Steady construction development of projects. During the Reporting Period, thanks to the rapid control of the domestic epidemic and the active resumption of production in China, the Group strengthened the coordination of key projects construction, promoted the orderly resumption of work and production for the relevant projects by relying on the remote collaborative work system. During the Reporting Period, we are benefited from the steady construction development of large EPC contracting projects such as Fujian Gulei Refining and Chemical Integration Project, Zhenhai Refining and Chemical Ethylene Expansion Project, SINOPEC SABIC Polycarbonate Project and Sinochem Quanzhou Ethylene Project. As at 31 December 2020, the Group's backlog was RMB105.655 billion, representing an increase of 11.2% on a year-on-year basis, and 2.02 times of the total revenue of RMB52.353 billion in 2020.

Steady progress in research and development of engineering technologies. The Group has achieved steady progress in research and development of engineering technologies and major progress in key scientific research projects. For "Solid Superacid C5, C6 Isomerization Technology Development and Industrial Test", we have completed the steam opening and calibration of the plant in Zhanjiang, and passed the acceptance of Sinopec Science and Technology Department on 1 December; for the key environmental protection research project "Research and Demonstration of Packaged Technologies for Safe and Reliable Large-flux Plasma Treatment of VOCs", we have completed the construction, commissioning and calibration of the plant in Jingmen, and achieved the target for key problem tackling. While the Group's "development and application of packaged technologies for ultra-low sulfur emission and resource utilization of sulfur-containing waste gas from refining and chemical industry" won the second prize of National Scientific and Technological Progress Award.

Chairman of SEG, Ms. Sun Lili said: "In 2020, the Company actively responded to changes. Facing the epidemic, we have merged and coexisted with our customers to overcome the difficulties. We built more than 100 projects in over 20 countries around the world. We adhered to scientific epidemic prevention and control measures, created conditions for efficient and orderly resumption of work and production. A number of refining and chemical integration projects, such as Zhongke Refining & Chemical and Sinochem Quanzhou, have been completed with high standards, which have actively helped improve quality and efficiency in the petrochemical field. In respect of scientific and technological innovations, the Company closely focused on the new needs of the development of the refining and chemical industry, and simultaneously carried out the research and development of equipment technology and construction methods as well as the research and development of process technology. As a result, the ability of technological efficiency creation was significantly enhanced and the development foundation was more solid. Looking forward to 2021, the challenges are severe, yet the opportunities are vast. The state's strategic layout, the transformation needs of the industry, the development needs of customers and the ardent expectations of shareholders are the inexhaustible motive force for the development of the Company. The Group will continue to improve and implement the development program under the "14th Five-Year Plan", and comprehensively start the new journey of building "the world's leading technology-oriented engineering company". We will take "Integrated Service Provider with Whole Industry Chain and Whole Life Cycle in Energy and Chemical Industry" as our development orientation. I firmly believe that with the unremitting efforts of the Board, the management and all employees, and with the strong support of shareholders and all sectors of society, we will be able to continuously enhance the core competitiveness, comprehensive strength, sustainable development capacity and risk resistance of the Company, and greater value for shareholders, customers, society, and our employees."

Business Review and Highlights

Forge ahead in market development

During the Reporting Period, the Group worked hard to overcome the impact of the epidemic and kept a close eye on key project contracts, and made full use of its overall advantages in its industry, business and technical chains, the value of new contracts entered into by the Group was RMB63.014 billion, reaching a new high in recent years, among which, the value of newly signed domestic contracts amounted to RMB52.852 billion, representing an increase of 15.9% on a year-on-year basis, and the value of newly signed overseas contracts amounted to approximately RMB10.161 billion, representing an increase of 50.9% on a year-on-year basis.

During the Reporting Period, the Group continued the intensive work in the domestic market. The Group entered into new contracts for a number of large projects, include Zhenhai Refining and Chemical Ethylene Expansion Project with a total contract value of approximately RMB12.093 billion, Hainan Refining & Chemical Ethylene and Oil Refining Reconstruction and Expansion Project with a total contract value of approximately RMB3.597 billion, Sinopec Tianjin Liquefied Natural Gas (LNG) Expansion Project (Phase II) Receiving Station Project with a total contract value of approximately RMB3.183 billion, Zhejiang Petrochemical Zhoushan Refining and Chemical Integration Project (Phase II) with a total contract value of approximately RMB2.870 billion, Shenghong Refining and Chemical Integration Project with a total contract value of approximately RMB1.676 billion, Shandong Yulong Island Refining and Chemical Integration Project with a total contract value of approximately RMB1.189 billion.

During the Reporting Period, the Group successfully reversed the adverse situation of overseas market development. In the Middle East, the channel and resource advantages formed by long-term operation in Saudi Arabia were brought into play, and the total amount of newly signed contracts was equivalent to about RMB5.8 billion, achieving strong growth; in Russia, Amur AGCC Polyolefin EPSS Project was successfully signed, with a total contract value of approximately RMB1.651 billion; in Southeast Asia, we signed the construction contract for Thailand Clean Oil Products Project with a total contract value of approximately RMB470 million, Contract for Design and Consulting Services of Hengyi (Brunei) PMB Petrochemical Phase II Project with a total contract value of approximately RMB368 million.

Successful Implementation of Major Projects

• One of Sinopec Group's "four world-class refining bases": Zhongke Refining and Chemical Integration Project has been completed and put into operation.

• The largest petrochemical industry corporation project cross-Strait：Fujian Gulei Refining and Petrochemical Integration Project is in the final stage of construction, with an overall progress of about 90%.

• Sinopec - Saudi Basic Industry Corporation Strategic Cooperation Project: detailed design of SINOPEC SABIC Polycarbonate Project is in the final stage of construction, with an overall progress exceeding 90%.

• Building a world-class portside petrochemical base: Sinochem Quanzhou Ethylene Project has been completed and put into operation.

• Committed to becoming the world's top five refining and chemical production base: Zhenhai Refining and Chemical Ethylene Expansion Project is in the stage of construction and installation, with an overall progress exceeding 40%.

• Zhoushan green petrochemical base: Zhejiang Petrochemical Zhoushan Refining and Chemical Integration Project (Phase II) is in the stage of construction and installation, with an overall progress exceeding 60%.

• The Company's boutique project implemented in Saudi: Saudi Arabia SABIC GAS Phase-9 Air Separation Project is in the peak stage of construction, with an overall progress exceeding 80%.

Strong support for engineering service

During the Reporting Period, the Group overcame the impact of the epidemic, promoted the orderly resumption of work and production for the relevant projects, and actively launched campaign to overcome difficulties and ensure the smooth operation of the projects; strengthened the coordination of key projects construction, ensured the continuous advancement of all work by relying on the remote collaborative work system; focusing on profitability and progress, the Group implemented the "triple warning" for progress deviation, revenue deviation and budget deviation, rectified the deviation in a timely manner, and strengthened closed-loop management; through optimising the design workflow and professional division interface, the Group strengthened standardization, integration, modular design and modular construction to improve the efficiency of design and construction.

During the Reporting Period, the Group continued to strengthen the construction of subcontracting management system, and dynamically evaluated the operational effectiveness of the QHSSE system of strategic subcontractors; continued to strengthen the cultivation of strategic subcontractors, optimized the allocation of subcontracting resources, and ensured the quality, safety, progress and cost control of project construction; improved the subcontracting resources and information sharing platform, realized the integrated management of subcontractor resource pool and subcontractor evaluation, and optimized the subcontracting management cost. While ensuring the supply of materials for various construction projects, the Group has actively explored ways and means to improve procurement management, procurement efficiency, cost reduction and efficiency promotion, continued to promote the practice of framework agreement procurement and centralized procurement, and strengthened procurement management for overseas projects, areas of which witnessed remarkable progress.

The advantages of engineering technology innovation are obvious

During the Reporting Period, the Group has newly set up 172 key scientific research projects. Relevant scientific research projects closely focused on the development trend and demand of engineering market technologies. Key research and development projects have steadily moved forward. For "Solid Superacid C5, C6 Isomerization Technology Development and Industrial Test", we have completed the steam opening and calibration of the plant in Zhanjiang, and passed the acceptance of Sinopec Science and Technology Department on 1 December; for the key environmental protection research project "Research and Demonstration of Packaged Technologies for Safe and Reliable Large-flux Plasma Treatment of VOCs", we have completed the construction, commissioning and calibration of the plant in Jingmen, and achieved the target for key problem tackling. For other key environmental protection projects, such as "Development and Industrial Application of Second-Generation High Efficiency Environmental-friendly Aromatics Packaged Technology" and "Integration and Development of Heavy Oil Catalytic Cracking Technology with High Slag Content and Low Emission", we have completed the plant construction, commissioning and calibration work in Hainan and Jingmen respectively as scheduled, and the progress of scientific research projects is under overall control.

During the Reporting Period, the Group completed 660 new patent applications, among which, 401 or 60.8% applications were invention patents applications. The Group also had 361 newly licensed patents, 131 of which were invention patents.

During the Reporting Period, the Group received a total of 81 scientific advancement awards in scientific innovation and engineering construction fields at the provincial and above level. Among these awards, "development and application of packaged technologies for ultra-low sulfur emission and resource utilization of sulfur-containing waste gas from refining and chemical industry" won the second prize of National Scientific and Technological Progress Award; further, there were 24 provincial and ministerial scientific advancement awards, 2 provincial and ministerial invention awards, 2 national excellent design awards, 8 national high quality projects awards, and 35 provincial and ministerial high quality projects awards.

New breakthroughs have been made in digital engineering construction

During the Reporting Period, the Group vigorously promoted digital transformation and intelligent upgrading. According to the model of "data + platform + application", we sorted out the "three-in-one" scenario of whole business life cycle flow, phased management process flow and production tool flow, compiled the information and digital development planning framework under the "14th Five-Year Plan", and comprehensively developed the overall planning and action roadmap of the Group's digital transformation. During the Reporting Period, the Group strengthened the pilot application of and promotion of the "Implementation Detailed Rules for Digital Delivery of Petrochemical Engineering", upgraded the engineering data transfer system and ensured the progress and quality of digital delivery of key projects; focused on smart factory services, deepened the application of engineering master data, explored and studied the integrated application of equipment domain, participated in the construction of petrochemical intelligent cloud, and won the bid for the MIIT's project of design simulation industrial software adaptation and verification center.

Environmental protection and low-carbon business continued to expand

During the Reporting Period, the Group continued to expand its energy saving and environmental protection business, and signed a series of contracts such as delayed coking unit closed decoking renovation project, low temperature methanol washing (rectisol) system tail gas treatment project, waste residue landfill site restoration project and circulating water system energy saving renovation project. In the field of energy conservation, the Group actively promoted the existing contracted energy management projects and carbon footprint evaluation services, undertook a number of research work on energy conservation issues, and promoted the construction projects of photovoltaic power stations in gas stations and oil depots. In the field of soil remediation, the Group closely followed the remediation projects of contaminated sites in many areas within the territory of China, and organized partners to participate in the bidding of KOC crude oil contaminated soil remediation project in Kuwait.

As of the date of the 2020 Annual Report, in order to promote the research on the strategic path of "carbon peaking and carbon neutrality", the Group has established a joint research and development center for carbon neutrality green technology by working with the Institute of Process Engineering, Chinese Academy of Sciences and Yanshan Petrochemical Company. In the future, the Group will give full play to its experience and advantages in engineering technology innovation and engineering transformation, boost the transformation of scientific and technological achievements, and make continuous contributions to energy conservation and emission reduction in both China and the world.

Deepening reform and promoting sustainable development

Adhering to the vision of "building the world's leading technology-oriented engineering company", the Group comprehensively promoted enterprise resource optimization, reform and restructuring in accordance with the development model of "integrated operation and group-wide management and control", and made great efforts to achieve internationalized layout, differentiated development, digital transformation and intelligent upgrading, striving to build a brand of "Integrated Service Provider with Whole Industry Chain and Whole Life Cycle in Energy and Chemical Industry". The Group promoted the Company reform in depth, coordinated the development of all business segments, formed the advantages of collectivization scale, exerted the integration synergy effect, improved and extended the business chain on the basis of consolidating the traditional and core business areas, and made the high-end business bigger and stronger.

During the Reporting Period, the Group continued to promote and improve the reform of the Company's information technology branch. At present, the top-level design of the information technology branch has been promoted as a whole, the key points have been broken through for market development, and various production and operation tasks has been steadily pushed forward. During the Reporting Period, the Group has established the Russian subsidiary of Refining & Chemical Engineering Group to provide more efficient service to overseas projects and owners.

Market and Business Outlook

Looking forward to 2021, without ignoring any kinds of derivative risks under the impact of the epidemic, we realize that the world political and economic situation is still complicated and grim. However, with the recovery of global trade demand, the restoration of economic growth momentum, and the construction of a new domestic and international dual-cycle development pattern, China's economic growth is expecting a continuous steady improvement in quality and efficiency. In the future, it is predictable that the epidemic will reshape the global energy pattern, the growth rate of crude oil demand will be weaker than supply, and the international oil price will rise to a limited margin; the newly-built refining and chemical production capacity in China will be released intensively, the market players are becoming diversified, the replacement of new energy is accelerated, the green and low-carbon standards are upgraded, and opportunities and challenges coexist.

2021 is the first year of the "14th Five-Year Plan". China's energy and chemical industry is moving towards a new stage of high-quality development. China will continue to exert its strength in accelerating energy transformation, improving energy security, accelerating technological innovation and releasing the vitality of the industry, and will promote the development of the industry to a higher level. Multiple petrochemical projects in the PRC continue to advance, private enterprises keep active investment, international giants such as ExxonMobil, BASF and Saudi Aramco actively deploy their resources in the Chinese market, and the refining and chemical engineering market remains to be the arena full of opportunities and challenges. For the situation overseas, emerging economies and developing countries still have greater demand for energy and basic chemical materials. With the expansion of vaccination scale, the recovery of economy after the alleviation of global epidemic is expected to drive the overseas engineering market to revive.

In 2021, the Group will adhere to the development orientation of "Integrated Service Provider with Whole Industry Chain and Whole Life Cycle in Energy and Chemical Industry", base itself on the energy and chemical engineering construction industry, continuously broaden its business scope, extend its value chain, strengthen engineering innovation and value creation, and provide customers with high-quality one-stop overall solutions. In 2021, the Group's target of domestic new contract value is RMB49 billion, and the target of overseas new contract value is USD1.5 billion.

Summary of Financial Data and Indicators Prepared in Accordance with International Financial Reporting Standards ("IFRS")

Unit: RMB'000

Unit: RMB'000

This press release is issued by PRChina Limited on behalf of SINOPEC Engineering (Group) Co., Ltd.

About SINOPEC Engineering (Group) Co., Ltd.

The Group is a leading energy and chemical engineering company in the PRC with strong international competitiveness and can provide domestic and overseas clients with overall solutions for petrol refining, petrochemicals, aromatics, coal chemicals, inorganic chemicals, pharmaceutical chemicals, clean energy, storage and transportation facilities, environmental protection and energy saving, among other industry sectors. The Group is an integrated service provider for the whole industry chain and the whole life cycle in energy and chemical industry and can provide overall industry chain services including engineering consulting, technology licensing, project management contracting, financing assistance, EPC (engineering, procurement and construction) contracting, as well as design, procurement, construction and installation, lifting and transportation of large equipment, precommissioning and start-up.

After nearly 70 years of continuous development, the Group currently has an academician of the Chinese Academy of Sciences, three academicians of the Chinese Academy of Engineering and more than 10,000 professionals. The Group has rich project management and implementation experience, and owns and cooperatively owns patents and know-how in core business areas. The Group has delivered on schedule hundreds of modern factories with enormous investment, complicated process, advanced technology and high quality to clients in more than 20 countries and regions around the world, established long-term and steady cooperative relationships with large energy and chemical enterprises at home and abroad, maintained an extensive and stable client base, and enjoys remarkable industrial influence and social reputation.

In the future, adhering to the development orientation of "Integrated Service Provider with Whole Industry Chain and Whole Life Cycle in Energy and Chemical Industry", the Group will base itself on the energy and chemical engineering construction industry, continuously broaden its business scope and extend its value chain, comprehensively improve the level of safe, efficient, green and lowcarbon service in the business chain through "differentiated development, international operation, digital transformation and intelligent upgrading", and create a new momentum in achieving the corporate vision of "building the world's leading technology-oriented engineering company".

Disclaimer

This press release includes "forward-looking statements". All statements, other than statements of historical facts that address activities, events or developments that the Group expects or anticipates will or may occur in the future (including but not limited to projections, targets, other estimates and business plans) are forward-looking statements. The Group's actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to the price fluctuation, possible changes in actual demand, foreign exchange rate, market shares, competition, environmental risks, possible changes to laws, finance and regulations, conditions of the global economy and financial markets, political risks, possible delay of projects, government approval of projects, cost estimates and other factors beyond the Group's control. In addition, the Group makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements.

Investor and Media Enquiries:

SINOPEC Engineering (Group) Co., Ltd. - Office of the Board
Liu Jingjing /Zheng Zhexia
Tel: (86) 10 5673 0523 / (86) 10 5673 0525
Email: seg.ir@sinopec.com

PRChina Limited

Alice Yip / Jack Liu / Edward Leung
Tel: (852) 2522 1838 / (852) 2522 1368
Fax: (852) 2521 9955
Email: seg@prchina.com.hk

SOURCE: SINOPEC Engineering (Group) Co., Ltd.

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