Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
PARKSON RETAIL GROUP LIMITED
百 盛 商 業 集 團 有 限 公 司
(Incorporated in the Cayman Islands with limited liability)
(Stock code: 3368)
DISCLOSEABLE TRANSACTION:
ENTERING INTO A TENANCY AGREEMENT
IN RESPECT OF PROPERTIES IN NANCHANG CITY,
JIANGXI PROVINCE, THE PRC
THE TENANCY AGREEMENT
Reference is made to the Announcement.
On 12 June 2019, the Tenant and the Landlord entered into a Tenancy Agreement in respect of the tenancy of the Properties.
Pursuant to IFRS 16, the entering into the Tenancy Agreement as tenant will require the Group to recognise the Properties as the right-of-use assets in which the amount was approximately RMB276.5 million calculated with reference to the present value of the fixed rental payments as discounted using a discount rate which is equivalent to the Company's incremental borrowing rate during the entire terms of Tenancy Agreement, thus the entering into the Tenancy Agreement and the transaction contemplated thereunder will be regarded as an acquisition of asset by the Group.
1
IMPLICATIONS UNDER THE LISTING RULES
The transaction contemplated under the Tenancy Agreement is regarded as an acquisition of assets under the Listing Rules. On the basis of the acquisition of right-of-use assets under the Tenancy Agreement, the amount recognised by the Group pursuant to IFRS 16 is approximately RMB276.5 million.
As the highest applicable percentage ratio under Rule 14.07 of the Listing Rules in respect of the consideration for the acquisition of the right-of-use assets recognised by the Group pursuant to IFRS 16 is more than 5% but less than 25%, the entering into the Tenancy Agreement constitutes a discloseable transaction for the Company, and is subject to the reporting and announcement requirements but is exempted from the circular and shareholders' approval requirements under the Chapter 14 of the Listing Rules.
1. INTRODUCTION
Reference is made to the Announcement. The Board is pleased to announce that on 12 June 2019, the Tenant and the Landlord entered into the Tenancy Agreement in respect of the Properties. A summary of the principal terms of the Tenancy Agreement and the relevant information is set out below.
2. TENANCY AGREEMENT
Date | : 12 June 2019 |
Parties | : Tenant: Jiangxi Parkson Retail Co., Ltd.*（江西百盛中山城 |
百貨有限公司）, an indirect wholly-owned subsidiary of the | |
Company, as tenant | |
Landlord: Nanchang Urban Rail Group Co., Ltd.*（南昌軌 | |
道交通集團有限公司）as landlord | |
Relevant Premise | : Buildings above Bayi Guan Station of Nanchang Rail Transit |
Line 1*（南昌地鐵1號線八一館站上蓋物業） |
2
Total gross area | : | approximately 42,903 sq. m |
Term of the tenancy | : | 12 years (renewable for another 3 years) |
Rental | : | For the first to third year, the rental payable will remain |
unchanged, i.e. at approximately RMB42.0 million per year | ||
inclusive of tax. | ||
For the fourth to sixth year, the rental payable for each | ||
year will be increased by 3% based on the third year rental | ||
payable. | ||
For the seventh to ninth year, the rental payable for each | ||
year will be increased by 5% based on the sixth year rental | ||
payable. | ||
For the tenth to twelfth year, the rental payable for each | ||
year will be increased by 7% based on the ninth year rental | ||
payable. | ||
The rental shall be paid by the Tenant to the Landlord on | ||
quarterly basis. | ||
Performance | : | Pursuant to the Tenancy Agreement, the performance |
Guarantee | guarantee payable by the Tenant is approximately RMB24.3 | |
million in the form of bank guarantee（銀行履約保函） | ||
(which had already been issued by the Bank of China, | ||
Jiangxi Branch, in favour of the Landlord on 27 May 2019). | ||
Use | : | Business operations |
Term of the rental- | : | 12 months |
free decoration | ||
period | ||
Effective date | : | To be confirmed by the Landlord and the Tenant in the |
of the tenancy | Notice of Handover（交付通知書） |
3
Renewal | : | • | The Tenant may renew the Tenancy Agreement |
by serving a written request 6 months prior to the | |||
expiration of the term to the Landlord. The Landlord | |||
may approve the renewal request if the Tenant has | |||
fulfilled all the renewal conditions including (i) prompt | |||
payment of rent, (ii) timely rectification, if applicable, | |||
and (iii) no breach committed during the term. |
- The Tenant may also choose not to renew the Tenancy Agreement by serving a prior written application 6 months prior to the expiration of the term to the Landlord.
3. BASIS FOR DETERMINATION OF THE RENTALS AND OTHER INFORMATION
The terms of the Tenancy Agreement (including the rental) were determined after arm's length negotiations between the Landlord and the Tenant, with reference to the prevailing market rentals for properties of similar type, age and location.
The rental and other amounts payable by the Tenant under the Tenancy Agreement are expected to be financed by the internal resources of the Group.
4. INFORMATION ON THE PARTIES
4.1. The Group and the Tenant
The principal activities of the Group are the operation and management of a network of department stores in the PRC.
The Tenant is an indirect wholly-owned subsidiary of the Company mainly participating in retail business.
4
4.2. Landlord
The Landlord is a company established in the PRC whose scope of business mainly includes financing, construction, operation and management of rail transit construction in Nanchang City.
To the best knowledge and belief of the Directors having made all reasonable enquiries, the Landlord and its ultimate owner(s) are third parties independent of, and not connected with, the Company and its connected persons (as defined under the Listing Rules).
5. REASONS AND BENEFITS FOR ENTERING INTO THE TENANCY AGREEMENT
The principal activities of the Group are the operation and management of a network of department stores in the PRC. The Company considers that the tenancy of the Properties plays an important role in the development of the Group's business in Nanchang City and is in line with the Group's development strategy in Jiangxi Province. The Board believes that the tenancy will have a positive impact on the future development of the Company. Having taken into account the above reasons and benefits, the Board is of the view that the tenancy is in the interests of the Company and its shareholders as a whole.
6. IMPLICATIONS UNDER THE LISTING RULES
6.1. Acquisition of asset by the Company
Pursuant to IFRS 16, the entering into the Tenancy Agreement as a tenant will require the Group to recognise the Properties as the right-of-use assets, thus the entering into the Tenancy Agreement and the transaction contemplated thereunder will be regarded as an acquisition of asset by the Group under the Listing Rules.
5
This is an excerpt of the original content. To continue reading it, access the original document here.