 2019, representing total transactions with shareholders recognised directly in equity (^) - (28,826) - - - (28,826) As at 30 June 2020 215,573 585,411 (5,482) (7,758) 36,562 824, As at 1 January 2021 215,573 609,694 (5,482) 13,579 37,086 870, Total comprehensive income for the year -^ 23,530^ -^ 1,083^ -^ 24, Share of associates' accumulated profits transferred to statutory reserve - (48) - - 48 - Dividend paid in respect of 2020, representing total transactions with shareholders recognised directly in equity (^) - (16,756) - - - (16,756) As at 30 June 2021 215,573 616,420 (5,482) 14,662 37,134 878,
Statement of Changes in Equity
D. Condensed interim consolidated statement of cash flows
Note 1H 2021 1H 2020 US$'000 US$'
Cash flows from operating activities Profit for the period 24,287 23, Adjustments for:- Depreciation of property, plant and equipment 5 377 377 Depreciation of right-of-use assets 5 4,734 5, Amortisation of intangible assets 89 106 Gain on disposal of property, plant and equipment 5 - (4) Allowance (Write back) for impairment loss on doubtful debts 5 1,125 (982) Fair value (gain) loss on derivative instruments (18,286) 12, Share of results of associates (net of tax) (16,098) (3,889) Interest income 5 (666) (2,256) Interest expense 5 9 55 Lease interest expense 5 71 177 Tax expense 2,262 1, Unrealised exchange differences 408 (52) (1,688) 36, Change in inventories (178,813) (18,967) Change in trade and other receivables (18,111) 367, Change in trade and other payables 204,983 (382,569) Cash from operating activities 6,371 3, Tax paid (13) (1,020) Net cash from operating activities 6,358 2,
Cash flows from investing activities Interest received 232 725 Purchase of property, plant and equipment (52) (41) Purchase of intangible assets (5) - Proceeds from disposal of property, plant and equipment - 6 Dividends received from associates 31,063 59, Net cash from investing activities 31,238 60,
Cash flows from financing activities Interest paid (11) (55) Interest paid on lease liabilities (71) (177) Repayment of lease liabilities (4,701) (5,461) Proceeds from loans and borrowings 566,519 46, Repayment of loans and borrowings (566,519) (46,560) Dividends paid (16,756) (28,826) Net cash used in financing activities (21,539) (34,519)
Net increase in cash and cash equivalents 16,057 27, Cash and cash equivalents at beginning of the period 269,107 378, Net effect of exchange rate fluctuations on cash held (408) 52 Cash and cash equivalents at end of the period 284,756 406,
Consolidated Statement of Cash Flows
3. Seasonal operations
The Group’s businesses are not affected significantly by seasonal or cyclical factors during the financial period.
4. Segment and revenue information
The Group is organised into the following main business segments:
(a) Middle distillates : Jet fuel and gas oil supply and trading; (b) Other oil products: Fuel oil, crude oil and gasoline supply and trading; and (c) Investments in oil-related assets: Investments in oil-related assets through the Group’s holdings in associates.
These operating segments are reported in a manner consistent with the internal reporting provided to Chief Executive Officer who is responsible for allocating resources and assessing performance of the operating segments.
4.1 Reporting segments
Middle Other oil Investment in oil distillates products related assets Total 1 Jan 2021 to 30 Jun 2021 US$'000 US$'000 US$'000 US$'
Revenue 3,879,999 4,803,256 - 8,683,
Gross profit 13,042 2,660 - 15, Other administrative /operating expenses (4,183) - (2) (4,185) Depreciation and amortisation (980) - - (980) Foreign exchange loss (151) - - (151) Interest income 665 1 - 666 Other income 204 - - 204 Finance costs (256) (549) - (805) Share of results of associates (net of tax) (^) - - 16,098 16, Profit before tax 8,341 2,112 16,096 26, Income tax expense (781) - (1,481) (2,262)
Earning for the interim period 7,560 2,112 14,615 24,
Segment assets 1,250,320 562,306 294,049 2,106, Deferred income tax assets 848 Total assets per statement of financial position 1,250,320 562,306 294,049 2,107,
Segment liabilities 626,550 588,750 - 1,215, Current income tax liabilities 594 Deferred income tax liabilities 6, Total liabilities per statement of financial position (^) 1,222,
Middle Other oil Investment in oil distillates products related assets Total 1 Jan 2020 to 30 Jun 2020 US$'000 US$'000 US$'000 US$'
Revenue 3,243,505 2,129,900 - 5,373,
Gross profit 22,292 579 - 22, Other administrative /operating expenses (^) (3,333) (1) (199) (3,533)
Depreciation and amortisation (900) - - (900) Foreign exchange gain/(loss) 572 - (2) 570
Interest income 2,256 - - 2, Other income 516 - - 516
Finance costs (157) (320) - (477) Share of results of associates (net of tax) - - 3,889 3,
Profit before tax 21,246 258 3,688 25, Income tax expense (1,466) - (155) (1,621)
Earning for the interim period 19,780 258 3,533 23,
Segment assets 967,078 278,222 300,948 1,546, Deferred income tax assets 2, Total assets per statement of financial position 967,078 278,222 300,948 1,548,
Segment liabilities 561,168 155,959 - 717, Current income tax liabilities 1, Deferred income tax liabilities 7, Total liabilities per
statement of financial position 725,
5. Profit before taxation
5.1 Significant items
1H 2021 1H 2020
US$'000 US$'
Income Bank interest income 666 2, Net foreign exchange (loss)/gain (151) 571
Expenses Depreciation of property, plant and equipment (377) (377) Depreciation of right-of-use assets (^) (4,734) (5,515) Amortisation of intangible assets (89) (106) Gain on disposal property, plant and equipment - 4 Interest expense (9) (55) Interest expense - lease liabilities (71) (177) (Allowance) Write back for impairment loss on doubtful debts (1,125) 982
The Group
5.2 Related party transactions
There are no material related party transactions apart from those disclosed elsewhere in the financial statements.
6. Taxation
The Group calculates the period income tax expense using the tax rate that would be applicable to the expected total annual earnings. The major components of income tax expense in the condensed interim consolidated statement of profit or loss are:
1H 2021 1H
US$'000 US$'
Current income tax expense 378 42 Utilisation of previously unused tax losses 400 1, Withholding tax expense 1,484 178 Total tax expense 2,262 1,
7. Dividends
There is no interim dividend declared or paid for the financial period ended 30 June 2021 and 30 June 2020.
8. Net Asset Value
30 Jun 2021 31 Dec 2020 30 Jun 2021 31 Dec 2020 Net asset value per ordinary share (US cents) (^) 102.94 101.94 102.11 101.
Number of ordinary shares issued ('000) 860,184 860,184 860,184 860,
Group Company
9. Associates
30 Jun 2021 31 Dec 2020 30 Jun 2021 31 Dec 2020 US$'000 US$'000 US$'000 US$'
Investment in associates (^) 278,854 304,577 278,854 304,
Group Company
The Group has one (2020: one) associate that is material and four (2020: four) other associates that are individually immaterial to the Group. All are equity accounted. The followings are details of the material associates of the Group and the Company:
Shanghai Pudong International Airport Aviation Fuel Supply Company Ltd (“SPIA”)
Nature of business Exclusive supplier of jet fuel at Shanghai Pudong International Airport Principal place of business/Country of incorporation
People’s Republic of China
Ownership interest/Voting rights held 33% (2020: 33%)
10. Financial assets at fair value through other comprehensive income
30 Jun 2021 31 Dec 2020 US$'000 US$' Investment in equity instrument designated as at FVTOCI
- unquoted equity shares 5,500 5,
The investment in equity instrument is not held for trading. Instead, it is held for medium to long-term strategic purposes. Accordingly, management has elected to designate this investment in equity instrument as at FVTOCI as they believe that recognising short-term fluctuations in this investment’s fair value in profit or loss would not be consistent with the Group’s strategy of holding this investment for long-term purposes and realising its performance potential in the long run.
No investment in equity instrument measured at FVTOCI has been disposed of during the current reporting period.
13. Trade and other payables
Group Company 30 Jun 2021
31 Dec 2020
30 Jun 2021
31 Dec 2020 US$’000 US$’000 US$’000 US$’
Trade payables 929,418 888,671 846,144 853, Other payables and accruals 25,964 38,687 24,723 36, Advance receipts from customers - 210 - - Amounts due to:
- immediate and ultimate holding Company (non-trade) 10,123 10,121 - -
- subsidiary (trade) - - 61,689 35,
- related corporation (trade) 89,952 554 89,952 -
- related corporation of a corporate shareholder (trade) 103,083 8,584 85,933 - Derivative financial liabilities:
- oil commodity derivatives 33,615 42,047 32,290 41, 1,192,155 988,874 1,140,731 967, 14. Borrowings
Amount repayable in one year or less, or on demand
30 Jun 2021 31 Dec 2020 US$'000 US$' Amount repayable within one year or on demand Secured (^) - - Unsecured (^) - -
Amount repayable after one year Secured - - Unsecured - -
The Group and the Company
15. Fair value measurement
Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
a) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
b) Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
c) Level 3 inputs are unobservable inputs for the asset or liability.
At the reporting date, the carrying amounts of the Group’s and the Company’s financial instruments carried at cost or amortised cost approximate their fair values because of the short period to maturity.
Level 1 Level 2 Level 3 Total Group US$'000 US$'000 US$'000 US$'
30 Jun 2021 Financial assets at FVTOCI* - - 5,500 5, Derivative financial assets (^) - 38,540 - 38, Derivative financial liabilities - (33,615) - (33,615)
31 Dec 2020 Financial assets at FVTOCI* - - 5,500 5, Derivative financial assets - 27,873 - 27, Derivative financial liabilities - (42,047) - (42,047)
Level 1 Level 2 Level 3 Total Company US$'000 US$'000 US$'000 US$'
30 Jun 2021 Derivative financial assets - 36,332 - 36, Derivative financial liabilities - (32,290) - (32,290)
31 Dec 2020 Derivative financial assets - 27,216 - 27, Derivative financial liabilities - (41,475) - (41,475)
- There was no movement to the Level 3 fair value measurement of the financial asset during the financial year.
16. Subsequent events
There are no known subsequent events which have led to adjustments to this set of interim financial statements.
Interim Consolidated Statements of Financial Position The Group’s current assets stood at US$1,799.92 million as at 30 June 2021 compared to US$1,567.11 million as at 31 December 2020. The increase of US$232.81 million in current assets resulted from the increase of US$178.81 million in inventories, US$38.35 million in trade and other receivable and US$15.65 million in cash and cash equivalents.
Non-current assets stood at US$307.60 million as at 30 June 2021 compared to US$320.84 million as at 31 December 2020. The decrease of US$13.24 million was mainly attributable to the dividend distribution of US$42.90 million from SPIA partially offset by the share of results of US$16.10 million and the increase in right-of-use assets of US$13.30 million.
Current liabilities which comprised of trade and other payables, contract liabilities, short term lease liabilities and tax liabilities, increased by US$201.24 million to US$1,204.90 million as at 30 June 2021 compared to US$1,003.66 million as at 31 December 2020, mainly attributable to the increase of US$198.03 million in trade and other payables and contract liabilities as a result of higher trading volumes and oil prices in June 2021 compared to December 2020.
Non-current liabilities which comprised of lease liabilities and deferred tax liabilities increased by US$9.72 million to US$17.13 million as at 30 June 2021 compared to US$7.41 million as at 31 December 2020, mainly due to the increase in lease liabilities.
The Group’s net assets stood at US$885.49 million as at 30 June 2021, or 102.94 US cents per share, compared to US$876. million as at 31 December 2020 or 101.94 US cents per share.
Interim Consolidated Statement of Cash Flows 1H 2021 v 1H 2020 Net cash generated from operating activities in 1H 2021 was US$6.36 million compared to US$2.04 million in 1H 2020, mainly attributable to net cash inflow from trade receivables and payables.
Net cash generated from investing activities were US$31.24 million in 1H 2021 compared to US$60.36 million in 1H 2020, a decrease of US$29.12 million mainly attributable to the lower receipt of dividend from SPIA in 1H 2021.
Net cash used in financing activities in 1H 2021 were US$21.54 million compared to US$34.52 million in 1H 2020, a decrease of US$12.98 million mainly attributable to lower dividends payout in 1H 2021.
Litigation- (1) Banque De Commerce Et De Placements S.A. DIFC Branch (“BCP-DIFC”), (2) Banque De Commerce Et De Placement SA (“BCP-Geneva”) v China Aviation Oil (Singapore) Corporation Ltd & 2 Ors (Suit No. HC/S 675/2020 (“the “Suit”)
The Company refers to its last update in relation to the amended Writ of Summons (“Writ of Summons-Amendment No. 1”) and the amended Statement of Claim (“Statement of Claim-Amendment No.1”) served on the Company by BCP-DIFC (as First Plaintiff) and BCP-Geneva (as Second Plaintiff), on 30 December 2020 and the amended Defence filed by the Company on 29 January 2021.
On 1 March 2021, BCP DIFC and BCP Geneva filed and served their Reply on the Company.
The Company filed and served the Third Party Statement of Claim (Amendment No. 1) on Shandong Energy International (Singapore) Pte Ltd (“SEIS”) on 2 March 2021. SEIS filed and served its amended Third Party Defence on 17 March 2021. On 31 March 2021, the Company filed and served its Third Party Reply on SEIS.
Separately, SEIS commenced proceedings against the Fourth Party, Golden Base Energy Pte Ltd (“GBE”) and GBE had separately filed an application seeking leave of Court to add the Fifth Party, Zenrock Commodities Trading Pte Ltd (In Liquidation) (“Zenrock”) to the proceedings on the basis that Zenrock had sold the cargo concerned in the Suit to GBE, who had then on-sold the cargo to SEIS.
Meanwhile, the Court suggested all parties to the Suit, the Third Party Proceedings and the Fourth Party Proceedings to consider whether or not they were each prepared to refer the subject dispute to mediation.
In May 2021, all parties to the Suit, the Third Party Proceedings and the Fourth Party Proceedings had agreed to an all-parties mediation to resolve all proceedings in the Suit on a global basis. The all-parties mediation is proposed to be held in October 2021 before a sole mediator to be conducted under the auspices of the Singapore International Mediation Centre.
3. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results.
Not applicable.
4. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months.
Supported by higher oil demand as the global economy geared up for recovery from the COVID-19 pandemic, oil prices had risen steadily in 1H 2021 with crude oil prices averaging US$73 a barrel in June 2021, its highest levels since May 2019.
However, the emergence of COVID-19 virus variants and resurgence of infections in many parts of the world in recent months have led governments to reintroduce travel restrictions. Coupled with unequal access to vaccines in many countries and the uneven pace of vaccination rollouts in different parts of the world, the COVID-19 pandemic continued to have a severe impact on the pace of recovery of the global aviation industry leading IATA to lower its forecast for total air passenger numbers in 2021 to be 52% lower than they were in 2019, as pandemic restrictions continued to hinder travel.
While market conditions are expected to remain challenging, the Group remains cautiously optimistic on its performance for the current financial year as it continues to navigate through this unprecedented period by implementing and executing detailed protocols across the Group’s operations to strengthen operational resilience ensuring minimal disruptions to sustain business continuity. The Group will stay the course to build on its jet fuel supply and trading network complemented with trading in other oil products. The Group will also continue to focus on long-term profitability by seeking opportunities for expansion through investments in synergetic and strategic oil related assets and businesses.
5. Dividend information
5a. Current Financial Period Reported on
Any dividend recommended for the current financial period reported on? No
5b. Corresponding Period of the Immediate Preceding Financial Year
Any dividend declared for the corresponding period of the immediately preceding financial year? No
5c. Date Payable
Not Applicable.
5d. Books Closure Date
Not Applicable.
5e. If no dividend has been declared (recommended), a statement to that effect and the reason(s) for the decision
Not Applicable.
Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than S$100,000 and transactions conducted under shareholders’ mandate pursuant to Rule 920)
Aggregate value of interested person transactions conducted under shareholders’ mandate pursuant to Rule 920 (excluding transactions less than S$100,000)
Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than S$100,000 and transactions conducted under shareholders’ mandate pursuant to Rule 920)
Aggregate value of interested person transactions conducted under shareholders’ mandate pursuant to Rule 920 (excluding transactions less than S$100,000)
Nature of IPT transactions
Nature of Relationship
1H 2021 1H 2021 YTD 1H 2021
YTD 1H 2021
US$’000 US$’000 US$’000 US$’
Sales from related corporation of a corporate shareholder
Associates of Controlling Shareholder, BP Investments Asia Limited
- 118,333^ - 118,
Purchases from related corporation of a corporate shareholder
- 229,692^ - 229,
Supply chain services rendered from related corporation of a corporate shareholder
- 4,173^ - 4,
- Based on the shareholders’ approval obtained at the Annual General Meeting of the Company held on 18 April 2017 for the jet fuel transportation services framework agreement entered into between China National Aviation Fuel TSN-PEK Pipeline Transportation Corporation Ltd (“TSN-PEKCL”) and China National Aviation Fuel Corporation Ltd (“CNAFCL”) relating to the provision of pipeline transportation services by TSN-PEKCL to CNAFCL
7. Confirmation that the issuer has procured undertaking from all its directors and executive officers (in the format set out in Appendix 7.7) under Rule 720(1)
The Company confirms that it has procured undertakings from all its Directors and Executive Officers pursuant to Rule 720(1) of the Listing Manual of the Singapore Exchange Securities Trading Limited.
BY ORDER OF THE BOARD
Doreen Nah Company Secretary 30 July 2021
