Common use of SCL Agreements Clause in Contracts

SCL Agreements. The Company and the Government entered into the SCL Preliminary Entrustment Agreement (“SCL EA1”) in 2008, the SCL Advance Works Entrustment Agreement (“SCL EA2”) in 2011, and the SCL Entrustment Agreement (“SCL EA3”) in 2012 (together, the “SCL Agreements”), in relation to the SCL. Pursuant to the SCL EA1, the Company is responsible for carrying out or procuring the carrying out of the design, site investigation and procurement activities while the Government is responsible for funding directly the total cost of such activities. Pursuant to the SCL EA2, the Company is responsible for carrying out or procuring the carrying out of the agreed works while the Government is responsible for bearing and paying to the Company all the work costs (“EA2 Advance Works Costs”). The EA2 Advance Works Costs and the Interface Works Costs (as described below) are reimbursable by the Government to the Company. During the six months ended 30th June 2022, HK$77 million of such costs were incurred by the Company, which are payable by the Government. As at 30th June 2022, the amount of such costs which remained outstanding from the Government was HK$190 million. The SCL EA3 was entered into in 2012 for the construction and commissioning of the SCL. The Government is responsible for bearing all the work costs specified in the SCL EA3 including costs to contractors and costs to the Company (“Interface Works Costs”) (which the Company would pay upfront and recover from the Government) except for certain costs of modification, upgrade or expansions of certain assets (including rolling stock, signalling, radio and main control systems) for which the Company is responsible under the existing service concession agreement with KCRC. The Company will contribute an amount in respect of the costs relating to such modifications, upgrades or expansions. This will predominantly be covered by the reduction in future maintenance capital expenditure which the Company would have otherwise incurred. The total sum entrusted to the Company by the Government for the main construction works under the SCL EA3, including project management fee, was HK$70,827 million (“Original Entrusted Amount”). The Company is responsible for carrying out or procuring the carrying out of the works specified in the SCL Agreements for a project management fee of HK$7,893 million (the “Original PMC”). As at 30th June 2022, the Company has received full payment of the Original PMC from the Government in accordance with the original agreed payment schedule. The total Original PMC of HK$7,893 million has been fully recognised in the consolidated profit and loss account in previous years.

SCL Agreements. The Company and the Government entered into the SCL Preliminary Entrustment Agreement (“SCL EA1”) in 2008, the SCL Advance Works Entrustment Agreement (“SCL EA2”) in 2011, and the SCL Entrustment Agreement (“SCL EA3”) in 2012 (together, the “SCL Agreements”), in relation to the SCL. Pursuant to the SCL EA1, the Company is responsible for carrying out or procuring the carrying out of the design, site investigation and procurement activities while the Government is responsible for funding directly the total cost of such activities. Pursuant to the SCL EA2, the Company is responsible for carrying out or procuring the carrying out of the agreed works while the Government is responsible for bearing and paying to the Company all the work costs (“EA2 Advance Works Costs”). The EA2 Advance Works Costs and the Interface Works Costs (as described below) are reimbursable by the Government to the Company. During the six months ended 30th June 20222021, HK$77 HK$157 million (2020: HK$80 million) of such costs were incurred by the Company, which are payable by the Government. As at 30th June 20222021, the amount of such costs which remained outstanding from the Government was HK$190 HK$276 million (as at 31st December 2020: HK$1,035 million). The SCL EA3 was entered into in 2012 for the construction and commissioning of the SCL. The Government is responsible for bearing all the work costs specified in the SCL EA3 including costs to contractors and costs to the Company (“Interface Works Costs”) (which the Company would pay upfront and recover from the Government) except for certain costs of modification, upgrade or expansions of certain assets (including rolling stock, signalling, radio and main control systems) for which the Company is responsible under the existing service concession agreement with KCRC. The Company will contribute an amount in respect of the costs relating to such modifications, upgrades or expansions. This will predominantly be covered by the reduction in future maintenance capital expenditure which the Company would have otherwise incurred. The total sum entrusted to the Company by the Government for the main construction works under the SCL EA3, including project management fee, was HK$70,827 million (“Original Entrusted Amount”). The Company is responsible for carrying out or procuring the carrying out of the works specified in the SCL Agreements for a project management fee of HK$7,893 million (the “Original PMC”). As at 30th June 20222021 and up to the date of the interim financial report, the Company has received full payment payments of the Original PMC from the Government in accordance with the original agreed payment schedule. The total During the six months ended 30th June 2021, Original PMC of HK$7,893 million has been fully HK$nil (2020: HK$333 million) was recognised in the consolidated profit and loss account. As at 30th June 2021, the total Original PMC recognised to date in the consolidated profit and loss account in previous yearsamounted to HK$7,893 million (as at 31st December 2020: HK$7,893 million).

SCL Agreements. The Company and the Government entered into the SCL Preliminary Entrustment Agreement (“SCL EA1”) in 2008, the SCL Advance Works Entrustment Agreement (“SCL EA2”) in 2011, and the SCL Entrustment Agreement (“SCL EA3”) in 2012 (together, the “SCL Agreements”), in relation to the SCL. Pursuant to the SCL EA1, the Company is responsible for carrying out or procuring the carrying out of the design, site investigation and procurement activities while the Government is responsible for funding directly the total cost of such activities. Pursuant to the SCL EA2, the Company is responsible for carrying out or procuring the carrying out of the agreed works while the Government is responsible for bearing and paying to the Company all the work costs (“EA2 Advance Works Costs”). The EA2 Advance Works Costs and the Interface Works Costs (as described below) are reimbursable by the Government to the Company. During the six months ended 30th June 20222023, HK$77 HK$39 million of such costs were incurred by the Company, which are payable by the Government. As at 30th June 20222023, the amount of such costs which remained outstanding from the Government was HK$190 HK$206 million. The SCL EA3 was entered into in 2012 for the construction and commissioning of the SCL. The Government is responsible for bearing all the work costs specified in the SCL EA3 including costs to contractors and costs to the Company (“Interface Works Costs”) (which the Company would pay upfront and recover from the Government) except for certain costs of modification, upgrade or expansions of certain assets (including rolling stock, signalling, radio and main control systems) for which the Company is responsible under the existing service concession agreement with KCRC. The Company will contribute an amount in respect of the costs relating to such modifications, upgrades or expansions. This will predominantly be covered by the reduction in future maintenance capital expenditure which the Company would have otherwise incurred. The total sum entrusted to the Company by the Government for the main construction works under the SCL EA3, including project management fee, was HK$70,827 million (“Original Entrusted Amount”). The Company is responsible for carrying out or procuring the carrying out of the works specified in the SCL Agreements for a project management fee of HK$7,893 million (the “Original PMC”). As at 30th June 2022, the Company has received full payment of the Original PMC from the Government in accordance with the original agreed payment schedule. The total Original PMC of HK$7,893 million PMC”)which has been fully received by the Company and recognised in the consolidated statement of profit and or loss account in previous years.