Sinopec Engineering Group Co Ltd. — Capital/Financing Update 2020

Apr 16, 2020

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 March 2020, the total value of the new contracts for the three months ended 31 March 2020 and the backlog as at 31 March 2020.

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 three months ended 31 March 2020, the total value of new contracts entered into by the Group amounted to RMB16.081 billion, representing a decrease of 14.2% as compared to RMB18.750 billion for the three months ended 31 March 2019. As at 31 March 2020, the backlog of the Group amounted to RMB101.471 billion, representing an increase of 6.8% as compared to RMB94.993 billion as at 31 December 2019.

• 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 March 2020, the total value of new contracts entered into by the Group amounted to RMB16.081 billion, and contracts that are representative are as follows:

1. an engineering, procurement and construction (EPC) contract entered into with Sinopec Zhenhai Refining & Chemical Company (中國石油化工股份有限公司鎮 海煉化分公司) in relation to the 1,200,000 tons/year ethylene facilities and PO/ SM facilities of the 15,000,000 tons/year refinery and 1,200,000 tons/year ethylene expansion project with a total contract value of approximately RMB5.933 billion;

2. a basic engineering, engineering, procurement and construction (BEPC) contract entered into with Sinopec Qingdao LNG Co., Ltd.* (中國石化青島液化天然氣有 限責任公司) in relation to Shandong LNG receiving terminal project (phase II) with a total contract value of approximately RMB865 million; and

3. an EPC contract entered into with Saudi Arabian Oil Company (Saudi Aramco) in relation to Saudi Aramco’s crude oil pumping station upgrading and improvement project with a total contract value of approximately USD386 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 categorised 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	Total	New
	Contract Value
	For the three months					Backlog
	ended 31 March			2020		As at 31 March			2020
	(RMB		Percentage			(RMB		Percentage
	thousand)			(%)		thousand)			(%)
Business segments
Engineering, Consulting and
Licensing	879,101			5.5		8,735,236			8.6
EPC Contracting	11,151,202			69.3		77,798,766			76.7
Construction	3,777,996			23.5		14,262,195			14.0
Equipment Manufacturing	273,051			1.7		674,713			0.7
Total	16,081,350			100.0	101,470,910				100.0
Industries in which the Group’s clients operate
Oil Refining	2,532,342			15.7		28,116,591			27.7
Petrochemicals	8,930,906			55.6		31,565,833			31.1
New Coal Chemicals	227,583			1.4		12,856,843			12.7
Other Industries	4,390,519			27.3		28,931,643			28.5
Total	16,081,350			100.0	101,470,910				100.0
Regions
PRC	12,254,966			76.2		78,891,213			77.7
Overseas	3,826,384			23.8		22,579,697			22.3
Total	16,081,350			100.0	101,470,910				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	9,094,458			56.6		54,100,975			53.3
Non-Sinopec Group and
its associates	6,986,892			43.4		47,369,935			46.7
Total	16,081,350			100.0	101,470,910				100.0

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The Board wishes to emphasise 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.

By order of the Board SINOPEC ENGINEERING (GROUP) CO., LTD. JIA Yiqun

Chief Financial Officer, Company Secretary

Beijing, the PRC 16 April 2020

As at the date of this announcement, the executive directors are YU Renming, XIANG Wenwu, SUN Lili (employee representative director) and ZHOU Yingguan (employee representative director); the non-executive director is WU Wenxin; and the independent non-executive directors 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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