Sinopec Engineering Group Co Ltd. — Capital/Financing Update 2018

Oct 26, 2018

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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中石化煉化工程（集團）股份有限公司 SINOPEC Engineering (Group) Co., Ltd.[*]

(a joint stock limited liability company incorporated in the People’s Republic of China)

(Stock Code: 2386)

Adjustment in the Allocations of the Use of Proceeds from the Global Offering

Reference is made to the prospectus (the “ Prospectus ”) of SINOPEC Engineering (Group) Co., Ltd. (the “ Company ”, together with its subsidiaries, the “ Group ”) dated 23 May 2013 relating to the global offering (the “ Global Offering ”) and listing of the Company’s H shares on the Main Board of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”). Reference is also made to the announcement of the Company dated 13 December 2013 relating to the adjustment in use of proceeds from the Global Offering (the “ Previous Announcement ”). The Board of Directors (the “ Board ”) of the Company announces that the Company has decided to adjust the allocations of the use of proceeds received from the Global Offering as more particularly set out in this announcement.

Reference is made to the Prospectus dated 23 May 2013 relating to the Global Offering and listing of the Company’s H shares on the Main Board of the Stock Exchange. Reference is also made to the Previous Announcement relating to the adjustment in use of proceeds from the Global Offering.

Unless otherwise defined in this announcement, terms defined in the Prospectus and the Previous Announcement have the same meanings when used in this announcement.

* For identification purposes only.

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Use of Proceeds from the Global Offering

As stated in the Previous Announcement, the Company in December 2013 decided to apply the net proceeds of the Global Offering for the following purposes (the “ Intended Use of Proceeds ”) at the ninth meeting of the first session of the Board in light of the need of reform and development of the Company:

• (1) Establishing an engineering and technological research and development (“ R&D ”) center, modular construction base and machinery manufacturing projects, accounting for approximately 15.86% of the net proceeds received from the Global Offering;

• (2) Payment for long-term equity investments in subsidiaries and settlement of non-trade amounts due to Sinopec Group, accounting for approximately 20.99% of the net proceeds received from the Global Offering;

• (3) Improving and developing overseas marketing networks, accounting for approximately 7.46% of the net proceeds received from the Global Offering;

• (4) Information technology development projects, accounting for approximately 6.53% of the net proceeds received from the Global Offering;

• (5) Purchasing large lifting and transport equipment and specialized construction equipment, accounting for approximately 7.46% of the net proceeds received from the Global Offering;

• (6) Newly added long-term equity investment, accounting for approximately 10.66% of the net proceeds received from the Global Offering; and

• (7) Mergers and acquisitions of engineering companies, purchase of patents and proprietary technologies and other items, accounting for approximately 31.04% of the net proceeds received from the Global Offering.

For more details on the use of proceeds from Global Offering, please refer to the announcement of the Company dated December 13, 2013.

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Net Proceeds from the Global Offering

As of the date of this announcement, the Company has gradually used the proceeds received from the Global Offering in certain investment projects for the purposes mentioned above. As of 30 June 2018, the net amount of the unused proceeds received from the Global Offering was RMB7.859 billion, among which:

• (1) Establishing an engineering technology R&D center, module construction base and machinery manufacturing projects: RMB1.749 billion (including the change of the balance denominated in Renminbi as a result of exchange rate movements, the same as below);

• (2) Payment for long-term equity investments in subsidiaries and settlement of non-trade amounts of RMB2 billion due to Sinopec Group: nil;

• (3) Improving and developing overseas marketing networks: RMB0.835 billion;

• (4) Information technology development projects: RMB0.642 billion;

• (5) Purchasing large lifting and transport equipment and specialized construction equipment: RMB0.696 billion;

• (6) Newly added long-term equity investment: RMB0.51 billion; and

• (7) Mergers and acquisitions of engineering companies, purchase of patents and proprietary technologies and other items: RMB3.427 billion.

Adjustment in the Allocation of the Use of Proceeds from Global Offering

Since the Global Offering, the Company has constantly examined the use of the proceeds received from the Global Offering according to the reform and development plan and the status of production and operation. Based on careful review and evaluation of the necessity, feasibility and economy of investment projects financed by the proceeds, and in light of the policies of the PRC foreign exchange authorities on management of funds raised from overseas listing, the Company passed a resolution at the first meeting of the third session of the Board to adjust the allocation of the net proceeds received from the Global Offering to the Intended Use of Proceeds as per the plan below (the “ Adjustment ”):

• (1) Establishing an engineering and technological R&D center, modular construction base and machinery manufacturing projects: RMB600.00 million, accounting for approximately 7.63% of the net proceeds received from the Global Offering;

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• (2) Payment for long-term equity investments in subsidiaries and settlement of non-trade amounts due to Sinopec Group: RMBnil, accounting for approximately 0.00% of the net proceeds received from the Global Offering;

• (3) Improving and developing overseas marketing networks: RMB300.00 million, accounting for approximately 3.82% of the net proceeds received from the Global Offering;

• (4) Information technology development projects: RMB500.00 million, accounting for approximately 6.36% of the net proceeds received from the Global Offering;

• (5) Purchasing large lifting and transport equipment and specialized construction equipment: RMB400.00 million, accounting for approximately 5.09% of the net proceeds received from the Global Offering;

• (6) Newly added long-term equity investment: RMB2,200.0 million, accounting for approximately 27.99% of the net proceeds received from the Global Offering; and

• (7) Mergers and acquisitions of engineering companies, purchase of patents and proprietary technologies and other items: RMB3,859.00 million, accounting for approximately 49.10% of the net proceeds received from the Global Offering.

The allocation of the remaining proceeds from Global Offering as of June 30, 2018, the allocation of proceeds from Global Offering after the Adjustment, and their corresponding percentages of the proceeds from Global Offering are listed below:

	Allocation of	Percentage of		Percentage
	the Remaining	the Remaining	Allocation	of the
	Proceeds from	Proceeds from	of Proceeds	Proceeds
	Global	Global	from Global	from Global
Intended Use of Proceeds from	Offering as of	Offering as of	Offering after	Offering after
Global Offering	June 30, 2018	June 30, 2018	Adjustment	Adjustment
	(RMB million)	(%)	(RMB million)	(%)
Establishing an engineering and
technological R&D center, modular
construction base and machinery
manufacturing projects	1,749.00	22.25	600.00	7.63

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	Allocation of	Percentage of		Percentage
	the Remaining	the Remaining	Allocation	of the
	Proceeds from	Proceeds from	of Proceeds	Proceeds
	Global	Global	from Global	from Global
Intended Use of Proceeds from	Offering as of	Offering as of	Offering after	Offering after
Global Offering	June 30, 2018	June 30, 2018	Adjustment	Adjustment
	(RMB million)	(%)	(RMB million)	(%)
Payment for long-term equity investments
in subsidiaries and settlement of
non-trade amounts due to Sinopec Group	0.00	0.00	0.00	0.00
Improving and developing overseas
marketing networks	835.00	10.62	300.00	3.82
Information technology development
projects	642.00	8.17	500.00	6.36
Purchasing large lifting and transport
equipment and specialized construction
equipment	696.00	8.86	400.00	5.09
Newly added long-term equity investment	510.00	6.49	2,200.00	27.99
Mergers and acquisitions of engineering
companies, purchase of patents and
proprietary technologies and other items	3,427.00	43.61	3,859.00	49.10
Total	7,859.00	100.00	7,859.00	100.00

Yours faithfully, By Order of the Board SINOPEC ENGINEERING (GROUP) CO., LTD. Sang Jinghua

Vice President and Secretary to the Board

Beijing, the PRC 26 October 2018

As of the date of this announcement, the executive Directors are LU Dong, XIANG Wenwu, SUN Lili (employee representative Director) and ZHOU Yingguan (employee representative Director); the non-executive Directors are YU Baocai and WU Wenxin; and the independent non-executive Directors are HUI Chiu Chung, Stephen, JIN Yong and YE Zheng.

This announcement will be available on the website of Hong Kong Exchanges and Clearing Limited (www.hkex.com.hk) and on the website of the Company (www.segroup.cn).

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