Annual Report 2019

091 Transport International Holdings Limited 2019 Annual Report Financial Review Shenzhen Bus Group Company Limited ( 深圳巴士集團股份有限公司 ) (“SZBG”) SZBG, which commenced operations in January 2005, is a Sino-foreign joint stock company formed by KMB (Shenzhen) Transport Investment Limited ( 九巴（深圳）交通投資有限 公司 ), a wholly-owned subsidiary of the Group, and four other Mainland investors. The Group has invested RMB387.1 million (equivalent to HK$363.9 million at the investment date) in SZBG, representing a stake of 35%. SZBG mainly provides public bus and taxi services in Shenzhen City, Guangdong Province, operating a fleet of over 5,000 buses running on around 300 routes and over 5,000 taxis. By continuously improving services, patronage of SZBG’s bus and taxi operations increased by 1.6% to 713.3 million in 2019 as compared to 701.8 million in 2018. To improve its competitiveness in the public transport field, SZBG has taken measures to enhance its operational efficiency and productivity. Beijing Beiqi Kowloon Taxi Company Limited ( 北京北汽九龍出租汽車股份有限公司 ) (“BBKT”) BBKT, a Sino-foreign joint stock company, was established in Beijing in March 2003. BBKT’s shareholders include KMB (Beijing) Taxi Investment Limited ( 九巴（北京）出租汽車 投資有限公司 ), a wholly-owned subsidiary of the Group, and four other China Mainland investors. The Group has invested RMB80.0 million (equivalent to HK$75.5 million at the investment date) in BBKT, representing an equity interest of 31.38%. BBKT operated both taxi hire and car rental businesses in Beijing until April 2013, when, to sharpen its focus on the business opportunities provided by the booming but challenging car rental market, BBKT spun off its car rental business to another Sino-foreign joint stock company, namely Beijing Beiqi First Company Limited ( 北京北汽福斯特 股份有限公司 ), which has the same shareholding structure as BBKT. As at 31 December 2019, BBKT had a fleet of over 3,000 taxis and 4,000 employees. Beijing Beiqi First Company Limited ( 北京北汽福斯特股份有限公司 ) (“BBF”) Established in April 2013 as a Sino-foreign joint stock company with the same shareholding structure as BBKT, BBF operates the car rental business formerly undertaken by BBKT. With ISO 9001:2008 certification for management systems in car rental services, BBF is well placed to take advantage of the business opportunities afforded by business commuters as well as by the wide variety of events, conferences and exhibitions that are held in the capital. As at 31 December 2019, BBF had over 1,000 vehicles available for charter mainly in Beijing and Tianjin. Connected Transactions and Continuing Connected Transactions The particulars of the following connected transactions and continuing connected transactions of the Group are set out below in compliance with the reporting requirements of Chapter 14A of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”): (a) THE GROUP Transactions with Sun Hung Kai Properties Insurance Limited (“SHKPI”) As described in note 33(a) to the financial statements on pages 231 and 232 of this Annual Report, on 2 November 2016, the Group entered into various insurance arrangements with SHKPI, a wholly-owned subsidiary of SHKP, which is a substantial shareholder of the Company, pursuant to which SHKPI agreed to provide to the Group (i) a motor vehicle third party and passengers’ liability insurance and an employees’ compensation insurance from 1 January 2017 to 31 December 2018; and (ii) a directors and officers liability and company reimbursement insurance from 1 January 2017 to 30 June 2018 (collectively, the “2017/18 Insurance Arrangements”). On 1 November 2017, the Group also entered into an insurance policy with SHKPI, pursuant to which the Group maintained medical and dental insurance coverage with SHKPI from 1 January 2018 to 31 December 2019 (the “2018/19 Medical and Dental Insurance Arrangement”). On 1 November 2018, the Group entered into various insurance policies with SHKPI, pursuant to which SHKPI agreed to provide to the Group a motor vehicle third party and passengers’ liability insurance and an employees’ compensation insurance from 1 January 2019 to 31 December 2020 (the “2019/20 Insurance Arrangements”). On 1 November 2019, the Group entered into an insurance policy with SHKPI, pursuant to which the Group will maintain medical and dental insurance coverage with SHKPI from 1 January 2020 to 31 December 2021 (the “2020/21 Medical and Dental Insurance Arrangement”). The transactions contemplated under the 2017/18 Insurance Arrangements, 2018/19 Medical and Dental Insurance Arrangement, 2019/20 Insurance Arrangements and 2020/21 Medical and Dental Insurance Arrangement constitute continuing connected transactions of the Company, particulars of which were disclosed in the announcements of the Company dated 2 November 2016, 1 November 2017, 1 November 2018 and 1 November 2019 respectively.