PARKSON RETAIL GROUP LIMITED 百盛商業集團有限公司

If you are in any doubt as to any aspect about this circular or as to the action to be taken, you should consultyour licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Parkson Retail Group Limited, you should at once hand thiscircular form to the purchaser(s) or transferee(s) or to the bank, licensed securities dealer or other agentthrough whom the sale or transfer was effected for transmission to the purchaser(s) or the transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take noresponsibility for the contents of this circular, make no representation as to its accuracy or completeness andexpressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the wholeor any part of the contents of this circular.

PARKSON RETAIL GROUP LIMITED百盛商業集團有限公司

(Incorporated in Cayman Islands with limited liability)

(Stock code: 03368)

MAJOR TRANSACTION:SUPPLEMENTAL AGREEMENT IN RELATION TO

THE ACQUISITION OFTHE QINGDAO SHOPPING MALL

A letter from the Board is set out on page 4 to page 13 of this circular.

* For identification purpose only

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

24 March 2016

Page

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

APPENDIX I – Unaudited Pro forma Financial Information onthe Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

APPENDIX II – Valuation Report on the Qingdao Shopping Mall . . . . . . II-1

APPENDIX III – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1

CONTENTS

– i –

In this circular, unless the context otherwise requires, the following terms have the

following meaning:

“2012 Announcement” means the announcement of the Company dated 20

December 2012 in relation to the Cooperative

Agreement;

“Above Ground Levels” means the four levels of the Qingdao Shopping Mall

above ground;

“Additional Land Premium” means the land premium and relevant taxes, duties and

surcharges in the amount of RMB112,344,623.48 payable

by the Purchaser to the Vendor for the acquisition of the

title to the Commercial Portion in accordance with the

Supplemental Agreement;

“Announcement” means the announcement of the Company in relation to

the Varied Transaction dated 25 February 2016;

“Beijing Huadesheng” means Beijing Huadesheng Property Management Co.,

Ltd.* (北京華德盛物業管理有限公司), a company

established in the PRC and an indirect wholly-owned

subsidiary of the Company;

“Board” means the board of Directors;

“Commercial Portion” means the portion of basement floor one of the Qingdao

Shopping Mall which is for commercial use;

“Company” means Parkson Retail Group Limited, a company

incorporated in the Cayman Islands;

“Cooperative Agreement” means the cooperative agreement dated 20 December

2012 in relation to the Qingdao Shopping Mall and

entered into between the Vendor and Beijing

Huadesheng;

“Directors” means the directors of the Company;

“East Crest” means East Crest International Limited, a Shareholder

holding 9,970,000 Shares representing approximately

0.37% of the entire issued share capital of the Company

as at the date of the Supplemental Agreement;

DEFINITIONS

– 1 –

“Group” means the Company and its subsidiaries;

“Hong Kong” means the Hong Kong Special Administrative Region of

the PRC;

“Listing Rules” means the Rules Governing the Listing of Securities on

the Stock Exchange;

“LPD” or “Latest Practicable

Date”

means 18 March 2016, being the latest practicable date

prior to the printing of this circular for ascertaining

certain information contained in this circular;

“Management Rules” means the Management Rules on the Land Use Right of

the Underground State-owned Land of the State-owned

Land Resources and Housing Management Authority of

Qingdao* (青島市國土資源和房屋管理局地下空間國有建設用地使用權管理辦法);

“Original Consideration” means the consideration paid under the SPA, being

RMB1,422,320,000;

“Original Transaction” means the transactions contemplated by the SPA;

“PRC” means the People’s Republic of China and, for the

purposes of this circular only, excludes Hong Kong,

Macau Special Administrative Region and Taiwan;

“PRG” means PRG Corporation Limited, a controlling

shareholder (as defined under the Listing Rules) holding

1,438,300,000 Shares representing approximately

53.50% of the entire issued share capital of the Company

as at the date of the Supplemental Agreement;

“Purchaser” means Qingdao Lion Plaza Retail Management Co., Ltd.*

(青島金獅廣場商業管理有限公司), a company established

in the PRC and a wholly-owned subsidiary of the

Company;

“Qingdao Shopping Mall” means the shopping complex located at No. 195, Hong

Kong East Road, Laoshan District, Qingdao City,

Shandong Province, PRC and acquired by the Purchaser

pursuant to the SPA;

“RMB” means Renminbi, the lawful currency of the PRC;

DEFINITIONS

– 2 –

“SFO” means the Securities and Futures Ordinance, Cap. 571 of

the Laws of Hong Kong;

“Shareholder(s)” means the shareholder(s) of the Company;

“Shares” means shares of nominal value of HK$0.02 each in the

capital of the Company;

“SPA” means the sales and purchase agreement dated 29

December 2014 in relation to the Qingdao Shopping Mall

and entered into between the Vendor and the Purchaser;

“SPA Announcement” means the announcement of the Company dated 29

December 2014 in relation to the SPA;

“Stock Exchange” means The Stock Exchange of Hong Kong Limited;

“Supplemental Agreement” means the supplemental agreement dated 25 February

2016 in relation to, among other things, the Purchaser’s

acquisition of the title to the Commercial Portion and

entered into between the Vendor and the Purchaser;

“Varied Transaction” means the Original Transaction as varied by the

Supplemental Agreement;

“Vendor” means Shanghai Industrial Qingdao Development Co.,

Ltd.* (上實發展(青島) 投資開發有限公司); and

“%” means percentage.

* For ease of reference, the names of the PRC established companies or entities and the PRC laws andregulations have generally been included in this announcement in both Chinese and English languages and inthe event of inconsistency, the Chinese language shall prevail.

DEFINITIONS

– 3 –

PARKSON RETAIL GROUP LIMITED百盛商業集團有限公司

(Incorporated in Cayman Islands with limited liability)

(Stock code: 03368)

Executive Directors:

Tan Sri Cheng Heng Jem

Mr. Chong Sui Hiong

Ms. Juliana Cheng San San

Non-Executive Directors:

Datuk Lee Kok Leong

Dato’ Dr. Hou Kok Chung

Independent Non-Executive Directors:

Dato’ Fu Ah Kiow

Mr. Ko Tak Fai, Desmond

Mr. Yau Ming Kim, Robert

Registered office:

c/o M&C Corporate Services Limited

P.O. Box 309

Ugland House

South Church Street

George Town

Grand Cayman

Cayman Islands

Principal place of business in Hong Kong:

Room 609, 6th Floor

Harcourt House

39 Gloucester Road

Wanchai, Hong Kong

24 March 2016

To the Shareholders

Dear Sir or Madam,

MAJOR TRANSACTION:SUPPLEMENTAL AGREEMENT IN RELATION TO

THE ACQUISITION OFTHE QINGDAO SHOPPING MALL

1. INTRODUCTION

Reference is made to the Announcement pursuant to which, among other things, it wasannounced that on 25 February 2016, the Purchaser, a wholly-owned subsidiary of theCompany, entered into the Supplemental Agreement with the Vendor, whereby the Purchaseragreed to pay the Additional Land Premium in accordance with the terms and conditions of theSupplemental Agreement.

In the 2012 Announcement, it was disclosed, among other things, that the Vendor andBeijing Huadesheng had entered into the Cooperative Agreement in relation to acquisition ofthe land use right and the building ownership right to the Qingdao Shopping Mall whichcomprised five levels above the ground and three basement floors.

LETTER FROM THE BOARD

– 4 –

In the SPA Announcement, it was disclosed, among other things, that:

(a) the Company had established a new wholly-owned subsidiary, namely the Purchaser,to take over the role of purchaser of the Qingdao Shopping Mall from BeijingHuadesheng;

(b) the Vendor and the Purchaser entered into the SPA in respect of the OriginalTransaction whereby the Purchaser would acquire the Qingdao Shopping Mall at theOriginal Consideration; and

(c) the Original Transaction would constitute a discloseable transaction of theCompany.

At the time of the entering into of the Cooperative Agreement and the SPA, the laws andregulations of the PRC applicable to the Qingdao Shopping Mall did not provide for mandatoryregistration of titles to properties which were situated underground. Accordingly and followingthe then prevailing market practice, the Vendor had not paid the land premium for theCommercial Portion and therefore the title to the Commercial Portion had not been registered.

In January 2015, the Qingdao government implemented the Management Rules which setout, among other things, the procedures and requirements for registration of titles to propertiessituated underground and the mandatory payment of land premium to the government for thoseunderground properties which were used for commercial purposes.

In light of the implementation of the Management Rules, the Vendor and the Purchaserentered into the Supplemental Agreement to provide for, among other things, the Purchaser’sacquisition of the title to the Commercial Portion and payment of the Additional LandPremium.

The purpose of this circular is to provide you with further information on the VariedTransaction.

2. THE SUPPLEMENTAL AGREEMENT

The principal terms of the Supplemental Agreement are summarised below:

(a) Date

25 February 2016.

(b) Parties

The Purchaser and the Vendor.

To the best of the Directors’ knowledge, information and belief having made allreasonable enquiries, the Vendor and its ultimate beneficial owners are third partiesindependent of, and not connected with, the Company and its connected persons (as definedunder the Listing Rules).


– 5 –

(c) Assets to be acquired by the Group

The title to the Commercial Portion.

(d) Additional Land Premium

The amount of the Additional Land Premium is RMB112,344,623, comprising (i) an

amount of RMB91,903,462 representing the land premium calculated in accordance with the

Management Rules and (ii) an amount of RMB20,441,161 representing the taxes, stamp duties

and surcharges arising from payment of land premium under the applicable PRC laws and

regulations. Set out below is further information on the calculation of the Additional Land

Premium:

Land Premium

As advised by the Purchaser’s PRC legal advisers, under the Management Rules: (i)

the land premium payable per square metre for the basement level one of a building is

calculated as one-third of the land premium payable per square metre for the levels above

ground; and (ii) such land premium payable per square metre for the levels above ground

is first evaluated by an independent property valuer and then approved and accepted for

filing by the relevant PRC governmental authority.

The land premium payable per square metre for the Commercial Portion calculated

in accordance with the Management Rules is approximately RMB3,192, being one-third

of the land premium payable per square metre for the Above Ground Levels as filed with

the relevant PRC governmental authority. According to the applicable PRC laws and

regulations, the amount of the Additional Land Premium is required to be calculated on

the basis of the Commercial Portion having an area of approximately 28,795 square

meters. Accordingly, the amount of the land premium is approximately RMB91,903,462.

However, the final registered area is subject to the calculation of the relevant PRC

governmental authorities.


– 6 –

Taxes

The total taxes, stamp duties and surcharges payable for the Commercial Portion in

the aggregate amount of RMB20,441,161 comprises various taxes calculated in

accordance with the applicable PRC laws and regulations, the calculation of which is set

out in the table below:

Tax type Tax rate (%) Amount of tax(RMB)

1. Taxes and surcharges incurred upon title registration by the Vendor (“Tax

Category 1”)(Note 1)

Deed tax 3 2,757,104Stamp duty 0.05 45,952

2. Taxes and surcharges incurred upon transfer of title from the Vendor to

the Purchaser (“Tax Category 2”)(Note 2)

Business tax 5 5,617,231Land appreciation tax 5 5,617,231Corporate income tax 5 5,617,231Stamp duty 0.05 56,172Educational and city development surcharge 0.65 730,240

Total taxes/surcharges(Note 3) 20,441,161

Notes:

1. The amount of taxes and surcharges payable under this category is calculated using the followingformula:

(Prescribed tax rate under Tax Category 1) x land premium payable for Commercial Portion

2. The amount of taxes and surcharges payable under this category is calculated using the followingformula:

(Land premium payable for Commercial Portion +Amount payable under Tax Category 1)

xPrescribed tax rate under

Tax Category 21-(Sum of tax rates for taxes and surcharges payableunder Tax Category 2 (%))

3. Total taxes/surcharges is derived by adding up the amounts payable under Tax Category 1 and TaxCategory 2.

In accordance with the Supplemental Agreement, the Purchaser has already paid the

Additional Land Premium, which was funded by the internal resources of the Group, to the

Vendor within one working day after the signing of the Supplemental Agreement.


– 7 –

(e) Material obligations of the Vendor

(i) As confirmed by the Vendor, it has already paid the Additional Land Premium in

accordance with legal documents entered into between the Vendor and the relevant

PRC governmental authorities as contemplated by the Supplemental Agreement.

(ii) The Vendor shall transfer the title to the Above Ground Levels and the Commercial

Portion to the Purchaser before 31 May 2016.

(f) Coming into effect of the Supplemental Agreement

The Supplemental Agreement shall come into effect after the Vendor and the Purchaser

have obtained, among other things, the relevant approvals under the applicable laws and

regulations. As at the date of the Supplemental Agreement, both the Vendor and the Purchaser

have obtained the approvals contemplated by the Supplemental Agreement and accordingly, the

Supplemental Agreement has come into effect. As to the shareholders’ approval of the

Purchaser, please refer to the paragraph headed “8. Implications under the Listing Rules”

below for more details.

3. INFORMATION ON THE QINGDAO SHOPPING MALL

The Qingdao Shopping Mall is located in Laoshan District of Qingdao City and is part of

a fully integrated commercial development project known as Beer City Project undertaken by

the Vendor. According to the Cooperative Agreement and as disclosed in the 2012

Announcement and the SPA Announcement, the Qingdao Shopping Mall was estimated to have

a site area of approximately 45,714 square metres. In 2013, the Vendor registered the title to

the Qingdao Shopping Mall individually and the actual area registered was 50,213.7 square

metres. Accordingly, the actual site area of the Qingdao Shopping Mall acquired by the

Purchaser pursuant to the SPA was 50,213.7 square metres.

Based on the original plan, the Qingdao Shopping Mall had a total planned gross floor

area of approximately 216,000 square metres, of which approximately 131,000 square metres

is for retail use and the balance of 85,000 square metres is for ancillary use and for an estimated

2,000 car parking lots. In 2013, the Purchaser changed the building specifications such that the

above ground levels of the Qingdao Shopping Mall were reduced from five to four, with a total

gross floor area of approximately 228,600 square metres, of which approximately 123,200

square metres is for retail use and the balance of 105,400 square metres is for ancillary use and

for an estimated 2,000 car parking lots. The Purchaser proposed the change in specifications

after taking into account, among other things, the construction costs, the expected shopping

leisure, the overall planning of the operation of the Qingdao Shopping Mall and the applicable

building work standard and concluded that four levels were more cost effective and could

produce more commercial benefits as compared to five levels.


– 8 –

The building and construction of the Qingdao Shopping Mall was completed in December

2015 and, based on the information available to the Company as at the LPD, it is expected that

the Qingdao Shopping Mall will be opened for business in April 2016. The Group intends to

use (i) approximately 25% of the lettable area for the Group’s businesses, including a

department store, a supermarket and its food and beverage businesses; and (ii) approximately

75% of the lettable area for leasing out to third parties. As at the LPD, binding agreements in

relation to the occupation of the Qingdao Shopping Mall, representing approximately 95% of

the lettable area, have already been entered into.

The book value of the Qingdao Shopping Mall was RMB1,422,320,000 as at 31 December

2015.

4. INFORMATION ON THE GROUP AND THE VENDOR

The principal activities of the Group are the operation and management of a network of

department stores in the PRC. The Purchaser is a wholly-owned subsidiary of the Company

whose scope of business includes, among other things, general merchandise, cosmetics and

property management.

The Vendor is a company established in the PRC whose scope of business includes,

among other things, property development and property management.

5. FINANCIAL AND TRADING PROSPECTS FOR THE FINANCIAL YEAR

ENDING 31 DECEMBER 2016

As disclosed in the Company’s results announcement for the financial year ended 31

December 2015 dated 23 February 2016, 2015 was a particularly difficult year for most

retailers in China, including the Company which recorded a decline of 6.9% in gross sales

proceeds. Nevertheless, the Company, being a seasoned retailer and having had a business

presence in China for over 20 years, is confident that it will be able to overcome the current

economic challenges faced.

The Company had various new business ventures in 2015, which included, among others:

(i) forming a joint venture with Korea’s E.Land Group in Shanghai and launching China’s first

Korean city lifestyle mall, the Parkson Newcore Citymall, which aims to bring Korean lifestyle

experiences to Chinese consumers through a range of brands, food and beverage (“F&B”) and

leisure services with Korean elements; (ii) forming a strategic partnership with AUM

Hospitality to develop F&B business in China; (iii) entering into four master franchise

agreements with renowned F&B brand owners; and (iv) expanding its brands and merchandise

range by bringing into China international brands as well as launching new private labels.


– 9 –

As the Chinese market matures, the Group expects ever-increasing demand for good

quality merchandise and lifestyle products from consumers. Whilst market headwinds are

likely to remain strong in 2016, the Group believes that retail in China remains one of the most

promising global business opportunities. China already has around 300 million middle-class

consumers and that figure is expected to reach 500 million within a decade. The growing

purchasing power of the Chinese middle class will fuel future growth for the retail segment and

rapid urbanisation will create needs for quality retail businesses in lower tier cities.

In order to strengthen the Group’s existing strategies and to shelter against market

headwinds whilst being prepared for the future market, the Group will continue to enhance its

three key strategic pillars:

• retail format and network optimisation;

• product and service offerings enhancement; and

• cross-platform customer engagement.

The Group will continue to surprise the industry with retail formats that are new and

innovative. New sub-brands with different market positioning under the Parkson brand name

will be launched in selected stores to strengthen our brand image in each market segment.

Following detailed monitoring of individual store’s performance, the Group will convert

a number of stores to the Elite, Parkson and Centro brands based on their respective target

customers. Standalone specialty stores will be launched for departments that can crystallise the

Group’s strength into financial prospects, for example, supermarket stores. In 2016, the Group

will mark a significant milestone for the Group’s venture into shopping malls with the launch

of the Qingdao Shopping Mall scheduled for April 2016. In addition, the Group will further

cultivate product and service offerings in 2016. Having paved the way for the Group’s enriched

lifestyle portfolio and F&B, the Group will focus on fine-tuning operational efficiency and

increasing sales of new business ventures to drive better financial performance.

In parallel, the Group places utmost importance on customer engagement and will

continue to build its proprietary customer engagement model to create cross-platform

connections across the Parkson business. The Group is working with experts and partners to

research on customer tastes and media preferences in different demographics. The Group will

also leverage its wide customer base to develop cutting-edge solutions. Parkson will continue

cooperation with mobile carriers and online payment providers to offer more mobile payment

options. This will not only enhance customer convenience, but also lower payment costs for the

Group.


– 10 –

6. SIGNIFICANT FINANCIAL EFFECTS OF THE ACQUISITION OF THECOMMERCIAL PORTION ON THE GROUP

Assets and liabilities

Based on the pro forma financial information on the Group as set out in Appendix I to this

circular (the “Pro Forma Financial Information”), the pro forma consolidated assets of the

Group as at 31 December 2015 would remain the same at approximately RMB13,225,551,000

and the pro forma consolidated total liabilities of the Group as at 31 December 2015 would

remain the same at approximately RMB8,186,237,000 after the acquisition of the Commercial

Portion, assuming that the acquisition had taken place on 31 December 2015.

Earnings

For illustrative purpose only, assuming that the acquisition of the Commercial Portion

was completed on 31 December 2015, the Directors expect that there will be no material

financial impact on the unaudited pro forma profits attributable to the Shareholders for the six

months period ended 30 June 2016 and the basic and diluted earnings per share for the six

months period ending 30 June 2016 will remain unchanged, since the amortisation and related

income from the Commercial Portion would only be recorded after the commencement of

operation of the Qingdao Shopping Mall.

Gearing

As at 31 December 2015, the Group had total assets of approximately

RMB13,225,551,000, total debt of approximately RMB4,017,375,000 and total equity of

approximately RMB5,039,314,000. With reference to the Pro forma Financial Information,

assuming that the acquisition of the Commercial Portion had taken place on 31 December 2015,

there would be no change to the Group’s total assets, total debt and total equity immediately

upon completion. As such, the Group’s gearing ratio (total debt/total assets) of 30.4% as at 31

December 2015 would remain the same before and after the acquisition of the Commercial

Portion.

7. REASONS AND BENEFITS FOR ENTERING INTO THE VARIEDTRANSACTION

As disclosed in the SPA Announcement, the SPA was entered into to formalise an option

provided under the Cooperative Agreement whereby the Vendor would continue to build and

deliver a completed Qingdao Shopping Mall to the Purchaser based on the building

specifications provided by the Purchaser. At the time the Cooperative Agreement and the SPA

were respectively entered into, the laws and regulations of the PRC applicable to the Qingdao

Shopping Mall did not provide for mandatory registration of titles to properties which were

situated underground. Accordingly, the Cooperative Agreement and the SPA were entered into

on the understanding that registration of title would be effected only for the levels of the

Qingdao Shopping Mall which were above ground and the Original Consideration was also


– 11 –

determined based on this understanding. As a result of the implementation of the Management

Rules in January 2015, payment of the Additional Land Premium became mandatory and,

procedurally, such payment must be completed before the registration of title to the Above

Ground Levels can be completed. Accordingly, if the Additional Land Premium is not paid, the

registration of titles to both the Commercial Portion and the Above Ground Levels will not be

accepted by the relevant PRC governmental authority. As such, the Vendor and the Purchaser

entered into the Supplemental Agreement to provide for the payment of the Additional Land

Premium by the Purchaser and the registration of title to the Commercial Portion, in addition

to the titles to the Above Ground Levels, by the Vendor. As disclosed in the section headed “2.

The Supplemental Agreement – (e) Material obligations of the Vendor” in this circular, the

Additional Land Premium has already been paid by the Vendor to the relevant PRC

governmental authorities.

Pursuant to the Cooperative Agreement, the Vendor had already delivered to the Purchaser

(i) the non-Commercial Portion of the first basement floor of the Qingdao Shopping Mall,

which will be used as car parks and ancillary purposes; and (ii) the second and third basement

floors of the Qingdao Shopping Mall, which will be used as car parks and ancillary purposes.

As advised by the Purchaser’s PRC legal advisers, since the Management Rules do not

specifically provide for the procedures in relation to the registration of title for the basement

levels of a building for non-commercial use, no title can be registered for the properties

referred to in (i) and (ii) above (the “Remaining Basement Floors”). Nevertheless, the

Purchaser has the right to use, occupy and is entitled to the revenue generated from the

Remaining Basement Floors, but cannot dispose of or otherwise create any encumbrance over

the Remaining Basement Floors. If and when title can be registered for the Remaining

Basement Floors in the future, it is expected that the Purchaser shall be the party responsible

for such registration and the related costs incurred, the amount of which is not presently

known, shall be borne by the Purchaser.

Having taken into account the above reasons and benefits, the Directors (including all the

independent non-executive Directors) consider that the terms of the Varied Transaction to be

fair and reasonable and in the interests of the Company and the Shareholders as a whole.

8. IMPLICATIONS UNDER LISTING RULES

As the applicable percentage ratios in respect of the Varied Transaction, after taking into

account both the Original Consideration and the Additional Land Premium (i.e. an aggregate

of RMB1,534,664,623.48), exceed 25% but are less than 100%, the Varied Transaction

constituted a major transaction for the Company under Chapter 14 of the Listing Rules and is

subject to the notification, announcement and the shareholders’ approval requirements under

the Listing Rules. However, as no Shareholder is required to abstain from voting if the

Company were to convene a general meeting for approving the Varied Transaction and a

closely allied group of Shareholders, who were interested in an aggregate of 1,448,270,000

Shares representing approximately 53.86% of the issued share capital of the Company as at the

date of the Supplemental Agreement (being 2,688,523,750 Shares) having the right to attend

and vote at any general meeting of the Company, has given its written approval of the Varied


– 12 –

Transaction, the written approval of the aforementioned group of Shareholders has been

accepted in lieu of holding a general meeting pursuant to Rule 14.44 of the Listing Rules. The

aforesaid group of Shareholders comprised (i) East Crest (holding 9,970,000 Shares

representing approximately 0.37% of the entire issued share capital of the Company as at the

date of the Supplemental Agreement) and (ii) PRG (holding 1,438,300,000 Shares representing

approximately 53.49% of the entire issued share capital of the Company as at the date of the

Supplemental Agreement). As at the date of the Supplemental Agreement and as at the LPD,

both East Crest and PRG were ultimately and wholly owned by Parkson Holdings Berhad,

which was in turn held by Tan Sri Cheng Heng Jem, an executive Director, together with his

spouse directly and through a series of controlled corporations, as to 60.96% and 61.52%,

respectively.

9. VOTING RECOMMENDATION

Should a general meeting of the Company is required to be held for the Shareholders to

consider and, if thought fit, approve the Varied Transaction, the Directors are of the opinion

that, having considered the factors and reasons set out in the paragraph headed “7. Reasons and

Benefits for entering into the Varied Transaction”, the Varied Transaction is in the interests of

the Group and the Shareholders as a whole and that the terms of the Varied Transaction are fair

and reasonable so far as the Group and the Shareholders are concerned. The Board would

recommend the Shareholders to vote in favour of the resolution approving Varied Transaction

should a general meeting of the Company is required to be held to approve the Varied

Transaction.

10. ADDITIONAL INFORMATION

Your attention is drawn to the information set out in the appendices to this circular.

Yours faithfully,

For and on behalf of the board of directors of

Parkson Retail Group LimitedTan Sri Cheng Heng Jem

Executive Director & Chairman


– 13 –

(A) UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP

(i) Basis of preparation of the unaudited pro forma financial information of the Group

To provide additional financial information, the unaudited pro forma statement of assets

and liabilities (the “Unaudited Pro Forma Financial Information”) of the Company and its

subsidiaries (the “Group”) as at 31 December 2015 has been prepared based on:

(a) pursuant to the Company’s announcement dated on 25 February 2016, the Group

entered into a supplemental agreement with Shanghai Industrial Qingdao

Development Co., Ltd (上實發展(青島)投資開發有限公司), to provide for, among

other things, the Group’s acquisition of the title to the commercial portion of the

first basement floor of the Qingdao Shopping Mall (the “Acquisition”), which is for

commercial use, and payment of land premium and related taxes, duties and

surcharges in the amount of RMB112,344,623.48.

(b) the historical information about the Group’s financial position as at 31 December

2015 has been extracted by the Directors from the Group’s audited consolidated

financial statement for the year ended 31 December 2015, on which an audit report

has been issued; and

(c) after taking into account the unaudited pro forma adjustments as described in the

notes thereto to demonstrate how the Acquisition might have affected the historical

financial information in respect of the Group as if the Acquisition had been

completed on 31 December 2015.

The Unaudited Pro Forma Financial Information of the Group is for illustrative purpose

only, and because of its hypothetical nature, it may not give a true picture of the financial

position of the Group as of 31 December 2015 or at any future date.

APPENDIX I UNAUDITED PRO FORMA FINANCIALINFORMATION ON THE GROUP

– I-1 –

(ii) Unaudited Pro Forma Financial Information

Note

At31 December

2015

UnauditedPro Forma

AdjustmentTotal after

AdjustmentRMB’000 RMB’000 RMB’000

NON-CURRENT ASSETSProperty, plant and equipment 1 5,151,089 112,345 5,263,434Investment properties 23,546 – 23,546Prepaid land lease payments 434,436 – 434,436Intangible assets 2,224,708 – 2,224,708Investment in a joint venture 29,056 – 29,056Investment in associates 55,389 – 55,389Other assets 404,146 – 404,146Deferred tax assets 281,958 – 281,958

Total non-current assets 8,604,328 8,716,673

CURRENT ASSETSInventories 390,770 – 390,770Trade receivables 61,130 – 61,130Prepayments, deposits and other

receivables 794,828 – 794,828Dividend receivables 21,122 – 21,122Investments in principal

guaranteed deposits 2,075,120 – 2,075,120Time deposits 297,354 – 297,354Cash and cash equivalents 1 980,899 (112,345) 868,554

Total current assets 4,621,223 4,508,878

CURRENT LIABILITIESTrade payables 1,494,092 – 1,494,092Customers’ deposits, other

payables and accruals 1,604,341 – 1,604,341Interest-bearing bank loans 644,186 – 644,186Tax payable 45,434 – 45,434

Total current liabilities 3,788,053 3,788,053

NET CURRENT ASSETS 833,170 720,825

TOTAL ASSETS LESSCURRENT LIABILITIES 9,437,498 9,437,498

NON-CURRENTLIABILITIES

Bonds 3,227,112 – 3,227,112Interest-bearing bank loans 146,077 – 146,077Long term payables 744,576 – 744,576Deferred tax liabilities 280,419 – 280,419

Total non-current liabilities 4,398,184 4,398,184

Net assets 5,039,314 5,039,314


– I-2 –

(iii) Note to the Unaudited Pro Forma Financial Information

(1) Total costs of the Acquisition are as follows:

RMB’000

Consideration of land premium 91,904Related cost directly attributable to the Acquisition 20,441

112,345

The Directors confirm that the basis used in the preparation of the Unaudited Pro Forma Financial Informationis consistent with the accounting policies of the Group, and the accounting policies and the principal assumptions willbe consistently adopted in the first set of the financial statements of the Company after the completion.


– I-3 –

The following is the text of a report received from our reporting accountants, Ernst &Young, Certified Public Accountants, Hong Kong, prepared for the purposes of incorporationin this circular, in respect of the additional unaudited pro forma financial information of theGroup.

22/F CITIC Tower1 Tim Mei Avenue

Central, Hong Kong24 March 2016

To the Directors of Parkson Retail Group Limited

We have completed our assurance engagement to report on the compilation of unauditedpro forma financial information of Parkson Retail Group Limited (the “Company”) and itssubsidiaries (hereinafter collectively referred to as the “Group”) by the directors of theCompany (the “Directors”) for illustrative purposes only. The unaudited pro forma financialinformation of the Group consists of the pro forma consolidated statement of assets andliabilities as at 31 December 2015 and related notes as set out on pages I-1 to I-3 of the circulardated 24 March 2016 (the “Circular”) issued by the Company (the “Unaudited Pro FormaFinancial Information”). The applicable criteria on the basis of which the Directors havecompiled the Unaudited Pro Forma Financial Information are described in Appendix I to theCircular.

The Unaudited Pro Forma Financial Information has been compiled by the Directors toillustrate the impact of the proposed acquisition (hereinafter referred to as the “Acquisition”)by the Group to acquire the title to the commercial portion of the first basement floor ofQingdao Shopping Mall on the Group’s financial position as at 31 December 2015 as if thetransaction had taken place on 31 December 2015. As part of this process, information aboutthe Group’s financial position has been extracted by the Directors from the Group’s auditedconsolidated financial statements for the year ended 31 December 2015, on which an auditreport has been issued.

Directors’ responsibility for the Unaudited Pro Forma Financial Information

The Directors are responsible for compiling the Unaudited Pro Forma FinancialInformation in accordance with paragraph 4.29 of the Rules Governing the Listing of Securitieson The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference toAccounting Guideline 7 (“AG7”) “Preparation of the Unaudited Pro Forma FinancialInformation for Inclusion in Investment Circulars” issued by the Hong Kong Institute ofCertified Public Accountants (the “HKICPA”).

Reporting Accountant’s responsibilities

Our responsibility is to express an opinion, as required by paragraph 4.29(7) of theListing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion toyou. We do not accept any responsibility for any reports previously given by us on anyfinancial information used in the compilation of the Unaudited Pro Forma FinancialInformation beyond that owed to those to whom those reports were addressed by us at the datesof their issue.


– I-4 –

We conducted our engagement in accordance with Hong Kong Standard on Assurance

Engagements 3420 “Assurance Engagements to Report on the Compilation of Pro Forma

Financial Information Included in a Prospectus” issued by the HKICPA. This standard requires

that the reporting accountant comply with ethical requirements and plan and perform

procedures to obtain reasonable assurance about whether the Directors have compiled the

Unaudited Pro Forma Financial Information, in accordance with paragraph 4.29 of the Listing

Rules and with reference to AG7 “Preparation of Unaudited Pro Forma Financial Information

for Inclusion in Investment Circulars” issued by HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing any

reports or opinions on any historical financial information used in compiling the Unaudited Pro

Forma Financial Information, nor have we, in the course of this engagement, performed an

audit or review of the financial information used in compiling the Unaudited Pro Forma

Financial Information.

The purpose of Unaudited Pro Forma Financial Information included in this Circular is

solely to illustrate the impact of the Acquisitions on unadjusted financial information of the

Group as if the event or the transaction had occurred or the transaction had been undertaken

at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any

assurance that the actual outcome of the event or transaction at 31 December 2015 would have

been as presented.

A reasonable assurance engagement to report on whether the Unaudited Pro Forma

Financial Information has been properly compiled on the basis of the applicable criteria

involves performing procedures to assess whether the applicable criteria used by the Directors

in the compilation of the Unaudited Pro Forma Financial Information provide a reasonable

basis for presenting the significant effects directly attributable to the event or the transaction,

and to obtain sufficient appropriate evidence about whether:

• the related pro forma adjustments give appropriate effect to those criteria; and

• the Unaudited Pro Forma Financial Information reflects the proper application of

those adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountant’s judgment, having regard to

the reporting accountant’s understanding of the nature of the Group, the event or transaction

in respect of which the Unaudited Pro Forma Financial Information has been compiled, and

other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Unaudited Pro

Forma Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a

basis for our opinion.


– I-5 –

Opinion

In our opinion:

(a) the Unaudited Pro Forma Financial Information has been properly compiled on the

basis stated;

(b) such basis is consistent with the accounting policies of the Group; and

(c) the adjustments are appropriate for the purpose of the Unaudited Pro Forma

Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing

Rules.

Yours faithfully,

Ernst & YoungCertified Public Accountants

Hong Kong


– I-6 –

The following is the text of a letter and a valuation certificate, prepared for the purpose

of incorporation in this circular received from Vigers Appraisal and Consulting Limited, an

independent valuer, in connection with its valuation as at 31 December 2015 of the Qingdao

Shopping Mall.

Vigers Appraisal & Consulting LimitedInternational Assets Appraisal Consultants

10th Floor, The Grande Building

398 Kwun Tong Road

Kowloon

Hong Kong

24 March 2016

The Board of Directors

Parkson Retail Group Limited

5th Floor, Metro Plaza,

555 Loushanguan Road,

Shanghai 200051,

China

Dear Sirs,

In accordance with the instructions of Parkson Retail Group Limited (the “Company”) for

us to value the property interest in the People’s Republic of China (“the PRC”), we confirm that

we have carried out an inspection, made relevant enquiries and obtained such further

information as we consider necessary for the purpose of providing you with our opinion of the

market value of such property interest as at 31 December 2015 (“valuation date”) for the

purpose of incorporation in the circular.

Our valuation is our opinion of the market value of the property interest which we would

define market value as intended to mean “the estimated amount for which an asset or liability

should exchange on the valuation date between a willing buyer and a willing seller in an

arm’s-length transaction after proper marketing and where the parties had each acted

knowledgeably, prudently and without compulsion”.

In valuing property, we have assessed the value of the property by adopting the direct

comparison approach and made reference to the recent transactions for similar premises in the

proximity. Adjustments have been made for the differences in transaction dates, building age,

floor area etc. between the comparable properties and the subject property. We have also

adopted the term and reversion approach by taking into account the current rent passing of the

property interest and the reversionary potential of the tenancies.

APPENDIX II VALUATION REPORT ON THEQINGDAO SHOPPING MALL

– II-1 –

We have not caused title searches to be made for the property interest at the relevant

government bureau in the PRC. We have been provided with certain extracts of title documents

relating to the property interest. However, we have not inspected the original documents to

verify the ownership, encumbrances or the existence of any subsequent amendments which

may not appear on the copies handed to us. In undertaking our valuation for the property

interest, we have relied on the legal opinion (the “PRC legal opinion”) provided by Qingdao

Lion Plaza Retail Management Co., Ltd’s PRC legal adviser, Shandong Qindao Law Firm.

We have relied to a considerable extent on information provided by the Company and

have accepted advice given to us by the Company on such matters as planning approvals or

statutory notices, easements, tenure, occupation, lettings, site and floor areas and in the

identification of the property and other relevant matter. We have also been advised by the

Company that no material facts had been concealed or omitted in the information provided to

us. All documents have been used for reference only.

All dimensions, measurements and areas included in the valuation certificate are based on

information contained in the documents provided to us by the Company and are approximations

only. No on-site measurement has been taken. We have inspected the exterior and, where

possible, the interior of the properties. However, we have not carried out a structural survey

nor have we inspected woodwork or other parts of the structures which are covered, unexposed

or inaccessible and we are therefore unable to report that any such parts of the property are free

from defect. No tests were carried out on any of the services.

No allowance has been made in our valuation for any charges, mortgages or amounts

owing on the property interest nor for any expenses or taxation which may be incurred in

effecting a sale. Unless otherwise stated, it is assumed that the property interest is free from

encumbrances, restrictions and outgoings of an onerous nature which could affect its value.

Our valuation is prepared in accordance with the HKIS Valuation Standards (2012

Edition) published by The Hong Kong Institute of Surveyors (HKIS) and the requirements set

out in Chapter 5 and Practice Note 12 to the Rules Governing the Listing of Securities issued

by The Stock Exchange of Hong Kong Limited.

Unless otherwise stated, all money amounts stated are in Renminbi (RMB). The exchange

rate used in valuing the property interest in the PRC as at 31 December 2015 was

HK$1=RMB0.838. There has been no significant fluctuation in the exchange rate for Renminbi

against Hong Kong Dollars (HK$) between that date and the date of this letter.


– II-2 –

We enclose herewith the valuation certificate.

Yours faithfully,

For and on behalf of

Vigers Appraisal & Consulting LimitedRaymond Ho Kai Kwong

Registered Professional Surveyor (GP)

MRICS MHKIS MSc(e-com)

China Real Estate Appraiser

Managing Director

Note: Mr. Raymond Ho Kai Kwong, Chartered Surveyor, MRICS MHKIS MSc(e-com), has over twenty nine years’experiences in undertaking valuations of properties in Hong Kong and has over twenty one years’ experiencesin valuations of properties in the PRC.


– II-3 –

VALUATION CERTIFICATE

Property Description and Tenure Particulars of occupancy

Market Value inexisting state as at31 December 2015

QingdaoShopping Malllocated atNo. 195Hong KongEast Road,Laoshan District,Qingdao City,Shandong Province,the PRC

The property comprises the wholeof Qingdao Shopping mall whichhas 4 retail levels and 3 basementlevels erected on a parcel of landwith a site area of approximately50,213 square metres. The propertywas completed in December 2015.

The total gross floor area of theproperty is approximately 228,622sq.m. of which approximately123,268 sq.m. for retail uses andapproximately 105,354 sq.m. forancillary uses and car parkinguses.

As per the property informationprovided by the Company, the areabreakdown of the gross floor areafor sale of the retail portion of theproperty is stated as below:

As at the valuation date, theproperty was currently vacant.

As per the tenancy scheduleprovided, a portion of theproperty was let and subjectto various tenancy agreementsfor different terms with thelatest lease expiring in April2031. The total monthly rentof the first year of thetenancy agreements isapproximately RMB6,290,000exclusive of turnover rent andproperty management fees.

RMB1,800,000,000

(equivalent toapproximately

HK$2,148,000,000)

(Please refer toNote 7)

Level

ApproximateGross Floor Area

for sale of theretail portion of

the property(sq.m.)

B1 28,1101 18,8642 26,6873 27,9484 21,659

Total 123,268

The property is held with the landuse rights for a term expiring on5 December 2050 for commercial,wholesale and retail uses.

Notes:

1. Pursuant to a Real Estate Ownership Certificate (Document No.: Qing Fang Di Quan Shi Zi No. 2013118644),the land use rights of the property were granted to Shanghai Industrial Qingdao Development Co. Ltd. “ 上實發展(青島) 投資開發有限公司” with a site area of approximately 50,213 sq.m. for a term expiring on 5December 2050 for commercial, wholesale and retail uses.

2. According to a Planning Permit for Construction Land (Document No.: De Zi No. 37 0200201005001) issuedby Qingdao Planning Bureau”青島市規劃局”on 22 January 2010, the construction site of a parcel of land witha site area of approximately 227,674.7 sq.m. is in compliance with the urban construction requirements.


– II-4 –

3. According to a Planning Permit for Construction Works (Document No.: Jian Zi No. 37 0200201305033)issued by Qingdao Planning Bureau on 30 December 2013, the construction works of Qingdao Shopping Mallare in compliance with the urban construction requirements and are approved.

4. According to a Permit for Commencement of Construction Works (Document No.: Qing Lao Jian Shi Zi No.14021) issued by the Construction bureau of Qingdao “ 青島市城鄉建設委員會”on 28 April 2014, theconstruction works of Qingdao Shopping Mall with a total gross floor area of approximately 228,622 sq.m. arein compliance with the requirements for works commencement and are approved.

5. According to a Sales and Purchase Agreement entered into between Shanghai Industrial Qingdao DevelopmentCo. Ltd. (“Shanghai Industrial Qingdao”) (Party A) and Qingdao Lion Plaza Retail Management Co., Ltd.(“Qingdao Lion Plaza”)” 青島金獅廣場商業管理有限公司”(Party B) dated 29 December 2014, the 4-levelshopping mall with a total gross floor area of approximately 95,510 sq.m. of the property was granted fromParty A to Party B at a consideration of RMB1,422,320,000.

6. According to a Supplementary Agreement entered into between Shanghai Industrial Qingdao (Party A) andQingdao Lion Plaza (Party B) dated 25 February 2016, the 4-level shopping mall with the retail portion of thebasement 1 of the property was granted from Party A to Party B at an additional consideration ofRMB112,344,623.

7. The remaining areas of gross floor area of approximately 105,354 sq.m. are for ancillary uses and car parkinguses and have not obtained the Building Ownership Certificate. Therefore, the remaining areas cannot beseparately freely transferrable in the market. We have ascribed no commercial value to the remaining areas ofthe property.

8. In the course of our valuation, we have made the following assumptions:

(i) the property has obtained the relevant title documents and whether as a whole or on a strata-title basis,is freely transferable together with the residual term of its land use rights to any third party (bothoverseas and domestic) in the open market at no extra land use rights grant premium and other onerouscharges payable to the government authorities;

(ii) the property is free from any mortgage, legal charges, order and other encumbrances which may causeadverse effects on the ownership of the property; and

(iii) regarding the development proposal, design, layout plans and correspondence provided by the Companystated in this report, including, inter alia, the uses, terms, site areas and the gross floor areas of property,etc., should there exist any variation and difference with that stated in the title documents issued byrelevant government authorities, we reserve our rights to amend the whole or any part of thecontents/valuation of this report.

9. The PRC legal opinion states, inter alia, the following:

(i) The construction of Qingdao Shopping Mall complies with the requirements of laws and regulations andgovernment departments. The quality of construction of Qingdao Shopping Mall is lawful andacceptable;

(ii) Shanghai Industrial Qingdao has obtained building ownership rights of Qingdao Shopping Mall uponcompletion and Shanghai Industrial Qingdao also has a right to freely transfer the building ownershiprights of Qingdao Shopping Mall under the related Real Estate Ownership Certificate;

(iii) According to a “Confirmation of Vacant Possession” entered into between Shanghai Industrial Qingdaoand Qingdao Lion Plaza dated 25 December 2015, Qingdao Shopping Mall was delivered to QingdaoLion Plaza. Although Qingdao Lion Plaza has not completed the transfer of real estate ownershipregistration of Qingdao Shopping Mall, Qingdao Lion Plaza may be regarded as the owner of QingdaoShopping Mall after Qingdao Lion Plaza has taken vacant possession of Qingdao Shopping Mall andQingdao Lion Plaza may exercise the related rights of Qingdao Shopping Mall;


– II-5 –

(iv) The procedure of obtaining the land use right of the retail portion of the basement 1 is still processingcurrently. Qingdao Lion Plaza would obtain the land use right from Shanghai Industrial Qingdao afterShanghai Industrial Qingdao has completed the registration of the land use right of the retail portion ofthe basement 1. However, it is still unable to apply for the rights transfer registration for the non-retailportion of 3 basement levels. As a result, Qingdao Lion Plaza cannot apply for the land use right andbuilding rights registration of the non-retail portion of the 3 basement levels. Therefore, the non-retailportion of the basement levels cannot be separately freely transferrable in the market; and

(v) Since Qingdao Lion Plaza has not yet completed the transfer registration of real estate rights, QingdaoLion Plaza cannot exercise the transfer and the mortgage of Qingdao Shopping Mall. Therefore,Qingdao Lion Plaza can only exercise the real estate right of Qingdao Shopping Mall after completionof the registration of real estate right of Qingdao Shopping Mall.

10. The status of title and grant of major approvals and permits in accordance with the PRC legal opinion andinformation provided by Qingdao Lion Plaza are as follows:

(i) Real Estate Ownership Certificate Yes(ii) Planning Permit for Construction Land Yes(iii) Planning Permit for Construction Works Yes(iv) Permit for Commencement of Construction Works Yes

11. Qingdao Lion Plaza is a wholly-owned subsidiary of the Company.

12. The property was inspected by Ms. Carol Liu, China Real Estate Appraiser, on 28 January 2016.


– II-6 –

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full

responsibility, includes particulars given in compliance with the Listing Rules for the purpose

of giving information with regard to the Group. The Directors, having made all reasonable

enquiries, confirm that to the best of their knowledge and belief the information contained in

this circular is accurate and complete in all material respects and not misleading or deceptive,

and there are no other matters the omission of which would make any statement herein or this

document misleading.

2. INTERESTS OF DIRECTORS

(a) Interests in securities

As at the Latest Practicable Date, the interests and short positions of the Directors and the

chief executive of the Company in the Shares, underlying Shares and debentures of the

Company and its associated corporations (within the meaning of Part XV of the SFO) which:

(i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions

7 and 8 of Part XV of the SFO (including interests and short positions in which they were

deemed or taken to have under such provisions of the SFO); or (ii) were required, pursuant to

section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required,

pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers under the

Listing Rules, to be notified to the Company and the Stock Exchange were as follows:

i. Long positions of Tan Sri Cheng Heng Jem in the share capital of the Company:

Nature of interestName ofregistered owner

Name ofbeneficial owner

Number andclass of securities

Approximatepercentage ofshareholding

Corporate interest PRG PRG 1,438,300,000

ordinary shares

53.49%

Corporate interest East Crest East Crest 9,970,000

ordinary shares

0.37%

Note: Tan Sri Cheng Heng Jem, together with his spouse Puan Sri Chan Chau Ha alias Chan Chow Har,through their interest and a series of companies in which they have a substantial interest, areentitled to exercise or control the exercise of more than one-third of the voting power at thegeneral meetings of PHB. Since PHB is entitled to exercise or control the exercise of 100% ofthe voting power at the general meeting of PRG through East Crest, pursuant to the SFO, he isdeemed to be interested in both the 1,438,300,000 Shares held by PRG and the 9,970,000 Sharesheld by East Crest.

APPENDIX III GENERAL INFORMATION

– III-1 –

ii. Long positions of Tan Sri Cheng Heng Jem in the share capital of the Company’s

associated corporations (as defined in the SFO)

Name ofassociatedcorporation

Nature ofinterest

Name ofregistered owner


Number andclass of

securities


ParksonHoldingsBerhad(“PHB”)

Beneficialinterest andcorporateinterest

Tan Sri Cheng HengJem together withhis spouse ChanChau Ha @ ChanChow Har directly,and through aseries of controlledcorporations


654,709,795ordinary

shares

61.52%

East Crest Corporateinterest

PHB PHB 1 ordinaryshare

100%

Puncak PelitaSdn Bhd

Corporateinterest

PHB PHB 2 ordinaryshares

100%

ParksonPropertiesHoldingsCo., Ltd.

Corporateinterest


100%

ParksonVietnamInvestmentHoldingsCo., Ltd.

Corporateinterest


100%

Prime YieldHoldingsLimited

Corporateinterest

PHB PHB 1 ordinaryshare

100%

Corporate CodeSdn Bhd

Corporateinterest


100%

PRG Corporateinterest

East Crest East Crest 1 ordinaryshare

100%

Smart SpectrumLimited

Corporateinterest

East Crest East Crest 1 ordinaryshare

100%

Park AvenueFashion Sdn.Bhd.

Corporateinterest

East Crest East Crest 250,002ordinary

shares

100%


– III-2 –


Nature ofinterest



Number andclass of

securities


SerbadagangHoldingsSdn. Bhd.

Corporateinterest

East Crest East Crest 2 ordinaryshares

100%

Parkson RetailAsia Limited

Beneficialinterest

Tan Sri Cheng HengJem

Tan Sri Cheng HengJem

500,000ordinary

shares

68.03%(in aggregate)

Corporateinterest

East Crest East Crest 457,933,300ordinary

shares

ParksonPropertiesNDT(Emperor)Co., Ltd.

Corporateinterest

Parkson PropertiesHoldingsCo., Ltd.


2 ordinaryshares

100%

ParksonPropertiesHanoiCo., Ltd.

Corporateinterest



1 ordinaryshare

100%

Parkson HCMCHoldingsCo., Ltd.

Corporateinterest

Parkson VietnamInvestmentHoldingsCo., Ltd.


2 ordinaryshares

100%

ParksonHaiPhongHoldingsCo., Ltd.

Corporateinterest



2 ordinaryshares

100%

Parkson TSNHoldingsCo., Ltd.

Corporateinterest



2 ordinaryshares

100%

Dyna PuncakSdn Bhd

CorporateInterest

Prime Yield HoldingsLimited


2 ordinaryshares

100%

Gema BinariSdn. Bhd.

Corporateinterest



2 ordinaryshares

100%

Prestasi SerimasSdn Bhd

Corporateinterest



2,000,000ordinary

shares

100%


– III-3 –


Nature ofinterest



Number andclass of

securities


Parkson CreditHoldings SdnBhd

Corporateinterest



2 ordinaryshares

100%

AUMHospitalitySdn Bhd

Corporateinterest



60,000ordinary

shares

60%

Dalian TianheParksonShoppingCentreCo., Ltd.

Corporateinterest

SerbadagangHoldingsSdn. Bhd.

SerbadagangHoldingsSdn. Bhd

60,000,000registered

capital (RMB)

60%

Centro RetailPte Ltd.

Corporateinterest

Parkson Retail AsiaLimited


2 ordinaryshares

100%

PT. TozySentosa

Corporateinterest



45,000ordinary

shares

100%(in aggregate)



5,000 ordinaryshares

ParksonCorporationSdn. Bhd.

Corporateinterest



50,000,002ordinary

shares

100%

ParksonMyanmarCo., Pte. Ltd.

CorporateInterest



1 ordinaryshare

100%

Parkson HBTPropertiesCo., Ltd.

Corporateinterest



2,100,000capital (USD)

100%

Idaman ErajutaSdn. Bhd.

CorporateInterest

Dyna PuncakSdn Bhd

Dyna PuncakSdn Bhd

2 ordinaryshares

100%

Magna RimbunSdn Bhd

CorporateInterest

Dyna PuncakSdn Bhd

Dyna PuncakSdn Bhd

2 ordinaryshares

100%

True ExcelInvestmentsLimited

CorporateInterest

Dyna PuncakSdn Bhd

Dyna PuncakSdn Bhd

1 ordinaryshare

100%


– III-4 –


Nature ofinterest



Number andclass of

securities


ParksonBrandingSdn Bhd

CorporateInterest



7,000,000ordinary

shares

100%

GiftmateSdn Bhd

CorporateInterest



120,000ordinary

shares

60%

Parkson CreditSdn Bhd

CorporateInterest

Parkson CreditHoldingsSdn Bhd

Parkson CreditHoldingsSdn Bhd

30,000,000ordinary

shares

100%

Entity AConceptsSdn Bhd

CorporateInterest

AUM Hospitality SdnBhd


2,000,000ordinary

shares

100%

Entity BManagementSdn Bhd

CorporateInterest



400,000ordinary

shares

100%

F&B EssentialsSdn Bhd

CorporateInterest



100,000ordinary

shares

100%

Fantastic RedSdn Bhd

CorporateInterest



75,000ordinary

shares

75%

AUM AsiaticRestaurantsSdn Bhd

CorporateInterest



187,500ordinary

shares

75%

Entity C SdnBhd

CorporateInterest



100,000ordinary

shares

100%

Parkson SGNCo., Ltd.

CorporateInterest

Parkson CorporationSdn. Bhd.



100%

ParksonCambodiaHoldingsCo., Ltd.

Corporateinterest



1 ordinaryshare

100%

Kiara InnovasiSdn. Bhd.

CorporateInterest



3,000,000ordinary

shares

60%


– III-5 –


Nature ofinterest



Number andclass of

securities


Parkson OnlineSdn Bhd

Corporateinterest



2,600,000ordinary

shares

100%

ParksonHaiphongCo., Ltd.

Corporateinterest




100%

Parkson Trading(Vietnam)CompanyLimited

Corporateinterest



300,000capital (USD)

100%

Solid GatelinkSdn. Bhd.

Corporateinterest



2 ordinaryshares

100%

ParksonVietnamCo., Ltd.

Corporateinterest




100%

ParksonMyanmarInvestmentCompanyPte Ltd.

CorporateInterest

Parkson MyanmarCo. Pte Ltd.

Parkson MyanmarCo. Pte Ltd.

2,100,000ordinary

shares

70%

Festival CitySdn. Bhd.

CorporateInterest

Idaman Erajuta Sdn.Bhd.

Idaman Erajuta Sdn.Bhd.

500,000ordinary

shares

100%

Megan MastikaSdn Bhd.

CorporateInterest

Magna Rimbun SdnBhd

Magna Rimbun SdnBhd

300,000ordinary

shares

100%

True ExcelInvestments(Cambodia)Co., Ltd.

CorporateInterest




100%

Parkson FashionSdn Bhd

CorporateInterest

Parkson BrandingSdn Bhd


5,000,000ordinary

shares

100%

ParksonBranding (L)Limited

CorporateInterest



300,000ordinary

shares

100%


– III-6 –


Nature ofinterest



Number andclass of

securities


Business SpiritSdn Bhd

CorporateInterest

Entity A ConceptsSdn Bhd


2 ordinaryshares

100%

J Rockets 1Sdn Bhd

CorporateInterest



350,000ordinary

shares

100%

MassivePrivilege SdnBhd

CorporateInterest



300,000ordinary

shares

100%

Urban PaletteSdn Bhd

CorporateInterest



720,000ordinary

shares

90%

The OperaGastroclubSdn Bhd

CorporateInterest



2,250,000ordinary

shares

90%

GenuineResourcesSdn Bhd

CorporateInterest



1,000,000ordinary

shares

100%

Alunan OmegaSdn Bhd

CorporateInterest



300,000ordinary

shares

100%

OmbrelloResourcesSdn Bhd

CorporateInterest

Entity C Sdn Bhd Entity C Sdn Bhd 100 ordinaryshares

100%

CollectiveEntitySdn Bhd

CorporateInterest

Entity C Sdn Bhd Entity C Sdn Bhd 300,000ordinary

shares

60%

Vertigo Dot MySdn Bhd

CorporateInterest

Entity C Sdn Bhd Entity C Sdn Bhd 60,000ordinary

shares

60%

Parkson(Cambodia)Co., Ltd.

Corporateinterest

Parkson CambodiaHoldingsCo. Ltd.

Parkson CambodiaHoldingsCo. Ltd.


100%


– III-7 –


Nature ofinterest



Number andclass of

securities


ParksonVietnamManagementServicesCo., Ltd.

CorporateInterest

Parkson Vietnam Co.Ltd.

Parkson Vietnam Co.Ltd.

100,000capital (USD)

100%

ParksonMyanmarAsia Pte. Ltd.

CorporateInterest

Parkson MyanmarInvestmentCompanyPte. Ltd.


30,000ordinary

shares (USD)1 ordinary

share (SGD)

100%

MyanmarParksonCompanyLimited

CorporateInterest



270,000ordinary

shares

100%(in aggregate)

Parkson MyanmarAsia Pte. Ltd.

Parkson MyanmarAsia Pte. Ltd.

30,000ordinary

shares

Ohla RestaurantSdn Bhd

CorporateInterest

Vertigo Dot My SdnBhd


100 ordinaryshares

100%

Providence ClubKL Sdn Bhd

CorporateInterest



500,000ordinary

shares

100%

ParksonEdutainmentWorld SdnBhd

CorporateInterest

Parkson CorporationSdn Bhd


700,000ordinary

shares

70%

Super GemResourcesSdn Bhd

CorporateInterest



700,000ordinary

shares

70%

ParksonLifestyleSdn Bhd

CorporateInterest



5,000,000ordinary

shares

100%

Parkson TrendsSdn Bhd(formerlyknown asOrientGreentechSdn Bhd)

CorporateInterest



2 ordinaryshares

100%


– III-8 –


Nature ofinterest



Number andclass of

securities


DimensiAndamanSdn Bhd

CorporateInterest

Megan Mastika SdnBhd

Megan Mastika SdnBhd

300,000ordinary

shares53,719,999redeemableconvertiblecumulativepreference

shares

100%

ParksonUnlimitedBeauty SdnBhd

CorporateInterest



1,000,000ordinary

shares

100%

Perfect GatelinkSdn Bhd

CorporateInterest



2 ordinaryshares

100%

iii. Short positions of Tan Sri Cheng Heng Jem in the share capital of the Company’s

associated corporations (as defined in the SFO):


Nature ofinterest



Number andclass of

securities


PHB Corporateinterest



40,000,142ordinary

shares

3.75%

iv. Long positions of Chong Sui Hiong in the share capital of the Company

Nature ofinterest Subject matter

Number andclass of

securities


Beneficial interest N/A 20,000ordinary shares

Less than 0.01%

Beneficial interest Option to subscribefor shares (note)

375,000ordinary shares

Less than 0.02%

Note: Offer was made on 27 November 2012 pursuant to the share option scheme adopted on 9November 2005.


– III-9 –

v. Long positions of Ko Tak Fai, Desmond in the share capital of the Company:


Number andclass of

securities



75,000ordinary share

Less than 0.01%


vi. Long positions of Yau Ming Kim, Robert in the share capital of the Company:


Number andclass of

securities




Less than 0.01%


vii. Long positions of Juliana Cheng San San in the share capital of the Company:


Number andclass of

securities




Less than 0.02%


Save as disclosed above, as at the Latest Practicable Date, none of the Directors orthe chief executive of the Company had any interest or short position in the Shares,underlying Shares and debentures of the Company and its associated corporations (withinthe meaning of Part XV of the SFO) which: (i) were required to be notified to theCompany and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO(including interests and short positions in which they were deemed or taken to have undersuch provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO,to be entered in the register referred to therein; or (iii) were required, pursuant to theModel Code for Securities Transactions by Directors of Listed Issuers under the ListingRules, to be notified to the Company and the Stock Exchange.

(b) Other interests

(i) As at the Latest Practicable Date, none of the Directors had any direct or indirectinterest in any asset which had been acquired, or disposed of by, or leased to anymember of the Group, or was proposed to be acquired, or disposed of by, or leasedto any member of the Group since 31 December 2015, the date to which the latestpublished audited financial statements of the Group were made up.


– III-10 –

(ii) As at the Latest Practicable Date, no contracts of significance to which the

Company, its holding company, subsidiaries or fellow subsidiaries was a party and

in which a Director had a material interest, whether directly or indirectly, except for

the following connected transactions in which Tan Sri Cheng Heng Jem, an

executive Director, had a material interest through the Connected Persons as listed

in the table below:

Type of contract Connected Persons Nature of the contracts

Deed of Non-

competition

PHB PHB grant to the Company a call

option on PHB’s interest in

their retail businesses in the

PRC and an undertaking not to

compete with the business of

the Group in the PRC (details

are set out in page 61 of the

Company’s annual report for

the financial year ended 31

December 2014).

Trademark license

agreement

Smart Spectrum

Limited (novated by

Parkson Corporation

Sdn. Bhd.)

Smart Spectrum Limited (a

wholly-owned subsidiary of

PHB) grant to Shanghai Lion

Investment (an indirect wholly-

owned subsidiary of the

Company) an exclusive license

to use certain trademarks,

including the “Parkson” and

“Xtra” trademarks (details are

set out in page 61 of the

Company’s annual report for

the financial year ended 31

December 2014).

Joint Venture

Agreement

(“JV Agreement”)

AUM Hospitality Sdn.

Bhd. (AUMH”),

which is 60% held

by a wholly-owned

subsidiary of PHB

The Company has through a

wholly-owned subsidiary,

Grand Parkson, entered into a

JV Agreement with AUMH to

establish a JV company for the

purposes of developing its food

and beverage business in China

(details are set out in the

announcement of the Company

dated 26 January 2015).


– III-11 –

3. INTERESTS OF SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as was known to any Director or the chief

executive of the Company, the following persons (other than any Director or the chief

executive of the Company) had an interest or short position in the Shares and underlying Shares

of the Company which would fall to be disclosed to the Company under the provisions of

Divisions 2 and 3 of part XV of the SFO, or, who were, directly or indirectly, interested in 10%

or more of the nominal value of any class of share capital carrying rights to vote in all

circumstances at general meetings of any other member of the Group:

Name ofshareholder Nature of interest

Number ofshares

Percentage ofshareholding

(direct or indirect)

PHB Corporate interest 1,448,270,000(Note 2)

53.86%

Puan Sri Chan ChauHa alias ChanChow Har

Interest of spouse 1,448,270,000(Note 2)

53.86%

PRG Corporation Beneficial interest 1,438,300,000(Note 3)

53.49%

Wang Hung Roger Beneficial interest,and Trustee

266,826,000(Note 4)

9.92%

Wang Hsu Vivine H Interest of spouse andbeneficiary of a Trust

266,826,000(Note 5)

9.92%

GEICO HoldingsLimited

Corporate interest 256,546,846(Note 6)

9.54%

Golden EagleInternational RetailGroup Limited

Beneficial interest 256,546,846(Note 6)

9.54%

Wang Dorothy S L Beneficiary of a Trust 256,546,846 9.54%

Wang Janice S Y Beneficiary of a Trust 256,546,846 9.54%

Prudential plc Corporate interest 170,937,500(Note 7)

6.35%

Notes:

1. All of the above are long positions.

2. Puan Sri Chan Chau Ha alias Chan Chow Har is the spouse of Tan Sri Cheng Heng Jem, an executiveDirector, and is deemed to be interested in 1,448,270,000 Shares which Tan Sri Cheng Heng Jem isdeemed to be interested in for the purposes of the SFO.

3. PRG Corporation is a wholly-owned subsidiary of East Crest which in turn is wholly-owned by PHB.By virtue of the SFO, PHB is deemed to be interested in the Shares held by PRG in the Company.


– III-12 –

4. The capacities of Wang Hung Roger in holding the 244,362,000 Shares (Long position) were as to10,279,154 Shares (Long position) as beneficial owner and 234,082,846 Shares (Long position) astrustee.

5. Wang Hsu Vivine H is the spouse of Wang Hung Roger and is deemed to be interested in 266,826,000Shares held by Wang Hung Roger.

6. Golden Eagle International Retail Group Limited is wholly-owned by GEICO Holdings Limited. Byvirtue of the SFO, GEICO Holdings Limited is deemed to be interested in the Shares held by GoldenEagle International Retail Group Limited in the Company.

7. The interest of Prudential plc was attributable on account through a number of its subsidiaries.

As at the Latest Practicable Date, so far as the Directors are aware, each of the following

persons, not being a Director of chief executive of the Company, was directly or indirectly

interested in 10% or more of the nominal value of any class of share capital carrying rights to

vote in all circumstances at general meetings of a member of the Group other than the

Company:

Substantial Shareholder Member of the GroupPercentage of

equity interest held

Xinjiang Youhao (Note 1) Xinjiang Parkson 49%

Wuxi Sunan (Note 2) Wuxi Parkson 40%

Chongqing Wanyou (Note 3) Chongqing Parkson 30%

Guizhou Shenqi Enterprise(Note 4)

Guizhou Parkson 40%

Shanghai Nine Sea Industry Shanghai Lion Property(Note 5)

71%

Shanghai Nine Sea Industry Shanghai Nine Sea Parkson(Note 6)

29%

Newcore Retail Hong KongLimited

Parkson Newcore RetailShanghai Ltd

51%

Mount Earnings Sdn. Bhd.(Note 7)

Yeehaw Best PracticesSdn. Bhd.

30%

Koh Wee Lit Rite BOS Sdn Bhd 23.88%

Gee Cher Chiang Rite BOS Sdn Bhd 16.67%

Bernice Cheong Nyuk Siew Rite BOS Sdn Bhd 16.67%

Notes:

1. Xinjiang Friendship (Group) Co., Ltd. (“Xinjiang Youhao”) owns 49% of the equity interest of XinjiangYouhao Parkson Development Co., Ltd. (“Xinjiang Parkson”).


– III-13 –

2. Wuxi Sunan Investment Guarantee Co., Ltd. (“Wuxi Sunan”) owns 40% of the equity interest of WuxiSanyang Parkson Plaza Co., Ltd. (“Wuxi Parkson”).

3. Chongqing Wanyou Economic Development Co., Ltd. (“Chongqing Wanyou”) owns 30% of the equityinterest of Chongqing Wanyou Parkson Plaza Co., Ltd. (“Chongqing Parkson”).

4. (i) Guizhou Shenqi Enterprise owns 40% of the equity interest of Guizhou Shenqi Parkson RetailDevelopment Co., Ltd. (“Guizhou Parkson”).

(ii) Zhang Pei, Zhang Zhi Jun and Zhang Ya own 30%, 40% and 30% of the equity interest in GuizhouShenqi Enterprise, respectively, representing a 12%, 16% and 12% indirect equity interest inGuizhou Parkson.

5. Shanghai Nine Sea Lion Properties Management Co., Ltd. (“Shanghai Lion Property”) is a cooperativejoint venture enterprise established under the laws of the PRC between Shanghai Nine Sea Industry Co.,Ltd. (“Shanghai Nine Sea Industry”) and Exonbury Limited (“Exonbury”), a wholly-owned subsidiaryof the Company. Shanghai Nine Sea Industry is entitled to 71% of the voting rights in the board ofShanghai Lion Property and 65% of its distributable profits. The Group is entitled to 29% of the votingrights in the board of Shanghai Lion Property and 35% of its distributable profits.

6. Shanghai Nine Sea Parkson Plaza Co., Ltd. (“Shanghai Nine Sea Parkson”) is a cooperative joint ventureenterprise established under the laws of PRC between Shanghai Nine Sea Industry and Exonbury.Shanghai Nine Sea Industry is entitled to 29% of the voting rights in the board of Shanghai Nine SeaParkson and a pre-determined distribution of income from Shanghai Nine Sea Parkson. The Group isentitled to 71% of the voting rights in the board of Shanghai Nine Sea Parkson and 100% of itsdistributable profit after deducting the aforesaid pre-determined distribution of income attributable toShanghai Nine Sea Industry.

7. Gee Cher Chiang and Chia Chong Lun own 60% and 40% of the equity interest in Mount Earnings Sdn.Bhd. respectively, representing a 18% and 12% indirect equity interest in Yeehaw Best Pratices Sdn.Bhd.

Save as disclosed above, as at the Latest Practicable Date, so far as was known to anyDirector or the chief executive of the Company, no persons (other than any Director or the chiefexecutive of the Company) had an interest or short position in the Shares and underlying Sharesof the Company which would fall to be disclosed to the Company under the provisions ofDivisions 2 and 3 of Part XV of the SFO, or, who were, directly or indirectly, interested in 10%or more of the nominal value of any class of share capital carrying rights to vote in allcircumstances at general meetings of any other member of the Group.

Tan Sri Cheng Heng Jem, an executive Director, is the Chairman and Managing Directorof PHB, which is a company which has an interest or short position in the shares andunderlying shares of the Company which would fall to be disclosed to the Company under theprovisions of Divisions 2 and 3 of Part XV of the SFO.

4. SERVICE CONTRACTS

As at the Latest Practicable Date:

(a) Tan Sri Cheng Heng Jem (an executive Director) entered into a letter of appointmentwith the Company in October 2014, pursuant to which he was appointed and he hasagreed to act as an executive Director for: (i) a term of three years commencing from9 November 2014; and (ii) an annual Director’s fee as stipulated in the letter ofappointment (or such amount as adjusted by the Board from time to time). Theannual Director’s fee payable by the Company to Tan Sri Cheng Heng Jem isHK$240,000.


– III-14 –

(b) Juliana Cheng San San (an executive Director) entered into a letter of appointmentwith the Company in August 2015, pursuant to which she was appointed and she hasagreed to act as an executive Director for: (i) a term of three years commencing from28 August 2015; and (ii) an annual Director’s fee as stipulated in the letter ofappointment (or such amount as adjusted by the Board from time to time). Theannual Director’s fee payable by the Company to Juliana Cheng San San isHK$240,000.

(c) Datuk Lee Kok Leong (a non-executive Director) and Dato Dr. Hou Kok Chung (anon-executive Director) each entered into a letter of appointment with the Companyin September 2014 and November 2014, respectively, pursuant to which they wereappointed and have agreed to act as non-executive Directors for: (i) a term of threeyears commencing from 1 September 2014 and 13 November 2014, respectively;and (ii) an annual Director’s fee as stipulated in the letters of appointment (or suchamount as adjusted by the Board from time to time). The annual Director’s feepayable by the Company to each of Datuk Lee Kok Leong and Dato’ Dr. Hou KokChung is HK$240,000.

Save as disclosed above, none of the Directors has any existing or a proposed servicecontracts with the Company or any member of the Group (excluding contracts expiring orwhich may be terminated by the Company or the relevant Group member within one yearwithout payment of compensation other than statutory compensation).

5. FINANCIAL INFORMATION OF THE GROUP FOR THE LAST THREEFINANCIAL YEARS

Please refer to the annual reports of the Company for the years ended 31 December 2013and 2014 published by the Company on 11 April 2014 and 21 April 2015 respectively, whichcontained information for the two financial years ended 31 December 2013 and 2014 withrespect to the profits and losses, financial record and position of the Group and the auditedconsolidated statement of financial position of the Group together with the notes on the annualaccounts for the two financial years ended 31 December 2013 and 2014. Please refer to theannouncement of the Company dated 23 February 2016 for information for the financial yearended 31 December 2015 with respect to the profits and losses, financial record and positionof the Group and the audited consolidated statement of financial position of the Group togetherwith the notes on the annual accounts for the financial year ended 31 December 2015. Theaforesaid annual reports and announcement of the Company are available on the Company’swebsite (www.parksongroup.com.cn) and the Stock Exchange’s website(www.hkexnews.com.hk).

6. WORKING CAPITAL OF THE GROUP

The Directors are of the opinion that, after taking into account the completion of theacquisition of the Commercial Portion as mentioned in this circular and the financial resourcesavailable to the Group (including but not limited to internally generated funds, cash and cashequivalents), the Group has sufficient working capital for its present requirements, that is forat least the next 12 months from the date of this circular.


– III-15 –

7. INDEBTEDNESS

As at the close of business on 31 January 2016, being the latest practicable date for the

purpose of the indebtedness statement prior to the printing of this circular, the Group had

outstanding interest-bearing bank loans of approximately RMB795,018,000 and Bonds (as

defined below) of outstanding principal amounts of approximately RMB3,237,582,000, details

of which are set out as follows:

(a) Bank loans

As at 31 January 2016, the Group had secured interest-bearing bank loans of

approximately RMB795,018,000 as follows:

Bank loansdenominated in US$ Lender

As at31 January

2016

Investment inprincipal

guaranteeddeposits pledged

for bank loansUSD’000 RMB’000 RMB’000

11,250 Financial institution 73,706 76,00011,250 Financial institution 73,706 76,00011,250 Financial institution 73,706 77,00011,250 Financial institution 73,706 77,000

294,824 306,000

Bank loansdenominated in HK$HKD’000

34,938 Financial institution 29,380 30,00034,577 Financial institution 29,076 30,00075,000 Financial institution 63,068 67,000140,310 Financial institution 117,989 123,000310,000 Financial institution 260,681 260,000

500,194 510,000

Total 795,018 816,000


– III-16 –

(b) Bonds

On 3 May 2013, the Company issued the 4.5% bonds due 2018 (the “Bonds”) with anaggregate principal amount of US$500 million. The net proceeds excluding direct transactioncosts were US$494.3 million (equivalent to approximately RMB3,070,295,000). The Bonds,which are listed on the Stock Exchange, bear a fixed coupon at 4.5% per annum, payablesemi-annually in arrears on 3 May and 3 November in each year and commenced on 3November 2013. The maturity date is 3 May 2018.

As at 31 January 2016, the Group had repurchased bonds with an aggregate principalamount of US$3 million on the Stock Exchange. The outstanding principal amount of theBonds as at 31 January 2016 was approximately US$494.2 million.

Save as disclosed above and apart from intra-group liabilities, the Group did not have anyother outstanding loans, mortgages, charges, debentures, loan capital and bank overdrafts orother similar indebtedness, financial leases or hire purchase commitment, liabilities underacceptances (other than normal trade and other payables), or acceptance credits, or anyguarantees or other material contingent liabilities at the close of business on 31 January 2016.

8. COMPETING INTERESTS

As at the Latest Practicable Date, none of the Directors or the chief executive of theCompany and their respective associates had any interest in any business which competes oris likely to compete, either directly or indirectly, with the business of the Group except for theindirect interests held by Tan Sri Cheng Heng Jem (through PHB) in Dalian Tianhe ParksonShopping Centre Co., Ltd. (“Dalian Tianhe Parkson”) which owns one Parkson brandeddepartment store located in the Shahekou District, Dalian, Liaoning Province, the PRC(“Dalian Tianhe Managed Store”).

As at the Latest Practicable Date, Dalian Tianhe Managed Store carried on retail businesswhich competed or is likely to compete, either directly or indirectly, with the business of theGroup. Dalian Tianhe Managed Store is owned by Dalian Tianhe Parkson, a company in whichPHB indirectly owned 60% of its equity interest as at the Latest Practicable Date.

Since Tan Sri Cheng Heng Jem together with his spouse, holds more than 60% equityinterest and therefore has control over PHB, Tan Sri Cheng Heng Jem is deemed to haveinterest in the business of Dalian Tianhe Managed Store which competes or is likely tocompete, either directly or indirectly, with the business of the Group. The Company possessedan option/right of refusal to acquire Dalian Tianhe Managed Store as and when it deems fit.

9. LITIGATION

Save as disclosed below, as at the Latest Practicable Date, so far as the Directors are

aware, no member of the Group was engaged in any litigation or claim of material importance

and no litigation or claim of material importance is known to the Directors to be pending or

threatened by or against any member of the Group.


– III-17 –

Litigation in relation to Tenancy between Parkson Retail Development Co., Ltd. and thelandlord of the CNACM Premises

Reference is made to the announcement of the Company dated 5 June 2015. ParksonRetail Development Co., Ltd. (百盛商業發展有限公司) (an indirect wholly-owned subsidiaryof the Company) (the “Tenant”) operates a flagship store, part of which is situated at the ChinaNational Arts and Crafts Museum (“CNACM”) and was leased from the landlord of theCNACM Premises (as defined below) under several tenancy agreements. One of the tenancyagreements was entered into in October 1993 (the “Head Tenancy Agreement”) in respect ofan area of approximately 18,000 square meters (the “CNACM Premises”) for a term of 30years under which a tenancy renewal agreement will be entered into every five years. TheTenant and the landlord of the CNACM Premises entered into a renewal agreement inaccordance with the Head Tenancy Agreement in 1998 and 2003 respectively, each for a termof five years.

In 2005, the Tenant and the landlord of the CNACM Premises entered into a supplementalrenewal agreement (the “2005 Renewal Agreement”), pursuant to which, among other things,it was provided that:

(i) the Tenant and the landlord of the CNACM Premises agreed that the term of thelease created under the agreement signed in 2003 would extend to 30 September2014; and

(ii) after the expiry of the 2005 Renewal Agreement, the landlord of the CNACMPremises and the Tenant would renew the tenancy in accordance with the HeadTenancy Agreement.

The landlord of the CNACM Premises had not entered into renewal agreement with theTenant to continue the tenancy after the expiry of the 2005 Renewal Agreement as providedunder the 2005 Renewal Agreement. Instead, the landlord of the CNACM Premises gave noticeto the Tenant in August and September 2014 demanding the Tenant to vacate the CNACMPremises and refused to accept the cheque of the Tenant for the payment of rental.

In October 2014, the Tenant initiated legal proceedings at the People’s Court of theWestern District of Beijing (the “Court”) requesting the Court to, inter alia, order the landlordof the CNACM Premises to perform the Head Tenancy Agreement and to pay all the costs inconnection with the legal proceedings.

In May 2015, the landlord of the CNACM Premises filed a counterclaim (the“Counterclaim”) against the Tenant requesting the Court to order the Tenant to, inter alia, (i)vacate the CNACM Premises; (ii) pay a fee for occupying the CNACM Premises during theperiod from 1 October 2014 up to the date on which the Tenant has vacated the CNACMPremises, such fee being RMB47,488,000 calculated up to 30 April 2015; and (iii) pay all thecosts in connection with the legal proceedings. The Court had arranged for a meeting betweenthe Tenant and the Landlord scheduled to be held on 12 June 2015. On 3 June 2015, the Tenantwas notified by the Court that the Court had cancelled the meeting and expected the parties toproceed to trial directly. The Tenant will pursue its claims and defend against the Counterclaimvigorously.


– III-18 –

10. EXPERTS AND CONSENTS

Name Qualification

Ernst & Young Certified Public Accountants

Vigers Appraisal and Consulting Limited Independent property valuer

Shandong Qindao Law Firm PRC legal adviser

The above experts have given and have not withdrawn their written consents to the issue

of the circular with the inclusion of their letters or opinions or advice and the references to their

names in the form and context in which they appear.

As at the Latest Practicable Date, the above experts were not beneficially interested in the

share capital of any member of the Group nor do they have any right, whether legally

enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any

member of the Group nor do they have any interest, either direct or indirect, in any assets

which have been, since 31 December 2015 (being the date to which the latest published audited

financial statements of the Company were made up), acquired or disposed of by or leased to

any member of the Group or are proposed to be acquired or disposed of by or leased to any

member of the Group.

11. NO MATERIAL ADVERSE CHANGE

At as the Latest Practicable Date, none of the Directors was aware of any material adverse

change in the financial or trading position of the Group since 31 December 2015 (being the

date to which the latest published audited financial statements of the Group were made up).

12. MATERIAL CONTRACTS

The following material contracts (not being contracts entered into in the ordinary and

usual course of business) were entered into by members of the Group within the two years

immediately preceding the date of this circular which are or may be material:

(a) the SPA;

(b) the agreement dated 15 July 2015 entered into among (i) East Crest as vendor; (ii)

Parkson Holdings Berhad as the vendor’s guarantor; (iii) Oroleon (Hong Kong)

Limited (a wholly-owned subsidiary of the Company) as purchaser; and (iv) the

Company as the purchaser’s guarantor whereby the purchaser agreed to acquire

457,933,300 ordinary shares in Parkson Retail Asia Limited from the vendor at the

consideration of 228,508,716.70 Singapore dollars; and

(c) the Supplemental Agreement.


– III-19 –

Save and except for East Crest and Parkson Holdings Berhad, who were the connectedpersons of the Company as at the date of the material contract set out in paragraph (b) above,each of the counter parties to the material contracts set out in this sub-section were partiesindependent of, and connected with, the connected persons of the Company as the date of therelevant material contract(s).

13. GENERAL

(a) The registered office of the Company is situated at c/o M & C Corporate ServicesLimited, PO Box 309, Ugland House, South Church Street, George Town, GrandCayman, Cayman Islands;

(b) The principal place of business of the Company in Hong Kong is at Room 609, 6thFloor, Harcourt House, 39 Gloucester Road, Wanchai, Hong Kong;

(c) The branch share registrar and transfer office of the Company in Hong Kong isTricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s RoadEast, Hong Kong; and

(d) The secretary of the Company is SENG SZE Ka Mee, Natalia FCS (PE), FCIS, MBA(Executive), FHKIoD, FTIHK.

14. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the office of thecompany secretary of the Company in Hong Kong at Level 54, Hopewell Centre, 183 Queen’sRoad East, Hong Kong during normal business hours on any business day up to and includingthe date which is 14 days from the date of this circular:

(a) the memorandum and articles of association of the Company;

(b) the service contracts referred to in the section headed “Service Contracts” in thisAppendix;

(c) the material contracts referred to in the section headed “Material Contracts” in thisAppendix;

(d) the letter from the Board, the text of which is set out on pages 4 to 13 of this circular;

(e) the written consents from the experts referred to in the section headed “Experts andConsents” of this appendix;

(f) the annual reports of the Company for each of the two years ended 31 December2013 and 2014;

(g) the annual results announcement of the Company for the year ended 31 December2015 dated 23 February 2016;


– III-20 –

(h) the accountants’ report on the Unaudited Pro Forma Financial Information on the

Group, the text of which is set out in Appendix I to this circular;

(i) the valuation report on the Qingdao Shopping Mall, the text of which is set out in

Appendix II to this circular;

(j) the PRC legal opinion of Shandong Qindao Law Firm referred to in the valuation

report set out in Appendix II to this circular; and

(k) this circular.


– III-21 –

Documents

PARKSON RETAIL GROUP LIMITED 百盛商業集團有限公司