Sinopec Engineering Group Co Ltd. — Capital/Financing Update 2017

Dec 20, 2017

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)

GRANT OF H SHARE APPRECIATION RIGHTS

References are made to the announcement of SINOPEC Engineering (Group) Co., Ltd. (the “ Company ”) in relation to the proposed initial terms of H Share Appreciation Rights Scheme dated 21 August 2017, the circular of the second extraordinary general meeting of the Company for the year 2017 (the “ EGM ”) dated 3 November 2017 (the “ Circular ”), the announcement in relation to the approval of the proposed initial terms of H Share Appreciation Rights Scheme by the SASAC dated 12 December 2017 and the announcement of resolutions passed at the EGM dated 20 December 2017. Unless otherwise defined, terms used in this announcement shall have the same meanings as those defined in the Circular.

The proposed adoption of the H Share Appreciation Rights Scheme and the proposed Initial Grant have been approved at the EGM. On 20 December 2017, the Company granted 13,143,000 units of H Share Appreciation Rights (representing 0.30% of the total issued Shares of the Company and 0.90% of the total issued H Shares of the Company as at the date of this announcement) to a total of 89 Incentive Recipients, accounting for approximately 0.5% of the total number of contracted employees, including the Directors (other than the independent non-executive Directors), the Company’s senior management members (including presidents, vice presidents and chief financial officer) and the core management, technical and highly skilled personnel of the Company’s subsidiaries.

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Details of the Initial Grant are as follows:

Total number of Shares in issue	4,428,000,000
Total number of units of H Share Appreciation Rights granted
under the Initial Grant	13,143,000
Proportion of the amount of the H Share Appreciation Rights
granted under the Initial Grant to the total number of Shares in
issue	0.30%

Details of the Initial Grant are	Details of the Initial Grant are	as follows:	as follows:	as follows:	as follows:	as follows:
Total number of Shares in issuTotal number of units of H Shunder the Initial GrantProportion of the amount of thgranted under the Initial Graissue	Total number of Shares in issuTotal number of units of H Shunder the Initial GrantProportion of the amount of thgranted under the Initial Graissue	eare Appreciation Rights grantede H Share Appreciation Rightsnt to the total number of Shares in	4	,428,000,0013,143,000.30	00%
		Averagenumber ofunits of HShareAppreciationTotal numberof units of HProportiunitsAppreciRgrant	on oShatiged	off Hareionhts in**Proportion **the tot**number ****units of **ShaAppreciati	toal
					of Hreon
	Name/Category of RecipientsLU DongVice Chairman andExecutive DirectorXIANG WenwuExecutive Director andPresidentSUN LiliExecutive Director andPresident of SinopecEngineering Incorporation	Number ofindividual(s)Rightsgranted perindividual inthis category(thousand)ShareAppreciationRights in thiscategory(thousand)this cat**to the **numbissued S12102100.12102100.12002000.	eg teha(000000	oryotalr ofres%)Righgrantunder tInitial Gra(5%1.605%1.605%1.52	tsedhent%)%%%
	WU DerongExecutive Director andPresident of SINOPECShanghai EngineeringCo., Ltd.XIAO GangVice PresidentGUANQingjieChairmanofTradeUnion	11801800.11801800.11801800.	004%1.37004%1.37004%1.37		%%%
			00
	QI GuoshengVice PresidentJIA YiqunChief Financial Officer	11801800.11801800.	0000	4%1.374%1.37	%%
	SANG JinghuaVice President andSecretary to the Board11801800.004%1.3SUN XiaoboVice President andPresident of Sinopec Liftand TransportationCompany11801800.004%1.37Senior management of subsidiaries（Chiefposition A）11801800.004%1.37Senior management of subsidiaries（Deputyposition A, Chief position B）171602,7200.061%20.70Senior management of subsidiaries（Deputyposition B）191502,8500.064%21.68			4%1.34%1.37	%%
				4%13	%
				.1%2070	%
				.4%21.68	%
	Senior management of subsidiaries（Chiefposition C)31404200.009%3.20%Senior management of subsidiaries（Deputyposition C)211202,5200.057%19.17%Key engineering technical expert A81601,2800.029%9.74%Key engineering technical expert B71501,0500.024%7.99%Key engineering technical expert C11081080.002%0.82%Key skills expert A180800.002%0.61%Key skills expert B155550.001%0.42%Total8914813,1430.30%100.00%

• Note (1): Percentage is calculated based on the total number of 4,428,000,000 issued Shares on 19 December 2017 and the Initial Grant of 13,143,000 units of H Share Appreciation Rights.

• Note (2): The difference between the figures in the list and the subtotal / aggregate figures is due to rounding.

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The Incentive Recipients do not actually hold the Shares, and do not have any Shareholders rights, such as voting rights or placement rights. The Incentive Recipients shall not deal in the H Share Appreciation Rights they are entitled to pursuant to the Scheme on their own, including but not limited to transfer, sell, exchange or charge such rights, or use such rights as guarantee or to settle debts. The Incentive Recipients must avoid behaviours that are prejudicial to the interests of the Group, including major derelictions of duties, major decision-making mistakes resulting in substantial damages to the Group’s interests, or dealings in the H Share Appreciation Rights in violation of the above restrictions. In the event of any aforementioned behaviour, the Incentive Recipients may lose all or part of the H Share Appreciation Rights and the gains thereon, and the Company has the right to reclaim the gains realised from exercising the H Share Appreciation Rights during the relevant period.

Under the Scheme, each H Share Appreciation Right is linked to one H Share and the H Share Appreciation Rights are to be settled by way of cash. Therefore, the Scheme does not affect the total number of H Shares in issue and will not result in any dilution effect on the Shares. The Scheme does not involve grant of options over new Shares or other new securities of the Company or any of its subsidiaries. Therefore, the Scheme is not required to be subject to the provisions under Chapter 17 of the Hong Kong Listing Rules.

The exercise price of each H Share Appreciation Right granted under the Initial Grant is HK$6.35, being the highest of: (i) HK$6.35, being the closing price of the H Shares as stated in the daily quotation sheet of the Hong Kong Stock Exchange on the date of grant (i.e. 20 December 2017); (ii) HK$6.348, being the average closing price of the H Shares as stated in the daily quotation sheets of the Hong Kong Stock Exchange for the five consecutive trading days prior to the date of grant; or (iii) RMB1.00, being the nominal value of each H Share.

By the Order of the Board SINOPEC Engineering (Group) Co., Ltd. SANG Jinghua Vice President, Secretary to the Board

Beijing, PRC 20 December 2017

As at the date of this announcement, the executive Directors are LU Dong, XIANG Wenwu, SUN Lili (employee representative Director) and WU Derong (employee representative Director); the non-executive Directors are LING Yiqun and LI Guoqing; 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).

• For identification purposes only.

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