China Aviation Oil Singapore : Letter to Shareholders dated 1 April 2024 794.1 KB

LETTER TO SHAREHOLDERS

in relation to

• (1) THE PROPOSED RENEWAL OF THE GENERAL MANDATE FOR INTERESTED PERSON TRANSACTIONS;

• (2) THE PROPOSED RENEWAL OF THE SHARE PURCHASE MANDATE; AND

• (3) THE PROPOSED CHANGE OF AUDITORS OF THE COMPANY FROM DELOITTE & TOUCHE LLP TO BDO LLP

TABLE OF CONTENTS

DEFINITIONS ........................................................................................................................................ 3

LETTER TO SHAREHOLDERS ............................................................................................................. 11

1.	INTRODUCTION ........................................................................................................................	11
2.	THE PROPOSED RENEWAL OF THE IPT MANDATE ...............................................................	12
3.	THE PROPOSED RENEWAL OF THE SHARE PURCHASE MANDATE ....................................	13
4.	THE PROPOSED CHANGE OF AUDITORS OF THE COMPANY ..............................................	26
5.	SHAREHOLDERS WHO WILL ABSTAIN FROM VOTING ..........................................................	28
6.	DIRECTORS WHO WILL ABSTAIN FROM VOTING ..................................................................	28
7.	DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTERESTS IN THE COMPANY ..........	29
8.	DIRECTORS' RECOMMENDATIONS .........................................................................................	29
9.	DIRECTORS' RESPONSIBILITY STATEMENT ...........................................................................	29
10.	DOCUMENTS FOR INSPECTION ..............................................................................................	30
31
33
52
55

ANNEX I ................................................................................................................................................

ANNEX II ...............................................................................................................................................

ANNEX III ..............................................................................................................................................

ANNEX IV .............................................................................................................................................

DEFINITIONS

In this Letter, the following definitions shall apply throughout unless the context otherwise requires or unless otherwise stated:

Entities

"Bluesky"

• : China National Aviation Fuel South China Bluesky Corporation Ltd (华南蓝天航空油料有限公司), a subsidiary of CNAFCL

  "BP"

• : BP p.l.c., an indirect Controlling Shareholder of the Company

  "BP Group"

• : BP and its associates

  "BPIA"

• : BP Investments Asia Limited, an indirect subsidiary of BP and a Controlling Shareholder of the Company

  "CAO" or "Company"

• : China Aviation Oil (Singapore) Corporation Ltd

  "CAO Group"

• : The Company and its unlisted subsidiaries (i.e. which are not listed on the SGX-ST or an approved exchange), and the unlisted (as defined herein) associated companies of the Company over which the Company and its subsidiaries, or the Company and its subsidiaries and its interested persons, have Control

  "CAO HK"

• : China Aviation Oil (Hong Kong) Company Limited, a wholly-owned subsidiary of the Company

  "CNAF"

• : China National Aviation Fuel Group Limited (中国航空油料集团 有限公司) formerly known as China National Aviation Fuel Group Corporation (中国航空油料集团公司), the holding company of the Company

  "CNAF Finance"

• : China National Aviation Fuel Finance Co., Ltd (中国航油集团财务 有限公司), a subsidiary of CNAF

  "CNAF Group"

• : CNAF and its associates

  "CNAF HKR"

• : CNAF Hong Kong Refuelling Limited (中国航油香港供油有限公 司), a 68-per cent. owned indirect subsidiary of the Company and an associate of CNAF

  "CNAF Logistics"

• : China National Aviation Fuel Logistics Co., Ltd (中国航油集团物 流有限公司), a subsidiary of CNAF

"CNAFCL"

• : China National Aviation Fuel Corporation Ltd (中国航空油料有限 责任公司), a subsidiary of CNAF

  "Group"

• : The Company and its subsidiaries

  "LandOil"

• : China National Aviation Fuel Petroleum Co., Ltd (中国航油集团石 油股份有限公司), a subsidiary of CNAF

  "TSN-PEKCL"

• : China National Aviation Fuel TSN-PEK Pipeline Transportation Corporation Ltd (中国航油集团津京管道运输有限责任公司), a 49-per cent. owned associated company of the Company and an associate of CNAF

General

"2017 AGM"

• : The annual general meeting of the Company held on 18 April 2017

  "2023 AGM"

• : The annual general meeting of the Company held on 27 April 2023

  "ACRA"

• : The Accounting and Corporate Regulatory Authority of Singapore

  "AGM"

• : The forthcoming 30th annual general meeting of the Company

  "Approved Entities"

• : The Investee Companies and other members of the CNAF Group

  "Audit Committee"

• : The audit committee of the Company, comprising Independent Non-Executive Directors, Mr Teo Ser Luck, Mr Hee Theng Fong and Dr Fu Xingran, and Non-Independent, Non-Executive Directors, Mr Zhang Yuchen and Dr Richard Yang Minghui, as at the date of this Letter

"Average Barrel Price"

• : The yearly average market price per barrel of KERO, which shall be the arithmetic average of the mean of the daily high and low quotations for KERO under the heading "FOB SINGAPORE - MARKET LOCATION" as published in Platts Asia-Pacific/Arab Gulf Marketscan, effective for the calendar month prior to the date of the relevant transaction

  "Beijing Airport"

• : Beijing Capital International Airport

  "Bluesky Supply Agreement"

• : The supply agreement entered into by the Company and Bluesky dated 1 April 2010 relating to the terms of the supply arrangements between the Company and Bluesky, which was previously renewed and extended to 1 April 2018, further renewed and extended to 1 April 2020, further extended to 1 April 2022 and then further extended again to 1 April 2024. On 8 January 2024, the Bluesky Supply Agreement was further renewed and extended to 1 April 2026 on substantially similar terms. The Audit Committee had reviewed the terms of the proposed extension of the Bluesky Supply Agreement prior to entry into the agreement

  "Board"

• : The board of Directors of the Company

  "BPIA Director"

• : Dr Richard Yang Minghui who is a Non-Independent and Non-Executive Director of the Company

  "CDP"

• : The Central Depository (Pte) Limited

  "CFR"

• : The acronym for the Incoterm "Cost and Freight" which indicates that the seller/exporter/manufacturer clears the goods for export and is responsible for the costs for transport of the goods to the port of destination. The buyer bears the risk of loss of the goods once the goods pass the ship's rail at the port of shipment (and not destination)

  "CNAF Directors"

• : Mr Shi Yanliang (Chairman of the Company, Non-Independent, Executive Director of the Company), Mr Shi Lei (Non-Independent, Non-Executive Director of the Company), Mr Zhang Yuchen (Non-Independent, Non-Executive Director of the Company) and Mr Lin Yi (Non-Independent, Executive Director of the Company)

"CNAFCL Supply Agreement"	:
"Code"	:
"Companies Act"	:
"Constitution"	:
"Control"	:
"Controlling Shareholder"	:
"Deposit Banks"	:	The banks which CNAF Finance holds primary accounts with,
such as Agricultural Bank of China Co., Ltd and PingAn Bank
Co., Ltd
"Derivative Financial	:	Derivative financial instruments including but not limited to all
Instruments"	futures and swaps products available in the energy and freight
markets
"Director"	:	A director of the Company as at the date of this Letter
"Entrust Loan Arrangement	:	The services of a duly licensed financial institution in the PRC
Services"	to provide loans on behalf of a person to another person in the
PRC
"EPS"	:	Earnings per Share
"Executive Director"	:	A Director who is an employee of and performs an executive
function for the Company
"FOB"	:	The acronym for the Incoterm "Free on Board", which indicates
that delivery is effected by the seller when the goods pass the
ship's rail at the named port of shipment. Accordingly, the seller
clears the goods for export, and all costs and risks of loss of or
damage to the goods from that port are borne by the buyer
"FY"	:	Financial year ended or ending on 31 December
"HKIA"	:	The Hong Kong International Airport at Chek Lap Kok
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The supply agreement entered into by the Company and CNAFCL dated 23 March 2010 relating to the terms of the supply arrangements between the Company and CNAFCL, the term of which was previously renewed and extended to 6 August 2018, and was further renewed and extended to 6 August 2020, further extended to 6 August 2022 and then further extended again to 6 August 2024. On 8 January 2024, the CNAFCL Supply Agreement was further extended to 6 August 2026 on substantially similar terms. The Audit Committee had reviewed the terms of the proposed extension of the CNAFCL Supply Agreement prior to entry into the agreement

The Singapore Code on Take-overs and Mergers

The Companies Act 1967 of Singapore

The Constitution of the Company currently in force

The capacity to dominate decision-making, directly or indirectly, in relation to the financial and operating policies of the Company

In relation to a listed company, a person who:

• (a) holds directly or indirectly fifteen per cent. (15%) or more of the total voting rights in the company. The SGX-ST may determine that a person who satisfies the above is not a Controlling Shareholder; or

• (b) in fact exercises Control over the company

"Incoterms"	:	The International Commercial Terms as developed and issued
by the International Chambers of Commerce and "Incoterm"
means any one of such terms
"Independent Directors"	:	The Directors who are considered independent for the purpose
of making a recommendation to Shareholders on the renewal
of the IPT Mandate, namely, Mr Teo Ser Luck, Mr Hee Theng
Fong, Dr Fu Xingran and Dr Jeffrey Goh Mau Seong, and
"Independent Director" means any one of them
"Interested Person	:	Transactions proposed to be entered into between the CAO
Transactions"	Group and the Interested Persons
"Interested Persons"	:	For the purposes of the IPT Mandate, the CNAF Group and the
BP Group, and "Interested Person" means any one of them
"Into-Plane Fuelling Services	:	The agreement entered into by CAO HK and CNAF HKR on 15
Framework Agreement"	February 2016 in relation to the provision of into-plane fuelling
services by CNAF HKR to CAO HK
"Investee Companies"	:	Interested Persons in which the CAO Group has an equity
investment
"IPT Mandate"	:
"KERO"	:
"Latest Practicable Date"	:
"Letter"	:
"Listing Manual"	:
"Listing Rules"	:
"Market Day"	:
"Maximum Price"	:
"MOPS"	:

The abbreviation of "kerosene" as published in Platts Asia-Pacific/Arab Gulf Marketscan under "FOB SINGAPORE - MARKET LOCATION"

• (a) For the purposes of this Letter, excluding Annexes II and III to this Letter, the Shareholders' general mandate pursuant to Chapter 9 of the Listing Manual permitting the Company, its subsidiaries and associated companies which are considered to be "entities at risk" under Chapter 9 of the Listing Manual or any of them, to enter into Interested Person Transactions with the Interested Persons, which was last renewed at the 2023 AGM; and

• (b) for the purposes of Annexes II and III to this Letter, the Shareholders' general mandate pursuant to Chapter 9 of the Listing Manual permitting the Company, its subsidiaries and associated companies which are considered to be "entities at risk" under Chapter 9 of the Listing Manual or any of them, to enter into Interested Person Transactions with the Interested Persons, proposed to be renewed at the AGM

The latest practicable date prior to the printing of this Letter, being 4 March 2024

This letter to Shareholders dated 1 April 2024

The Listing Manual of the SGX-ST

The listing rules of the SGX-ST set out in the Listing Manual

A day on which the SGX-ST is open for trading in securities

Has the meaning ascribed to it in paragraph 3.3.4 of this Letter

Mean of Platts Singapore

"Mr Ng"

• : Has the meaning ascribed to it in paragraph 4.5(b) of this Letter

  "Non-Executive Director"

• : A Director (including an Independent Director) of the Company, as the case may be, who is not an Executive Director

  "NTA"

• : Net tangible assets

  "Off-Market Purchases"

• : Has the meaning ascribed to it in paragraph 3.3.3 of this Letter

  "On-Market Purchases"

• : Has the meaning ascribed to it in paragraph 3.3.3 of this Letter

  "OTC"

• : Over-the-counter

  "Petroleum Products"

• : Petroleum products including but not limited to aviation fuel, gas oil, fuel oil, crude oil and other petrochemicals

  "Pipeline Services Contract"

• : The jet fuel transportation services framework agreement entered into between TSN-PEKCL and CNAFCL relating to the provision of pipeline transportation services by TSN-PEKCL to CNAFCL which entry was approved at the 2017 AGM

"PRC"

• : The People's Republic of China

  "Relevant Period"

• : The period commencing from the date of the AGM being the date on which the Share Purchase Mandate is passed, if approved by the Shareholders, and expiring on the date the next annual general meeting is held or is required by law to be held, whichever is the earlier, after the date the resolution relating to the Share Purchase Mandate is passed

"Risk Management Committee" :

The risk management committee of the Company, comprising the Non-Executive Directors, namely Mr Hee Theng Fong (Independent Director), Mr Zhang Yuchen (Non-Independent CNAF Director), Mr Teo Ser Luck (Independent Director), Mr Shi Lei (Non-Independent CNAF Director) and Dr Jeffrey Goh Mau Seong (Independent Director) as at the date of this Letter, set up for the purposes of assisting the Board in fulfilling its oversight and approval responsibilities relating to its risk management framework and policies, as well as market, credit, operational, compliance and all other risk concerns

"ROE"

• : Return on equity

  "SASAC"

• : Means the State-owned Assets Supervision and Administration Commission of the State Council

  "SASAC Rotation Requirements"

• : Has the meaning ascribed to it in paragraph 4.1 of this Letter

  "Securities Account"

• : A securities account maintained by a depositor with CDP but does not include a securities sub-account maintained with a depository agent

"Senior Executives"

• : The senior executives of the CAO Group who, for the purposes of undertaking the review procedures described in paragraph 6 of Annex II to this Letter (Review Procedures for Interested Person Transactions), are the chief executive officer, chief financial officer, deputy chief financial officer, vice president, head of finance, deputy head of finance, head of trading, deputy head of trading, head of risk management, deputy head of risk management, head of operations, deputy head of operations, any head of department, function or business unit, assistant to the chief executive officer, or any position of equivalent rank or seniority as the foregoing, of any of the members of the CAO Group, and/or such other senior management personnel tasked to undertake the functions of the foregoing senior executives' positions from time to time

  "Services"

• : Services that the member(s) of the BP Group may provide to the CAO Group from time to time, whereby the member(s) of the BP Group share(s) the benefit of its contacts, expertise or knowledge with the CAO Group or where efficiencies and economies of scale can be achieved by the member(s) of the BP Group and the CAO Group through the provision of services by the former to the latter, including, without limitation, services relating to risk management, information-sharing, marketing, training, secondment of staff and other corporate functions

  "SGX-ST"

• : Singapore Exchange Securities Trading Limited

  "Share Purchase Mandate"

• : Shareholders' mandate to authorise the Directors to make purchases of Shares in accordance with the terms set out in this Letter as well as the rules and regulations set forth in the Companies Act and the Listing Manual

"Shareholders"

• : The registered holders of Shares, except that where the registered holder is CDP, the term "Shareholders" shall, in relation to those Shares, mean the depositors whose Securities Accounts are credited with Shares

  "Shares"

• : Ordinary shares in the capital of the Company

"Substantial Shareholder"

• : A substantial shareholder of the Company as defined under Section 2(6) of the Securities and Futures Act 2001

  "Supply Agreements"

• : Collectively, the CNAFCL Supply Agreement and Bluesky Supply Agreement

  "Term Charter Party Agreement"

• : The term charter party agreement entered into by the Company and CNAF Logistics dated 10 February 2014 relating to the provision of freight services by CNAF Logistics in respect of the transportation of Petroleum Products. The Term Charter Party Agreement, which was due to expire on 30 April 2015, was extended on the same terms (save for adjustments to the delivery schedule, duration and pricing) by way of a new agreement dated 10 February 2015 and expired on 30 April 2017. It was previously extended for two (2) years to 30 April 2019 and was further extended for two (2) years to 30 April 2021, in both cases, on the same terms. The Term Charter Party Agreement was further extended for a further term of five (5) years to 30 April 2026, on substantially similar terms (save for certain adjustments to the delivery routes and pricing). The Audit Committee had reviewed the terms of the renewed Term Charter Party Agreement prior to entry into the agreement

"Treasury Services"

• : Transactions relating to:

  • (a) interest-bearing placement of funds by the CAO Group with CNAF Finance;

  • (b) the borrowing of funds by the CAO Group from CNAF Finance;

  • (c) the provision of loans by the CAO Group to Approved Entities;

  • (d) the grant of guarantees by the CAO Group in favour of third parties for the purposes of the Investee Companies; and

  • (e) the provision of Entrust Loan Arrangement Services by CNAF Finance to the CAO Group required for the purpose of the provision of loans by the CAO Group to Approved Entities based in the PRC

  "%" or "per cent."

• : Per centum or percentage

  "S$"

• : Singapore dollars, the lawful currency of the Republic of Singapore

  "US$" and "US cents"

• : U.S. dollars and cents, respectively, the lawful currency of the United States of America

  "Wuyige"

• : WUYIGE Certified Public Accountants LLPThe terms "depositor" and "depository agent" shall have the meanings ascribed to them respectively in Section 81SF of the Securities and Futures Act 2001 in force as at the Latest Practicable Date.

The terms "associate", "associated company", "entity at risk", "interested person", "interested person transaction", "chief executive officer" and "approved exchange" shall have the meanings

ascribed to them respectively in the Listing Manual.

The term "subsidiary" shall have the meaning ascribed to it in Section 5 of the Companies Act.

Words importing the singular shall, where applicable, include the plural and vice versa and words importing any one gender shall, where applicable, include the other genders. References to persons shall, where applicable, include corporations.

Any reference to a time of day in this Letter shall be a reference to Singapore time unless otherwise stated.

Any reference in this Letter to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any term defined under the Companies Act or the Listing Manual and used in this Letter shall, where applicable, have the meaning ascribed to it under the Companies Act or the Listing Manual, as the case may be, unless otherwise provided. Save as otherwise stated, summaries of the provisions of any laws and regulations (including the Listing Manual) contained in this Letter are of such laws and regulations (including the Listing Manual) in force as at the Latest Practicable Date.

Any discrepancies in the tables in this Letter between the listed amounts and the totals thereof are due to rounding.

Unless otherwise stated, the following closing exchange rate as at the Latest Practicable Date has been used in this Letter:

S$1: US$0.745

The exchange rate as set out above is used for illustration purposes only and should not be construed as a representation that the relevant amounts have been or could be converted at the rate above or at any other rate.

The Company has appointed WongPartnership LLP as the legal adviser to the Company as to Singapore law in relation to the proposed renewal of the IPT Mandate, the proposed renewal of the Share Purchase Mandate and the proposed change of auditors of the Company.

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