NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
MATERIAL RELATED PARTY AND CONNECTED TRANSACTIONS (Continued)
30
(b)
Other material related party and connected transactions
(i)
(ii)
(iii)
In 1999, the Group entered into a development agreement (the "Agreement") with Henderson Land Development Company Limited ("HLD") and two wholly-owned subsidiaries of HLD ("HLD Sub"), whereby HLD Sub acquired the right to 50% of any proceeds from the future sale of the residential portion of the redevelopment of Metro Harbour View, Kowloon Inland Lot No. 11127 (the "MHV Property") for a consideration of HK$1,500,000,000.
As part of the Agreement, HLD Sub agreed to reimburse the Group 50% of its development expenditures relating to the residential portion of the MHV Property. At 31 December 2016, an amount of HK$268,000 (2015: HK$265,000) remained unpaid and was included in trade and other receivables.
In February 2017, the Group entered into a deed of novation (the "Deed of Novation") with HLD and first HLD Sub and second HLD Sub pursuant to which first HLD Sub transferred and assigned unto second HLD Sub, and second HLD Sub took and assumed all of the rights and obligations of the first HLD Sub under the Agreement subject to the terms and conditions as stated in the Deed of Novation. The Deed of Novation was supplemental to the Agreement.
In December 2001, a wholly-owned subsidiary of the Company acquired 50% equity interest in 20K Company Limited ("20K") which was set up to provide mortgage loans to the residential unit buyers of the MHV Property. HLD through its subsidiaries beneficially owned the remaining 50% equity interest in 20K at 31 December 2016. During the year, the Group received management and administrative fees in the total of HK$125,000 (2015: HK$150,000) from 20K. The Group and HLD Sub have made advances to 20K to finance the latter's mortgage operation and interest was charged on amounts advanced. During the year, the Group received interest amounting to HK$62,000 (2015: HK$38,000) from 20K. At 31 December 2016, the amount advanced by the Group totalling HK$5,236,000 (2015: HK$1,169,000) is in proportion to the Group's equity interest in 20K and is unsecured and has no fixed repayment terms.
In December 2002, the Group appointed a wholly-owned subsidiary of HLD ("HLD Sub A") as the leasing and promotion agent of the commercial arcade of the MHV Property, Metro Harbour Plaza ("MHP"), for an initial term of two years at the remuneration of 5% of the monthly rental income from MHP and such agreement shall thereafter be renewable on the same terms from year to year until terminated by either party by giving three months' prior notice in writing. An amount of HK$2,025,000 (2015: HK$1,903,000) was charged to the Group for the year. At 31 December 2016, an amount of HK$1,020,000 (2015: HK$990,000) remained unpaid and was included in trade and other payables.
As the aforementioned agreement was renewable on the yearly basis until terminated by either party, the Group had monitored the receipt of the funds during the year.
Hong Kong Ferry (Holdings) Company Limited
136 Annual Report 2016