(For immediate release)
（Stock code: 2386）
SEG Announces 2020 Interim Results
Seizing Market Opportunities to Continue Improving Operating Results
(23 August 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 interim results for the six months ended 30 June 2020 (the "Reporting Period").
In the rest half of 2020, confronted with this unprecedented difficult situation and the complicated and ever-changing domestic and international environment, the Company braved all the difficulties and actively carried out the "one hundred day campaign to address the tough challenges and to improve performance" initiative, focusing on epidemic prevention and control and on production and operation, emphasizing work resumption, strengthening project process control and improving the level of intensive management, achieving hard-won business performance. During the Reporting Period, the Group recognized a revenue of RMB23.797 billion, a period-on-period increase of 4.9%, and the profits attributable to equity holders of the Company were RMB1.260 billion, with a period-on-period increase of 5.1%. After due consideration of the Company's earnings, return to the Shareholders and the needs for future sustainable development, the Board recommended a 2020 interim dividend of RMB0.113 per Share, representing an increase of 4.6% on a year-on-year basis. Payout ratio reached 40%.
Seizing market opportunities and achieved significant results in market development. In the first half of 2020, the Group seized the opportunity of alleviated epidemic situation in China, closely followed the transition of the domestic petrochemical industry and grasped the market opportunities of steady advancement of the "seven major national petrochemical industry bases" and the "four world-class refining and petrochemical bases of Sinopec Group". Meanwhile, thanks to long-term hard work in overseas markets such as in the Middle East, Russia and Central Asia, the Group achieved a breakthrough in overseas market. During the Reporting Period, the value of new contracts entered into by the Group was RMB36.638 billion, representing an increase of 10.3% on a period-on-period basis. Devoting itself to epidemic prevention and control and actively fulfilled its social responsibilities, the Group built the first meltblown fabric production line of Sinopec in only 12 days, and built the world's largest meltblown fabric production base in Sinopec Yanshan Petrochemical Company and Sinopec Yizheng Chemical Fiber Co., LTD. within 76 days.
Continuous enhancement of project management capability and guarantee successful implementation of the projects. To ensure projects were implemented efficiently, orderly and safely, the Group fully leveraged its overall advantages by overall planning and optimising resources, worked hard to control the cost of subcontracting and procurement, and the safety, quality, progress and cost of the projects were under fully control. As at the end of the Reporting Period, the Group's backlog was RMB107.834 billion, representing an increase of 13.5% compared to that as at 31 December 2019, and was 2.06 times of the total revenue of RMB52.261 billion in 2019.
Steady progress in research and development and numerous fruitful results in technological innovation. The Group worked hard to successfully organise the collaboration of major technologies and the implementation of technological innovation projects, made full use of the distinctive advantages of the R&D center in the development of engineering technology and continuously strengthened the collaboration with well-known licensors in the world. The Group received a total of 20 scientific advancement awards in scientific innovation and engineering construction fields at the provincial and above level, among them, the project "Development and Application of Packaged Technologies for Ultra-low Sulfur Emission and Resource Utilization of Sulfide-bearing Waste Gas from Refining and Chemical Industry" won the second prize of National Science and Technology Progress Award in 2019.
Chairman of SEG, Mr. Yu Renming, said: "In the first half of 2020, the global economy suffered heavy losses from the pandemic and the plummeted oil price, the Petrochemical Industry is facing severe challenges. Confronted with these difficulties, we have been focusing on epidemic prevention and control and on business operation, and established work resumption orderly since the first quarter of the year. In the second quarter, we actively responded to Sinopec Group's initiatives and carried out the "one hundred day campaign to address the tough challenges and to improve performance", achieving hard-won business performance and growth during the first half of the year. For the second half of 2020, the prevention and control of domestic epidemic has become the new normal, economy will accelerate back to its normal track. The previously suppressed and stagnant demand of petroleum and petrochemical products is expected to be released rapidly. We will seize favorable market recovery opportunities, stick to the long-term perspective and enhance our capabilities. We will further carry out the campaign to improve performance, take effective measures to enhance profitability, to continuously enhance our core competitiveness and promote the sustainable development of the Company, so as to deliver returns to shareholders, society and employees."
Business Review and Highlights
Significant results in market development
During the Reporting Period, fully grasped the market opportunities and made full use of its overall advantages in Industry chain, service chain and technology chain, the Group vigorously expanded the market. During the Reporting Period, the value of new contracts entered into by the Group was RMB36.638 billion, representing an increase of 10.3% on a period-on-period basis; out of which, the value of newly signed domestic contracts amounted to RMB30.094 billion, representing a decrease of 3.1% on a period-on-period basis, and the value of newly signed overseas contracts amounted to approximately RMB6.544 billion, representing an increase of 200.6% on a period-on-period basis.
During the Reporting Period, the Group continued to develop market in the PRC and strive to explore new business in new fields and new areas. The Group entered into new contracts for a number of large projects in the PRC, such as Zhenhai Refining and Chemical Ethylene Expansion Project with a total contract value of approximately RMB10.565 billion; Sinopec Tianjin Liquefied Natural Gas (LNG) Project Expansion Project (Phase II) Receiving Terminal Project with a total contract value of approximately RMB3.183 billion.
During the Reporting Period, the Group continuously strengthened the cooperation with international engineering companies and strengthened overseas outlets, improved the deployment in overseas markets. Thanks to the long-term hard work in key markets, the Group has made a breakthrough in overseas market. The major overseas projects newly signed include: Saudi Aramco Crude Oil Transportation Pump Station Upgrade Project with a total contract value of approximately USD386 million; Russian Amur AGCC Polyolen Project with a total contract value of approximately USD256 million; and Hengyi Brunei PMB Project Design Contract with a total contract value of approximately USD47 million.
In addition to above projects, the Group followed up with several projects in oil refining, petrochemicals, new coal chemicals, environmental protection and energy saving fields, which are expected to enter into new contracts in the future.
Successful Implementation of Major Projects
Continuous enhancement of project management capability
During the Reporting Period, the Group established a key project work coordination group, to maintain close communication with the project owners and tighten the coordination of key projects; the Group intensified early planning, optimized management process, and enhanced in-process quality control; focusing on efficiency 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 project process management and closed-loop management to ensure smooth implementation of all projects; optimising the design work‑ow and professional division interface, the Group strengthened standardized design, modular design, and modular construction to improve design and construction efficiency; the Group carried out project management trainings and contract management trainings, implementing the advanced management concepts and management processes of international projects.
During the Reporting Period, the Group further improved the subcontracting management system, strengthened the cultivation of strategic subcontractors, and dynamically evaluated the operational effectiveness of the QHSSE system of strategic subcontractors, optimized the allocation of subcontracting resources; the Group developed subcontracting resources and information sharing platform, realised integrated management of subcontractor resource pool and subcontractor assessment, reduced subcontracting management costs; the Group guaranteed the supply of materials for various projects, actively explored ways to improve procurement efficiency and cost reduction, improved standard procedures, document templates and management regulations of procurement further improved procurement management for domestic and overseas projects.
Continuous promotion of innovation and technological advancement
During the Reporting Period, the Group has signed 158 new contracts for the scientific research programs, covering new energy sources, new materials, and energy saving and emission reduction technologies required for the development of petrochemical market.
During the Reporting Period, the Group's key R&D programs were steadily advanced. The project "Solid Superacid C5, C6 Isomerization Technology Development and Industrial Test" has gone through the plant start-up stage and is now under adjustment, entering the calibration preparation stage; the project "Research and Demonstration of Packaged Technologies for Safe and Reliable Large-‑ux Plasma Treatment of VOCs" has been completed and is expected to be delivered in the near future; the project "Integration and Development of High Slag Content and Low Emission Heavy Oil Catalytic Cracking Technology" has gone through the start-up for some units; and other key research projects have been advanced as scheduled and are under overall control.
During the Reporting Period, the Group completed 271 new patent applications, among which, 163 or 60.1% applications were invention patents applications. Besides, the Group completed 192 newly licensed patents, 66 of which were invention patents.
During the Reporting Period, the Group received a total of 20 scientific advancement awards in scientific innovation and engineering construction fields at the provincial and above level, among them, the project "Development and Application of Packaged Technologies for Ultra-low Sulfur Emission and Resource Utilization of Sulfide-bearing Waste Gas from Refining and Chemical Industry" won the second prize of National Science and Technology Progress Award in 2019, 14 projects won the annual Sinopec Science and Technology Progress Award, and 3 projects won quality engineering awards at different levels.
The application of digital engineering has achieved initial success
During the Reporting Period, the Group vigorously promoted digital transformation and smart upgrade. According to the "data + platform + application" model, the Group combed the "three-in-one" scenario of business ‑ow, phased management process ‑ow and production tool ‑ow in the whole life cycle from project tracking to project operation, prepared the information and digital development planning framework of the 14th Five-Year Plan, and comprehensively scheme the overall plan of the Group's digital transformation. During the Reporting Period, the Group focused on the integration of industry and finance, deepened ERP application, promoted comprehensive budget management, and established and optimized an operation management platform; paying special attention to digital delivery the Group developed in-depth application of digital factory production line through an engineering cloud APP; focusing on smart factory services, the Group deepened the application of engineering master data, explored the integrated application of equipment domains, and participated in the construction of petrochemical intelligent cloud.
Market and Business Outlook
Looking forward to the second half of 2020, the global economy is still facing great challenges. The "long tail effect" of the epidemic and the trend of "anti-globalization" have a profound impact on global development. Financial market is subject to accumulated risks, and the uncertainty of international oil prices becomes prominent, resulting the market competition increasingly fierce. However, China's economy still has great potential and momentum, and the fundamentals of long-term improvement have not changed. With continuous improvement of the epidemic situation, the demand recovery is expected to accelerate. The Group will stick to the long-term perspective, strive to find new chances amidst the crisis, create new leads in the changing situation, take initiatives in grasping the domestic and international market opportunities, and give full play to the advantages of collectivization, integration and scale to continuously enhance the core competitiveness of the enterprises and promote the sustainable development of the Group.
In the future, the development of the energy industry will adjust the pace with improved quality and efficiency, and the pattern of refining and chemical industry will constantly change. Projects of the "seven major national petrochemical industry bases" and Sinopec Group's "four world-class refining and petrochemical bases" will continue to move forward. Investments from private sector will remain active, and international energy giants such as Exxon Mobil, BASF and SABIC are poised to enter the Chinese market. Focusing on the development orientation of "Whole Life Cycle Service Provider from Project Tracking to Project Operation", the Group will strengthen its traditional advantageous businesses in oil rening and petrochemical industries and continue to establish overall solutions for industries of natural gas, new coal chemicals, environmental protection and energy saving, and build an innovation system with technological innovation as the core, focusing on key points, optimizing resources, implementing the policies in a classified and targeted manner, and jointly promoting the development of various business segments. Meanwhile, the Group will continue to closely track the market opportunities in countries and regions along the "Belt and Road" and continuously improve the competitiveness of overseas business and increase the anti-risk ability.
Summary of Financial Data and Indicators Prepared in Accordance with International Financial Reporting Standards ("IFRS")
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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, chemical engineering, aromatics, coal chemicals, inorganic chemicals, pharmaceutical engineering, clean energy, storage and transportation facilities, environmental protection and energy saving, and other industry sectors. The Group 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, pre-commissioning, start-up, digital delivery and digital factory.
After more than 60 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 nearly 10,000 high-quality professionals. The Group has extensive project management and implementation experience, and owns and cooperatively owns advanced 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. The Group has long- term and steady cooperative relationships with large energy and chemical enterprises at home and abroad, maintains an extensive and stable client base, and enjoys remarkable industrial influence and social reputation.
In the future, the Group will embrace the development positioning of "a service provider for the whole life cycle from project tracking to project operation", continue to focus on the development strategies of "energy and petrochemical-oriented, innovation-driven, globalization-targeted and value-focused", promote international expansion, differentiated evolution, digital transformation, smart upgrade, strengthen the exploration and development in the field of renewable energy and new materials, and create a new momentum in achieving the corporate vision of "building a world-leading engineering company"
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
Liting Chen / Alice Yip / Sherry Ren
Tel: (852) 2522 1838 / (852) 2522 1368
Fax: (852) 2521 9955
File: SEG Announces 2020 Interim Results Seizing Market Opportunities to Continue Improving Operating Results