PETALING JAYA: Retailer Parkson Holdings Bhd’s Hong Kong-listed subsidiary Parkson Retail Group Ltd (PRGL) has issued a profit warning after losing a property dispute in Beijing for which the latter must cough up 140.4 million yuan (RM83.9mil).
PRGL said in the announcement that the China International Economic and Trade Arbitration Commission had made an award in favour of the landlord of the premises that PRGL’s indirect subsidiary had rented in Metro City Shopping Plaza, Beijing. Parkson Holdings has a 53.07% stake in PRGL.
PRGL’s board told the Hong Kong stock exchange that it expected the group’s profit for the quarter ending March 31, 2015, to decline significantly from a year earlier.
It said this was based on preliminary review of its unaudited consolidated management accounts for the two months ended Feb 28, 2015.
“(Taking) into account the results of the arbitral award, the board does not expect that the operating results of the group for the first quarter of 2015 could cover the impact resulting from the arbitral award,” it said.
In Parkson Holdings’ filing with Bursa Malaysia yesterday, it had attached PRGL’s announcement to the Hong Kong stock exchange of the inside information, results of the arbitration, profit warning and resumption of trading.
The tenant, had submitted an application to the commission on Dec 27, 2012, for an arbitration ruling in respect of the dispute between the two parties.
The commission announced that the tenant had to pay a lump sum of 36.8 million yuan (RM22mil) for occupation of the premises after the termination of the tenancy agreement on Dec 6, 2012, as well as a daily fee from Nov 1, 2014, to March 26, 2015, totaling 12.6 million yuan (RM7.5mil).
The tenant is also required to pay to the landlord rental of 89.9 million yuan (RM53.7mil), which is the difference between the rental amount already paid and the amount the commission had determined to be payable.
Lastly, the commission declared that the tenant should also pay an arbitration fee of 1.1 million yuan (RM657,504) to the landlord, adding that the four payments must be made within 30 days of the arbitral award, otherwise an annual interest rate of 6% would be applicable.
“As at the date of this announcement, the company (PRGL) is considering the options available to it, including the submission of an appeal to the court in China to overturn the arbitral award,” said PRGL.
It added that it had made an application to the Hong Kong stock exchange for resumption of trading in the company’s securities with effect from today.