Annual Report 2019

227 ANNUAL REPORT 2019 43. RELATED PARTY TRANSACTIONS (CONTINUED) (a) Balances and transactions with associates and joint ventures of the Group and with CMG, its subsidiaries, associates and joint ventures (collectively referred to as the “CMG Group”) (Continued) Notes: (i) The Group rented certain vessels and properties from and leased office premises and residential units to the CMG Group. Lease payments were received or charged at a fixed amount per month in accordance with respective tenancy agreements. As at 31 December 2019, the Group has additional right-of-use-assets of HK$17 million and lease liabilities of HK$17 million in relation to these leases (2018: N/A). (ii) The ports, logistics and information technology service fees were charged with reference to market rates. (iii) These related parties provided barges to bring cargos into terminals operated by the Group and provided cargo management services to the Group. The service fees were charged with reference to market rates. (iv) As at 31 December 2019, the Group placed deposits of HK$644 million (2018: HK$494 million) with China Merchants Group Finance Co., Ltd., a subsidiary of CMG, which is a financial institution approved and regulated by the People’s Bank of China and the China Banking Regulatory Commission. The amounts are included in cash and bank balances. Interest income was charged at interest rates ranging from 1.61% to 3.30% (2018: 1.61% to 3.12%) per annum. (v) Interest income was charged at interest rates as specified in notes 24 and 27 on the outstanding advance to associates of the Group and a joint venture, and amount due from a related party. (vi) Interest expenses were charged at interest rates as specified in note 33 on the outstanding amounts due to these related parties. (vii) During the year ended 31 December 2019, a subsidiary of the Company entered into a transaction with a related party for leasing of a parcel of land located in Djibouti. At inception of the relevant lease, the Group recognised right-of-use assets of HK$217 million. Lease payment of HK$217 million has been made by the Group during the year. As at 31 December 2019, the corresponding carrying amount of the right-of-use asset is HK$214 million. (viii) During the year ended 31 December 2019, the Group acquired property, plant and equipment of HK$5 million (2018: nil) from fellow subsidiaries. (ix) Pursuant to the relevant agreements entered into between the Group, QHSH and the CMG Group, the Group’s participation in the development of the Qianhai-Shekou Free Trade Zone includes: (1) resumption of certain land parcels held by two subsidiaries of the Group in Qianhai, Shenzhen, the PRC, by QHSH. The compensation for the resumption includes cash of RMB5,693 million (equivalent to approximately HK$6,457 million) and a piece of land located in Dachan Bay Port Phase II, Shenzhen, the PRC; (2) the establishment of a joint venture company (the “Joint Venture Company”) by (i) an entity established in the PRC in which the Group holds 14% equity interest (“A1 Company”, with the other 86% equity interest being held by certain members of the CMG Group) and (ii) a subsidiary of QHSH; and (3) the injection into the Joint Venture Company of certain land parcels by A1 Company and injection of cash of RMB1,407 million (equivalent to approximately HK$1,596 million) into A1 Company by the Group, of which RMB1,190 million (equivalent to approximately HK$1,350 million) was injected into the Joint Venture Company. During the year ended 31 December 2019, QHSH has assigned the land and related debt to a subsidiary of A1 Company (“A2 Company”) and the Group has received the compensation in cash of RMB5,693 million (equivalent to approximately HK$6,457 million) from A2 Company. As at 31 December 2019, the Group has not received the said piece of land in Dachan Bay. Other parties’ participation in the Qianhai-Shekou Free Trade Zone include, among others: (1) the injection into the Joint Venture Company of certain land parcels and injection of cash of RMB8,643 million (equivalent to approximately HK$9,803 million) into A1 Company by certain members of the CMG Group, of which RMB7,310 million (equivalent to approximately HK$8,291 million) has been injected into the Joint Venture Company; and (2) the injection into the Joint Venture Company of certain land parcels by QHSH. (x) During the year ended 31 December 2018, the Company disposed of its entire interest in CMPG Group to certain subsidiaries of CMG for an aggregate cash consideration of HK$5,410 million. Further details are set out in note 39.