CORPORATE INFORMATION

Board of DirectorsJia Changbin Chairman and Non-Executive DirectorChen Jiulin Managing Director &

Chief Executive OfficerGu Yanfei Non-Executive DirectorLi Yongji Non-Executive DirectorChen Kaibin Non-Executive DirectorZhang Lianxi Non-Executive DirectorJerry Lee Kian Eng Independent DirectorTan Hui Boon Independent DirectorDr Yan Xuetong Independent Director

Audit CommitteeJerry Lee Kian Eng ChairmanLi YongjiTan Hui Boon

Remuneration CommitteeTan Hui Boon ChairmanChen JiulinJerry Lee Kian EngLi Yongji

Company SecretariesAdrian Chang Choon Siew ACAAnne Skading ACIS

Share Registrar & Share Transfer OfficeLim Associates (Pte) Ltd10 Collyer Quay #19-08 Ocean BuildingSingapore 049315

AuditorsErnst & Young10 Collyer Quay #21-01 Ocean BuildingSingapore 049315

Partner-in-charge since 2003Ho Shyan Yan

Principal BankersFortis Bank S.A./N.V.Societe GeneraleBNP ParibasUnited Overseas Bank LimitedThe Development Bank of SingaporeBank of CommunicationsIndustrial and Commercial Bank of ChinaNatexis Banques Populaires

Registered Office8 Temasek Boulevard #31-02 Suntec Tower ThreeSingapore 038988Tel : (65) 6334 8979Fax : (65) 6333 5283Tlx : CAO RS20338Website : http://www.caosco.comE-Mail : admin@caosco.com

Corporate Information ... INF

Key Milestones, Awards & Accolades ... 2

Chairman’s Message ... 4

Managing Director and CEO’s Review ... 6

Financial Review ... 12

Board of Directors ... 14

Key Executives ... 17

Corporate Governance ... 18

Financial Reports

Report of the Directors ... 25Statement by Directors ... 26Auditors’ Report ... 27Profit and Loss Accounts ... 28Balance Sheets ... 29Statements of Changes in Equity ... 30Consolidated Statement of Cash Flows ... 31Notes to the Financial Statements ... 32Additional Information ... 54Statistics of Shareholdings ... 55Notice of Annual General Meeting ... 56Proxy Form ... 59

CONTENTS

2

200411 to 13 February Went with CLSA on roadshow in the US to increase its profile amongst international

institutional investors.

5 February Acquired a 24.5%-stake in South China Bluesky Aviation Oil Co. Ltd from Fortune Oil Plc ofthe UK. Bluesky owns the jet fuel supply infrastructure in 15 airports in Southern and CentralChina, and is the sole jet fuel supplier to all domestic Chinese and foreign airlines in the region.The Bluesky stake is CAO’s largest investment to date.

26 to 30 January Went with ABN AMRO on roadshows in the US and UK.

20 January Acknowledged for its outstanding risk-management structure and procedures by ChinaNational Enterprise Federation at China’s Tenth Annual Creative Management Awards. CAOwas the only overseas Chinese-funded enterprise accorded the honour.

200329 December Announced acquisition of 80% stake in Shuidong oil storage facilities from Shenzhen

Juzhengyuan Petrochemical Co Ltd (“JZY”). A joint-venture between CAO and JZY will beestablished to operate the Southern China oil facilities and carry out other oil-related activities.

28 November Sealed first gasoil deal with Saudi Aramco of Dhahran in Saudi Arabia, one of the largestsuppliers in the global oil business.

28 November Opened branch office for wholly owned subsidiary, Greater China Travel Industry at People’sPark Complex, Singapore.

19 to 21 November Went with ABN AMRO on roadshow in Thailand to increase the profile of CAO regionally.

20 to 24 October Went with DBS Vickers on roadshows in the US and UK.

30 September Held CAO’s first real-time, bilingual Internet forum for interested investors, analysts and mediarepresentatives to increase interaction and understanding between participants of the forum andmanagement.

26 September Announced new corporate slogan – Chinese Wisdom, International Expertise – and initiativesaimed at enhancing Company’s management practises, increasing transparency and opennesswith investors, and optimising risk management procedures.

18 July Signed US$160 million five-year Syndicated Term Credit Facility with ten international banksled by Societe Generale Asia to capitalise on oil-related investment opportunities.

24 June Granted five-year extension to membership in Global Trader Programme (“GTP”) by IESingapore. Under the terms of membership, CAO will enjoy a concessionary tax rate of 10%on qualifying income for a term of five years, commencing 1st January 2003.

23 April Completed transfer of ownership of CAO from China Aviation Oil Supply Corporation(“CAOSC”) to China Aviation Oil Holding Company (“CAOHC”).

7 April Ranked alongside leading companies in the sixth annual industry perception survey by Houston,U.S.-based Applied Trading Systems Inc. (“ATS”) of regional petroleum trading firms. CAO wasranked 3rd in “Specialty or Niche”, 4th in the “Improved” and 5th in the “National Oil Co.”categories.

2002

11 October Announced impending transfer of ownership of CAO from CAOSC to CAOHC.

August Won “Most Transparent Company Award” by the Securities Investors Association (Singapore)among newly listed companies on the Singapore Exchange.

August Transformed into an integrated enterprise encompassing international oil trading and strategicinvestments in the second of CAO’s series of business transformation. Announced CAO’s “three-pronged strategy” to include Strategic Oil-related Investments, International Oil Trading and JetFuel Procurement.

KEY MILESTONES, AWARDS & ACCOLADES

Annual Report 2003

3

31 July Signed Sale and Purchase Agreement for a 5% equity investment in Compania Logistica deHidrocarburos, S.A. (“CLH”) of Spain.

23 July Entered into a Share Transfer Agreement for the investment of a 33% stake in Shanghai PudongInternational Airport Aviation Fuel Supply Company Ltd (“Pudong”) of China.

March Rated 26th most transparent company among those listed in Singapore by Business Times Index.

22 February Ranked top company listed on the Singapore Exchange in 2001 according to Singapore 1000,a report by the DP Information Network and compiled in conjunction with the Registry ofCompanies and Businesses.

CAO was ranked 127th among other big multinational corporations, the highest rankedcompany that had an IPO in 2001, and 26th among oil companies and 2nd among overseasChinese companies in Singapore.

2001

6 December Listed on the mainboard of the Singapore Exchange with gross proceeds of S$80.6 million. CAOwas subsequently ranked first in terms of economic performance among IPO companies listed onthe Singapore Exchange in 2001. CAO is also the only publicly listed entity of China AviationOil Supply Corporation, a state-owned aviation transportation logistic group of the People’sRepublic of China.

1999

1999 Labelled “King of Jet Fuel Procurement” by Singapore’s main Chinese daily, Lianhe Zaobao.Market share of total jet fuel imports to China jumped significantly to 83% from an initial 3% in1997, subsequently rose to near 100%.

Extended jet fuel procurement activities to a wider range of products e.g. fuel oil, gas oil,petrochemical products and oil derivatives.

1998

Attained profitability for the first time since company was incorporated in Singapore,underscoring the success of CAO’s business transformation.

8 September Conferred the Approved Oil Trader Award (renamed as Member of Global Trader Programme)by the Government of Singapore.

1997

Embarked on the first of a series of strategic transformations and resumed operations as an oiltrading company, with focus on jet fuel procurement activities.

1995

14 February Became a wholly owned overseas subsidiary of CAOSC after the company acquired the sharesheld by the two other shareholders.

1993

26 May Incorporated in Singapore as a joint venture between CAOSC, China Foreign TradeTransportation Corporation and Neptune Orient Lines Ltd of Singapore as a shipping broker.

4

Dear Shareholders,

On behalf of the Board of Directors of China Aviation Oil(Singapore) Corporation Ltd (“CAO”), I take great pride inpresenting to you our Annual Report for FY03, a year that wasaffected by two landmark events – the Iraq War and the SevereAcute Respiratory Syndrome (“SARS”) epidemic – each of whichleft an indelible imprint on the world.

The volatile operating conditions of FY03 particularly impactedcompanies engaged in international oil trading activities, and thosewith businesses in China relating to aviation and travel. I wishto commend the management team and all employees of theGroup for having outdone themselves in FY03. Despite suchunprecedented external events, they have managed to increaseshareholder value in FY03. CAO again posted record results, withS$2.43 billion in revenue and S$54.3 million in net profit aftertax. Net assets amount to approximately S$225 million.

China’s aviation industry continues to be one of the country’sshining stars. As many market watchers have projected, air travelin China will continue to grow at amongst the highest levels inthe world for some time to come, and the fast rebound from theSARS outbreak has underscored its resilience. Our jet fuelprocurement volumes have broken all-time records for the pastthree consecutive quarters since July 2003, with a good possibilitythat the April – June 2004 will also be a record-breakingquarter. I am confident that CAO will continue to benefit byspringboarding on this tremendous growth potential as it isfounded on robust fundamentals.

China Aviation Oil has prided itself on the development of itsunique three-pronged business model, encompassing strategicoil-related investments, international oil trading and jetfuel procurement. CAO’s achievements in the months sinceDecember 2003 have been highly significant for CAO’s long-termgrowth strategy, beginning with the acquisition of an 80% equityinterest in the Shuidong oil tank farm in southern China. Inaddition, CAO’s successful wrapping-up of the acquisition of a24.5% stake in South China Bluesky Aviation Oil Co. Ltd(“Bluesky”) from UK-based Fortune Oil Plc in early February 2004was another important milestone.

Bluesky is the largest jet fuel supply company in the boomingeconomic zone of southern and central China covering 15 airports.These include the Guangzhou Baiyun International Airport, whichwill be China’s largest when the new airport is open in the secondhalf of 2004. Coupled with 33%-owned associate companyShanghai Pudong International Airport Aviation Fuel SupplyCompany Ltd (“Pudong”), the investment means the Group will

CHAIRMAN’s MESSAGE

control most of China’s major jet fuel consumption points, withthe exception of the fuel supply company at Beijing CapitalInternational Airport, controlled by CAO’s sister company.

With Bluesky, CAO’s Asian “growth triangle” is now well-established, comprising our head office in Singapore, the world’sthird largest oil trading hub; Pudong in Shanghai, China’seconomic power-house; and Bluesky and Shuidong in the heartof China’s southern economic region. Furthermore, CAO has top-level access to global oil majors through our board seat in Spanishoil infrastructure leader, Compania Logistica de Hidrocarburos,S.A. (“CLH”).

I am extremely pleased that CAO has gained recognition as anemerging player in the international business and financialcommunities. It is a ringing endorsement of CAO’s prospects, forinstance, that London-listed Fortune Oil decided to accept asignificant portion of the consideration for its Bluesky stake in theform of CAO shares and share options.

With all three of our business lines thus developing in positivedirections, we feel confident that we are succeeding in ourmission of value creation. However, this is only the beginning ofa long road. It is advantageous to have secured fresh investmentdeals so early in the New Year, as this places the Group in anexcellent position to achieve record profitability in 2004,assuming no unforeseen external shocks. CAO will persist inbuilding our earnings base further in order to rise to the next levelof profitability.

In view of the results and of our continuing positive outlook,the Board is recommending a tax-exempt dividend of 3.5 Singaporecents per share. In addition, the Board recommends the issuanceof two bonus shares for every five shares held, which shouldfurther increase the liquidity of CAO’s shares while rewarding ourshareholders for their loyalty.

I would like to thank all our shareholders, customers, businesspartners, directors, managers and staff for their unfailing support.Such dedication has benefited CAO immeasurably through thechallenges of the past year. We look forward to meriting yourcontinuing support in the years to come.

Jia ChangbinChairman

Annual Report 2003

5

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6

Dear Shareholders,

On behalf of the management, I am proud to present the AnnualReport for China Aviation Oil (Singapore) Corporation Ltd(“CAO”) for the year ended 31 December 2003 (“FY03”).

FY03 represented another landmark year for CAO, in more waysthan we had expected. On the international front, the first half ofFY03 saw the unprecedented twin challenges of the Iraq War andSevere Acute Respiratory Syndrome (“SARS”) epidemic, whichtogether spurred extensive uncertainties and fanned doomsdayanxieties.

These turbulent circumstances in our operating environment werebeyond our control and posed special challenges for oil- and China-related companies. Fortunately, SARS was brought under control,with important lessons for the future, and the recovery was strong.As the year proceeded, business sentiment broadly turnedoptimistic, but residual uncertainties kept global marketsvolatile.

This period of external turmoil tested the resilienceand dynamism of our three-pronged diversificationstrategy, encompassing strategic investments in oil-related infrastructure businesses, international oiltrading and jet fuel procurement. It also broughthome the cold fact that the Group must be preparedfor any unforeseen shocks, including ongoingterrorism threats, which would impact our Asian economies andoperating spheres acutely.

Ultimately, the Group’s achievement of net profit after tax of S$54.3million on revenues of S$2.43 billion was the best testimony todate of the efficacy of our three-pronged strategy, leveraging onthe vast potential of China’s burgeoning economy to expand ourinternational presence. We are confident that this proven strategywill continue to be the strong foundation of the Group’scontinual thrust towards becoming one of the leading players inthe global oil-related industry.

Performance Scorecard for FY03

During the year under review, the Iraq war brought aboutexceptional volatility and some of the toughest trading conditionsin the world’s oil markets, while the SARS epidemic decimatedChina’s aviation-related industry, on both domestic andinternational fronts. Inevitably, contributions from our 33%-owned associate company, Shanghai Pudong InternationalAirport Aviation Fuel Supply Company Ltd (“Pudong”) were alsoaffected.

MANAGING DIRECTOR & CEO’s REVIEW

I am pleased to report that our risk-management systems andtrading acumen enabled our trading and procurement divisionsto surmount these unfamiliar challenges. Total volumes from theinternational oil trading division climbed 56% to reach 38million metric tonnes for FY03. Jet fuel procurement volumesrose 31% to 1.88 million metric tonnes.

Achieved normalised profits growth of 60% For FY03, theGroup recorded net profit after tax of S$54.3 million and profitbefore tax of S$67.1 million These represented 12.5% growth overthe S$48.2 million in after-tax profits booked in FY02 and a22.8% gain on FY02’s S$54.6 million in pretax profits.

Shareholders should note that the FY02 results included one-timeexceptional items amounting to S$12.7 million, arising from thewrite-back of unutilised provisions for management fees and staffbonuses in prior years which were included in FY02's fourthquarter. Excluding these exceptional items, pre-tax profit for FY03rose 60.0% over FY02.

Strategic investments were the main contributor to ourbottom line as planned. Three dividends from 5%-owned Compania Logistica de Hidrocarburos S.A.(“CLH”) of Spain in FY03 amounting to EUR6.6 million(S$13.1 million). The FY03 return on investments(“ROI”) for our CLH investment was thus 10.9% inEuro terms and 12.0% in S$ terms. Together with theequity accounting of Pudong’s profits, investments

accounted for 68% of the Group’s profit before tax for FY03.

Proposed Dividend of 3.5 cents plus 2-for-5 Bonus Issue Inview of the FY03 results and continuing positive outlook, the Boardhas proposed rewarding shareholders with a tax-exempt dividendof 3.5 Singapore cents per share, representing a dividend yieldof 2.8% based on the year-end share price, and a 2-for-5 bonusissue.

Enhanced Investment War-chest CAO signed a US$160million syndicated term credit facility with ten international bankson 18 July 2003. CAO also received from Pudong a dividend ofRMB105.6 million (approximately S$22.3 million) paid out ofPudong’s FY02 profit and a distribution of retained earnings ofRMB39.6 million (approximately S$8.4 million) accrued in yearsprior to FY02.

Acquired Shuidong Oil Tank Farm near Maoming,Southern China On 29 December, CAO purchased an 80%equity interest in the Shuidong oil tank farm in Southern China,including 76,732 square meters of land, for RMB18.4 million incash (S$3.83 million). The facility is connected by a short pipe-line to the neighbouring Maoming Oil Refinery, China’s second-

Annual Report 2003

7

largest refinery. It has direct ocean access and is close to China’sthird- and fifth-largest airports. Total capacity is 50,000 cubicmetres (“CBM”) comprising six 5,000 CBM tanks and two10,000 CBM tanks. The facilities have been in use for 10 yearsand economic useful lives are at least 50 years. Based on theexisting land area, the tank farm may be expanded to more thandouble its current capacity. Total stored volume reached 650,000CBM in FY03 for a turnover rate around 13 times.

Outlook for the Future

The Group kicked off FY04 on a high note with record levels ofprocurement, and continued the momentum by securing majorstrategic initiatives, fundamentally strengthening CAO’s powerbases in investments, international oil trading and jet fuelprocurement.

Breaking All-time Highs for Quarterly Jet Fuel ProcurementVolumes Jet fuel procurement was at all-time highs in 3Q03and again in 4Q03. Total spot and tender volumes for theJanuary-March 2004 quarter (“1Q04”) reached 603,000 metrictonnes (“MT”) were the highest ever for a first quarter, marking athird consecutive quarterly record. All current indications pointto CAO maintaining or surpassing FY03 levels in FY04.

Securing Foothold in Southern and Central China throughBluesky Investment On 5 February 2004, CAO acquired a 24.5%stake in South China Bluesky Aviation Oil Co. Ltd (“Bluesky”),the largest jet fuel supply company in Southern and Central China,from UK-listed Fortune Oil Plc. Consideration was agreed atearnings-accretive valuations, comprising US$21.7 million in cash(RMB180 million), 37.76 million new CAO shares (5.2% of

enlarged share capital) and options for 26 million new CAO shareswith a strike price of S$1.60. The use of shares in the deal, was agreat vote of confidence by Fortune Oil in CAO’s future potential.

Bluesky owns the entire jet fuel supply infrastructure at 15airports in Southern and Central China, and is the sole jet fuelsupplier to all domestic Chinese and foreign airlines operatingthere. CAO thus has obtained immediate access to these airports,including the new Guangzhou Baiyun International Airport,which, when it opens in the second half of 2004, will becomeChina’s largest airport. Together with the stake held by our sistercompany, China Aviation Oil Supply Corporation, Groupshareholding in Bluesky is 75.5%, with the balance held byBP.

Potential for China’s Oil Market This is the third yearfollowing China’s accession to the WTO. Among the biggestderegulations seen to date are those in financial services,telecommunications, utilities, and civil aviation. The impact ofthe reduction in tariffs and of the further opening of the marketwill continue to grow. The relaxation or lifting of import quotasfor non-State-owned oil product traders and the progressivereduction of import tariff rates will lead to more intense market

8

competition. Against this backdrop, however, CAO is of theopinion that the open-door policies and future deregulations inChina offer more opportunities than threats.

China is expected to consume 6.8 million MT of jet fuel in 2004,up 19% from the 5.7 million MT last year, of which 33% wassupplied by CAO. Total consumption is forecast to jump to 10million MT in 2008. Officials forecast China’s dependency onimports may rise to 50% by 2007 from only 31% in 2002.

Experts have estimated that nationwide oil demand is expected togrow at a compound annual rate of 12% over the next two decades.By 2020, total oil demand will reach 450 million MT a year.Dependence on supply sources outside of China will rise to 60%,compared with 30% currently. Of total imports, southern Chinais expected to consume 60%.

Leveraging on China, Going Global China’s long-term growthprospects remain among the strongest in the world. CAOcapitalizes on its Chinese background and its multinational talentand reach to provide superior growth prospects and maximizeshareholder value. Underpinned by its three-pronged strategy, its1-2-3 management concept and its stringent risk managementsystem, CAO will continue to collaborate with industry leadersand positioning towards growing presence and influence in theglobal arena over the long term.

For FY04, Shuidong and Bluesky a re expected tostart contributing to the Group’s performance. Pudong’smargins post-SARS are expected to stabilise. Procurementvolumes are expected to sustain or exceed FY03’s levels. Inlight of the developments outlined above and barring anyunforeseen circumstances in the external environment, theGroup is confident it is on track to record another year ofgrowth.

MANAGING DIRECTOR & CEO’s REVIEW

Sincerely

Chen JiulinManaging Director and CEO

In Appreciation

CAO has ridden through difficult times and made severallandmark accomplishments since the start of 2003. On behalf ofthe management, I wish to express our appreciation to ourshareholders, customers, strategic partners and business associates,as well as the Singapore government agencies and the Embassyof the People's Republic of China in Singapore, for theirconsiderable contributions in making it all happen for CAO.

I also wish to express particular gratitude to fellow members ofthe Board, in particular our Chairman Jia Changbin, as well asthe staff members of CAO. I thank you all for your invaluablededication, support and hard work in bringing CAO to a newlevel of growth, profitability and shareholder value-creation.