(23March 2020, Hong Kong) SINOPEC Engineering (Group) Co., Ltd. (“SEG” or the“Company”, together with its subsidiaries collectively known as the “Group”)(stock code: 2386) today announces its annual results for the twelve monthsended 31 December 2019 (the “Reporting Period”).
In 2019,confronted with heavytasks and various challenges, the Grouphas made efforts to fulfill the market developmenttargets, ensurethe progress of key projects, tighten cost control and expensesreduction, deepenenterprise reform, and strengthen qualityand safety management,and has achieved hard-wonbusiness performance.Duringthe Reporting Period, theGroup’s revenuewasRMB52.261 billion, representing an increase of 11.1%on a year-on-year basis;the net profit was RMB2.184 billion,representing an increase of 30.0% on a year-on-year basis; Afterdue consideration of the Group’s earnings, return to theShareholders and the needsfor future sustainable development,the Board recommended a ­finaldividend of RMB0.212 per Sharefor the year 2019. After taking into account the interim dividendof RMB0.108 per Share, thetotal dividend for the year will beRMB0.320 per Share, representing a substantial increase of42.9% on a year-on-yearbasis. Payout ratio reached 65%.
Chairman of SEG, Mr. Yu Renming said: “In 2019, the world’s political andeconomic situation was complicated and changeable, the Group has made effortsto fulfill the market development targets, ensure the progress of key projects,tighten cost control and reduce expenses, deepen enterprise reform, and strengthenquality and safety management, and has achieved hard-won business performance.Looking forward to 2020, profound changes are brewing in the energy andchemical industry. The industrial structure, consumption structure and energystructure are constantly adjusted. The Group’s operation and development arefacing new opportunities and challenges. The Group will earnestly carry outanalysis on the circumstances and task, imperturbably face and tacklechallenges, and build itself into a ‘service provider of the whole life cyclefrom project planning to project operation’, striving to create a new momentumfor the reform and development of the SEG, so as to deliver real benefits to toshareholders , society and employees with more excellent performance.”
The Group fi­rmly grasped the goldenopportunity of domestic refi­ning investmentandachievedsignificant results in market development. SEGfocused on the potential projects of “seven majornationalpetrochemical industry bases” and the“world-class refi­ning bases” of Sinopec Group, exerted ourcompetitive advantages tostrive to expand our market shares. In 2019, the Group entered into new contracts for a numberof large projects in the PRC, such as Fujian Gulei Refi­ning and PetrochemicalIntegration Project, largest petrochemicalindustry corporation project cross – Strait, with a total contract value ofapproximately RMB12.513 billion. The Group has continuously improved itscompetitiveness, improved the deployment in overseas markets. In 2019, the Groupachieved breakthroughs in the Omani and Uzbek markets for the fi­rst time. Italso signed new contracts of Saudi Aramco Marjan Oil and Gas Increase andExpansion Project, BASF USA Pipeline Prefabrication Project, Kuwait’s Al-ZourNew Refi­nery Maintenance Project and Saudi Aramco Overhaul and RenovationProject. During the Reporting Period, the total new contract value wasRMB52.319 billion, representing an increase of 2.7% on a year-on-year basis.
Kuwait Oil Re­finingProject
Continuous enhancement of project management capability and guaranteesuccessful implementation of the projects. In 2019, Zhongke Re­fining and Chemical Integration Project achieved acomprehensive high standard of handover while Zhong’An Joint Coalifi­cationIntegration Project successfully finished start-up. The 4,000-ton crawler cranemade its debut in Saudi Arabia, and the down-stream processing project ofKazakhstan won the China Construction Engineering Luban Prize. In respect ofmore efficient, orderly and safe implementation, the Group fully leveraged itsoverall advantages by overall planning and optimising resources, worked hard tocontrol the cost of subcontracting and procurement, and the safety, quality,progress and cost of the projects were under fully control. As at 31 December2019, the Group’s backlog was RMB94.994 billion, which was generally in linewith that as at 31 December 2018, and 1.8 times of the total revenue ofRMB52.261 billion in 2019.
Zhongke Re­fining and Chemical Integration Project
Steady progress in research and development and numerous fruitful resultsin technological innovation. The Group workedhard to successfully organise the collaboration of major technologies and theimplementation of technological innovation projects, made full use of thedistinctive advantages of the R&D center in the development of engineeringtechnology and continuously strengthened the collaboration with well-knownlicensors in the world. “Development and Industrial Application ofSecond-Generation High Efficiency Environmental-friendly Aromatics PackagedTechnology” was successfully commissioned once in September 2019, producingeligible PX products. High Efficiency Catalyst and Complete Set of Technologyfor Dilute Ethylene Value-added Conversion” received the national scienti­ficand technological advancement award.
Business Review and Highlights
Significant results in market development
During the Reporting Period, the Group made full use of its overalladvantages in its industry, business and technical chains, and expanded itspresence in the market in a proactive manner. During the Reporting Period, thevalue of new contracts entered into by the Group was RMB52.319 billion, amongwhich, the value of newly signed domestic contracts amounted to RMB45.585billion, which remained broadly the same on a year-on-year basis, and the valueof newly signed overseas contracts amounted to approximately RMB6.734 billion,representing an increase of 34.6% on a year-on-year basis.
The Group continued to deepen its traditional markets while striving toopen up new regional markets. The Group entered into new contracts for a numberof large projects in the PRC, such as Fujian Gulei Re­fining and PetrochemicalIntegration Project with a total contract value of approximately RMB12.513billion, Sinopec Tianjin Oil Product Upgrade Project with a total contractvalue of approximately RMB2.601 billion, Tianjin Bohai Chemical DMTO Relocationand Transformation Project with a total contract value of approximatelyRMB2.049 billion, Sinochem Quanzhou Oil Refining Reconstruction and ExpansionProject with a total contract value of approximately RMB1.913 billion.
The Group strengthened its cooperation with international engineeringcompanies, continuously improved its competitiveness, improved the deploymentin overseas markets, strengthened the building of overseas outlets and expandedits business to new regions and new fi­elds. The Group achieved breakthroughsin the Omani and Uzbek markets for the ­first time, signing the Oman DUQM Refi­neryP2 Construction Project with a total contract value of approximately RMB376million, and the basic design of the new sulfuric acid and phosphate fertilizerproject for Uzbekistan with a total contract value of approximately RMB29million. During the Reporting Period, other major newly signed overseasprojects of the Group include Saudi Aramco Marjan Oil and Gas Increase andExpansion Project with a total contract value of approximately RMB1.004billion; BASF USA Pipeline Prefabrication Project with a total contract valueof approximately RMB826 million; Kuwait’s Al-Zour New Re­finery MaintenanceProject with a total contract value of approximately RMB395 million; SaudiAramco Overhaul and Renovation Project with a total contract value ofapproximately RMB376 million.
In addition to the above projects, the Group also followed up withseveral projects in oil re­fining, petrochemical engineering, new coalchemicals, environmental protection and energy saving ­fields, and is expectedto sign the contracts with the relevant parties regarding such projects in thefuture.
Fujian Gulei Refi­ning andPetrochemical Integration Project
Successful Implementation of Major Projects
One of Sinopec Group’s “four world-class refiningbases”: Zhongke Refi­ningand Chemical Integration Project was in the ­final stage of constructionwith an overall progress exceeding 90%, and the progress was under control ingeneral.
The largest petrochemical industry corporation project cross-Strait：Fujian Gulei Refi­ning andPetrochemical Integration Project is inthe stage of underground pipeline and civil construction, with an overallprogress of about 30%.
Eastern China 's largest coal-based methanol toolefins project: Zhong’An Joint Coalification Complex Project’s main unitsachieved a comprehensive high standard of handover, and the whole plantsuccessfully commissioned once and produced acceptable products.
Sinopec - Saudi Basic Industry Corporation StrategicCooperation Project: detailed design of SINOPEC SABIC Polycarbonate Project wascompleted, and the fi­eldinstallation started, with an overall progress of about 40%.
Building a world-class portside petrochemical base:Sinochem Quanzhou EthyleneProject is in the ­finalstage of construction, with an overall progress exceeding 90%.
The Company's largest project by contract value in theMiddle East region: Kuwait Oil Re­fining Project has been completed and handedover to the owner, which made us the ­first to complete the contract among thecontractors in the project and was highly recognised by the owner.
TheCompany's largest project in the Southeast Asian region: the overall progressof the Malaysia RAPID Oil Refining Project has already completed the start-upof the atmospheric unit, and the start-up of other units was in progress asscheduled.
The Company's boutique project implemented in Saudi: designof Saudi Arabia SABIC GAS Phase-9 Air Separation Project has been largelycompleted, and the procurement progressed nearly 80%. Currently, the project isunder construction with an overall progress exceeding 70%.
Saudi Arabia SABIC GAS Phase-9 Air Separation Project
Continuous enhancement of project management capability
The Group kept close communications with owners, strengthened thecoordination of key projects construction, issued a list of key projects,established a coordination group for key projects, and strengthenedorganisation and coordination. Focusing on efficiency and progress, the Groupimplemented the “triple warning” for progress deviation, revenue deviation andbudget deviation, rectifi­ed the deviation in a timely manner, strengthenedclosed-loop management, and ensured the smooth implementation of the projects.Through optimising the design work?flow and professional division interface,the Group strengthened standardisation and modular designs, and improved designefficiency; carried out project management trainings and contract managementtrainings, creating International Project Management Manual brand trainings andimplementing the advanced management concepts and management processes ofinternational projects; strengthened project settlement management,continuously followed up the reduction of project inventory and accountsreceivable, and constantly paid attention to the analysis of project basic dataand recti­fication guidance.
The Group further improved the subcontracting management system,strengthened the cultivation of strategic subcontractors, and evaluated theoperational effectiveness of the QHSSE system of strategic subcontractors;developed subcontracting resources and information sharing platform, realisedintegrated management of subcontractor resource pool and subcontractorassessment, with continuous optimisation of allocation in subcontractingresources, which reduced subcontracting management costs. While ensuring thesupply of materials for various construction projects, we have activelyexplored ways and means to improve procurement management, procurementefficiency, cost reduction and efficiency promotion. We improved standardprocedures, document templates and management regulations, promoted frameworkagreement procurement, and strengthened procurement management for overseasprojects, areas of which witnessed remarkable progress.
International Project Management Manualbrand trainings
Continuous promotion of innovation and technological advancement
Steady progress in research and development of engineering technologiesand major progress in key scientific research projects. The Group has newly setup 190 key scientifi­c research projects. Relevant scienti­fic researchprojects closely focused on the development trend and demand of engineeringmarket technologies.
Key research and development projects have been steadily moved forward.“Development and Industrial Application of Second-Generation High EfficiencyEnvironmental-friendly Aromatics Packaged Technology” was successfullycommissioned once in September 2019. The key research tasks represented by “SEWater Coal (Coke) Slurry Gasifi­cation Complete Technology” have achieved thekey research objectives at a high standard. Other key research projects, suchas “Alkylation of High-grade Polybutene -1 and 200,000 Tons Per Annum ZCA-1Solid Acid”, were all moved forward as scheduled and under overall control.
Increasing number of patent applications and numerous fruitful resultsin technological innovation. The Group completed 600 new patent applications,among which, 370 or 61.7% applications were invention patents applications. TheGroup also had 338 newly licensed patents, 138 of which were invention patents.
During the Reporting Period, the Group received a total of 72 scientificadvancement awards in scientific innovation and engineering construction ­fieldsat the provincial and above level. Among these awards, “High EfficiencyCatalyst and Complete Set of Technology for Dilute Ethylene Value-addedConversion” received the national scienti­fic and technological advancementaward. Further, there was 1 provincial and ministerial scientific advancementaward, 24 provincial and ministerial invention awards, 1 national excellentdesign award, 10 high quality projects awards, and 27 provincial andministerial high quality projects awards.
Development and Industrial Application of Second-Generation HighEfficiency Environmental-friendly Aromatics Packaged Technology
ERP system successfully constructed and implemented
During the Reporting Period, the Group comprehensively promoted theapplication of integrated design and digital delivery, and established aconstruction platform for digital factory based on INTERGRAPH/AVEVA productionline. The innovation of the Group in engineering design model supported theintelligent factory operation of domestic and foreign owners. The Groupstrengthened the cross-group control of large-scale engineering softwarelicensing in full scope, full module, full process and full element costs,deepened application of intelligent process design, comprehensively promotedintegrated engineering design, improved quality and efficiency of visualthree-dimensional design, achieved breakthrough in pilot of digital delivery,centralized control of standardised engineering main data, and shared virtualengineering cloud resources. The overall engineering design capability andproject execution effectiveness of the Group were improved, and new momentumwas obtained for the networking, digitalisation and intelligence reform of theengineering construction model of the Group.
The Group steadily pushed forward the construction of smart projects andcompleted a series of smart engineering projects such as the draft ofImplementation Detailed Rules for Digital Delivery of PetrochemicalEngineering, the pilot application of Zhenhai Refi­ning and Chemical POX UnitProject, the promotion and application of key Sinopec projects with unifi­edengineering material coding, the integration and application of Zhongke Re­finingand Chemical Integration Project in the 4D pipeline construction managementsystem, and the research, development and independent innovation ofthree-dimensional design in equipment and structure. The standardised design,centralised procurement and modular construction have enabled the Group totransform and upgrade its digitalisation. The Group has effectively guaranteedthe high level, high quality and high efficiency for completion of the owner’scontracts with fi­rst-class platform, excellent design and high-qualityservice.
the application of integrated design and digital delivery
Market and Business Outlook
Lookingforward to 2020, there are still many uncertain factors affecting the recoveryof the world economy and the complicatedsituation where domestic andinternational contradictions exist simultaneously may continue. The year of2020 is the last year ofChina’s 13th Five-Year Plan and the decisive year forbuilding a comprehensive well-off society. Chinese economy will overcomethe impact of the COVID-19 andcontinue to maintain a development with stable growth rate, optimisedstructure, and kineticenergy conversion. In the future, the development of theenergy industry will adjust the pace with improved quality and efficiency,and the patten of re­fining andchemical industry will constantly change. Certain projects of the national“seven major nationalpetrochemical industry bases” and Sinopec Group’s “fourworld-class re­fining bases” will continue to progress. Private investmentswill remain active, and internationallarge energy companies such as Exxon Mobil, BASF and SABIC will actively beinvolved intheChinese market. The business development of the Group will meet newopportunities and challenges.
In 2020,the Group will enthusiastically seize the market opportunities at home andabroad, fully leverage its advantages such ascollectivisation, integration andlarge scale, continuously enhance its core competitive edge, propel itssustainable and healthydevelopment. In 2020, the Group ‘s new contract value targetis RMB56 billion.