We attach herewith the announcement made to The Stock Exchange of Hong Kong Limited ("The HKEx") on 20 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 discloseable transaction on a tenancy agreement in respect of a property in Kunming City, Yunnan Province, the People's Republic of China ("PRC").
On 20 June 2024, PRGL had announced the entering into of a tenancy agreement on 19 June 2024 between Kunming Yun Shun He Retail Development Co., Ltd. ("Tenant"), an indirect wholly-owned subsidiary of PRGL, and Kunming Nanya Fengqing Real Estate Development Co., Ltd. in respect of the tenancy of Basement Level 1 at Block A1, Yangjia Community Committee, Fuhai Subdistrict Office, Kunming City, Yunnan Province, the PRC ("Property") for a term of 15 years from the actual date of business operation in the Property or the expiration of the period of 5 months commencing on 1 July 2024, being the date of delivery of the Property to the Tenant, whichever is the earlier ("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 tenant will require the PRGL Group to recognise the Property as a right-of-use asset, the amount of which is approximately Rmb29.7 million (equivalent to approximately RM19.3 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 for 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 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 2023.