Sinopec Engineering Group Co Ltd. — Proxy Solicitation & Information Statement 2015

Jan 22, 2015

THE CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in SINOPEC Engineering (Group) Co., Ltd. , you should at once hand this circular, together with the accompanying form of proxy, to the purchaser or to the transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or the transferee.

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 circular.

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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)

MAJOR TRANSACTION AND CONNECTED TRANSACTION PROPOSED PROVISION OF COUNTER GUARANTEE TO SINOPEC GROUP

PROPOSED AMENDMENTS TO THE ARTICLES

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

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A letter from the Board is set out on pages 5 to 12 of this circular. A letter from the Independent Board Committee is set out on page 13 of this circular. A letter from ABCI is set out on pages 14 to 20 of this circular.

An extract of the notice convening the second extraordinary general meeting for the year 2015 (“ EGM ”) to be held at the Crowne Plaza Park View Wuzhou Beijing, 8 Beisihuan Zhong Lu, Chaoyang District, Beijing, the PRC at 9 a.m. on Tuesday, 10 March 2015 is set out on pages 21 to 23 of this circular.

If you intend to attend the EGM, please complete and return the enclosed reply slip in accordance with the instructions printed thereon as soon as possible and in any event by Tuesday, 17 February 2015.

Whether or not you are able to attend the EGM, please complete and return the enclosed proxy form in accordance with the instructions printed thereon as soon as possible and in any event not less than 24 hours before the time scheduled for holding the EGM (or any adjourned meeting thereof). Completion and delivery of the proxy form shall not preclude you from attending and voting at the EGM or any adjournment thereof should you so wish.

* For identification purposes only

23 January 2015

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Notice of the Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
Appendix I — Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24
Appendix II — General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25

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DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions shall have the following meanings.

• “Articles”

• the articles of association of the Company, as amended, modified or supplemented from time to time

“associate(s)” has the meaning ascribed thereto under the Hong Kong Listing Rules

• “Board of Directors” or “Board” the board of directors of the Company

• “Companies Ordinance” the Companies Ordinance (Chapter 622 of the laws of Hong Kong), as amended, supplemented or otherwise modified from time to time

“Company” SINOPEC Engineering (Group) Co., Ltd., a joint stock limited liability company incorporated under the laws of the PRC on 28 August 2012, which is listed on the Hong Kong Stock Exchange (Stock Code: 2386)

• “Company Law” the Company Law of the People’s Republic of China (中華人民共和國公司法), as amended and adopted by the Standing Committee of the Twelfth National People’s Congress on 28 December 2013 and effective on 1 March 2014 (as amended, supplemented or otherwise modified from time to time)

• “connected person(s)” has the meaning ascribed thereto under the Hong Kong Listing Rules

• “connected transaction(s)” has the meaning ascribed thereto under the Hong Kong Listing Rules

• “controlling shareholder” has the meaning ascribed thereto under the Hong Kong Listing Rules

• “Counter Guarantee” the counter guarantee to be provided by the Company to Sinopec Group according to the Counter Guarantee Agreement

• “Counter Guarantee Agreement” the agreement entered into by and between the Company and Sinopec Group in respect of the Counter Guarantee on 15 January 2015

• “Director(s)” the director(s) of the Company

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DEFINITIONS

“Domestic Share(s)” ordinary share(s) of the share capital of the Company, with a nominal value of RMB1.00 each, which are subscribed for and paid up in RMB and are unlisted Shares which are currently not listed or traded on any stock exchange “EGM” the second extraordinary general meeting of the Company for the year 2015 to be convened and held on 10 March 2015 “EGM Notice” the notice for convening the EGM set out on pages 21 to 23 of this circular “Group” or “we” the Company and its subsidiaries “H Share(s)” overseas listed foreign invested ordinary share(s) in the ordinary share capital of the Company, with a nominal value of RMB1.00 each, listed on the Main Board of the Hong Kong Stock Exchange “H Shareholders” the Shareholders who/which hold H Shares “HK$” Hong Kong dollars and cents, respectively, the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the PRC “Hong Kong Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended, supplemented or otherwise modified from time to time “Hong Kong Stock Exchange” The Stock Exchange of Hong Kong Limited

“Independent Board Committee”

• “Independent Financial Adviser” or “ABCI”

a committee under the Board of Directors which is set up for the purpose of advising the Independent Shareholders on the Counter Guarantee, including independent non-executive Directors Mr. HUI Chiu Chung, Stephen, Mr. JIN Yong and Mr. YE Zheng ABCI Capital Limited, a corporation licensed to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities as defined under the Securities and Futures Ordinance and the independent financial adviser as appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in respect of the Counter Guarantee

“Independent Shareholders”

Shareholders other than Sinopec Group and its associates

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DEFINITIONS

“Independent Third Party(ies)” party(ies) not connected with any of the directors, the supervisors, the chief executives or the substantial shareholders of the Company or any of its subsidiaries or their respective associates “Latest Practicable Date” 20 January 2015, being the latest practicable date for ascertaining certain information before the printing of this circular “Parent Guarantee” the guarantee provided by Sinopec Group in favour of PRPC for the Company’s performance of its obligations, warranties, liabilities and undertakings (including compensation obligations) under the RAPID Contract “Parent Guarantee Letter” the letter dated 28 November 2014 issued by Sinopec Group to PRPC in respect of the Parent Guarantee “PETRONAS” Petroliam Nasional Bhd., an Independent Third Party “PRC” or “the People’s Republic the People’s Republic of China which, for the purpose of this of China” circular, excludes Hong Kong, Macau Special Administration Region of the PRC and Taiwan “Project RAPID” an oil refining and petrochemical integrated development project of the Company and PRPC. For details, please refer to the Company’s announcement dated 29 August 2014 “PRPC” PRPC Refinery and Cracker Sdn. Bhd., a subsidiary of PETRONAS and an Independent Third Party “RAPID Contract” a package contract of engineering, procurement, construction and commissioning (EPCC) of an oil refining and petrochemical integrated development project entered into by and between the Company, as the contractor and PRPC, a subsidiary of PETRONAS, on 28 August 2014, with a total contract value of approximately US$1.329 billion. For details, please refer to the Company’s announcement dated 29 August 2014 “RMB” the lawful currency of the PRC “SASAC” State-owned Assets Supervision and Administration Commission of the State Council of the PRC “Securities and Futures the Securities and Futures Ordinance (Chapter 571 of the laws Ordinance” of Hong Kong), as amended, supplemented or otherwise modified from time to time

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	DEFINITIONS
“Share(s)”	share(s) in the share capital of the Company, with a nominal
	value of RMB1.00 each
“Shareholder(s)”	holder(s) of the Shares
“Sinopec Group”	China Petrochemical Corporation (中國石油化工集團公司), a
	state-owned enterprise incorporated under the laws of the
	PRC and established in July 1998 upon reorganisation of the
	former China Petrochemical Corporation (中國石油化工總公
	司), and the Company’s controlling shareholder
“subsidiary” or “subsidiaries”	has the meaning ascribed thereto in section 15 of the
	Companies Ordinance
“substantial shareholder(s)”	has the meaning ascribed thereto in the Hong Kong Listing
	Rules
“Supervisor(s)”	the members of the Supervisory Committee
“Supervisory Committee”	the Company’s supervisory committee established pursuant to
	the Company Law
“US$”	the lawful currency of the United States
“%”	percentage ratio

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LETTER FROM THE BOARD

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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)

Non-executive Directors: ZHANG Jianhua (章建華) (Chairman) LI Guoqing (李國清)

Executive Directors: LU Dong (陸東) (Vice Chairman) YAN Shaochun (閆少春) SUN Lili (孫麗麗) (Employee Representative Director) WU Derong (吳德榮) (Employee Representative Director)

Independent non-executive Directors: HUI Chiu Chung, Stephen (許照中) JIN Yong (金涌) YE Zheng (葉政)

23 January 2015

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION AND CONNECTED TRANSACTION — PROPOSED PROVISION OF COUNTER GUARANTEE TO SINOPEC GROUP

PROPOSED AMENDMENTS TO THE ARTICLES

I INTRODUCTION

The purpose of this circular is to provide you with, among other things, further information in relation to the following resolutions to be proposed at the EGM:

1. to consider and approve the proposed provision of the Counter Guarantee in respect of Project RAPID in Malaysia in favour of Sinopec Group, which constitutes a major transaction and a connected transaction of the Company; and

2. to consider and approve the proposed amendments to the Articles.

3. For identification purposes only

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LETTER FROM THE BOARD

II MAJOR TRANSACTION AND CONNECTED TRANSACTION

1. Background, reasons for and benefit of the Counter Guarantee

On 28 August 2014, the Company, as the contractor, entered into the RAPID Contract of engineering, procurement, construction and commissioning (EPCC) of an oil refining and petrochemical integrated development project with PRPC, a subsidiary of PETRONAS, with the total contract value of approximately US$1.329 billion (approximately RMB8.192 billion). For details, please refer to the Company’s announcement on EPCC Contract with PETRONAS dated 29 August 2014. After the Company entered into the RAPID Contract, the Company has gradually carried out certain pre-stage preparation in order for Project RAPID to proceed smoothly. Project RAPID is expected to be completed within 52 months from the date of the contract.

According to the RAPID Contract, the parent company or the controlling shareholder of the Company shall provide a parent guarantee to guarantee the Company’s performance of the contract. Therefore, the Company made an application to its controlling shareholder, Sinopec Group, requesting Sinopec Group to issue the Parent Guarantee Letter under which Sinopec Group shall provide the Parent Guarantee in favour of PRPC in respect of the obligations, warranties, liabilities and undertakings (including compensation obligations) of the Company under the RAPID Contract. Sinopec Group therefore issued the Parent Guarantee Letter dated 28 November 2014, which shall remain valid and in force until all the obligations of the Company have been satisfied and performed in full under and in accordance with the RAPID Contract.

During the process of the Company’s application to Sinopec Group for the Parent Guarantee, for the purpose of the Parent Guarantee to become fully effective, Sinopec Group, at the request by SASAC, required the Company to provide the Counter Guarantee in favour of Sinopec Group for its obligations under the Parent Guarantee, for the purpose of obtaining compensation from the Company in case of any loss or fee arising from the performance by Sinopec Group of the above obligations under the Parent Guarantee and holding Sinopec Group harmless. If the Counter Guarantee Agreement is not approved by the Independent Shareholders, Sinopec Group and the Company will not be able to fulfil the relevant request by SASAC, which will have a negative impact on the Company to implement Project RAPID.

Both the Parent Guarantee and the Counter Guarantee are in their nature a performance guarantee. The purpose of the Parent Guarantee is to guarantee that the Company, as the contractor, satisfies its obligations under and in connection with the RAPID Contract. The Counter Guarantee is a guarantee as a result of the performance guarantee under the Parent Guarantee. Therefore, no cap is set for the amount of the Parent Guarantee or the Counter Guarantee. The Directors are of the view that it is the normal practice of the Company and the relevant industry not to set a cap for the amount of a performance guarantee.

2. Key Terms of the Counter Guarantee Agreement

The key terms of the Counter Guarantee Agreement are as follows:

Date : 15 January 2015

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LETTER FROM THE BOARD

• Beneficiary : Sinopec Group Guarantor : the Company Obligations under the : If Sinopec Group agrees to provide the Parent Guarantee in Counter Guarantee favour of PRPC according to the Parent Guarantee Letter, the Company shall unconditionally and irrevocably guarantee that once any loss or fee is incurred by Sinopec Group due to its performance of the obligations or responsibilities under the Parent Guarantee (“ Guaranteed Liabilities ”), Sinopec Group shall be entitled to require the Company to indemnify and hold harmless Sinopec Group against such Guaranteed Liabilities. The amount assumed by the Company therefrom shall not exceed the loss or fee incurred by Sinopec Group due to its performance of the obligations or responsibilities under the Parent Guarantee.

• Security : None Conditions : Pursuant to the Hong Kong Listing Rules, the Counter Guarantee Agreement will become effective on the date it is approved by the Independent Shareholders.

• Term : The guarantees under the Counter Guarantee Agreement shall be continuing guarantees and shall have full effect as continuing guarantees. The guarantees under the Counter Guarantee Agreement shall become invalid on the later of: (1) the date on which the parent guarantee liabilities of Sinopec Group under the Parent Guarantee Letter have become invalid; or

• (2) the date on which the Guaranteed Liabilities have been satisfied, fully performed or discharged.

• Applicable law : The execution, effectiveness, interpretation and enforcement of, and disputes arising from, the Counter Guarantee Agreement, as well as the rights and obligations of the parties under the Counter Guarantee Agreement, shall be governed by and construed according to the laws of the PRC.

• Dispute Resolution : In case of any dispute arising out of or in connection with the Counter Guarantee Agreement, the parties shall attempt in the first instance to resolve such dispute through friendly negotiations. In the event that no settlement can be reached through negotiations, either party can submit the dispute to Beijing Arbitration Commission for arbitration in accordance with the arbitration rules of such commission in force at relevant time. The arbitral award shall be final and binding on the parties.

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LETTER FROM THE BOARD

3. Advantages and Disadvantages of the Counter Guarantee

Southeast Asia is one of the key target markets for the Group to develop its internationalised operation. Project RAPID in Malaysia attracted many world-renowned engineering companies to compete. The participation in this project is of great importance for the Company to uplift its international reputation and further expand its market in Southeast Asia.

It is a common practice for a contractor to provide a parent guarantee to the vendor in the petrochemical engineering market in Southeast Asia. All contractors of Project RAPID have been required to provide parent guarantees.

Where a state-owned enterprise incorporated under the laws of the PRC provides a guarantee for its non wholly-owned subsidiary, based on the actual circumstances, SASAC may generally request such non wholly-owned subsidiary to provide a counter guarantee in favour of such state-owned enterprise. Since the Company has become a non wholly-owned subsidiary of Sinopec Group immediately following the Company’s listing on the Hong Kong Stock Exchange, other than the Parent Guarantee as required under Project RAPID, there is no such circumstances in which the Company requires a parent guarantee from Sinopec Group.

The Group has minimised the risks through contract negotiations, and in previous projects which were contracted by the Group and for which the Company’s parent company provided a guarantee, the parent company has never been required to perform the guaranteed liabilities.

4. Implications under the Hong Kong Listing Rules

The Parent Guarantee under the Parent Guarantee Letter constitutes a financial assistance. However, the Parent Guarantee is provided on normal commercial terms and not secured by the assets of the Group. Therefore, according to Rule 14A.90 of the Hong Kong Listing Rules, it is exempted from notification, announcement and Independent Shareholders’ approval requirements.

Since the Counter Guarantee constitutes a financial assistance and one of the applicable percentage ratios calculated according Rule 14.07 of the Hong Kong Listing Rules is over 25%, the Counter Guarantee constitutes a major transaction of the Company and is therefore subject to the announcement, circular and Shareholders’ approval requirements under Chapter 14 of the Hong Kong Listing Rules.

Since Sinopec Group holds 67.01% of the Company’s issued share capital and is a substantial shareholder of the Company, according to Rules 14A.07(1) and (4) of the Hong Kong Listing Rules, Sinopec Group and its associates are connected persons of the Company and therefore, the Counter Guarantee to be provided by the Company in favour of Sinopec Group constitutes a connected transaction of the Company.

The Counter Guarantee will be provided on normal commercial terms in the ordinary and usual course of the Group’s business. One of the applicable percentage ratios of the Counter Guarantee calculated according to the Rule 14.07 of the Hong Kong Listing Rules is over 25% and therefore, the

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LETTER FROM THE BOARD

Counter Guarantee does not constitute a de minimis transaction to which an exemption can be applied according to Rule 14A.76 of the Hong Kong Listing Rules and it shall be subject to the notification, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Hong Kong Listing Rules.

5. Financial Effects of Proposed Provision of the Counter Guarantee on the Company

The Directors expect that the proposed provision of the Counter Guarantee will not have any immediate material financial impact on the earnings, assets or liabilities of the Company unless and until such time that the Counter Guarantee Agreement is to be executed upon the Parent Guarantee is executed under the Parent Guarantee Letter owing to the default of the RAPID Contract.

6. Approval by Directors and Independent Shareholders

On 12 January 2015, the Company held the 14th meeting of the First Session of the Board. After discussion, all the non-connected Directors unanimously approved the proposed provision of the Counter Guarantee by the Company to Sinopec Group. Since the proposal is related to a connected transaction with the parent company and Mr. ZHANG Jianhua serves as a director in a connected company, Mr. ZHANG Jianhua abstained from voting on the aforementioned proposal at the relevant Board meeting. Mr. HUI Chiu Chung, Stephen, Mr. JIN Yong and Mr. YE Zheng, being the independent non-executive Directors, unanimously approved the proposed provision of the Counter Guarantee to Sinopec Group. All non-connected Directors considered that (i) the proposed provision of the Counter Guarantee to Sinopec Group is on normal commercial terms in the ordinary and usual course of the Group’s business, and (ii) the terms and relevant transaction are fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

According to the Hong Kong Listing Rules, the Independent Board Committee has been formed. After considering the advice from the Independent Financial Adviser, the Independent Board Committee will advise the Independent Shareholders on the fairness and reasonableness of the Counter Guarantee, whether it is in the interests of the Company and the Shareholders as a whole, and how to vote. To the best of the Directors’ knowledge, information and belief after making all due enquiry, no member of the Independent Board Committee has any material rights or interests in the Counter Guarantee.

ABCI has been appointed as the Independent Financial Adviser and will advise the Independent Board Committee and the Independent Shareholders on the fairness and reasonableness of the Counter Guarantee and whether it is in the interests of the Company and the Shareholders as a whole. It will also advise the Independent Shareholders on how to vote and other relevant issues.

The Company will convene the EGM to seek the Independent Shareholders’ approval on the Counter Guarantee to be provided by the Company to Sinopec Group. Sinopec Group and its associates will abstain from voting at the EGM in respect of the ordinary resolution of the above matter.

7. General Information

The Company

The Company is a leading oil refining, petrochemical and new coal chemical engineering company in the PRC. The Group provides engineering services for a broad range of industries

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LETTER FROM THE BOARD

including oil refining, petrochemicals, new coal chemicals, inorganic chemicals, pharmaceutical chemicals and clean energy with technology licensing, consultation, financing assistance, engineering, procurement, construction and pre-commissioning/start-up services. Leveraging over 60 years of experience in the industry and continual innovation in technical expertise, the Group has achieved great success in engineering and constructing large-scale complexes of oil refining, petrochemical, new coal chemical projects and other industries with strong competitiveness.

Sinopec Group

Established in July 1998, Sinopec Group is a state-owned company and functions as a state-authorised investment organisation. Sinopec Group is the largest integrated oil and petrochemical enterprise in the PRC and is one of the largest integrated oil and petrochemical enterprises in the world. Sinopec Group principally engages in businesses including: (i) exploration, development, production and trading of oil and gas; (ii) oil processing and production, trading, transportation, distribution and marketing of oil products; (iii) production, distribution and trading of petrochemical and other chemical products; (iv) oil engineering; (v) utilities services and social services such as water and electricity; and (vi) international trading, R&D as well as manufacturing of chemical fiber, fertiliser and polyester related equipment.

III PROPOSED AMENDMENTS TO THE ARTICLES

1. Rationale for Proposed Amendments to the Articles (the “Proposed Articles Amendments”)

In accordance with the Company Law and the resolutions passed at the 14th meeting of the First Session of the Board, considering the changes to the scopes of business of certain subsidiaries of the Company and the needs to expand the scope of business as required for the business development of the Company, amendments are proposed to be made to Article 11 of the Articles. The amended Articles will become effective on the date they are considered and approved at the EGM. The Company’s scope of business shall be as approved by the authorities responsible for the registration of the Company.

2. Major Contents of the Proposed Articles Amendments

The Company proposes to make amendments to Article 11 of the Articles.

The current Article 11:

The Company’s scope of business shall be as approved by the authorities responsible for the registration of the Company.

The Company’s scope of business includes: licensed projects: dispatch of labour required for overseas projects; general projects: engineering, procurement and construction (“EPC”) contracting in respect of local and overseas oil refining, chemical engineering, storage and transportation; maintenance service contracting in respect of local and overseas oil refining, operation and maintenance of chemical production facilities; project consultancy services in

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LETTER FROM THE BOARD

respect of local and overseas engineering projects; project financing services in respect of local and overseas engineering projects; EPC contracting in respect of international tenders in China; other businesses and services related to overseas EPC contracting; import and export business.

is proposed to be amended as follows:

The Company’s scope of business shall be as approved by the authorities responsible for the registration of the Company.

The Company’s scope of business includes: licensed projects: dispatch of labour required for overseas projects; general projects: contracting in respect of (among other things) local and overseas oil refining, petrochemical engineering, coal chemical engineering, natural gas and unconventional gas engineering, ocean engineering, environmental engineering, energy saving engineering, biological and renewable energy engineering, storage and transportation engineering, inorganic chemical engineering, pharmaceuticals, power and municipal engineering projects; project consultancy, exploration, design, procurement, construction, installation, transportation and supervision; project management services, investment and financing services, startup services, operation and maintenance services as well as energy saving and environmental protection services; technical research and development, technical transfer (license), technical consultancy and technical services; design, manufacturing and sale of equipment and pressure vessels; import and export business. (Projects that are required to be approved according to laws can only be conducted after being approved by relevant authorities.)

IV RECOMMENDATION

Major Transaction and Connected Transaction — Proposed Provision of Counter Guarantee to Sinopec Group

The Directors (including all independent non-executive Directors) considered that (i) the proposed provision of the Counter Guarantee to Sinopec Group is on normal commercial terms in the ordinary and usual course of the Group’s business, and (ii) the terms and relevant transaction are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Therefore, the Board recommends the Independent Shareholders to vote in favour of the relevant ordinary resolution to be proposed at the EGM. As mentioned above, ABCI has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders.

Your attention is drawn to the letter from the Independent Board Committee and the letter from ABCI to the Independent Board Committee and the Independent Shareholders which are set out on page 13 and pages 14 to 20 of this circular, respectively. The Independent Board Committee, having taken into consideration the advice of ABCI, considers that (i) the proposed provision of the Counter Guarantee to Sinopec Group is on normal commercial terms in the ordinary and usual course of the Group’s business, and (ii) the terms and relevant transaction are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Therefore, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the relevant ordinary resolution to be proposed at the EGM.

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LETTER FROM THE BOARD

Proposed Amendments to the Articles

The Directors (including all independent non-executive Directors) considered that the resolution in respect of the proposed amendments to the Articles is fair and reasonable and is in the interests of the Company and the Shareholders as a whole. Therefore, the Directors recommend all Shareholders to vote in favour of the relevant resolution to be proposed at the EGM and contained in the notice of the EGM.

V ADDITIONAL INFORMATION

Your attention is drawn to the financial and general information set out in the Appendix I and Appendix II of this circular.

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

Vice President, Secretary to the Board and Company Secretary

Beijing, the PRC 23 January 2015

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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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)

23 January 2015

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION — PROPOSED PROVISION OF COUNTER GUARANTEE TO SINOPEC GROUP

We refer to the circular of the Company dated 23 January 2015 (the “ Circular ”) despatched to the Shareholders of which this letter forms part. Unless the context requires otherwise, terms and expressions in this letter shall have the same meanings as those defined in the Circular.

We have been appointed to advise the Independent Shareholders on whether the proposed provision of the Counter Guarantee by the Company to Sinopec Group is fair and reasonable and in the interests of the Company and the Shareholders as a whole. ABCI has been appointed to advise the Independent Board Committee and the Independent Shareholders on the proposed provision of the Counter Guarantee by the Company in favour of Sinopec Group.

We wish to draw your attention to the letter from the Board as set out on pages 5 to 12 of the Circular and the letter from the Independent Financial Adviser as set out on pages 14 to 20 of the Circular.

Having considered the advice given by the Independent Financial Adviser, we are of the opinion that (i) the proposed provision of the Counter Guarantee to Sinopec Group is on normal commercial terms in the ordinary and usual course of the Group’s business, and (ii) the terms and relevant transaction are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Therefore, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the relevant resolution to be proposed at the EGM.

Yours faithfully,

For and on behalf of the Independent Board Committee HUI Chiu Chung, Stephen JIN Yong YE Zheng Independent Non-Executive Directors

* For identification purposes only

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of a letter of advice dated 23 January 2015 from ABCI prepared for the purpose of inclusion in this circular, setting out its advice to the Independent Board Committee and the Independent Shareholders in respect of the connected transaction of providing the Counter Guarantee by the Company to Sinopec Group.

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23 January 2015

To the Independent Board Committee and the Independent Shareholders of SINOPEC Engineering (Group) Co., Ltd.

Dear Sirs,

MAJOR TRANSACTION AND CONNECTED TRANSACTION PROPOSED PROVISION OF COUNTER GUARANTEE TO SINOPEC GROUP

INTRODUCTION

We refer to our engagement as the independent financial adviser to advise the Independent Board Committee and Independent Shareholders in respect of the provision of Counter Guarantee by the Company to Sinopec Group contemplated under the Counter Guarantee Agreement, details of which are set out in the Letter from the Board contained in the circular of the Company dated 23 January 2015 (the “Circular”) of which this letter forms part. Unless the context requires otherwise, capitalized terms used in this letter shall have the same meanings as those defined in the Circular.

As at the Latest Practicable Date, Sinopec Group hold approximately 67.01% of the issued share capital of the Company. By virtue of this shareholding interest, Sinopec Group is a substantial shareholder (as defined in the Hong Kong Listing Rules) of the Company. According to Rules 14A.07 of the Hong Kong Listing Rules, Sinopec Group is a connected person of the Company.

Since the Counter Guarantee constitutes a financial assistance and one of the applicable percentage ratios in respect of the Counter Guarantee is more than 25% but less than 100%, the Counter Guarantee constitutes a major transaction of the Company and is subject to notification, publication and Shareholders’ approval requirement under Chapter 14 of the Hong Kong Listing Rules. As Sinopec Group is a connected person of the Company, the Counter Guarantee also constitutes a connected transaction of the Company and is subject to notification, publication and Independent Shareholders’ approval requirement under Chapter 14A of the Hong Kong Listing Rules. Sinopec Group and its associates will abstain from voting at the EGM on the resolution approving the Counter Guarantee.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee has been established to advise the Independent Shareholders as to the terms of the Counter Guarantee Agreement. We, ABCI Capital Limited, have been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders as to whether the Counter Guarantee Agreement is entered into on normal commercial terms, and the terms of Counter Guarantee Agreement are fair and reasonable so far as the Independent Shareholders are concerned and in the interest of the Company and the Shareholders as a whole.

ABCI is independent from the Company and Sinopec Group, and has sufficient expertise and resources to give an opinion on the transaction. ABCI was engaged as independent financial adviser in the continuing connected transactions under a financial services framework agreement on 10 September 2013. ABCI was also engaged as independent financial adviser of China Petroleum & Chemical Corporation, a subsidiary of Sinopec Group, in the connected transactions under two assets acquisition agreements on 30 October 2014. On 12 September 2014, Sinopec Marketing Co., Ltd., a subsidiary of China Petroleum & Chemical Corporation, entered into a capital injection agreement with 25 domestic and foreign investors, pursuant to which the investors subscribed for 29.99% shareholding interest in Sinopec Marketing Co., Ltd. for an aggregate amount of RMB107.094 billion (including amount in U.S. dollar equivalent). ABCI invested RMB200 million through a fund established by HuaXia SSF1 Investors Limited (“HuaXia”). HuaXia subscribed approximately 2.170% of the total issued share capital of Sinopec Marketing Co., Ltd. at a consideration of RMB7,750 million. As such, ABCI indirectly holds approximately 0.056% of the total issued share capital of Sinopec Marketing Co., Ltd. We have assessed that the above relationships would not affect our independence.

BASIS OF OUR OPINION

In formulating our advice and recommendations, we have relied on the accuracy of the information and facts supplied, and the opinions expressed by the Company, its Directors and its management to us. We have assumed that all statements of belief and intention made by the Directors and the management of the Company were made after due enquiry. We have also assumed that all information, representations and opinion made were true, accurate and complete at the time they were made and continued to be true at the date of the Circular and will remain so up to the time of the EGM. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Company, its Directors and its management, and we have been advised by the Directors and the management of the Company that no material facts have been omitted from the information provided.

We consider that we have reviewed sufficient information to reach an informed view, to justify our reliance on the accuracy of the information provided to us by the Company, its Directors and its management and to provide a reasonable basis for our recommendation. We have not, however, conducted in-depth investigation into the business affairs, financial position or future prospects of the Group and Sinopec Group, nor carried out independent verification of the information supplied, representations made or opinions expressed by the Company, its Directors and its management. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

information made available to us as at the Latest Practicable Date. We have no obligation to update, revise or reaffirm this opinion to take into account subsequent developments (including any material change in market and economic conditions) after the date that this opinion is delivered to the Independent Board Committee and the Independent Shareholders.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendations regarding the Counter Guarantee, we have considered the principal factors and reasons set out below. In reaching our conclusion, we have considered the results of the analysis in light of each other and ultimately reached our opinion based on the results of all analysis taken as a whole.

1. Background of the Counter Guarantee Agreement

1.1 Background of the Counter Guarantee

On 28 August 2014, the Company together with the Malaysian Company, as the joint contractors entered into the RAPID Contract of engineering, procurement, construction and commissioning (EPCC) of an oil refining and petrochemical integrated development project with PRPC, a subsidiary of PETRONAS, with the total contract value of approximately US$1.329 billion (approximately RMB8.192 billion). Project RAPID is expected to be completed within 52 months from the date of the RAPID Contract.

As stated in the letter from the Board, as a mandatory condition precedent of RAPID Contract, the parent company or the controlling shareholder of the Company shall provide a parent guarantee to guarantee the Company’s performance of the contract. Therefore, the Company has requested Sinopec Group to issue the Parent Guarantee Letter to PRPC in respect of the obligations, warranties, liabilities and undertakings (including compensation obligations) of the Company under the RAPID Contract. For that reason, Sinopec Group issued the Parent Guarantee Letter dated 28 November 2014, which shall remain valid and in force until all the obligations of the Company have been satisfied and performed in full under and in accordance with the RAPID Contract. During the process of the Company’s application to Sinopec Group for the Parent Guarantee, in order to keep the Parent Guarantee fully effective, Sinopec Group, at the request by SASAC, required the Company to provide the Counter Guarantee in favour of Sinopec Group for its obligations under the Parent Guarantee, for the purpose of obtaining compensation from the Company in case of any loss or fee arising from the performance by Sinopec Group of the above obligations under the Parent Guarantee and holding Sinopec Group harmless. In compliance with the relevant request of SASAC, the Company proposes to provide the Counter Guarantee to Sinopec Group.

1.2 Background information of the Company

The Company is a leading oil refining, petrochemical and new coal chemical engineering company in the PRC. The Group provides engineering services for a broad range of industries including oil refining, petrochemicals, new coal chemicals, inorganic chemicals, pharmaceutical chemicals and clean energy with technology licensing, consultation, financing assistance, engineering, procurement, construction and pre-commissioning/start-up services.

— 16 —

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Set out below is a summary of certain selected audited financial information of the Company for each of the three years ended 31 December 2013 and the six months ended 30 June 2014, as extracted from the Company’s 2013 annual report, 2014 interim report and the Company’s prospectus dated 10 May 2013:

RMB’000 Non-current assets Current assets Current liabilities Non-current liabilities Total equity attributable to shareholders of the company RMB’000 Revenue Gross profit Operating profit Profit before taxation Profit for the year/period	**As **	**As **
	2011 30,600,677 5,074,336 3,724,592 4,243,958 3,375,112	2012 38,526,489 5,528,106 3,832,023 4,252,067 3,317,269

• 1.3 Background information of Sinopec Group

Established in July 1998, Sinopec Group is a state-owned company and functions as a state-authorised investment organisation. Sinopec Group is the largest integrated oil and petrochemical enterprise in the PRC and is one of the largest integrated oil and petrochemical enterprises in the world. Sinopec Group principally engages in business including: (i) exploration, development, production and trading of oil and gas; (ii) oil processing and production, trading, transportation, distribution and marketing of oil products; (iii) production, distribution and trading of petrochemical and other chemical products; (iv) oil engineering; (v) utilities services and social services such as water and electricity; and (vi) international trading, R&D as well as manufacturing of chemical fiber, fertiliser and polyester related equipment.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

2. Principle terms in the Counter Guarantee Agreement

As disclosed in the Letter from the Board, principle terms in the Counter Guarantee Agreement are set out as below:

• Date : 15 January 2015 Beneficiary : Sinopec Group Guarantor : the Company

• Obligations under the : If Sinopec Group agrees to provide the Parent Guarantee to Counter Guarantee PRPC according to the Parent Guarantee Letter, the Company shall unconditionally and irrevocably guarantee that once any loss or fee is incurred by Sinopec Group due to its performance of the Guaranteed Liabilities, Sinopec Group shall be entitled to require the Company to indemnify and hold harmless Sinopec Group against such Guaranteed Liabilities. The amount assumed by the Company therefrom shall not exceed the loss or fee incurred by Sinopec Group due to its performance of the Guaranteed Liabilities.

• Security : None

• Conditions : Pursuant to the Hong Kong Listing Rules, the Counter Guarantee Agreement will become effective on the date it is approved by the Independent Shareholders.

• Term : The guarantees under the Counter Guarantee Agreement shall be continuing guarantees and shall have full effect as continuing guarantees. The guarantees under the Counter Guarantee Agreement shall become invalid on the later of:

• (1) the date on which the parent guarantee liabilities of Sinopec Group under the Parent Guarantee Letter have become invalid; or

• (2) the date on which the Guaranteed Liabilities have been satisfied, fully performed or discharged.

• Applicable law : The execution, effectiveness, interpretation and enforcement of, and disputes arising from, the Counter Guarantee Agreement, as well as the rights and obligations of the parties under the Counter Guarantee Agreement, shall be governed by and construed according to the laws of the PRC.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Dispute	Resolution	:	In case of any dispute arising out of or in connection with the
			Counter Guarantee Agreement, the parties shall attempt in the
			first instance to resolve such dispute through friendly
			negotiations. In case no settlement can be reached through
			negotiations, either party can submit the dispute to Beijing
			Arbitration Commission for arbitration in accordance with the
			arbitration rules of such commission in force at relevant time.
			The arbitral award shall be final and binding on the parties.

The Directors confirmed that the principle terms under the Counter Guarantee Agreement are generally in line with the Parent Guarantee Letter, and the terms of Counter Guarantee Agreement are: (i) on normal commercial terms and arrived at after arm’s length negotiations, (ii) and are fair and reasonable so far as the Independent Shareholders are concerned and in the interest of the Company and the Shareholders as a whole.

3. Reasons for the Counter Guarantee Agreement

As disclosed in the Letter from the Board, it is a common practice to provide a parent guarantee to the owner in the petrochemical engineering market in Southeast Asia. Hence, all contractors of the RAPID Contract have been required to provide parent guarantees. Therefore, the Parent Guarantee to PRPC is a mandatory condition precedent for the RAPID Contract. As disclosed in the Letter from the Board, where a state-owned enterprise incorporated under the laws of the PRC provides a guarantee for its non wholly-owned subsidiary, based on the actual circumstances, SASAC may generally request such non wholly-owned subsidiary to provide a counter guarantee in favour of such state-owned enterprise. Given Sinopec Group, as the controlling shareholder of the Company, shall provide the Parent Guarantee to the Company, a non wholly-owned subsidiary of Sinopec Group, the Counter Guarantee to be provided by the Company constitutes a prerequisite for the Parent Guarantee to be fully effective in order to comply with relevant request of SASAC.

Besides, as disclosed in the Letter from the Board, the Parent Guarantee is provided on normal commercial terms and not secured by the assets of the Group without any consideration. Both the Parent Guarantee and the Counter Guarantee are in their nature a performance guarantee. The purpose of the Parent Guarantee is to guarantee that the Company, as the contractor, satisfies its obligations under and in connection with the RAPID Contract. The Counter Guarantee is a guarantee as a result of the performance guarantee under the Parent Guarantee. As such, no cap is set for the amount of the Parent Guarantee or the Counter Guarantee. We concur with the view of the Directors that it is in line with the normal practice of the Company and the relevant industry not to set a cap for the Parent Guarantee or the Counter Guarantee. The Directors also confirmed that under the Counter Guarantee to be made between the Company and Sinopec Group, the obligations of the Company born towards Sinopec Group do not exceed accumulated liabilities of Sinopec Group relevant under RAPID Contract. As such, the Counter Guarantee to be provided by the Company to Sinopec Group is back to back by nature.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

In addition, we noted that it is the company’s business strategy to explore overseas market along with its domestic business development. Project RAPID is also in line with the Company’s business strategy and hence will benefit for development of the Company’s Southeast Asia market. The Directors are of the view that the provision of Counter Guarantee to Sinopec Group will bring a successful cooperation with PRPC as well as benefit the Company to develop overseas project in the future. We concur with the view of the Directors that Sinopec Group and the Company will not be able to fulfil the relevant requirements of SASAC if the Counter Guarantee Agreement is not approved by the Independent Shareholders, and it will have a negative impact on the Company to implement Project RAPID.

Given the business strategy of the Company and the back to back nature of the Counter Guarantee Agreement, we consider the Counter Guarantee is reasonable and will benefit for business development of the Company.

4. Financial effects of the Counter Guarantee Agreement

We understand from the Directors that, the provision of Counter Guarantee will not be expected to have any immediate material financial impact on the earnings, assets or liabilities of the Company unless and until such time that the Counter Guarantee is to be executed under the Counter Guarantee Agreement upon the Parent Guarantee is executed under the Parent Guarantee Letter owing to the default of the RAPID Contract.

RECOMMEDATIONS

Having taking into account the above principal factors, we consider that: (i) the Counter Guarantee Agreement is on normal commercial terms, (ii) and the terms of which are fair and reasonable so far as the Independent Shareholders are concerned and in the interest of the Company and the Shareholders as a whole.

Therefore, we advise the Independent Board Committee to recommend the Independent Shareholders, and we also recommend the Independent Shareholders, to vote in favour of the relevant resolution to approve the Counter Guarantee to be proposed at the EGM.

Yours faithfully, For and on behalf of ABCI Capital Limited Steve WONG Managing Director

Note: Mr. Steve Wong is a licensed person registered with the Securities and Futures Commission and as a responsible officer of ABCI Capital Limited to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities as defined under the Securities and Futures Ordinance. Mr. Steve Wong has over 18 years of experience in the corporate finance industry, and has participated in the provision of independent financial advisory services for various connected transactions involving companies listed in Hong Kong.

— 20 —

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

==> picture [43 x 44] intentionally omitted <==

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)

NOTICE OF THE SECOND EXTRAORDINARY GENERAL MEETING FOR THE YEAR 2015 AND CLOSURE OF REGISTER OF MEMBERS FOR H SHARES

NOTICE IS HEREBY GIVEN that the second extraordinary general meeting (the “ EGM ”) for the year 2015 of SINOPEC Engineering (Group) Co., Ltd. (the “ Company ”) will be held at Crowne Plaza Park View Wuzhou Beijing, 8 Beisihuan Zhong Lu, Chaoyang District, Beijing, the PRC at 9 a.m. on Tuesday, 10 March 2015. In this notice, unless the context otherwise requires, terms used herein shall have the same meanings as defined in the Company’s circular (the “ Circular ”) dated 23 January 2015.

RESOLUTIONS TO BE CONSIDERED AND APPROVED AT THE EGM

By way of ordinary resolution:

• (1) to consider and approve the proposed provision of the Counter Guarantee in respect of Project RAPID in Malaysia in favour of Sinopec Group, the controlling shareholder of the Company, which would constitute a connected transaction and a major transaction, and to approve the authorisation of Mr. YAN Shaochun, the executive Director and President, to sign relevant documents on behalf of the Company and take and adopt measures and steps as he deems necessary or appropriate according to the Board resolutions, in order to effect this resolution and make any amendment to it as he deems necessary, appropriate or desirable; and

By way of special resolution:

• (2) to consider and approve the amendments to the Articles, and approve the authorisation of Mr. SANG Jinghua, Vice President, the secretary to the Board and the Company secretary, to, on behalf of the Company, deal with all procedural requirements such as applications, approvals, registration and filings in relation to the Proposed Articles Amendments (including the amendments to wording as requested by relevant regulatory authorities).

• For identification purposes only

— 21 —

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

Details of the above resolution proposed at the EGM are contained in the Circular, which is available on the website of Hong Kong Exchanges and Clearing Limited (www.hkex.com.hk) and the website of the Company (www.segroup.cn).

By Order of the Board SINOPEC ENGINEERING (GROUP) CO., LTD. SANG Jinghua

Vice President, Secretary to the Board and Company Secretary

Beijing, PRC 23 January 2015

As at the date of this notice, the executive Directors are LU Dong, YAN Shaochun, SUN Lili (employee representative Director) and WU Derong (employee representative Director); the non-executive Directors are ZHANG Jianhua and LI Guoqing; and the independent non-executive Directors are HUI Chiu Chung, Stephen, JIN Yong and YE Zheng.

Notes:

ATTENDEE OF THE EGM

1. Eligibility for attending the EGM

For the purpose of ascertaining Shareholders who are entitled to attend and vote at the EGM, the H Share register of members of the Company will be closed from Saturday, 7 February 2015 to Tuesday, 10 March 2015 (both days inclusive). Holders of the Company’s H Shares whose names appear on the register of members of the Company before the close of business day on Saturday, 7 February 2015 are entitled to attend and vote in respect of all resolutions to be proposed at the EGM. Holders of H Shares who wish to attend the EGM shall lodge their share certificates accompanied by the transfer documents with Computershare Hong Kong Investor Services Ltd. (address: Rooms 1712-1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong) before 4:30 p.m. on Friday, 6 February 2015 for registration.

1. Proxy

2. (a) A Shareholder eligible to attend and vote at the EGM is entitled to appoint, in written form, one or more proxies to attend and vote on his/her/its behalf. A proxy need not be a Shareholder.

3. (b) A proxy should be appointed by a written instrument signed by the appointer or its attorney duly authorised in writing. If the form of proxy is signed by the attorney of the appointer, the power of attorney authorising that attorney to sign or the authorisation document(s) must be notarised.

4. (c) To be valid, the power of attorney or other authorisation document(s) which have been notarised together with the completed form of proxy must be delivered to the place of business of the Company not less than 24 hours before the time designated for holding of the EGM. In the case of holders of Domestic Shares, the relevant documents should be delivered to the Company, and in the case of holders of H Shares, the relevant documents should be delivered to Computershare Hong Kong Investor Services Ltd.

5. (d) A Shareholder or his/her/its proxy may exercise the right to vote by poll.

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NOTICE OF THE EXTRAORDINARY GENERAL MEETING

3. Registration procedures for attending the EGM

• (a) A Shareholder or his/her/its proxy shall produce proof of identity when attending the meeting. If a Shareholder is a legal person, its legal representative or other persons authorised by the board of directors or other governing body of such Shareholder may attend the EGM by producing a copy of the resolution of the board of directors or other governing body of such Shareholder appointing such persons to attend the meeting.

• (b) Holders of Domestic Shares and H Shares intending to attend the EGM should return the reply slip for attending the EGM to the Company on or before Tuesday, 17 February 2015.

• (c) Shareholders may send the above reply slip to the Company in person, by post or by fax.

• (d) Closure of Register of Members. The H Share register of members of the Company will be closed from Saturday, 7 February 2015 to Tuesday, 10 March 2015 (both days inclusive).

Resolution for independent shareholders’ approval

Pursuant to the Hong Kong Listing Rules, the ordinary resolution numbered 1 to be proposed at the EGM is subject to Independent Shareholders’ approval. Sinopec Group and its associates will abstain from voting on this resolution.

Miscellaneous

• (a) The EGM will not last for more than one working day. Shareholders who attend the EGM shall bear their own travelling and accommodation expenses.

• (b) The address of the Share Registrar of H Shares, Computershare Hong Kong Investor Services Ltd., is at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong.

• (c) The place of business of the Company is at:

Tower B, No. 19 Anyuan, Anhui Beili, Chaoyang District, Beijing, the PRC Post Code: 100101

Telephone No.: +86(10) 6499 8114

Facsimile No.: +86(10) 6499 8599

— 23 —

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL INFORMATION OF THE GROUP

The financial information of the Group (i) for the year ended 31 December 2013 is disclosed on pages 108 to 177 of the 2013 annual report of the Company published on 17 March 2014; and (ii) for the year ended 31 December 2012 is disclosed in Appendix I to the prospectus issued by the Company on 10 May 2013. The above have been published on the website of the Stock Exchange (www.hkex.com.hk) and the website of the Company (www.segroup.cn).

2. INDEBTEDNESS STATEMENT

As at the close of business on 31 December 2014, being the latest practicable date for the purpose of preparing this indebtedness statement, the Group did not have any loan capital issued, any bank overdrafts and liabilities under acceptances (other than general commercial papers) or other similar indebtedness, debentures, mortgages, charges or loans or acceptance credits or hire purchase commitments, guarantees or other material contingent liabilities.

3. WORKING CAPITAL

Taking into account the internal and other financial resources available to the Group, after diligent and thorough consideration, the Directors are of the opinion that, in the absence of unforeseen circumstances, the Group has sufficient working capital required at present and for at least the next 12 months from the date of this circular.

4. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

There has been no significant change in the trend of the business and financial and trading prospects of the Group since the date of the last published interim report.

— 24 —

GENERAL INFORMATION

APPENDIX II

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Hong Kong Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, so far as was known to the Board, none of the Directors, Supervisors and senior management members of the Company had any interest or short positions in any shares, underlying shares or debentures of the Company or any associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance) which are required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the Securities and Futures Ordinance (including interests or short positions which they are taken or deemed to have under such provisions of the Securities and Futures Ordinance), or which were required, pursuant to section 352 of the Securities and Futures Ordinance, to be entered in the register maintained by the Company referred to therein, or which are required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers in Appendix 10 to the Hong Kong Listing Rules, to be notified to the Company and the Hong Kong Stock Exchange.

As at the Latest Practicable Date, so far as was known to the Board, none of the Directors was a director or employee of a company which has an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under provisions of Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance.

— 25 —

GENERAL INFORMATION

APPENDIX II

3. DISCLOSURE OF SUBSTANTIAL SHAREHOLDERS’ INTERESTS

As at the Latest Practicable Date, save as disclosed below, so far as was known to the Board, no persons (not being a Director, Supervisor or senior management member of the Company) had an interest or short position in the shares or underlying shares and debentures of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance, or, who was, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at the general meeting of any other member of the Company:

				Approximate
				percentage	Approximate
				(%) in the	percentage
				Company’s	(%) in the
			Number of Shares	total issued	Company’s
Name of	Class of		Held or Deemed	share capital	total share
shareholders	Shares	Capacity	to be Held	of that class(6)	capital(7)
Sinopec Group(1)	Domestic	Beneficial	2,967,200,000(L)	100(L)	67.01(L)
	Shares	owner/Interests of
		controlled
		corporation
National Council for	H Shares	Beneficial owner	131,468,000(L)	8.99(L)	2.97(L)
Social Security
Fund of the PRC
(全國社會保障基金
理事會)(2)
State Administration	H Shares	Interests of	131,756,000(L)	9.02(L)	2.98(L)
of Foreign		controlled
Exchange of the		corporation
PRC
(國家外匯管理局)(3)
JPMorgan Chase &	H Shares	Trustee/Interests of	101,457,350(L)	6.94(L)	2.29(L)
Co.(4)		controlled	260,000(S)	0.01(S)	0.00(S)
		corporation	80,816,169(P)	5.53(P)	1.83(P)
Franklin Mutual	H Shares	Trustee/Interests of	87,751,183(L)	6.01(L)	1.99(L)
Advisers, LLC(5)		controlled
		corporation

(L) — long position; (S) — short position; (P) — Lending Pool

Notes:

(1) Sinopec Group directly or indirectly holds 2,967,200,000 Domestic Shares, representing 100% of the domestic share capital and approximately 67.01% of the total share capital of the Company, respectively. Sinopec Assets Management Co., Ltd. (“ SAMC ”) is a wholly-owned subsidiary of Sinopec Group and directly holds 59,344,000 Domestic Shares, representing 2% of the domestic share capital and approximately 1.34% of the total share capital of the Company, respectively. For the purposes of the Securities and Futures Ordinance, Sinopec Group is also deemed to be interested in the Domestic Shares held by SAMC.

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GENERAL INFORMATION

APPENDIX II

• (2) The information is based on the Corporate Substantial Shareholder Notices dated 19 November 2013 and filed by National Council for Social Security Fund of the PRC with the Hong Kong Stock Exchange.

• (3) According to the Corporate Substantial Shareholder Notices dated 4 June 2013 and filed by each of (i) the State Administration of Foreign Exchange of the PRC, (ii) Pagoda Tree Investment Company Limited (中國華馨投資有限公司), (iii) Compass Investment Company Limited (博遠投資有限公司), (iv) GUOXIN International Investment Corporation Limited (國新國際投資有限公司) and (v) Metroson Holdings Corporation Limited (都盛控股有限公司) with the Hong Kong Stock Exchange, Metroson Holdings Corporation Limited directly holds 131,756,000 H Shares. As each of Pagoda Tree Investment Company Limited, Compass Investment Company Limited, GUOXIN International Investment Corporation Limited and Metroson Holdings Corporation Limited is a subsidiary directly or indirectly controlled by State Administration of Foreign Exchange of the PRC, each of the State Administration of Foreign Exchange of the PRC, Pagoda Tree Investment Company Limited, Compass Investment Company Limited and GUOXIN International Investment Corporation Limited is deemed interested in the long positions held by Metroson Holdings Corporation Limited for the purposes of the Securities and Futures Ordinance.

• (4) The information is based on the Corporate Substantial Shareholder Notices dated 12 December 2014 and filed by JPMorgan Chase & Co. with the Hong Kong Stock Exchange.

• (5) The information is based on the Corporate Substantial Shareholder Notices dated 10 December 2014 and filed by Franklin Mutual Advisers, LLC with the Hong Kong Stock Exchange.

• (6) It is calculated on the basis that the Company has issued 2,967,200,000 Domestic Shares and 1,460,800,000 H Shares.

• (7) It is calculated on the basis that the Company has issued 4,428,000,000 Shares in total.

4. PARTICULARS OF DIRECTORS’ AND SUPERVISORS’ CONTRACTS

The executive Directors and non-executive Directors have entered into service contracts with the Company. Such service contracts shall be valid from the date on which the relevant Director was appointed to the expiry of the First Session of the Board. The service contracts may be renewed according to the Articles and applicable laws and regulations.

The Supervisors have entered into contracts with the Company in respect of their compliance with relevant laws and regulations, the Articles and arbitration rules. The tenure will be from the date on which the relevant Supervisor is appointed to the expiry of the First Session of the Supervisory Committee. The service contracts may be renewed according to the Articles and applicable laws and regulations.

Save as disclosed above, none of the Directors and the Supervisors has entered or intends to enter into a service contract with any member of the Group (other than contracts expiring or determinable by the relevant employer within one year without the payment of compensation (other than statutory compensation)).

— 27 —

GENERAL INFORMATION

APPENDIX II

5. COMPETING INTERESTS

As at the Latest Practicable Date, other than certain directorships and/or other senior management positions held by some of the Directors in China Petroleum & Chemical Corporation (“ Sinopec Corp. ”) as disclosed below, so far as the Board was aware, none of the Directors or their respective associates had any interest in a business which competes or is likely to compete directly or indirectly with the business of the Group:

• (a) Mr. ZHANG Jianhua is a director and the senior Vice President of Sinopec Corp.; and

• (b) Mr. LI Guoqing is the director of the Engineering Department of Sinopec Corp.

6. DIRECTORS’ AND SUPERVISORS’ INTERESTS IN ASSETS AND/OR CONTRACTS AND OTHER INTERESTS

As at the Latest Practicable Date, none of the Directors and the Supervisors had any interests, either directly or indirectly, in any assets which had been, since 30 June 2014 (being the date to which the latest published audited financial statements of the Group were made up), acquired, disposed of by, or leased to any member of the Group, or were proposed to be acquired, disposed of by, or leased to any member of the Group.

As at the Latest Practicable Date, none of the Directors and the Supervisors was materially interested in any contract or arrangement which was significant in relation to the business of the Group taken as a whole.

7. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Company since 30 June 2014 (being the date to which the latest published audited financial statements of the Group were made up).

8. LITIGATION

The Company is currently litigating claims which arose in connection with the collapse of a partially completed oil storage tank of the oil and gas storage tank project in Alberta, Canada on 24 April 2007, which resulted in the death of two workers and injuries of four others. In 2012, the Company recorded a total provision of RMB 380 million. The litigation is now in the evidence exchange and cross-examination phase.

In February 2014, Medicine Bow Fuel & Power LLC purported to terminate a project in the United States with the Company. For details, please refer to the Company’s announcement dated 28 February 2014 and 28 March 2014. As at the Latest Practicable Date, there was no material development on the above matter.

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GENERAL INFORMATION

APPENDIX II

In June 2014, Sinopec Ningbo Engineering Company Limited, a wholly-owned subsidiary of the Company, received a letter from Arbitration Institute of Stockholm Chamber of Commerce in relation to a request for arbitration from INEOS USA LLC. For details, please refer to the Company’s announcement dated 18 June 2014. As at the Latest Practicable Date, there was no material development on the above matter.

Save as disclosed above, as at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and, so far as the Directors were aware, no litigation or claim of material importance was pending or threatened by or against any member of the Group.

9. EXPERT

The following is the qualification of ABCI which has given its opinion or advice contained in this circular:

Name	Qualifications
ABCI	a corporation licensed by Securities and Futures Commission
	to carry out type 1 (dealing in securities) and type 6 (advising
	on corporate finance) regulated activities as defined under the
	Securities and Futures Ordinance

As at the Latest Practicable Date, ABCI had no shareholding in any member of the Group and did not have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, ABCI had no direct or indirect interest in any assets which had been, since 30 June 2014 (being the date to which the latest published audited financial statements of the Company were made up), acquired or disposed of by, or leased to any member of the Group, or were proposed to be acquired or disposed of by, or leased to any member of the Group.

ABCI has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and the reference to its name included herein in the form and context in which it appears.

10. MATERIAL CONTRACTS

Within the two years immediately preceding the issue of this circular, there was no contract (not being contracts entered into in the ordinary course of business) entered into by the members of the Group which was or might be material.

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GENERAL INFORMATION

APPENDIX II

11. MISCELLANEOUS

• (a) The Company Secretary is Mr. SANG Jinghua. For details of his biographical information, please refer to the Company’s 2013 annual report.

• (b) The registered office of the Company is at 6A Huixin East Street, Chaoyang District, Beijing, the PRC.

• (c) H share Registrar of the Company is Computershare Hong Kong Investor Services Ltd. at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong,

• (d) In the event of any inconsistency, the English language version of this circular shall prevail over the Chinese language version.

12. ROUNDING

Certain amounts and percentages figures included in this circular have been subject to rounding adjustments, or have been rounded to one or two decimal places. Any discrepancies between totals and sums of amounts listed in any table are due to rounding.

13. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the offices at 20/F, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong from the date of this circular up to and including Friday, 6 February 2015:

• (a) the Counter Guarantee Agreement;

• (b) the letter from the Independent Board Committee to the Independent Shareholders dated 23 January 2015, the full text of which is set out on page 13 of this circular;

• (c) the letter from ABCI to the Independent Board Committee and the Independent Shareholders dated 23 January 2015, the full text of which is set out on pages 14 to 20 of this circular;

• (d) the written consent of ABCI referred to in the paragraph headed “Expert” in this Appendix;

• (e) the Articles;

• (f) the prospectus and the 2013 annual report of the Company; and

• (g) this circular.

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