We attach herewith the announcement made to The Stock Exchange of Hong Kong Limited ("The HKEx") on 2 April 2024 by Parkson Retail Group Limited ("PRGL"), a 54.97% owned subsidiary of Parkson Holdings Berhad ("PHB" or the "Company") listed on The HKEx, in relation to the discloseable transaction on a tenancy agreement in respect of a property in Guiyang City, Guizhou Province, the People's Republic of China ("PRC").
On 2 April 2024, PRGL had announced the entering into of a tenancy agreement on 29 March 2024 between Guizhou Shenqi Parkson Retail Development Co., Ltd. ("Sub-Tenant"), an indirect 60% owned subsidiary of PRGL, Guizhou Longgang Commercial Operation Management Co., Ltd. ("Tenant A"), an indirect wholly-owned subsidiary of Guizhou Shenqi Enterprise Co., Ltd. ("Guizhou Shenqi Enterprise"), and Guizhou Yuncui Property Management Co., Ltd. in respect of the sub-lease of Basement Level 1, and Level 1 to Level 4 in Longgang International Center, 117 Zhonghua Middle Road, Guiyang City, Guizhou Province, the PRC ("Property") for a term of up to 15 years and 7 months commencing from the date of commencement of the 7-month renovation period, which shall be no later than 30 April 2024 ("Tenancy Agreement").
Pursuant to the International Financial Reporting Standard 16 - Leases ("IFRS 16") issued by the International Accounting Standards Board, the entering into of the Tenancy Agreement as a sub-tenant will require the PRGL Group to recognise the Property as a right-of-use asset, the amount of which is approximately Rmb57.1 million (equivalent to approximately RM37.1 million). Thus, the entering into of the Tenancy Agreement and the transactions contemplated thereunder will be regarded as an acquisition of asset by the PRGL Group ("Acquisition of Asset") under the Rules Governing the Listing of Securities on The HKEx ("Listing Rules").
For the purpose of this announcement, an exchange rate of Rmb1.00: RM0.65 is assumed.
As the highest applicable percentage ratio in respect of the consideration for the acquisition of the right-of-use asset recognised by the PRGL Group pursuant to IFRS 16 is more than 5% but less than 25%, the entering into of the Tenancy Agreement constitutes a discloseable transaction of PRGL, and is therefore subject to reporting and announcement requirements but is exempted from circular and shareholders' approval requirements under Chapter 14 of the Listing Rules.
The total assets, profits and revenue of the Sub-Tenant compared with that of the PRGL Group was less than 5% of the applicable percentage ratios for the financial year ended 31 December 2023, hence the Sub-Tenant is an insignificant subsidiary of PRGL.
Notwithstanding Tenant A is indirectly wholly-owned by Guizhou Shenqi Enterprise, a substantial shareholder holding the remaining 40% equity interest in the Sub-Tenant; Guizhou Shenqi Enterprise and Tenant A are not regarded as connected persons of PRGL pursuant to the Listing Rules as the Sub-Tenant is an insignificant subsidiary of PRGL. Therefore, the entering into of the Tenancy Agreement does not constitute a connected transaction of PRGL under Chapter 14A of the Listing Rules.
The Acquisition of Asset does not have a material impact on the earnings of the PHB Group for the financial year ending 31 December 2024 and the net assets of the PHB Group based on the audited consolidated statement of financial position of the Company as at 31 December 2022.