CIC Sustainable Finance

Certification Scheme (SFCS)

Summary Report

July 2024

YAU LEE CONSTRUCTION COMPANY LIMITED has confirmed the proceeds will be used for the specified Project Categories that meet the eligibility criteria stated:

Project Categories	Circular Economy Adapted Products, Production Technologies and Processes
Eligibility Criteria	Design and production of components, products and assets that support the circular economy

YAU LEE CONSTRUCTION COMPANY LIMITED has confirmed that the selected Project Categories and Eligibility Criteria are in line with the following internationally recognized frameworks across financial markets:

Frameworks

• The International Capital Market Association and Loan Market Association’s Green Loan Principles (GLP) (2021 Edition)

YAU LEE CONSTRUCTION COMPANY LIMITED has also confirmed the following purposes of the proceeds:

Purpose of financing

• Exclusively used to finance new eligible green projects

YAU LEE CONSTRUCTION COMPANY LIMITED has identified the below project(s) as eligible green projects which meet the eligible criteria:

Project name	Construction of Public Housing Development at Fanling North Area 15 East Phase 1
Location	Eastern part of Fanling North New Development Area 15
Project description	This contract comprises of two nos. of 32 to 35 storeys and one no. of 40 storeys domestic blocks in modular integrated construction (MiC) (total 3,120 flats), two kindergartens, one estate management office, one refuse collection point, one day care centre for elderly, one district support centre for persons with disabilities, one carpark and retail facilities, etc.
Highlights of green elements and estimated environmental impact	Waste Reduction: - Over 90% of materials installed in the prefabrication factory, materials usage can be effectively controlled such that materials wastage can be minimized and surplus materials can be reused or recycled in the prefabrication factory. - The MiC RC mould can be reused in a single project or altered for other projects. Waste generated due to mould wastage can be minimized. Reduced Environmental Impact by Construction Activities - On-site construction works activities can be reduced, environmental impact by construction activities such as dust, noise generated can be significantly reduced due to over 90% production works are carried out in prefabrication factory where construction process can be effectively controlled in the factory.

Overall Opinion on this section:

General Project Information, Clearly state the purpose of financing and framework. The applicant use the advanced technologies Modular Integrated Construction (MiC) which can reused in a single project, and over 90% can be installed in the prefabrication factory. That means the on-site construction activities can be reduced, hence the environmental impact by the construction activities can be reduced too.
The applicant provided the supporting document to show the over 90% of metal formwork could be reused and less 10% waste of concrete could be produced. We can verify the said percentage in the post-lending state.

To ensure that the projects financed by the sustainable financing instrument meet the eligible criteria, YAU LEE CONSTRUCTION COMPANY LIMITED has established an evaluation and selection process with the following key elements:

Evaluation and selection

• Clearly defined environmental sustainability objectives
• Clearly defined process for project evaluation and selection
• Clearly defined governance body to oversee the evaluation process
• Provision of eligibility criteria in line with the standards and technical requirements
• Provision of evidences to substantiate project eligibility according to the technical requirements

Overall Opinion on this section:

Clearly defined the evaluation and selection.
The applicant use the MiC that can meet the 3S concept, waste reduction, reduce energy consumption and carbon emission, reused, minmize the environmental impact.
Applicant has set up a governance body (from the top management level to the frontline level) to evaluate and select eligible projects by reviewing and monitoring th eligible projects, recommending the changes, updates and continuous developments to the green finance strategy.
Please note that the air and noise is not the focus of this application, therefore in your statement "5. Minimizing environmental impact on air and noise nuisance" in Environmental sustainability objectives, the case is focused on the waste and the air and noise impact is inrelevant to this case.

YAU LEE CONSTRUCTION COMPANY LIMITED has provided information regarding the internal governance process through which the company can track allocation of funds towards green projects. YAU LEE CONSTRUCTION COMPANY LIMITED will establish a register of funds to contain the following information:

Information

• issuer/ borrower entity transaction date
• principal amount of proceeds
• repayment or amortisation profile
• maturity date
• name and basic information of eligible projects to which proceeds have been allocated in accordance with the defined criteria
• amount of proceeds allocated to each project
• remaining amount of proceeds that have not been allocated to eligible projects

Pending the full allocation of the proceeds, YAU LEE CONSTRUCTION COMPANY LIMITED intends to hold and/or invest the balance of proceeds not yet allocated in accordance with Internal Governance Process

Overall opinion on this section:

Applicant establish a register of funds, which contain the all the information
Applicant establish and maintain an internal governance process and ensuring that the funds are allocated towards green projects and the money flow of the project can be traceable. A Project Code will be established for each specific Project. Funds granted by Banks. A register of funds will be established to register the utilization and repayment of funds.
The Project Code can monitor and control the Funds allocated towards green projects, payments input to the Account System, revenue received from employer in the Account System, the costs and revenue throughout the project period.

YAU LEE CONSTRUCTION COMPANY LIMITED is committed to transparent reporting and will publish Annual Report within one year from the date of issuance of each sustainable financing instrument and Annually thereafter until the full allocation of the proceeds. The report will consist of information on the allocation of the proceeds and the environmental impacts of the projects.

Allocation Report

• List of green projects to which the proceeds have been allocated
• Brief description of the projects
• Distribution of proceeds earmarked to eligible green projects at project level
• Proportion of net proceeds used for financing versus refinancing
• Balance of any allocation proceeds invested in cash and/or cash equivalents

In terms of impact reporting, YAU LEE CONSTRUCTION COMPANY LIMITED will report on relevant environmental metrics of the projects to which the proceeds have been allocated in line with the technical requirements.

Project Categories	Waste recycling rate
Metrics	%
Methodologies	KPI

Overall Opinion on this section:

The applicant use other methodologies KPI with % to measure the reusable and recyclable materials, components and products.
The as-built amount of materials, components and products that are reusable and recyclable were measured in tonnes / cubic meter compared with the overall materials, components and products (sum of reusable/recyclable and non-reusable/non-recyclable) measured in tonnes / cubic meter to get the %.
In the supporting document, the historical percentage (30%) has be shown when the amounts of waste for a conventional project and a MiC project are compared, therefore the non-inert waste amount can use the formila to estimate.