Annual Report 2019

Report of the Directors 96 CHINA MERCHANTS PORT HOLDINGS COMPANY LIMITED CMPG Services Framework Agreement on 31 December 2019, CMPG and the Company entered into a new services framework agreement (the “ 2020 CMPG Services Framework Agreement ”) for a term of one year commencing on 1 January 2020 and ending on 31 December 2020. The Directors resolved to set the annual cap in respect of the service fees for the provision of port and port-related services receivable by the Group from CMPG Group for the year ending 31 December 2020 as RMB24,000,000 (equivalent to approximately HK$27,000,000) and the annual cap in respect of the service fees for port and freight forwarding services payable by the Group to CMPG Group for the year ending 31 December 2020 as RMB20,000,000 (equivalent to approximately HK$22,000,000). CMPG is a substantial shareholder of the Company, and accordingly, CMPG is a connected person of the Company. (ix) As the 2019 Comprehensive Services Framework Agreement and 2019 CMPG Services Framework Agreement are of similar nature or otherwise connected, the port and port-related services provided by the Group to (i) Sinotrans & CSC and its associates and (ii) CMPG Group will be aggregated and treated as if they were one transaction. Similarly, the port-related agency service provided by (i) Sinotrans & CSC and (ii) CMPG Group and its associates to the Group will be aggregated and treated as if they were one transaction. The Directors resolved to set an aggregate annual cap in respect of the annual aggregate maximum amount of port and port-related service fees receivable by the Group and its associates from the CMG Group and its associates for the year ended 31 December 2019 at RMB75,000,000 (equivalent to approximately HK$85,200,000) and an aggregate annual cap in respect of the annual aggregate maximum amount of port-related agency service fees payable by the Group and its associates to the CMG Group and its associates for the year ended 31 December 2019 at RMB38,000,000 (equivalent to approximately HK$43,200,000). The annual aggregate port and port-related service fees received and receivable by the Group and its associates from the CMG Group and it associates for the year ended 31 December 2019 was RMB63,100,000 (equivalent to approximately HK$71,500,000) and the aggregate port-related agency service fees paid and payable by the Group and its associates to the CMG Group and its associates in connection with the service period in the year ended 31 December 2019 was RMB17,300,000 (equivalent to approximately HK$19,600,000). (x) On 11 October 2016, Shenzhen Jinyu Rongtai Investment Development Company Limited ( 深圳金域融泰投資發展有限公司 ) (“ Shenzhen Jinyu ”), an indirect wholly-owned subsidiary of the Company, and CMPM entered into a supplemental property services agreement to amend certain payment terms under a previous property services agreement, which is in relation to the provision of certain property services (such as cleaning, repair and maintenance, security and other daily management services) by CMPM for a property. The term of the property services agreement (as amended by the supplemental property services agreement) is three years from the date of completion of construction of the property, which is 11 March 2016. On 28 October 2016, the Directors resolved to set the annual caps in respect of the fees payable to CMPM under the agreement at RMB13,000,000 (equivalent to approximately HK$15,100,000), RMB13,000,000 (equivalent to approximately HK$15,100,000) and RMB2,600,000 (equivalent to approximately HK$3,000,000) for the year ended 31 December 2017, for the year ended 31 December 2018 and for the two months and eleven days ended 11 March 2019, respectively. The aggregate amount of fees paid and payable by Shenzhen Jinyu in connection with the service period in the year ended 31 December 2019 was RMB276,000 (equivalent to approximately HK$313,000). CMPM is an indirect subsidiary of CMG, the ultimate holding company of the Company, and accordingly, a connected person of the Company. (xi) On 23 December 2016, the Company and China Merchants Finance entered into a financial services agreement (the “ 2016 Financial Services Agreemen t”) for a term of three years commencing from the date of completion of the proposed merger between CMG and Sinotrans & CSC to set out the framework for future transactions in relation to, inter alia, the depositing of money by the Group with China Merchants Finance at rates no less than those offered by major domestic commercial banks. On the same day, the Directors resolved to set the cap in respect of the aggregate amount of deposit that may be placed by the Group with China Merchants Finance at any point of time during the term of the financial services agreement at HK$50,000,000. On 31 March 2017, the Directors resolved to further revise the cap in respect of the aggregate amount of deposit that may be placed by the Group with China Merchants Finance at any point of time during the term of the financial services agreement at HK$500,000,000 and on 4 October 2017, the Directors further revised the cap in respect of the aggregate amount of deposit that may be placed by the Group with China Merchants Finance at any point of time during the term of the financial services agreement at HK$3,500,000,000. The maximum amount of deposit placed by the Group during the year ended 31 December 2019 was HK$684,800,000. On 19 December 2019, in view of the expiry of the 2016 Financial Services Agreement on 22 December 2019, the Company and China Merchants Finance entered into the new financial services agreement (the “ 2020 Financial Services Agreement ”) for a term of three years commencing on 23 December 2019 and ending on 22 December 2022. With respect to the depositing of money by the Group with China Merchants Finance at any point of time during the term of the 2020 Financial Services Agreement, the Directors resolved to set the maximum amount of deposit at HK$2,100,000,000. With respect to (i) the fees payable by the Group for the provision of clearing and settlement services; (ii) the fees payable by the Group for the provision of foreign exchange clearance and settlement services and (iii) the fees payable by the Group for the provision of other financial services for each of the years ending 31 December 2020, 2021 and 2022 under the 2020 Financial Services Agreement, the Directors resolved to set the annual caps at HK$10,000,000, HK$10,000,000 and HK$10,000,000, respectively. China Merchants Finance is a subsidiary of CMG, the ultimate holding company of the Company, and accordingly, a connected person of the Company. (xii) On 17 December 2018, China Merchants (Luxembourg) S.a.r.l. (“ CM Luxembourg ”), an indirect wholly-owned subsidiary of the Company and Sinotrans Air entered into a proxy services agreement for a term of one year commencing on 1 January 2019 and ending on 31 December 2019 (the “ 2019 Proxy Services Agreement ”). Pursuant to the 2019 Proxy Services Agreement, Sinotrans Air will provide proxy services, including, among others, freight purchase, cargo inspection, customs clearance, warehousing, document processing, in relation to international transportation to CM Luxembourg (and vice versa). The management fees under the proxy services agreement are negotiated on an arm’s length basis with reference to the market management fees of similar services and the volume of services required by CM Luxembourg. It is estimated that the management fees payable by CM Luxembourg to Sinotrans Air are approximately EUR4,000,000 (equivalent to approximately HK$35,400,000). The Directors resolved to set the annual cap in respect of the aggregate management fees payable under the 2019 Proxy Services Agreement for the year ended 31 December 2019 at EUR4,000,000 (equivalent to approximately HK$35,400,000). The aggregate management fee paid and payable under the 2019 Proxy Services Agreement in connection with the service period in the year ended 31 December 2019 was RMB464,000 (equivalent to approximately HK$526,000). On 19 December 2019, in view of the expiry of the 2019 Proxy Services Agreement on 31 December 2019, CM Luxembourg and Sinotrans Air entered into a