Annual Report 2021

67 ANNUAL REPORT 2021 (viii) On 7 July 2020, Haixing and CMIT entered into a framework agreement (the “ Haixing IT System Framework Agreement ”) with respect to the development of the Haixing IT System for Haixing under the IT system development agreement dated 19 March 2019 and amended on 30 March 2020 (the “ Haixing IT System Development Agreement ”). According to the Haixing IT System Development Agreement, there are 28 deliverables to be completed by CMIT and the total consideration payable by Haixing to CMIT under the Haixing IT System Development Agreement shall be RMB109.89 million (equivalent to approximately HK$134 million). Pursuant to the Haixing IT System Framework Agreement, Haixing and CMIT may enter into separate agreements to amend the scope of work to be completed and the consideration payable by Haixing to CMIT for the additional work and equipment required from CMIT. The Directors resolved to set the annual cap in respect of the consideration payable by Haixing to CMIT under the Haixing IT System Framework Agreement at RMB94.2 million (equivalent to approximately HK$115 million) and RMB3.6 million (equivalent to approximately HK$4.39 million) for the year ended on 31 December 2020 and 2021, respectively. On 24 December 2021, the Directors resolved to revise the annual cap in respect of the service fees payable by Haixing to CMIT under the Haixing IT System Framework Agreement at RMB35.6 million (equivalent to approximately HK$43.41 million) for the year ended 31 December 2021 and resolved to set an annual cap in respect of the services payable by Haixing to CMIT under the Haixing IT System Framework Agreement at RMB15 million (equivalent to approximately HK$18.29 million) for the year ending 31 December 2022. The amount of service fees paid and payable by the Group to CMIT in connection with the Haixing IT System Framework Agreement in the year ended 31 December 2021 was RMB30.2 million (equivalent to approximately HK$36.4 million). CMIT is a subsidiary of CMPG, a substantial shareholder of the Company and accordingly, CMIT is a connected person of the Company. (ix) On 30 June 2021, China Merchants Qianhai Bay Property Co., Ltd. ( 深圳市 招商前海灣置業有限公司 ) (“ Qianhai Bay Property ”), an indirect wholly- owned subsidiary of the Company entered into a series of lease agreements (the “ Qianhai Bay Garden Lease Agreements ”) with (i) Yiu Lian Shekou, (ii) Chiwan Container Terminal, (iii) China Merchants Bonded Logistics, (iv) CMIT, (v) Chiwan Port, (vi) Shenzhen West Port Security and (vii) CMPG (together the “ Lessees ”) respectively for the period commencing on dates between 1 May 2021 to 1 September 2021 and ending on dates between 30 April 2022 to 31 October 2022 in relation to the leasing of numerous residential units located at Qianhai Bay Garden ( 前海灣花園 ), a residential building located in Shenzhen, PRC as housing for the employees of the Lessees. The Directors resolved to set aggregate annual caps in respect of the annual aggregate maximum amount of rental income receivable by the Group under the Qianhai Bay Garden Lease Agreements at RMB9 million (equivalent to approximately HK$10.82 million) and RMB13 million (equivalent to approximately HK$15.63 million) for the year ending 31 December 2021 and 31 December 2022, respectively. The amount of service fees received by the Group under the Qianhai Bay Garden Lease Agreements in the year ended 31 December 2021 was RMB7.6 million (equivalent to approximately HK$9.1 million). Each of Yiu Lian Shekou, Chiwan Container Terminal, CMIT, Chiwan Port and Shenzhen West Port Security is a subsidiary of CMG and therefore each of them is a connected person of the Company. China Merchants Bonded Logistics is a 60%-owned subsidiary of the Company and 40%-owned by CMPG, a substantial shareholder of the Company. Accordingly, China Merchants Bonded Logistics is a connected subsidiary of the Company. CMPG is a substantial shareholder of the Company and therefore a connected person of the Company. (x) On 24 December 2021, Haixing (a connected subsidiary of the Company) entered into a series of agreements with Shekou Container Terminal (a subsidiary of the Company), Chiwan Container Terminal, Chiwan Port Container and Mawan Port for a term of two years commenced from 1 January 2021 and ending on 31 December 2022 pursuant to which Shekou Container Terminal, Chiwan Container Terminal, Chiwan Port Container and Mawan Port will provide technology services to Haixing for the Mawan Smart Port (together, the “ Mawan Smart Port Technology Services Agreements ”). The Directors resolved to set the annual caps in respect of the service fees receivable by Shekou Container Terminal from Haixing under the respective Mawan Smart Port Technology Services Agreement as RMB10.81 million (equivalent to approximately HK$13.18 million) for the year ended 31 December 2021 and RMB3.6 million (equivalent to approximately HK$4.39 million) for the year ending 31 December 2022. The amount of service fees received by Shekou Container Terminal from Haixing under the respective Mawan Smart Port Technology Services Agreement for the year ended 31 December 2021 was RMB10.2 million (equivalent to approximately HK$12.3 million). The Directors further resolved to set an aggregate annual cap in respect of the annual aggregate service fees payable by Haixing to Chiwan Container Terminal, Chiwan Port Container and Mawan Port under the Mawan Smart Port Technology Services Agreements as RMB14.99 million (equivalent to approximately HK$18.28 million) for the year ended 31 December 2021 and RMB3.85 million (equivalent to approximately HK$4.69 million) for the year ending 31 December 2022. The amount of aggregate service fees paid by Haixing to Chiwan Container Terminal, Chiwan Port Container and Mawan Port under the Mawan Smart Port Technology Services Agreements for the year ended 31 December 2021 was RMB14.2 million (equivalent to approximately HK$17.1 million). Haixing is 67%-owned by the Company and 33%-owned by Sinotrans & CSC, which is in turn wholly-owned by CMG, the ultimate holding company of the Company and therefore is a connected subsidiary of the Company. Each of Chiwan Container Terminal, Chiwan Port Container and Mawan Port is a subsidiary of CMPG, a substantial shareholder of the Company, and therefore each of the Chiwan Container Terminal, Chiwan Port Container and Mawan Port is a connected person of the Company. (b) The Independent Non-executive Directors have reviewed the continuing connected transactions set out in paragraph (a) 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.