Annual Report 2023

Notes to the Consolidated Financial Statements For the year ended 31 December 2023 194 CHINA MERCHANTS PORT HOLDINGS COMPANY LIMITED 39. 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 fellow subsidiaries, and also leased warehouse to joint ventures. Lease payments were received or charged at a fixed amount per month in accordance with respective tenancy agreements. During the year ended 31 December 2023, the Group has recognised an addition of right-of-use-assets of HK$139 million (2022: HK$109 million) and lease liabilities of HK$139 million (2022: HK$109 million) in relation to these leases. (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 and information technology services to the Group. The service fees were charged with reference to market rates. (iv) As at 31 December 2023, the Group placed deposits of HK$1,472 million (2022: HK$1,681 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 2.10% (2022: 1.61% to 2.10%) per annum. (v) Interest income was charged at interest rates as specified in note 22 on the outstanding advances to associates and a joint venture. (vi) As at 31 December 2023, the Group placed deposits of HK$2,958 million (2022: HK$2,334 million) with China Merchants Bank Co., Ltd., an associate of CMG. (vii) Interest expenses were charged at interest rates as specified in note 30 on the outstanding loans from immediate holding company and fellow subsidiaries. (viii) In previous years, 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 lease, the Group had recognised a right-of-use asset amounting to HK$217 million. Lease payment of HK$217 million had been made by the Group during the previous years. As at 31 December 2023, the corresponding carrying amount of the right-of-use asset was HK$313 million (2022: HK$208 million). (ix) During the year ended 31 December 2023, the Group acquired property, plant and equipment of HK$1 million (2022: HK$4 million) from an associate (2022: an associate). (x) During the year ended 31 December 2023, the Group disposed of its entire interest in Ningbo Daxie to Ningbo Zhoushan Port Company Limited for a cash consideration of approximately RMB1,845 million (equivalent to approximately HK$2,021 million). Further details are set in note 37. The balances with entities within CMG Group as at 31 December 2023 and 31 December 2022 are disclosed in notes 22, 25, 30 and 34. Save and except for those connected transactions or continuing connected transactions under the Listing Rules set out under “Connected Transactions” in the section “Report of the Directors” in the Annual Report, the other transactions as set out in this note 39(a) were not regarded as connected transactions or continuing connected transactions under the Listing Rules or were exempt from reporting, announcement and shareholders’ approval requirements under the Listing Rules. (b) Transactions with other PRC state-controlled entities A number of subsidiaries of the Company operate in Mainland China, an economic environment currently predominated by entities controlled, jointly controlled or significantly influenced by the PRC government. These PRC subsidiaries therefore have substantial volumes of transactions with other PRC state-controlled entities during their ordinary course of businesses including but not limited to the purchases of assets, construction of ports and related facilities, bank deposits and borrowings, among others.