Things are not so well at Parkson Holdings Berhad, the departmental store operator that operates in China, Malaysia, and Vietnam, in its latest detailed audit opinion published to Bursa, the group’s 18 months financial position is in the red flag zone.
For its financial period of December 2021, the Group reported a net loss of RM129.9 million and as of that date, its current liabilities exceeded its current assets by RM1.48 billion. These events along with other matters indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern the audit report revealed.
The report also added that the ability of Parkson Holdings to continue as going concern is dependent on attaining future profitable operations and conditions as outlined in the notes it submitted to Bursa on the financial statements.
Parkson Group primarily operates retail stores in China, Malaysia, and Vietnam, as well as food and beverage stores in Malaysia and China. The group recognised property, plant and equipment, and right-of-use assets with carrying amounts of
RM2.11 billion and RM2,54 billion, representing 29% and 35% respectively of noncurrent assets.
To address the current financial climate, Parkson took steps including proposed private placement pursuant to the second tranche of the private placement of 30,000,000 new ordinary shares at RM0.165 per share for cash which had raised proceeds of RM4,950,000 used for working capital and expenses for private placement. In December Parkson took a Syndicated term loan facility under Parkson Retail Group Limited, a 54.97% owned subsidiary an aggregate amount of up to HK$2,700,000,000 (equivalent to approximately RM1,443,420,000).
PRGL has entered into a lease contract for one of its investment properties located in Beijing Financial Street with a term of 12 years with an annual rental of approximately Rmb250,068,000(equivalent to approximately RM163,720,000) (inclusive of value-added tax). The property is under assets enhancement and is expected to complete in the first half of 2022 to hand over to the tenant. This rental income would contribute to PRGL’s operating cash flows in the coming 12 months.
The Group had negotiated with the lender to extend the repayment date to provide continuing support to the Group during this challenging and unprecedented situation and intends to adhere to the repayment date of the loan agreement, The focus now is to reassess the stores and operation feasibility, including opening new department stores with competitive advantages, closing those non-performing department stores, placing more focus on the fashion and beauty division and improving its “online + offline” sales model.
Although the group has avoided triggering the PN17 criteria, Parkson is confident it’s on the road to recovery.