2018E — Page 161

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

28 MATERIAL RELATED PARTY AND CONNECTED TRANSACTIONS (Continued)

(b) Other material related party and connected transactions (Continued)

(ii)

(iii)

(iv)

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 subsidiary beneficially owned the remaining 50% equity interest in 20K at 31 December 2018. During the year, the Group received management and administrative fees in the total of HK$Nil (2017: HK$100,000) 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$78,000 (2017: HK$91,000) from 20K. At 31 December 2018, the amount advanced by the Group totalling HK$3,107,000 (2017: HK$4,031,000) 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$2,105,000 (2017: HK$2,047,000) was charged to the Group for the year. At 31 December 2018, an amount of HK$1,058,000 (2017: HK$1,047,000) 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.

In May 2006, the Group appointed a wholly-owned subsidiary of HLD (“HLD Sub C") as the main contractor for a fee of 5% on all works relating to the development of Shining Heights, Nos. 220-222 Tai Kok Tsui Road, Kowloon, Hong Kong. The aggregate of the cost of works carried out by the main contractor or any connected persons (as defined in the Listing Rules) of the Group together with the 5% fee were subject to each annual ceiling of HK$16,000,000 up to the period end of 31 March 2009. In September 2009, the prime cost contract extension letter was signed which all the terms and conditions remain unchanged except to extend the period of payment for the respective ceiling of HK$5,500,000 and HK$6,500,000 for the nine months ended 31 December 2009 and for the year ended 31 December 2010 respectively.

During the years ended 31 December 2018 and 2017, there were no change in cost estimates. At 31 December 2018, an amount of HK$2,294,000 (2017: HK$2,294,000), which included amounts payable to other subcontractors through this main contractor, remained unpaid and was included in trade and other payables.

Hong Kong Ferry (Holdings) Company Limited

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Annual Report 2018