We attach herewith the announcement made to The Stock Exchange of Hong Kong Limited ("The HKEx") on 6 June 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 major transactions on the supplemental agreements to the tenancy agreements in respect of properties in Shenyang and Harbin, the People's Republic of China ("PRC").
On 6 June 2024, PRGL had announced that on even date:
(i) Shenyang Parkson Shopping Plaza Co., Ltd., an indirect wholly-owned subsidiary of PRGL, had entered into a supplemental agreement to the tenancy agreement with Shenyang Holding Company Limited ("Shenyang Holding") ("Shenyang Supplemental Agreement") in relation to the renewal of tenancy in respect of the relevant parts of Level LG1 to Level 8 of the building located at No. 21, Zhonghua Road, Heping District, Shenyang, Liaoning Province, the PRC ("Shenyang Property") ("Shenyang Tenancy"); and
(ii) Parkson Retail Development Co., Ltd., an indirect wholly-owned subsidiary of PRGL, had entered into a supplemental agreement to the tenancy agreement with Harbin International Company Limited ("Harbin International") ("Harbin Supplemental Agreement") in relation to the renewal of tenancy in respect of the relevant parts of Level LG1 to Level 6 of the building located at No. 222, Zhongyang Street, Daoli District, Harbin (previously known as No. 167-217 Youyi Road, Daoli District, Harbin), Heilongjiang Province, the PRC ("Harbin Property") ("Harbin Tenancy")
(collectively, the "Tenancies Renewal Transactions") ("PRGL Announcement").
Both the Shenyang Tenancy and the Harbin Tenancy are renewed for a term of 10 years from 1 January 2025 up to 31 December 2034 pursuant to the Shenyang Supplemental Agreement and the Harbin Supplemental Agreement (collectively, the "Supplemental Agreements").
Pursuant to the International Financial Reporting Standard 16 - Leases ("IFRS 16") issued by the International Accounting Standards Board, the PRGL Group is required to recognise the Shenyang Property and the Harbin Property as right-of-use assets, and the entering into of the Supplemental Agreements as acquisitions of assets under the Rules Governing the Listing of Securities on The HKEx ("Listing Rules") ("Acquisitions of Assets"). The considerations for the Acquisitions of Assets recognised by the PRGL Group pursuant to IFRS 16 are approximately Rmb150.3 million (equivalent to approximately RM97.7 million) for the Shenyang Property and Rmb154.3 million (equivalent to approximately RM100.3 million) for the Harbin Property.
For the purpose of this announcement, an exchange rate of Rmb1.00: RM0.65 is assumed.
Shenyang Holding and Harbin International are connected to one another as they share the same ultimate owner, and therefore fall under Rule 14.23(1) of the Listing Rules, being a factor that The HKEx will take into account in determining whether transactions shall be aggregated. Nonetheless, none of the other factors set out in Rule 14.23 of the Listing Rules apply, and the transactions contemplated under the Shenyang Supplemental Agreement and the Harbin Supplemental Agreement are not required to be aggregated and treated as if they are one transaction for the reasons as set out in the PRGL Announcement.
As the highest applicable percentage ratio in respect of each of the considerations for the Acquisitions of Assets recognised by the PRGL Group pursuant to IFRS 16 is more than 25% but less than 100%, the Tenancies Renewal Transactions and the entering into of the Supplemental Agreements constitute major transactions of PRGL, and are therefore subject to announcement, circular and shareholders' approval requirements under Chapter 14 of the Listing Rules. In this regard, the written approval of a closely allied group of shareholders interested in an aggregate of 1,448,270,000 ordinary shares of HK$0.02 each, representing approximately 54.97% of the total number of issued shares of PRGL, on the Tenancies Renewal Transactions and the entering into of the Supplemental Agreements have been accepted in lieu of holding a general meeting of PRGL pursuant to Rule 14.44 of the Listing Rules.
The Acquisitions of Assets do not have 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 2023.