Chairman's Statement
Dear shareholders and friends,
On this occasion of SEG’s 10th anniversary of listing, on behalf of the Board, I would like to express my heartfelt thanks to all shareholders and friends from all sectors of society for your attention and support to the Group!
Since the listing of the Company ten years ago, we have actively adapted ourselves to the major trend of energy transformation. Taking “To build the world’s leading technology-oriented engineering company” as the development vision, we actively contributed to the upgrade of petrochemical industry, and made efforts to become a comprehensive engineering and technical service provider which integrates engineering technology R&D, engineering transformation and engineering implementation, and adapted ourselves to meet the demands of full industrial chain and lifecycle. Over the past decade, the Group have completed a large number of representative key projects successively. The market influence and brand reputation of the Group have been continuously enhanced. The Group won 22 national excellent design achievement awards, 37 national quality engineering awards and 319 science and technology progress awards at national, provincial and ministerial level. Over the past decade, the Group have accumulatively generated income of RMB476.4 billion, made profit of RMB23.9 billion, generated operational cash flow of RMB33.9 billion, and distributed dividend of RMB12.1 billion, creating generous values for the society, industry and shareholders while realizing its sustainable and healthy development.
In year of 2022, the Group was faced with multiple pressures from turbulent international situations, transformation of energy and petrochemical industry as well as other influence. With focus on the enterprise strategy of “Value-Oriented, Innovation-Driven, Green & Clean, Talent-Based, Globalization-Targeted, Fusion Symbiosis” and firmly following the development target of building the world’s leading technology-oriented engineering company, the Board of the Group led all employees in a coordinated effort to propel high-quality development. The Group took upon the responsibilities and successfully completed targets and tasks to reward the society and shareholders with stable business performance. The Group’s RMB53.028 billion, net profit RMB2.282 billion, and new orders with a total value of RMB72.525 billion throughout the year. These are all hard-earned achievements. With an overall consideration of the profitability of the Group, return to the shareholders and the needs for sustainable development, the Board proposed a final dividend of RMB0.210 per share for the year of 2022. Taking into account of the interim dividend of RMB0.118 per share, the total dividend for the year was RMB0.328 per share with a dividend payout ratio of 65%, which ensures the stability of dividend payment.
Improvement of corporate governance. We have continuously improved the building of the Board according to the regulatory requirement. The function and power of the Board have been fully performed. We completed the SOE Reform 3-year action plan with high standards and passed the special audit. We strengthened the compliance governance and successfully passed the ISO 37301 compliance management system certification of LRQA, becoming one of the first batch listed companies in China and the first listed company in the petrochemical industry receiving this certification. We continuously propelled integration of management system, and implemented management penetration enhancement action, so as to continuously improve the Group overall coordination ability and resource allocation ability, as well as to reinforce the advantages of complementarity and comprehensive cooperation between the Group members. We also optimized the tracking and monitoring system for major risk events and indicators, which ensured effective prevention and control of major operating risks.
Enhancement of production and operation capability. Throughout the year, we implemented 1,192 projects at home and abroad. There were over 80,000 working headcounts per day, accumulatively reaching 250 million safe-man hours throughout the year. Domestically, by leveraging the organization and construction advantages within the Group, we completed the construction of Zhenhai Project Phase I and Jiujiang Aromatics Project, which now have been put into operation. Hainan Ethylene Project was delivered in high quality. Tianjin Nangang Ethylene Project has speeded up the construction. Huizhou Ethylene Project, Anqing Transformation and Upgrading Project and many other projects are pressing ahead. We are also accelerating the implementation of a cluster of LNG projects and Green Hydrogen projects. In overseas market, we fully carried forward the projects in Saudi Arabia, and the start-up and completion of RAPID project in Malaysia. The overseas business maintained continuous, stable and healthy operation. We build up the lean management in engineering projects to ensure project safety and quality while achieving project delivery on schedule. We strived to ensure reasonable profit margin while saving investment and achieving added value for the clients.
New track record of market exploration. We vigorously explored new markets and the value of new contracts in domestic market throughout the year hit a record high. We undertook the early work of a batch of large-scale petrochemical projects. We signed engineering design, EPC and construction contracts of many remarkable projects in the industry, such as Tianjin Nangang Ethylene Projects, CNOOC Shell Huizhou Project Phase III, CNPC Petrochemical Transformation and Upgrading Project in Jilin and so on. Besides working for SINOPEC, we also actively provided good service of development planning for CNPC, CNOOC, CHN Energy Group, Sinochem Group and Yanchang Group. In the fields of new energy and new material, we speeded up to expand our business presence and signed new contracts of RMB4.65 billion throughout the year. We made a breakthrough in overseas market under adverse situations, marked by exceeding annual contract target of USD1 billion. We entered the Algerian market for the first time, continued to consolidate the Middle East market, and successfully started to provide “technology +” high-end engineering services in the Central Asian market.
New results of innovative development. A large number of key energy and petrochemical technologies R & D programs have been carried out smoothly, represented by 24 state-level programs. We totally won 35 scientific and technological progress awards at the provincial and ministerial level and higher throughout the year. Several projects tackling core technologies in new fields have completed construction and been put into operation. We actively promoted our independently developed technologies, the technology licensing contract amount of which reached RMB399 million, with an increase of 40% year-on-year. We also worked on transformation reservation focusing on “carbon peaking and carbon neutrality” targets. The research regarding the carbon sources in the petrochemical industry was carried out with carbon neutrality strategy and implementation method in order to develop and reserve related technologies in parallel from the source, to the process and till the end.
New stage of digital empowerment. We continued to deepen the application of digital technology. Nearly 40 large-scale projects have achieved digital delivery, which strengthened the foundation of smart plant construction. Aiming at the advanced capability of digital engineering in the industry, we have continued to promote the application of digital technology in close alignment with the needs of domestic and overseas project execution. The system base platform, digital service platform and integrated design platform have been established and improved to continuously support the efficiency and quality of engineering design. In response to clients’ new needs to digital delivery and intelligent management, we developed an integrated delivery application platform based on the industrial Internet platform to realize the integration of design, construction, delivery, smart plant construction and production consulting services. The digital delivery empowers the plant operation and maintenance, thus promoting the digital engineering to be extended towards smart plant.
New achievements of green and low-carbon development. We provided clients with a full range of services for environmental protection. Resource conservation and utilization were fully implemented in the consultation planning and overall design of more than 10 major petrochemical plants, such as in Maoming, Luoyang, Jilin and Huizhou, and so on. Our service helps to enhance energy, water and land utilization efficiency from the very beginning of the petrochemical plants, life cycle, which promoted clean production. We further reduced the energy consumption and main pollutant emissions of devices by using a new generation independently-developed technology, reaching the international advanced level. These devices are from several representative projects, such as Gulei Ethylene Project, Jiujiang Aromatics Project and so on. A series of environmental protection core technologies, such as sewage treatment technology using new petrochemical materials, PTA wastewater anaerobic expansion granular sludge bed technology, and freezing crystallization technology treating wet air oxidized alkali waste from ethylene unit were respectively applied in projects such as Zhenhai Project Phase II, Yizheng Chemical Fiber Project and Nangang Ethylene Project. We provided energy-saving consultation and diagnosis for equipment in operation. We also offered companies integrated solutions covering investment, construction and project implementation, through which the energy-saving and consumption-reduction projects invested and implemented by Energy Management Company have saved 170,000 tons of standard coal per year and reduced carbon dioxide equivalent to nearly 410,000 tons per year. The three hydrogen fueling stations designed by us supplied hydrogen for 2022 Beijing Winter Olympics and light up the Olympics torch with high-purity hydrogen, which guaranteed clean energy supply for the “Green Winter Olympics”.
As we served the society and promoting high-quality development, our talent team were fully fostered and trained. Throughout the year, we gained 1 winner of “SINOPEC Scientific and Technical Meritorious Service Award”, 7 SINOPEC Outstanding Contribution Experts, 8 Min-Enze Young Scientific and Technical Talents and 35 persons with principal senior professional title. Technical and management professionals have created value on their positions, brought added value for customers, and played a leading role in the industry. We held a Summit Forum of High-quality Development of Petrochemical Industry under the Target of “Carbon Peaking and Carbon Neutrality”. The Forum invited academicians and experts to discuss green development and contributed wisdom and strength to industrial development together. The Forum attracted 1.8 million audiences online.
Looking forward to the future, under the target of “carbon peaking and carbon neutrality”, the constraint of resources and environment will have a profound impact on the development of the energy and petrochemical industry. The development of the industry will enter into a period requiring transformation and qualitative change, at same time of which the Group’s high-quality development will also come into a critical stage. At the beginning of 2023, SINOPEC Group brought forward a new strategic plan for high-quality development, following which we will strive our best along the road towards premium products, reputable brand, leading innovation and modern governance. We will coordinate and make overall plan to effectively carry out the high-quality development of the Group, striding towards the goal of making the Group world’s leading technology-oriented engineering company.
Enhance service capability to accelerate on the road towards premium products. We will pool superior resources to provide high-end consultation and reliable engineering service for the green transformation and development of the energy and petrochemical industry, in order to realize the target of “carbon peaking and carbon neutrality”. Every major project is of vital importance for clients’ long-term development. We will enhance intrinsic safety in the process of engineering design with focus on project progress, quality, profit and process control, so as to meet the higher request of customers at home and abroad. We will pursue practical actions to effectively enhance the construction guarantee and capability for major projects to build high quality projects. Smart design to be continuously improved to extend the digital engineering towards smart plant, through which we will accelerate the creation of full lifecycle digital engineering value chain.
Coordinate soft power and hard power to accelerate on the road towards reputable brand. We will firmly pursue the practice of using advanced technology under scientific and standardized management to ensure reliable product quality, which will not only create value for clients, but also facilitate us to win a broader market. We will actively participate in the “Belt and Road Initiative”. While winning important projects, we will promote our equipment, technology and standards going global to create an outstanding name card known for our excellent petrochemical engineering capability. In professional, highly-sophisticated, specialized and advanced areas, we will sharp the strength of our sub-brands to strive for the top position in their fields. We will actively participate in public service to give back to the society. We will fulfill our social responsibility to establish a good image and improve our brand reputation. We will put the concept of green, environmental protection and low-carbon into real practice to together build a beautiful homeland. We are committed to build a responsibility value chain to share benefits with relevant parties, fully unleash our brand influence, and continue to build an integrated and harmonious engineering ecosystem.
Take advantage of our unique strengths to accelerate on the road towards leading innovation. We will focus on the development demands of the industry and fully leverage our own engineering and technological advantages. With focus on the fields such as oil transformed to chemicals, oil producing chemicals, oil to special materials, new petrochemical materials and the whole hydrogen energy industrial chain, we will enhance our capability in original innovation and integrated innovation, and pursue a faster pace in developing new refining and petrochemical integrated process and achieve process flow optimization so as to explore deeper in more advanced and more extensive area of scientific and technological innovation.
Release development momentum to accelerate on the road towards modern governance. We will continue to enhance corporate governance, strengthen the construction of management system, consolidate the management foundation, and improve the management penetration throughout the whole petrochemical engineering business chain. We will stress on risk-oriented management and promote the integration and fusion of process system, internal risk control and compliance management. We will give greater support targeted to introduce more high-caliber personnel, and implement training plans for outstanding engineers and executive managers to ensure that more outstanding individuals could be continuously attracted in a long run. We will deepen the reform of the internal allocation system by highlighting benefit-oriented, and optimize a flexible and efficient market-oriented motivation and guarantee mechanism.
The roadmap has been drawn, and we are embarking on a long journey with heavy responsibility. SINOPEC Engineering Group will remain true to our original aspiration and commit ourselves to the responsibility and mission entrusted by the era. With the persistent efforts of the Board, executive staffs and all employees, under the strong support of shareholders and people from all walks of life, I believe that SINOPEC Engineering Group will make concerted effort on high-standard corporate governance, production and operation, transformation and development, scientific and technological innovation, reform management, risk prevention and control, so as to create stronger momentum for the high-quality development of petrochemical industry. We will present more quality service and bring greater value to shareholders, society and employees. We are committed to reward our investors for your support and attention with excellent business achievement and performance!
Beijing, the PRC
