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SEG Announces 2022 Interim Results Ensuring Stable Production and Business Operation Maintaining Hard-won Results


HONG KONG, CHINA / ACCESSWIRE / 21 August 2022 / SINOPEC Engineering (Group) Co., Ltd. (“SEG” or the “Company”, together with its subsidiaries collectively known as the “Group”) (stock code: 2386) today announces its interim results for the six months ended 30 June 2022 (the “Reporting Period”).

The first half of 2022 was extraordinary and challenging with the continuous change in international situation, violent fluctuation of energy market, domestic epidemic spread in multiple areas, and increased downward pressure on the economy. Facing the severe and complicated situations, the Company concentrated its efforts to overcome difficulties, strove to repay the society and shareholders with stable operating performance and pragmatic responsibilities, and obtained hard-won results. According to IFRS, the Group achieved total revenue of RMB25.959 billion, representing a decrease of 3.3% year-on-year, and the net profi­t was RMB1.355 billion, representing a year-on-year increase of 0.6%.

The board has always focused on shareholder’s return and insisted on sharing the Company’s growth with shareholders. In the first half of the year, despite facing many difficulties and challenges, the board decided to maintain the continuity of dividend distribution and distribute an interim dividend of RMB0.118 per share, with a dividend payout ratio of 40%.

In the ­first half of 2022, the Group gave full play to the “Large Troop Formation” combat mode, continued innovation, deepened reform, and brought together a strong synergy to promote high-quality development, and achieved positive results in various aspects.

1. Anchored technological guidance and made every effort to strengthen innovation leadership

The Group fully utilized the advantages of leading technologies and technological guidance to explore the structural adjustment of the refi­ning and chemical industry and the path of energy conservation and emission reduction under the “Carbon Peaking and Neutrality” targets. By focusing on “throat-cutting” technologies, accelerating the layout plan of “three new” areas and deepening digital transformation, high-quality innovations in engineering technologies were used to make advancement in “strengthening the origin and base” and “making high-end growth” in the re­fining and chemical industry.

In terms of transformation and upgrading of oil re­fining structure, the Group anchored on the development direction of “oil transformed to chemicals”, “oil producing chemicals” and “oil transformed to special products”, and actively promoted the inception and implementation of projects based on the new technologies of “cracking” and “dehydrogenation”. Steady progress was made in deep catalytic cracking technology for residue to chemicals (RTC) in Anqing, naphtha catalytic cracking (SNCC) in Zhanjiang and moving-bed propane dehydrogenation technology in Zhenhai, providing technical support for the transformation and upgrading of refi­ning and chemical enterprises in improving quality and efficiency; production of qualifi­ed products was realized in the third-generation aromatics (Jiujiang) plant; the low-cost ethane cracking gas to styrene demonstration plant started operation successfully for the first time. The above technologies opened up a new route of process technologies for the efficient conversion and utilization of oil products.

In terms of new energy, the Group actively explores the integrated development model of new energy and traditional energy, focusing on research in the fields of green and low-carbon new energy such as CO2 recycling and “thermal hydrogen wind and solar”. Among them, three well-planned and designed hydrogen refueling stations started operation successfully, making a unique contribution to enabling the “Green Winter Olympics”. Xinjiang Kuqa photovoltaic hydrogen production demonstration project is progressing steadily, and distributed photovoltaic projects of Zhongke were successfully connected to the grid, and several rooftop photovoltaic projects of oil (gas) refueling stations were successfully constructed and started power generation, providing supportive efforts for energy conservation, emission reduction and green development in the energy industry.

In terms of new chemical materials, the Group focused on tackling key problems with “key-bottleneck” materials, acting courageously as the chain leader and striving to build an efficient research and development chain that integrates basic research, engineering transformation and user needs with mutual reinforcement. Among them, the 10,000-ton class 48K large tow carbon ­fiber project was successfully completed for delivery, and the 1,000-ton class high-grade polybutene-1 industrial demonstration plant started operation successfully in Zhenhai, marking the Group’s new major technological breakthrough in the field of high-end synthetic materials. Steady progress was made in the development of new materials and industrial application projects represented by polyolefin elastomers (POE) in Maoming and polyglycolic acid (PGA) in Guizhou, and actively explored the construction of engineering conversion platform technologies for high-viscosity and ultra-high-viscosity materials, with a high level of China’s engineering research and complemented the critical links in the industrial chain of the re­fining and chemical industry in China with high-standard engineering research and development and engineering transformation capabilities.

In terms of digitalization construction, the Group aimed at the advanced level of digital engineering capabilities in the industry, continued to deepen the application of digital technology, closely matched the needs of domestic and foreign project execution, established and improved the basic system platform, digital service platform and integrated design platform, and continued to improve engineering design efficiency and quality. Given the new needs of industry customers for digital delivery and intelligent management, an integrated platform for delivery applications was developed based on the internet platform of the industry to achieve the integration of design, construction, delivery, smart factory construction and production consulting services. Digital delivery empowered factory operation and maintenance, and facilitated the extension of digital engineering construction to smart factories.

2. Strengthen resource planning and made every effort to promote value enhancement

In terms of market development, the Company continued to deepen its development in traditional markets and actively promoted emerging markets, and achieved good results in market development. In the first half of the year, the total value of new contracts entered into by the Group amounted to RMB44.150 billion, representing a year-on-year increase of 20.4%. For domestic market, the Group entered a number of large EPC contracts, including Huizhou Ethylene Project, Tianjin Ethylene Project and Zhenhai Phase Two Project. For overseas, the Group has made major breakthrough in EPC Contracting project field in Africa market and signed two EPCC contracts with National Petroleum Company of Algeria.

In terms of project implementation, the Group actively fulfilled its core responsibilities of “Ensuring National Energy Security”, gave full play to its advantages in the integration of the industrial chains of engineering and construction, and implemented 1,138 projects, with overall safety, quality and environmental protection under control. The ethylene expansion project in Zhenhai, which was undertaken by the Group through EPC general contracting, was fully completed and put into operation, empowering capabilities and intelligence for the creation of a “world-class, high-tech and integrated” green petrochemical base. Hainan’s refi­ning and chemical integration projects will be delivered in the near future to support the petrochemical industry with high quality development.

3. Secured reform management and made every effort to improve governance efficiency

In terms of corporate reform, the Group continued to optimize the organizational structure, management mechanism and operation model of international business, integrated advantageous resources, and utilized overall collaboration to lay the foundation for high-quality development of overseas business.

In terms of system construction, the Group launched the campaign of “improvement of management penetration” to continuously optimize the management system and enhance management efficiency. The construction of a compliance system based on the new standard ISO 37301 was initiated first, striving to lead the industry in realizing the integration of compliance system and management system, injecting new momentum into the Company’s high-quality development.

In terms of internal control and risk control management, the Group focused on “strengthening internal control, preventing risks and promoting compliance”, continued to strengthen the construction of internal control system, and improved the working rules and supporting systems of various governance entities. The management and control system of major business risks based on the entire life cycle of project contracts commenced pilot operation, and the Company’s key risk management and control capabilities were further improved.

4. Established a high-quality platform and forged a high-quality talent team

During the reporting period, the Group continued to deepen the development strategy of “Talent-based Enterprises”, optimized the talent training model, and created a “Future Scientist” platform to carry out the young science and technology elite competition. A group of young science and technology talents with development potential and forward-looking innovative projects stood out. Two outstanding young people won the title of “Sinopec Outstanding Young Technological Innovation Talents”. The Group launched the “Talent Seedling Program” and selected 34 “post-1985” outstanding young talents to take temporary positions for training in difficult positions, complex positions and key positions. Through platform building and undertaking burdens of pressure, efforts were increased in nurturing young cadres through source cultivation, practical training and target nurturing to improve the comprehensive capabilities and quality of young talents and realize the common development of talents and enterprises. Through such a series of measures, a bridge for in-depth communication between various units was set up, the Group’s advantages of scale and integrated synergies were enhanced continuously with the power of integration.

Chairwoman of SEG, Ms. Sun Lili said: “The current global political and economic situation is severe and complex, the international energy market fluctuated sharply, various risks were closely intertwined, intense competition in the industry and pressure on profit margins have brought unprecedented challenges to the Company’s operation. Facing this severe and complex situation, we will continue to concentrate on self-targeted efforts and make solid steps to maintain basic production and business operation, better deal with the uncertainty of external environment with the certainty of our own business. The Group will consistently fulfill its core responsibilities of ensuring national energy security, supporting the petrochemical industry with high quality development, and contributing to the promotion of national strategic scientific and technological strength. We will continue to focus on engineering innovation and value creation, fusion and symbiosis with various stakeholders, and comprehensively improve the integrated service capabilities of the entire business chain and life cycle. This year marks the tenth year that Sinopec SEG has completed its reorganization. It is an important milestone in the integrated development of SEG and a new starting point for setting sail. We believe that with the unremitting efforts of the board, management and all employees, and the strong support of our shareholders and the society, SEG will achieve higher-quality and more efficient development, and create greater value for the society, shareholders and employees!”

Business Review and Highlights

Market development continue to achieved success

During the Reporting Period, the total value of new contracts entered into by the Group amounted to RMB44.150 billion, representing a year-on-year increase of 20.4%.

During the Reporting Period, the Group continued to deepen its development in the domestic market. The Group entered into new contracts for a number of large projects, including the BEPC contract for the Huizhou Ethylene Project with a total contract value of approximately billions of dollars; EPC contract for the Tianjin Nangang 1.20 million t/a Ethylene and Downstream High-end New Material Industry Cluster Project with a total contract value of approximately RMB9.174 billion; EPC contract for the Zhenhai Re­fining and Chemical 11.00 million t/a Re­fining and High-end Synthetic New Materials Project with a total contract value of approximately RMB4.055 billion; EPC contract for the Xinjiang Kuqa Green Hydrogen Demonstration Project with a total contract value of approximately RMB1.164 billion.

During the Reporting Period, the Group has made major breakthrough in EPC Contracting project field in Africa market, and signed EPCC contract for Skikda LNG Storage Tank Project and Arzew MTBE project of National Petroleum Company of Algeria with total contract value of USD182 million and USD315 million, respectively; continuously consolidated the market in the Middle East, and signed procurement construction contract of Ras Tanura Project of Saudi Aramco and framework agreement for construction of Luberef of Aramco in Jeddah Yanbu; started the “technology + high-end” development in market of Russia and Middle Asia, and signed equipment manufacture, design and procurement contract for MTO Project of Jizzakh Petroleum Company of Uzbekistan; made new breakthrough in front-end consultation service field in Southeast Asia, and signed feasibility study contract for Re­fining and Chemical Integration Project of Zhejiang Petrochemical in Pengerang in Malaysia.

Efficient and stable progress of major projects’ constructions

  • Hainan Refining and Chemical Integration Project has been delivered.
  • Tianjin Nangang Ethylene Project was in the early stage, and the overall progress was about 30%.
  • Baling Caprolactam Project has entered the peak period of construction, with an overall progress exceeding 50%.
  • Xinjiang Kuqa Green Hydrogen Demonstration Project was in the early stage, and the overall progress was about 30%.
  • Tianjin LNG (Phase II) Project has entered the peak period of construction, with an overall progress exceeding 70%.
  • Shandong LNG (Phase III) Project has entered the peak period of construction, with an overall progress exceeding 80%.
  • Wenzhou LNG Project has entered the peak period of construction, and the overall progress was about 70%.
  • Longkou LNG Project was in the early stage, and the overall progress was about 20%.
  • AGCC Project in Russia: some related work of Russian AGCC Project were rescheduled according to the owner’s request. For the next step, the Group will maintain active communication with the owner

Steady advancement in research and development of engineering technologies and smooth progress in key scientifi­c research projects

During the reporting period, the Group signed 265 new contracts on various types of technological developments and 39 contracts on licensing of technologies. Innovations in various types of engineering technologies closely focused on strategic development of the Company and technical needs of the engineering market. Key scientifi­c research projects advanced steadily, and critical core technologies achieved important progress in making breakthroughs.

Increasing number of patent applications and numerous fruitful results in technological innovation

During the reporting period, the Group continued to strengthen its patent portfolio, maintained a good momentum of patent applications and completed 272 new patent applications. 280 patents were newly licensed, of which 126 were licensing of invention patents and quality of patents was steadily improved. The patent “A Device and Method for Distributing and Collecting Liquid Materials in an Adsorption Separation Tower” won the Silver Award of China Patents. The Group’s innovations in engineering technologies were closely focused on the Group’s strategic development and technological needs of the engineering market, and 265 new contracts on various types of technological developments and 39 contracts on technology licensing were signed, with the value of technology licensing contracts exceeding RMB150 million. Key scientifi­c research projects were progressing steadily, signi­ficant progress was achieved in tackling issues on critical core technologies. Technological innovation yielded further fruitful results. The Group has won a total of 36 scientifi­c and technological advancement awards under various categories, including 9 first prizes of provincial and ministerial level scientifi­c and technological progress prizes.

Engineering and construction projects implementation being carried forward comprehensively and efficiently

During the reporting period, the Group actively fulfilled its core responsibilities of “Ensuring National Energy Security”, gave full play to its advantages in the integration of the industrial chains of engineering and construction, and implemented 1,138 projects, with overall safety, quality and environmental protection under control. The ethylene expansion project in Zhenhai, which was undertaken by the Group through EPC general contracting, was fully completed and put into operation, empowering capabilities and intelligence for the creation of a “world-class, high-tech and integrated” green petrochemical base. Hainan’s re­fining and chemical integration projects will be delivered in the near future to support the petrochemical industry with high quality development.

During the Reporting Period, the Group continued to strengthen the construction of subcontracting management system, and dynamically evaluated the operational effectiveness of the QHSE (quality, health, safety and environment) system of strategic subcontractors; continued to strengthen the cultivation of strategic subcontractors, ensured the construction proportion of strategic subcontractor, and ensured the quality, safety, progress and cost control of project construction; realized the integrated management of subcontractor resource pool and subcontractor evaluation, optimized the allocation of subcontracting resources and reduced the cost of subcontracting management. The Group continued to promote procurement through framework agreements and centralized procurement, carried out strategic cooperation with overseas project suppliers, and improved the efficiency of procurement management.

Proper ful­lfillment of accountability of subject for safety, quality and environmental protection

During the reporting period, the Group always adhered to the QHSE core value concepts of “people-oriented, quality first”, adhered to system thinking, deepened the integration of system, production and operation, strictly realized the undertaking of major risk responsibilities, promoted consistent implementation of the system, and effectively improved the penetration power of safety management. Thorough implementing on-site environmental protection, management and control, environmental protection management was integrated into the whole business process, making new contributions to accelerate the creation of a green and low-carbon development industry. The relevant national requirements were implemented consistently, the “three-tier” epidemic prevention and control system operated efficiently, normalized preventive controls and emergency treatment were effectively combined and always maintained a “zero infection” record, while overall public safety and risk of epidemic in overseas projects were under control. As of the end of this reporting period, a total of 119 million consecutive safe man-hours were realized, maintaining good momentum in safe production.

Business Prospects

Looking forward to the second half of 2022, the external environment is becoming more complex and severe, the global inflation pressure continues to accumulate, and the characteristics such as instability, uncertainty and imbalance of world economy development are becoming more prominent. Nevertheless, China’s government at the same time has made effective overall plan for pandemic prevention and control as well as economic and social development, strengthened the adjustment of macro-policy, and national economy is gradually overcoming adverse influence and showing a good momentum of recovery.

In the coming period, the energy industry will face a series of transformational challenges: firstly, the rapid development of new energy industry will profoundly affect the energy industry pattern; secondly, the green and low-carbon transformation under the goal of “Carbon Peaking and Neutrality” will become the fundamental drive for the growth of traditional energy industry; thirdly, industrial transformation and upgrading pose higher requirements for independent innovation capability of enterprises.

In the second half of 2022, facing the more complex environment and challenges, the Group will fully study and judge risks and keep clear-minded in the profound and complicated changes. On the other hand, we will always concentrate on self-targeted efforts and make solid steps to maintain basic production and business operation, better deal with the uncertainty of external environment with the certainty of our own business, and strive to reinforce the stability of the annual business performance.

Firstly, insisting on leading by innovation, promoting independence and self-development in science and technology with full efforts. Focusing closely on national strategic needs, daily needs of common people, as well as transformation and development of the industry, our efforts will be concentrated on critical core technologies in solving problems in the fields of “oil transformed to chemicals”, “oil producing chemicals”, “oil transformed to special products”, high-end new materials, and hydrogen energy industrial chain, exploring integrated development models for new energy sources and traditional energy sources, conducting strategic research and building technology reserve for achieving the targets of “Carbon Peaking and Neutrality”, strongly promoting “establishing leaders”, “solving problems with soft teams” and building “innovative joint entities” to stimulate innovative forces and assisting in the realization of compatible and complementary links for “production and learning, research and application”, and using “sophisticated craftsmanship” on the “­ne materials” of scientists to design and produce with excellence and transform the fruits of science and technology in the R&D laboratories into green and efficient production capabilities. Meanwhile, full efforts will be exerted to promote digital construction, conducting systematic studies on the application scenarios of digital delivery, continue to deepen the construction of smart plants and lay a solid foundation for building smart plants for the refining and chemical enterprises.

Secondly, insisting on value creation, promoting high-quality and stable growth with full efforts. In terms of market development, we will focus on key domestic projects and consolidate our leading position in the industry with high quality and competitive prices; increase overseas market development, implement new international business operation models, cultivate new competitiveness and development momentum, and strive to achieve new achievements in overseas market development. In terms of project execution, in the second half of the year, we will strengthen overall coordination, integrate sophisticated equipment, superb technology and capable forces to promote high-quality, safe and efficient implementation of engineering projects. Meanwhile, taking the intrinsic safety of design as the standard, we will make every effort to carry out the inspection and evaluation of the design compliance of the old equipment of the refi­ning and chemical enterprises, so as to provide a strong guarantee for the improvement of the intrinsic safety level of the whole life cycle of the refining and chemical equipment.

Thirdly, insisting on being Talent-based Enterprises, building a strong portfolio of outstanding talents with full efforts. Based on the six talent projects, the Group will focus on the critical period for the growth of scientifi­c and technological talents and the golden period of innovation, accelerate the improvement of a talent development mechanism with petrochemical characteristics and international competitiveness to achieve high-quality development in the work of talents. The training programs of “Approaching Scientists” and “Entering Advanced Enterprises” will be launched, adopting the method of “inviting in and going out” to strengthen professional quality training, improve the overall quality of cadres and employees, and accelerate the training of a group of strategic scientists and engineering technology leading talents, outstanding engineers, skilled masters and young talents in science and technology, to achieve a high degree of compatibility between talent growth and enterprise development, and contribute powers to the construction of a talent center of worldwide importance and a landmark of innovation for the nation.

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

Unit: RMB’000

Items

As at 30 June
2022
As at 31 December 2021 Changes from the end of 2021 (%)

Total assets

72,256,949 72,917,243 (0.9 )

Total equity attributable to equity holders of the Company

29,521,670 29,118,084 1.4

Net assets per share attributable to equity holders of the Company (RMB)

6.67 6.58 1.4
Unit: RMB’000

Items

For the six months Changes over the same period of
ended 30 June
2022 2021 2021 (%)

Revenue

25,958,552 26,851,392 (3.3 )

Gross profit

2,664,294 2,524,351 5.5

Operating profit

1,167,517 1,161,083 0.6

Profit before taxation

1,621,965 1,611,209 0.7

Net profit attributable to equity holders of the Company

1,354,606 1,347,127 0.6

Basic earnings per share (RMB)

0.31 0.30 0.6

Net cash flow generated from operating activities

(1,378,489 ) (1,978,359 ) (30.3 )

Net cash flow generated from operating activities per share (RMB)

(0.31 ) (0.45 ) (30.3 )
For the six months ended 30 June

Items

2022 2021

Gross profit margin (%)

10.3 9.4

Net profit margin (%)

5.2 5.0

Return on assets (%)

1.9 1.9

Return on equity (%)

4.6 4.7

Return on invested capital (%)

4.7 4.8

Items

As at 30 June
2022
As at 31 December 2021

Asset-liability ratio (%)

59.1 60.1

~ End ~

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 than10,000 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. The Group take “Engineering Innovation” and “Value Creation” as the development engines and deepen the implementation of the six development strategies of “Value-Oriented, Innovation-Driven, Green & Clean, Talent-Based, Globalization-Targeted, Fusion & Symbiosis”. The Group comprehensively improve the level of safe, efficient, green and lowcarbon service in the business chain, and fuel 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: [email protected]
PRChina Limited

Joanne Liu / Jack Liu / Mei Ning
Tel: (852) 2522 1838 / (852) 2522 1368
Fax: (852) 2521 9955
Email: [email protected]

File: SEG Announces 2022 Interim Results Ensuring Stable Production and Business Operation Maintaining Hard-won Results

SOURCE: PRChina Limited



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