Annual Report 2019

91 ANNUAL REPORT 2019 by the relevant city planning authority as 172,748.811 square meters. As a result, the parties agreed to amend the Land Use Rights Transfer Agreement to reflect the final area with an adjusted consideration. The parties agreed that the revised balance of the consideration, as adjusted pursuant to the Zhangzhou Supplemental Agreement, is RMB93,221,039.90 (equivalent to approximately HK$105,933,000) and shall be payable by Zhangzhou Xiamen Bay to China Merchants Zhangzhou by 31 December 2019. China Merchants Zhangzhou is an indirect subsidiary of CMG, the ultimate holding company of the Company. Accordingly, China Merchants Zhangzhou is a connected person of the Company and the transaction contemplated under the Zhangzhou Supplemental Agreement constitutes a connected transaction of the Company under the Listing Rules. (g) On 20 September 2019, the Company decided that it will not accept the possible mandatory unconditional cash offer (the “ H Share Offer ”) by China International Capital Corporation Hong Kong Securities Limited, on behalf of Broadford to acquire all the issued H shares in Dalian Port (PDA) Company Limited ( 大連港股份有限公 司 ) (“ Dalian Port ”) (other than those already owned or agreed to be acquired by Broadford and parties acting in concert with it but including the H shares of Dalian Port held by the Company through Team Able International Limited ( 群力國際有限公司 ) (“ Team Able ”)) at an offer price of HK$1.0127 in cash for each H share of Dalian Port (the “ H Share Offer Price ”). The final decision of the Company to not accept the H Share Offer was set out in the shareholders’ circular dated 11 October 2019. As at 11 October 2019, the Company held 2,714,736,000 H shares of Dalian Port, representing approximately 21.05% of the total issued share capital of Dalian Port, through Team Able. Based on the H Share Offer Price, the total consideration of the H Share Offer payable to the Company would be HK$2,749,213,147.20, assuming full acceptance. As Broadford is an indirect controlling shareholder of the Company, it is therefore a connected person of the Company. Accordingly, the non-acceptance of the H Share Offer constitutes a connected transaction of the Company under the Listing Rules. (h) On 19 December 2019, Zhangzhou Xiamen Bay, a subsidiary of the Company, entered into a sale and lease agreement (the “ Sale and Leaseback Agreement ”) with China Merchants Finance Lease (Tianjin) Company Limited ( 招商局融資租賃 ( 天津 ) 有限公司 ) (“ Tianjin Finances ”), a subsidiary of CMG, the ultimate holding company of the Company for the sale and leaseback of two port assets located in Xiamen Bay, the PRC with an area of 17,303.94 square metres and 16,575.72 square metres, respectively for a term of 72 months at the consideration of RMB150,000,000 (equivalent to approximately HK$166,210,000). As security for the performance of Zhangzhou Xiamen Bay’s obligations under the Sale and Leaseback Agreement, on 19 December 2019, Zhangzhou Xiamen Bay entered into (i) a security agreement (the “ Security Agreement ”) in favour of Tianjin Finances pursuant to which Zhangzhou Xiamen Bay agreed to pledge the land use rights of two pieces of land located in Longhai City, PRC with an area of 126,401.13 square metres and 172,748.81 square metres, respectively to Tianjin Finances and (ii) a deposit agreement (the “ Deposit Agreement ”) with Tianjin Finances pursuant to which Zhangzhou Xiamen Bay agreed to pay to Tianjin Finances a deposit of RMB4,500,000 (equivalent to approximately HK$5,000,000). On the same day, Zhangzhou Xiamen Bay entered into a consultancy services agreement (the “ Consultancy Services Agreement ”) with Tianjin Finances pursuant to which Tianjin Finances will provide various consultancy services to Zhangzhou Xiamen Bay for a consideration of RMB2,700,000 (equivalent to approximately HK$3,000,000). Tianjin Finances is a subsidiary of CMG, the ultimate holding company of the Company, and therefore a connected person of the Company. Accordingly, the transactions contemplated under the Sale and Leaseback Agreement, the Security Agreement, the Deposit Agreement and the Consultancy Services Agreement constitutes a connected transaction of the Company under the Listing Rules.