Annual Report 2019

97 ANNUAL REPORT 2019 new proxy services agreement for a term of one year commencing on 1 January 2020 and ending on 31 December 2020. On the same day, the Directors resolved to set the annual cap in respect of the aggregate management fees payable under the new proxy services agreement for the year ending 31 December 2020 at EUR4,000,000 (equivalent to approximately HK$34,000,000). Sinotrans Air is an indirect subsidiary of CMG, the ultimate holding company of the Company, and accordingly, a connected person of the Company. (xiii) On 6 November 2018, the Company and CMHIT, a subsidiary of the Company, entered into a comprehensive services framework agreement (the “ 2019 CMHIT Comprehensive Services Framework Agreement ”) to set out the framework for future transactions in relation to the provision of technology consulting services, software development and information systems integration services by CMHIT to other members of the Group. The Comprehensive Services Framework Agreement is valid until 31 December 2019 with an option to extend. The Directors also resolved to set the annual caps in respect of the service fees payable by the Group to CMHIT for each of the two years ended 31 December 2018 and 2019 at RMB16,000,000 (equivalent to approximately HK$18,000,000) and RMB18,000,000 (equivalent to approximately HK$20,200,000), respectively. On 9 August 2019, the Board resolved to revise the annual cap in respect of the service fees payable by the Group to CMHIT for the year ended 31 December 2019 at RMB90,000,000 (equivalent to approximately HK$102,300,000). The amount of service fees paid and payable by the Group to CMHIT in connection with the service period in the year ended 31 December 2019 was RMB29,200,000 (equivalent to approximately HK$33,100,000). On 19 December 2019, in view of the expiry of the 2019 CMHIT Comprehensive Services Framework Agreement on 31 December 2019, the Company and CMHIT entered into the 2020 CMHIT Comprehensive 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 following annual cap in respect of the service fees payable by the Group to CMHIT for the year ending 31 December 2020 at RMB90,000,000 (equivalent to approximately HK$100,000,000). CMHIT is held by the Company and CMPG as to 76.84% and 23.16%, respectively. Since CMPG is a substantial shareholder of the Company, CMPG is a connected person of the Company, and accordingly, CMHIT is a connected subsidiary of the Company. (xiv) On 9 August 2019, Shenzhen Jinyu, an indirect wholly-owned subsidiary of the Company, and SCMPI entered into a property services agreement (the “ 2019 Property Services Agreement ”) for a term of three years commencing on 1 July 2019 and ending on 30 June 2022. Pursuant to the 2019 Property Services Agreement, Shenzhen Jinyu engages SCMPI to provide lease management and operational management services in relation to a property located in Nanhai Yikumeng Industrial Building located in the Guangdong Province (the “ Target Property ”). Shenzhen Jinyu agrees to pay to SCMPI (i) a management fee of 6% of any operational income actually received by Shenzhen Jinyu (including but not limited to rental fees received from the rental of advertisement space and venue space at the Target Property); (ii) a commission fee of 6% of any annual income received by Shenzhen Jinyu from the rental of car parks at the Target Property; and (iii) any expense (including human resources costs) incurred by SCMPI under the 2019 Property Management Services Agreement. The Directors resolved to set the annual caps in respect of the fees payable to SCMPI under the 2019 Property Management Services Agreement for the six months ended 31 December 2019, the year ending 31 December 2020 and the year ending 31 December 2021 as RMB4,400,000 (equivalent to approximately HK$5,000,000), RMB9,200,000 (equivalent to approximately HK$10,500,000), and RMB9,600,000 (equivalent to approximately HK$10,900,000), respectively. The amount of service fees paid and payable by the Group to SCMPI in connection with the service period in the year ended 31 December 2019 was RMB4,200,000 (equivalent to approximately HK$4,800,000). SCMPI is an indirect wholly-owned subsidiary of CMG, and accordingly, a connected person of the Company. (k) The Independent Non-executive Directors have reviewed the continuing connected transactions set out in paragraph (j) of this section above. In their opinion, these transactions were: (i) in the ordinary and usual course of business of the Group; (ii) on normal commercial terms; and (iii) in accordance with the relevant agreements governing such transactions and on terms that are fair and reasonable and in the interests of the shareholders of the Company as a whole. The Independent Non-executive Directors further opined that: (i) in respect of the lease by Euroasia to CMCS of Tsing Yi Leased Land, details of which are set out in note (i) to paragraph (j) of this section, the aggregate rental fees for the year ended 31 December 2019 have not exceeded HK$15,500,000, the annual cap for the year ended 31 December 2019; (ii) in respect of the lease by CMSIZ to SCMPS of 14 parcels of land in Shekou, details of which are set out in note (ii) to paragraph (j) of this section, the aggregate rental fees for the year ended 31 December 2019 have not exceeded RMB21,700,000, the annual cap for the year ended 31 December 2019; (iii) the lease agreements set out in notes (i) to (ii) to paragraph (j) of this section are of a similar nature or otherwise connected, and thus will need to be aggregated as if they were one transaction. In addition, members of the Group and other associates of the CMG Group have also entered into other lease agreements and management agreements requiring the payment of rental or management service fees by members of the Group to the corresponding associates of the CMG Group which individually, are de minimis