We attach herewith the announcement made to The Stock Exchange of Hong Kong Limited ("The HKEx") on 31 October 2022 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 the entering into of a tenancy agreement as tenant in respect of a property in Nanchang City, Jiangxi Province, the People's Republic of China ("PRC").
On 31 October 2022, PRGL had announced a discloseable transaction on the entering into of a tenancy agreement on even date between Jiangxi Parkson Shopping Centre Management Co., Ltd., an indirect wholly-owned subsidiary of PRGL, and Nanchang Hui Xin Industrial Co., Ltd. in respect of the tenancy of LG1, Level 1 to Level 4 in Building No. 4 at Royal Core Plaza, No. 2013 Middle Ying Bin Avenue, Nanchang County in Jiangxi Province, the PRC ("Property") for a term of 20 years commencing from the actual opening date of the shopping centre to be opened at the Property per the terms of the tenancy agreement ("Term") ("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 tenant will require the PRGL Group to recognise the Property as a right-of-use asset, the amount of which is approximately Rmb70.49 million (equivalent to approximately RM45.82 million) calculated with reference to the present value of the rental payments as discounted using a discount rate equivalent to PRGL's incremental borrowing rate during the entire Term. Thus, the entering into of the Tenancy Agreement and the transactions contemplated thereunder is regarded as an acquisition of asset by the PRGL Group ("Acquisition of Asset").
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 the circular and shareholders' approval requirements under Chapter 14 of the Rules Governing the Listing of Securities on The HKEx.
The Acquisition of Asset does not have a material impact on the earnings of the PHB Group for the financial year ending 31 December 2022 and the net assets of the PHB Group based on the audited consolidated statement of financial position of the Company as at 31 December 2021.