Annual Report 2023

ANNUAL REPORT 2023 73 (vi) Reference is made to the announcements of the Company dated 31 October 2022 and 28 September 2023. Between 27 May 2022 and 31 October 2022, 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 (together, the “Existing Qianhai Bay Garden Lease Agreements” ) with (i) Yiu Lian Shekou, (ii) Sinotrans Supply Chain, (iii) Shenzhen West Security, (iv) CMPG, (v) Chiwan Container Terminal, (vi) CMBL, (vii) CMIT, (viii) Chiwan Port, (ix) CM Chuangrong, (x) Shenzhen Gangteng and (xi) CM Property Management (together, the “Existing Lessees” ), respectively, for the period commencing on dates between 1 May 2022 to 1 December 2022 and ending on dates between 30 April 2023 to 30 November 2023 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 Existing Lessees. The Directors resolved to set aggregate annual caps in respect of the rental income receivable by the Group under the Existing Qianhai Bay Garden Lease Agreements at RMB5.00 million (equivalent to approximately HK$5.51 million) and RMB16.80 million (equivalent to approximately HK$18.67 million) for the years ended 31 December 2022 and 31 December 2023, respectively. Between 1 April 2023 and 30 November 2023, in view of the expiry of the Existing Qianhai Bay Garden Lease Agreements, Qianhai Bay Property entered into new lease agreements with (i) Yiu Lian Shekou, (ii) CM Property Management, (iii) Shenzhen West Security; (iv) CMPG; (v) Chiwan Container Terminal; (vi) Chiwan Port; (vii) CMBL; (viii) CMIT; (ix) CM Chuangrong; and (x) Shenzhen Gangteng (together, the “ New Lessees ”), respectively, to lease numerous residential units located at Qianhai Bay Garden as staff quarters for their respective employees for the period commencing on dates between 1 April 2023 to 1 December 2023 and ending on dates between 30 April 2024 to 30 November 2024 (together, the “ 2023 Qianhai Bay Garden Lease Agreements ”). The Directors expected that the annual cap in respect of the rental income receivable by the Group under the Existing Qianhai Bay Garden Lease Agreements and the 2023 Qianhai Bay Garden Lease Agreements for the year ending 31 December 2023 will not be sufficient. Accordingly, on 28 September 2023, the Directors resolved to revise the annual cap upwards to RMB20.90 million (equivalent to approximately HK$23.22 million) for the year ending 31 December 2023 and set aggregate annual cap in respect of the rental income receivable by the Group under the 2023 Qianhai Bay Garden Lease Agreements for the year ending 31 December 2024 at RMB10.43 million (equivalent to approximately HK$11.59 million). The aggregate rental income received and receivable by the Group under the Existing Qianhai Bay Garden Lease Agreements and the 2023 Qianhai Bay Garden Lease Agreements in the year ended 31 December 2023 were RMB14.75 million (equivalent to approximately HK$16.39 million). Each of the Existing Lessees and New Lessees is an indirect subsidiary of CMG, the ultimate holding company of the Company and accordingly each of them is a connected person of the Company. (vii) Reference is made to the announcements of the Company dated 24 December 2021, 29 December 2022 and 18 December 2023. On 24 December 2021, the Company and Sinotrans & CSC entered into a comprehensive services framework agreement which sets out the framework for the provision of port-related services by members of the Group to members of the Sinotrans & CSC Group and the provision of agency services by members of the Sinotrans & CSC Group to members of the Group for a term of three years commencing on 1 January 2022 and ending on 31 December 2024 (the “ 2022 Sinotrans Services Framework Agreement ”). The annual caps in respect of the service fees for port-related services receivable by the Group from the Sinotrans & CSC Group for each of the three years ended/ending 31 December 2022, 2023 and 2024 were RMB26.00 million (equivalent to approximately HK$28.89 million), RMB34.00 million (equivalent to approximately HK$37.78 million) and RMB45.00 million (equivalent to approximately HK$50.00 million). On 29 December 2022, the Directors resolved to revise the annual caps in respect of the service fees for port-related services receivable by the Group from the Sinotrans & CSC Group under the 2022 Sinotrans Services Framework Agreement upwards to RMB35.00 million (equivalent to approximately HK$38.89 million), RMB50.00 million (equivalent to approximately HK$55.56 million) and RMB60.00 million (equivalent to approximately HK$66.67 million) for each of the three years ended/ending 31 December 2022, 2023 and 2024, with terms of the 2022 Sinotrans Services Framework Agreement unchanged. The Directors expected that the existing annual cap in respect of the service fees for port-related services receivable by the Group from the Sinotrans & CSC Group under the 2022 Sinotrans Services Framework Agreement will not be sufficient for the year ending 31 December 2023. Accordingly, on 18 December 2023, the Directors resolved to revise the annual caps upwards to RMB55.00 million (equivalent to approximately HK$61.11 million) for the year ending 31 December 2023. The Directors also expect that the existing annual caps in respect of the services fees for cargo transportation and related agency services payable by the Group to the Sinotrans & CSC Group under the 2022 Sinotrans Services Framework Agreement will not be sufficient for the years ending 31 December 2023 and 31 December 2024. Accordingly, on 18 December 2023, the Directors resolved to revise the annual caps upwards to RMB12.00 million (equivalent to approximately HK$13.33 million) and RMB13.20 million (equivalent to approximately HK$14.67 million) for each of the two years ending 31 December 2023 and 2024. The aggregate service fees received and receivable by the Group for port-related services, in the year ended 31 December 2023 were RMB47.13 million (equivalent to approximately HK$52.36 million), and the aggregate service fees paid and payable by the Group for cargo transportation and related agency services in the year ended 31 December 2023 were RMB7.58 million (equivalent to approximately HK$8.42 million). Sinotrans & CSC is a wholly-owned subsidiary of CMG, the ultimate holding company of the Company, and accordingly, a connected person of the Company. (viii) Reference is made to the announcements of the Company dated 24 December 2021 and 18 December 2023. On 24 December 2021, CMPG and the Company entered into a service framework agreement (the “ 2022 CMPG Services Framework Agreement ”) which sets out the framework for the provision of port and port-related comprehensive services by members of the Group to members of the CMPG Group and the provision of port and port-related comprehensive services by members of the CMPG Group to members of the Group for a term of two years commencing on 1 January 2022 and ending on 31 December 2023. Pursuant to the 2022 CMPG Services Framework Agreement, the prices for the provision of services should be fair and reasonable and shall be at terms not less than those provided to independent third parties and that the terms and conditions for these services shall be determined with reference to the prevailing market conditions. The Directors had resolved to set the annual caps in respect of the service fees for the provision of port and port-related comprehensive services receivable by the Group from CMPG Group as RMB17.00 million (equivalent to approximately HK$18.89 million) and RMB23.00 million (equivalent to approximately HK$25.56 million) for the years ended/ending 31 December 2022 and 2023, respectively, and the annual caps in respect of the service fees for port and port-related comprehensive services payable by the Group to CMPG Group as RMB10.00 million (equivalent to approximately HK$11.11 million) and RMB13.00 million (equivalent to approximately HK$14.44 million) for the years ended/ending 31 December 2022 and 2023, respectively. The Directors expected that the existing annual cap in respect of the service fees for port and port-related comprehensive services payable by the Group to CMPG Group and the annual cap in respect of the service fees for the provision of port and port-related comprehensive services receivable by the Group from CMPG Group will not be sufficient for the year ending 31 December 2023. Accordingly, on 18 December 2023, the Directors resolved to revise the annual cap in respect of the service fees for the provision of port and port-related comprehensive services receivable by the Group from CMPG Group under the 2022 CMPG Services Framework Agreement upwards to RMB32.00 million (equivalent to approximately HK$35.56 million) and