Annual Report 2019

225 ANNUAL REPORT 2019 42. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED) (e) Contingent liabilities (i) As at 31 December 2019, TCP Group has significant contingent liabilities arising from pending legal proceedings in Brazil in respect of disputes with local tax authorities, employees or former employees of TCP Group and other parties, amounting to HK$306 million (2018: HK$369 million), which, based on the latest estimates of the management of the Group, is not probable that outflows of resources embodying economic benefits will be required to settle these obligations. Accordingly, no provision for litigation claims in respect of the above cases has been made in the consolidated financial statements. A counter indemnity in favour of the Group is executed by the Selling Shareholders pursuant to which the latter indemnify to the Group for the above contingent liabilities for and up to predetermined amounts and specified length of time. (ii) As at 31 December 2019 and 2018, the other shareholder of an associate of which the Group held as to 49% of its issued share capital provided corporate guarantees to the full amount for certain loan facilities granted by banks to and other obligations borne by the relevant associate. A counter indemnity in favour of the other shareholder of the associate is executed pursuant to which the Group undertakes to indemnify the other shareholder 49% of the liabilities in the aggregate amount of HK$90 million (2018: HK$108 million) arising from the above loan facilities and other obligations. In addition to above, the Group also provides guarantees for banking facilities granted to and other obligations borne by an associate of CMG. The total amount guaranteed by the Group is HK$224 million (2018: nil) and the aggregate amount utilised by the relevant related party amounted to HK$132 million (2018: nil). As at 31 December 2018, the Group has also provided guarantees for banking facilities granted to and other obligations borne by an associate of the Group. The total amount guaranteed by the Group was HK$392 million and the aggregate amount utilised by the relevant associate amounted to HK$28 million. The Group has been released from the guarantee upon expiring by the relevant deed of guarantee during the current year. The directors of the Company assessed the risk of default of the related party and the associates in serving the aforesaid loan facilities and other obligations at the end of the reporting period and considered the risk to be insignificant and it is not likely that any guaranteed amount will be claimed. (iii) As at 31 December 2019 and 2018, the Company was involved in a legal action involving dispute over the Group’s overseas investment. Based on advice of legal counsel and information available to the Group, the directors of the Company are of the opinion that it is pre-mature to assess the possible outcome of the case and the Company is unable to ascertain the likelihood and estimate a reliable amount of the claim at the current stage. 43. RELATED PARTY TRANSACTIONS The directors of the Company regard CMG, a stated-owned enterprise registered in the PRC and is controlled by the PRC government, as being the ultimate holding company of the Company. Related parties refer to entities in which CMG has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions, or directors or officers of the Company and its subsidiaries. Other than as disclosed elsewhere in these consolidated financial statements, a summary of significant related party transactions entered into in the normal course of business between the Group and its related parties during the year and balances arising from related transactions as at 31 December 2019 are as follows: