Sinopec Engineering Group Co Ltd. — Capital/Financing Update 2019

Feb 18, 2019

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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)

VOLUNTARY ANNOUNCEMENT TOTAL NEW CONTRACT VALUE AND BACKLOG

This announcement is made voluntarily by SINOPEC Engineering (Group) Co., Ltd. (the “ Company ”, together with its subsidiaries, the “ Group ”). The board of directors of the Company (the “ Board ”) is pleased to update shareholders of the Company and potential investors on certain information in connection with the representative new contracts entered into by the Group for the three months ended 31 December 2018, the total value of the new contracts for the twelve months ended 31 December 2018 and the backlog as at 31 December 2018.

This announcement is made by the order of the Board. The Board collectively and individually accepts responsibility for the accuracy of this announcement.

Shareholders of the Company and potential investors are advised to exercise caution when dealing in the shares of the Company.

This announcement is made voluntarily by the Company. The Board is pleased to update shareholders of the Company and potential investors on the following information.

During the twelve months ended 31 December 2018, the total value of new contracts entered into by the Group amounted to RMB50.927 billion, representing an increase of 30.4% as compared to RMB39.063 billion for the twelve months ended 31 December 2017. As at 31 December 2018, the backlog of the Group amounted to RMB94.935 bilion, representing an increase of 4.3% as compared to RMB91.028 billion as at 31 December 2017.

* For identification purposes only.

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New Contract Value and Backlog

Representative New Contracts

New contract value represents the value of the contracts the Group entered into during a specified period. The value of a contract is the amount that the Group expects to receive under the terms of the contract if the contract is performed in accordance with its terms. During the three months ended 31 December 2018, the total value of new contracts entered into by the Group amounted to RMB8.768 billion, and contracts that are representative are as follows:

1. an EPC contract entered into with Luoyang Branch of China Petroleum and Chemical Corporation for the residue hydrogenation improvement project with a total contract value of approximately RMB1.842 billion;

2. an EPC contract entered into with SABIC for the reliability improvement project of SABIC IBB ammonia plant with a total contract value of approximately USD97 million; and

3. a supplementary construction contract entered into with Kuwait National Petroleum Corporation (KNPC) in relation to the Kuwait Al-Zour refinery project with a total contract value of approximately USD20.04 million.

Backlog

Backlog represents the total estimated contract value of work that remains to be completed pursuant to outstanding contracts as at a certain date, net of estimated value added tax and is based on the Group’s assumption that the relevant contracts will be performed in accordance with their terms. Backlog is not a measure defined by generally accepted accounting principles. Any modification, termination or suspension of these contracts by the Group’s clients may have a substantial and immediate effect on the Group’s backlog. Projects may also remain in the Group’s backlog for an extended period of time beyond what was initially anticipated due to various factors beyond the Group’s control.

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The table below sets out the details of the total value of new contracts entered into by the Group and its backlog categorized by (1) business segments; (2) the industries in which the Group’s clients operate; (3) regions; and (4) clients of each of (i) China Petrochemical Corporation (“ Sinopec Group ”) and its associates and (ii) the non-Sinopec Group and its associates during the period or as at the date indicated:

	**Total **	of New
	Contract Value
	For the nine months		Backlog
	ended 31 December		As at
	2018		**31 December **		2018
	(RMB	Percentage	(RMB	Percentage
	thousand)	(%)	thousand)		(%)
Business segments
Engineering, Consulting
and Licensing	2,883,414	5.7	7,797,111		8.2
EPC Contracting	35,314,893	69.3	73,892,040		77.8
Construction	12,236,631	24.0	12,731,186		13.4
Equipment Manufacturing	491,605	1.0	515,127		0.5
Total	50,926,544	100.0	94,935,464		100.0
Industries in which the Group’s clients operate
Oil Refining	18,750,233	36.8	33,542,698		35.3
Petrochemical	22,304,787	43.8	29,395,716		31.0
New Coal Chemicals	3,946,775	7.8	10,491,448		11.1
Other Industries	5,924,749	11.6	21,505,602		22.7
Total	50,926,544	100.0	94,935,464		100.0
Regions
PRC	45,924,486	90.2	71,720,786		75.5
Overseas	5,002,058	9.8	23,214,678		24.5
Total	50,926,544	100.0	94,935,464		100.0
Clients of each of (i) Sinopec Group and its associates			and (ii) the non-Sinopec
Group and its associates
Sinopec Group and its
associates	33,472,018	65.7	46,294,473		48.8
Non-Sinopec Group and
its associates	17,454,526	34.3	48,640,991		51.2
Total	50,926,544	100.0	94,935,464		100.0

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The Board wishes to emphasize that the above information in relation to the representative new contracts, the total value of new contracts and backlog shall not constitute any forecast or prediction of the profits of the Group.

This announcement is made by the order of the Board. The Board collectively and individually accepts responsibility for the accuracy of this announcement.

Shareholders of the Company and potential investors are advised to exercise caution when dealing in the shares of the Company .

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

Vice President, Secretary to the Board

Beijing, the PRC 18 February 2019

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

This announcement is 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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