We attach herewith the announcement made to The Stock Exchange of Hong Kong Limited (“The HKEx”) on 1 June 2020 by Parkson Retail Group Limited (“PRGL”), a 54.97% owned subsidiary of the Company listed on The HKEx, in relation to the discloseable transaction on the entering into a tenancy agreement as tenant in respect of a property in Wuzhou City, the People's Republic of China (“PRC”) (“PRGL Announcement”).
On 1 June 2020, PRGL had announced a discloseable transaction on the entering into a tenancy agreement on even date between Nanning Brilliant Parkson Commercial Co., Ltd. (“Tenant”), an indirect wholly-owned subsidiary of PRGL, and Wuzhou Sankee Investment Co., Ltd. (“Landlord”) in respect of the tenancy of the first to fourth floors above ground level of Sunshine 100 Sankee City, No. 62 Hubin Road, Changzhou District, Wuzhou City in Guangxi Zhuang Autonomous Region, the PRC ("Property") for a term of 20 years from the Business Commencement Date (as defined in the PRGL Announcement) (“Term”) (“Tenancy Agreement”).
Pursuant to the International Financial Reporting Standard 16 - Leases (IFRS 16) issued by the International Accounting Standards Board, the entering into the Tenancy Agreement as tenant will require the PRGL Group to recognise the Property as the right-of-use assets in which the amount was approximately Rmb86.52 million (equivalent to approximately RM51.91 million) calculated with reference to the present value of the rental payments as discounted using a discount rate which is equivalent to PRGL’s incremental borrowing rate during the entire Term of the Tenancy Agreement. Thus, the entering into the Tenancy Agreement and the transaction contemplated thereunder are regarded as an acquisition of assets by the PRGL Group (“Acquisition of Assets”).
The entering into the Tenancy Agreement constitutes a discloseable transaction for PRGL, and is subject to reporting and announcement requirements but is exempted from circular and shareholders’ approval requirements under Chapter 14 of the Rules Governing the Listing of Securities on The HKEx.
The Acquisition of Assets does not have a material impact on the earnings of the Group for the financial year ending 30 June 2020 and the net assets of the Group based on the audited consolidated statement of financial position of the Company as at 30 June 2019.