China Aviation to pay dividends on profit of $369m

CHINA Aviation Oil (CAO) is paying dividends to shareholders for the first time in three years, as it announced net profits of about $369 million for the year ended Dec 31.

Much of the earnings - up from $29.6 million a year earlier - was due to a debt waiver of $312 million under its restructuring exercise last year.

However, even excluding this amount, after-tax profits still almost doubled to $57.3 million.

The mainboard-listed company has therefore proposed a final dividend of two cents per share, saying the payout is a sign that it has finally turned the corner.

Chairman Lim Jit Poh yesterday thanked shareholders for their 'continued confidence and support'.

'The proposed dividend is evidence that CAO is back on track and has achieved good growth in 2006,' he said.

CAO last paid its shareholders dividends when it announced its 2003 results, before trouble erupted at the end of 2004 with revelations of a massive oil trading loss.

Since then, the jet fuel trader has brought in new investors - Temasek Holdings and oil giant BP - and embarked on an equity restructuring exercise.

Yesterday, it said that the resumption of jet fuel procurement on a principal basis meant a jump in revenue for last year to almost $3 billion, from just $20.7 million in 2005.

This was due to the value of the underlying contracts now being recorded as revenue, whereas only commission income was recognised as revenue prior to June.

Last year, CAO procured 4.66 million tonnes of jet fuel, up 53 per cent from the year before.

It also cut total expenses by $7 million, or 21 per cent, as the completion of the restructuring exercise meant lower professional fees.

Earnings per share rose to 61.69 cents, from 15.27 cents previously.

Net asset value backing per share rose to 23.62 cents, from negative assets of 68.12 cents as at the end of 2005.

Jet fuel demand in China is likely to grow with increased air travel, said CAO, which supplies to the mainland market.

CAO shares yesterday closed unchanged at $1.02.