China Aviation Oil (Singapore), which almost collapsed in 2004 after incurring about US$550 million of derivatives trading losses, almost doubled its underlying profit last year as the quantity of jet fuel handled increased 53 per cent.
The listed arm of the mainland's dominant jet-fuel distributor, China Aviation Oil Holding, yesterday posted a net profit of S$369 million (HK$1.89 billion).
Excluding a one-time gain from debt waived under a debt-restructuring exercise after the huge trading losses, profit jumped 95 per cent to S$57.3 million from a year earlier, the company said.
The gain was due mainly to the rise in jet-fuel trading volume to 4.66 million tonnes last year from 3.04 million tonnes in 2005. It traded 2.87 million tonnes in 2004.
Turnover soared to S$2.93 billion from S$20.74 million, thanks to the change since June last year in the company's business model from agency-based, where only commissions are booked as revenues, to principle-based, where it takes possession of the fuel and books the entire sales amount.
China Aviation briefly switched to the agency-based model after the derivative trading losses scandal in 2004, which led to its former chief executive being jailed in Singapore for four years and three other executives fined for concealing the losses.
The company said it had set up additional board committees, strengthened internal audit functions and established a whistle-blowing system to enhance risk management and internal control.
The board declared a dividend of two Singapore cents per share.
To cut debt, the firm last year raised US$130 million by selling shares to its parent, BP and Temasek Holdings.
It also raised S$346 million by selling its 5 per cent stake in Spanish oil products logistics firm Compania Logistica de Hidrocarburos and its 41 per cent interest in Xinyuan Petrochemicals.