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

Feb 22, 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)

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 with certain information in connection with the representative new contracts entered into by the Group for the three months ended 31 December 2016, the total value of new contracts for the twelve months ended 31 December 2016 and the backlog as at 31 December 2016. The relevant information shall be subject to the information to be disclosed in the annual report of the Company for the year ended 31 December 2016.

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 the following information. The relevant information shall be subject to the information to be disclosed in the annual report of the Company for the year ended 31 December 2016.

During the twelve months ended 31 December 2016, the total value of new contracts entered into by the Group amounted to RMB27.564 billion, representing a decrease of 47.7% as compared to RMB52.676 billion for the twelve months ended 31 December 2015. As at 31 December 2016, the backlog of the Group amounted to RMB88.173 billion, representing a decrease of 11.8% as compared to RMB99.985 billion as at 31 December 2015.

• 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 2016, the total value of new contracts entered into by the Group amounted to RMB12.932 billion, and contracts that are representative are as follows:

1. a contract of engineering, procurement and construction (EPC) entered into with National Iranian Oil Engineering and Construction Company in relation to Phase I of Abadan refinery upgrading project in Iran. The Group will pursue approximately RMB4.081 billion of the total contract value;

2. an installation contract entered into with Saudi Aramco in relation to the mechanical, electrical and instrument equipment for its Fadhili natural gas processing project in Saudi Arabia. The total contract value is approximately RMB1.738 billion; and

3. a construction contract entered into with SP Chemicals (Taixing) Co., Ltd. (新浦 化學（泰興）有限公司) in relation to its light hydrocarbon utilisation project with a capacity of 1,100 kilo tons per annum. The total contract value is approximately RMB666 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 periods or as at the date indicated:

Total of New Contract Value	Total of New Contract Value	Total of New Contract Value	Total of New Contract Value
For the twelve months ended				Backlog
	31 December 2016			As at 31 December 2016
	(RMB	Percentage		(RMB	Percentage
	thousand)		(%)	thousand)	(%)
Business segments
Engineering,
Consulting and
Licensing	2,652,723		9.62	6,977,048	7.90
EPC Contracting	10,911,030		39.58	68,930,902	78.18
Construction	13,801,475		50.07	12,110,670	13.74
Equipment
Manufacturing	198,585		0.73	154,642	0.18
Total	27,563,813		100.00	88,173,262	100.00
Industries in which the	Group’s clients operate
Oil Refining	10,024,575		36.37	32,215,821	36.54
Petrochemical	7,444,181		27.01	17,649,823	20.02
New Coal Chemicals	2,559,285		9.28	20,227,322	22.94
Other Industries	7,535,772		27.34	18,080,296	20.50
Total	27,563,813		100.00	88,173,262	100.00
Regions
PRC	17,193,356		62.38	55,604,482	63.06
Overseas	10,370,457		37.62	32,568,780	36.94
Total	27,563,813		100.00	88,173,262	100.00

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Total of New Contract Value
For the twelve months ended	Backlog
31 December 2016	As at 31 December 2016
(RMB Percentage	(RMB	Percentage
thousand) (%)	thousand)	(%)

Clients of each of (i) Sinopec Group and its associates and (ii) the non-Sinopec Group and its associates

Sinopec Group and its associates Non-Sinopec Group and its associates Total	10,091,361 17,472,452 27,563,813	36.61 63.39 100.00	37,802,158 50,371,104 88,173,262	42.87 57.13
				100.00

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 .

Yours faithfully, By order of the Board

SINOPEC ENGINEERING (GROUP) CO., LTD. SANG Jinghua

Vice President, Secretary to the Board

Beijing, PRC 22 February 2017

As at the date of this announcement, the Company’s 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).

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