THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this circular or as to the action to be taken, you should consult your 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 this circular to the purchaser or the transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee.

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

This circular is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of PARKSON RETAIL GROUP LIMITED .

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

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3368)

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF 95.91% EQUITY INTEREST IN QINGDAO PARKSON, 100% EQUITY INTEREST IN DALIAN PARKSON AND

100% EQUITY INTEREST IN SHENYANG PARKSON NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent financial adviser to the Independent Board Committee and the Independent Shareholders

==> picture [149 x 32] intentionally omitted <==

A letter from the Board is set out on pages 7 to 16 of this circular and a letter from the Independent Board Committee is set out on page 17 of this circular. A letter from Investec, the independent financial adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 18 to 33 of this circular.

A notice convening the Extraordinary General Meeting (“EGM”) to be held at The Executive Centre, Seminar Room 1, Level 3, Three Pacific Place, 1 Queen’s Road East, Hong Kong on 28 September 2012, Friday, at 9:00 a.m. is set out on page 63 of this circular. In the event you are not able to attend the EGM, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon to the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, as soon as possible and in any event not less than 48 hours before the appointed time for holding EGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude you from attending and voting in person at EGM and any adjourned meeting (as the case may be) should you so wish.

13 September 2012

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . .	17
LETTER FROM INVESTEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
APPENDIX I – LETTER FROM THE VALUER . . . . . . . . . . . . . . . . . . . . . . . .	34
APPENDIX II – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . .	47
APPENDIX III – PROCEDURES TO DEMAND POLL
AT GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . .	62
NOTICE OF EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	63

– i –

DEFINITIONS

In this circular, the following expressions have the meanings set out below unless the context otherwise requires:

“Acquisition”

the transactions contemplated under the Sale and Purchase Agreement, including but not limited to the entire issued paid up capital of Victor Crest, Wide Crest, Wide Field, Parkson Venture and Sea Coral, and 95.91% equity interest in Qingdao Parkson, 100% equity interest in Dalian Parkson and 100% equity interest in Shenyang Parkson

“Announcement”
the announcement dated 27 August 2012 issued by the Company in relation to the Acquisition and all transactions contemplated in the Sale and Purchase Agreement
“associate(s)” has the meaning ascribed to it in the Listing Rules
“Board”
the board of Directors of the Company
“Business Day”
means a day (other than a Saturday and/or Sunday) when banks are open for business in Hong Kong, PRC and Malaysia
“Company”
Parkson Retail Group Limited (百盛商業集團有限公司), a limited liability company incorporated under the laws of the Cayman Islands with limited liability on 3 August 2005
“Completion”
the completion of the Acquisition in accordance with the terms and conditions of the Sale and Purchase Agreement
“Completion Date”

the date on which the Completion shall take place, i.e. 10 business days after the immediate month end in which the date the Sale and Purchase Agreement become unconditional pursuant to the terms therein contained

“Connected Person(s)”
has the meaning ascribed to it in the Listing Rules

– 1 –

DEFINITIONS

“Consideration”
the total consideration of RMB420,000,001 for the Acquisition which comprises:
(a) RMB340,000,000 for the 95.91% equity interest in Qingdao Parkson;
(b) RMB80,000,000 for the 100% equity interest in Shenyang Parkson; and
(c) RMB1 for the 100% equity interest in Dalian Parkson
“Dalian Parkson”
“Dalian Parkson Store”
“Deed of Non-competition”
“Director(s)”
“EGM”
“GDP”
“Group”
“HK$”
Dalian Parkson Retail Development Co., Ltd. (大連時尚百盛商業發展有限公司), a limited liability company incorporated in the PRC on 15 April 2005, which is 100% owned by Sea Coral
Parkson branded department store located at No. 261, Zhongshan Road, Xigang District, Dalian City, Liaoning Province, PRC with total operating area of approximately 30,900 square meters
deed dated 17 September 2007 entered into between the Company, the Vendor and PHB whereby PHB and the Vendor agreed inter alia, to grant to the Company a call option on PHB’s and the Vendor’s interest in their retail businesses in the PRC and an undertaking not to compete with the business of the Group in the PRC
the director(s) of the Company
the extraordinary general meeting to be convened by the Company at The Executive Centre, Seminar Room 1, Level 3, Three Pacific Place, 1 Queen’s Road East, Hong Kong on 28 September 2012, Friday, at 9:00 a.m. for approving, inter alia, the Acquisition
gross domestic product
the Company, its subsidiaries, jointly controlled entities and associated company

the lawful currency of Hong Kong

– 2 –

DEFINITIONS

“Hong Kong”
the Hong Kong Special Administrative Region of the People’s Republic of China
“Independent Board Committee” an independent committee of the Board, comprising independent non-executive Directors, to advise the Independent Shareholders regarding the Sale and Purchase Agreement and the transactions contemplated thereunder
“Independent Shareholder(s)”
shareholders other than persons who are required to abstain from voting on the resolution to approve the Acquisition as defined under the Listing Rules
“Investec”
Investec Capital Asia Limited, a corporation licensed to carry on Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO, being the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders on the terms of Sale and Purchase Agreement and the transactions contemplated thereunder
“Latest Practicable Date” 6 September 2012, being the latest practicable date prior to the printing of this circular for ascertaining certain information set out in this circular
“Listing Committee”
has the meaning ascribed to it in the Listing Rules
“Listing Rules”
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
“Parkson Venture”
Parkson Venture Pte. Ltd., a limited liability company incorporated under the laws of Singapore with limited liability on 26 May 1993
“PHB”
Parkson Holdings Berhad, a public limited liability company incorporated and domiciled in Malaysia, the shares of which are listed on the Main Board of Bursa Malaysia Securities Berhad, a controlling shareholder of the Company
“PRC”
the People’s Republic of China

– 3 –

DEFINITIONS

“Purchaser”
Grand Parkson Retail Group Limited, a 100% direct subsidiary of the Company
“Qingdao Parkson”
Qingdao No.1 Parkson Co., Ltd. (青島第一百盛有限公司), a sino-foreign equity joint venture enterprise incorporated in the PRC on 26 August 1994, and are being held as to 50% by Parkson Venture, as to 45.91% by Serbadagang and as to 4.09% by Qingdao No.1 Department Store (青島第一百貨商店), an independent third party
“Qingdao Parkson Store” Parkson branded department store located at No.44-60, Zhongshan Road, Qingdao City, Shandong Province, PRC with total operating area of approximately 28,900 square meters
“Qingdao Parkson Transfer” the transfer of the 45.91% equity interest in Qingdao Parkson from Serbadagang to Parkson Venture
“Qingdao Property”
the land use right and property use right in respect to the property with a total gross floor area of 76,013 square meters currently owned by Qingdao Parkson and occupied by Qingdao Parkson Store
“RMB”
Renminbi, the lawful currency of the PRC
“Sale and Purchase Agreement”
the sale and purchase agreement dated 27 August 2012 entered into between the Purchaser and the Vendor after the trading hours of the Stock Exchange on 27 August 2012
“Sea Coral”
Sea Coral Limited, a limited liability company incorporated under the laws of Hong Kong on 25 January 2005 and an indirect wholly-owned subsidiary of PHB through the Vendor
“Serbadagang”
Serbadagang Holdings Sdn. Bhd., a limited liability company incorporated in Malaysia on 25 April 1985 and an indirect wholly-owned subsidiary of PHB through the Vendor
“SFO”
Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

– 4 –

DEFINITIONS

“Shenyang Parkson”
Shenyang Parkson Shopping Plaza Co., Ltd. (瀋陽百盛購物廣場有限公司), a limited liability company incorporated in the PRC on 28 November 2003, which is 100% owned by Wide Field
“Shenyang Parkson Store” Parkson branded department store located at No. 21 Zhonghua Road, Heping District, Shenyang city, Liaoning Province, PRC with total operating area of approximately 33,400 square meters
“Stipulated Period” a period of 120 days from the date of the Sale and Purchase Agreement or such extended period as may be agreed by the Purchaser in writing
“Stock Exchange”
The Stock Exchange of Hong Kong Limited
“subsidiary”
has the meaning ascribed to it in section 2 of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong)
“Tianhe Parkson Store” Parkson branded department store located at No. 342350, Minquan Street, Shahekou District, Dalian City, Liaoning Province, PRC with total operating area of approximately 17,400 square meters
“US$”
United States Dollar, the lawful currency of the United States of America
“Valuer”
Vigers Appraisal & Consulting Limited, 10th Floor, The Grande Building, 398 Kwun Tong Road, Kowloon, Hong Kong, an International Assets Appraisal Consultants
“Vendor”
East Crest International Limited, a limited liability company incorporated under the laws of British Virgin Islands on 2 August 2006, a wholly-owned subsidiary of PHB
“Victor Crest”
Victor Crest Limited, a limited liability company incorporated under the laws of the British Virgin Island with limited liability on 8 February 2010
“Wide Crest”
Wide Crest Limited, a limited liability company incorporated under the laws of the British Virgin Island with limited liability on 8 February 2010

– 5 –

DEFINITIONS

“Wide Field”	Wide Field International Limited, a limited liability
	company incorporated under the laws of Hong Kong with
	limited liability on 8 February 2010
“Yantai Parkson Store”	Parkson branded department store located at No.166,
	South Street, Zhifu District, Yantai City, Shandong
	Province, PRC with total operating area of approximately
	50,000 square meters
“%”	per cent

– 6 –

LETTER FROM THE BOARD

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

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3368)

Executive Directors: Registered office: Datuk Cheng Yoong Choong (Managing Director) c/o M&C Corporate Services Limited Mr. Chew Fook Seng (Chief Executive Officer) P.O. Box 309 Ugland House Non-executive Director: South Church Street Tan Sri Cheng Heng Jem (Chairman) George Town Grand Cayman Independent non-executive Directors: Cayman Islands Mr. Ko Tak Fai, Desmond Mr. Yau Ming Kim, Robert Principal place of business Mr. Werner Josef Studer in Hong Kong: Level 28, Three Pacific Place 1 Queen’s Road East Hong Kong

13 September 2012

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF 95.91% EQUITY INTEREST IN QINGDAO PARKSON, 100% EQUITY INTEREST IN DALIAN PARKSON AND 100% EQUITY INTEREST IN SHENYANG PARKSON

NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Pursuant to the Deed of Non-competition, PHB and the Vendor have granted to the Company, inter alia, an option to acquire the interest in their retail businesses in the PRC. On 27 August 2012, the Company announced that it has decided to exercise the said option and has through a wholly owned subsidiary agreed to acquire 100% equity interest in Victor Crest, which indirectly owns 95.91% equity interest in Qingdao Parkson, 100% equity interest in Dalian Parkson and 100% equity interest in Shenyang Parkson.

– 7 –

LETTER FROM THE BOARD

The Company through its wholly owned subsidiary has entered into a Sale and Purchase Agreement in which the Vendor has agreed to sell and the Purchaser has agreed to purchase the entire issued share capital in Victor Crest. Victor Crest is the sole legal and beneficial owner of all the equity interest in Wide Crest, which in turn is the sole legal and beneficial owner of all the equity interest in Parkson Venture, Sea Coral and Wide Field.

Parkson Venture, on or before the Completion Date will be the sole legal and beneficial owner of the 95.91% equity interest in Qingdao Parkson, which owns and operates the Parkson branded department stores each in Qingdao city and Yantai city. Sea Coral is the sole legal and beneficial owner of the 100% equity interest in Dalian Parkson, which owns and operates the Parkson branded department store in Dalian city and Wide Field is the sole legal and beneficial owner of the 100% equity interest in Shenyang Parkson, which owns and operates the Parkson branded department store in Shenyang city. All the subject department stores are currently managed by an indirect subsidiary of the Company.

The Vendor is a wholly owned subsidiary of PHB, which in turn is a substantial shareholder of the Company. Hence, the Vendor is a connected person to the Company by virtue of Rule 14A.11(4) of the Listing Rules. As the relevant percentage ratio calculation for the Acquisition exceeds 5% but fall below 25%, pursuant to Chapter 14 and Chapter 14A of the Listing Rules, the Acquisition constitutes a discloseable and connected transaction for the Company which is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules and the reporting, announcement and the Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Pursuant to the Listing Rules, PHB and its associates have a material interest in the Acquisition. Accordingly, they are required to abstain from voting in the EGM for the approval of the Acquisition.

This circular contains details of the Acquisition and the associated trading arrangement in respect thereof required to be disclosed under the Listing Rules.

THE SALE AND PURCHASE AGREEMENT

Date

27 August 2012

Parties

Vendor: East Crest International Limited

Purchaser: Grand Parkson Retail Group Limited

– 8 –

LETTER FROM THE BOARD

Assets to be acquired

100% equity interest in Victor Crest, which indirectly owns:
95.91% equity interest in Qingdao Parkson
100% equity interest in Dalian Parkson
100% equity interest in Shenyang Parkson

CONSIDERATION AND CONDITIONS FOR THE ACQUISITION

Consideration

The total Consideration for the Acquisition is RMB420,000,001, which comprises:

(a) RMB340,000,000 for the 95.91% equity interest in Qingdao Parkson;
(b) RMB80,000,000 for the 100% equity interest in Shenyang Parkson; and
(c) RMB1 for the 100% equity interest in Dalian Parkson.

The Consideration shall be satisfied and fully paid by cash as follows:

(a) Within 3 Business Days from the date of the Sale and Purchase Agreement, the Purchaser shall pay to the Vendor in cash as deposit, amounting to the sum of RMB42,000,000.
(b) Within 3 Business Days from the Completion Date, the Purchaser shall pay to the Vendor RMB252,000,000 in cash.
(c) Within 90 days after the Completion Date, the Purchaser shall pay to the Vendor RMB126,000,001 in cash.

The deposit is payable in US$ calculated by reference to the middle rate published by the People’s Bank of China for the conversion of RMB to US$ on 3 Business Days preceding the day of the Sale and Purchase Agreement and the balance of Consideration shall be paid in US$ calculated by reference to the middle rate published by the People’s Bank of China for the conversion of RMB to US$ on 3 Business Days preceding the date of payment.

– 9 –

LETTER FROM THE BOARD

The Directors considered that the Consideration is fair and reasonable, and it reflects normal commercial terms which were arrived at after arm’s-length negotiations between the Vendor and the Purchaser, with reference to (i) the valuation carried out by the Valuer that value the Qingdao Property at a market value of RMB380.0 million, which increase the adjusted net asset value of Qingdao Parkson as at 31 December 2011 to RMB370.4 million after incorporating the estimated revaluation gain of RMB167.3 million on Qingdao Property; (ii) the historical profit earnings of Shenyang Parkson and the valuation carried out by the Valuer which attached a business value of RMB96.0 million to 100% equity stake in Shenyang Parkson; and (iii) the historical loss making of Dalian Parkson.

Conditions

The Completion of the Acquisition is subject to the satisfaction of the following conditions:

(a) the completion of due diligence review by the Purchaser on Victor Crest and its subsidiaries (including Wide Crest, Wide Field, Parkson Venture, Sea Coral, Qingdao Parkson, Dalian Parkson and Shenyang Parkson) and the results of which are satisfactory to the Purchaser;
(b) the obtaining by the Company of its Independent Shareholders’ approval for the Acquisition in the EGM;
(c) the completion of the Qingdao Parkson Transfer as evidenced by the Vendor obtaining the following documents:
(1) the certificates of approval issued by the Bureau of Commence, Qingdao approving the Qingdao Parkson Transfer and the amendments to the memorandum and articles of association of Qingdao Parkson confirming Parkson Venture as 95.91% equity interest holder of Qingdao Parkson;
(2) registration of Parkson Venture as the owner of the 95.91% equity interest in Qingdao Parkson and the issuance of new business license by, the Administration of Industry and Commerce, Qingdao.
(d) the execution of unconditional deed of assignment in favour of the Purchaser for the debts owing by Victor Crest, Wide Crest, Wide Field, Sea Coral, Dalian Parkson and Shenyang Parkson to the Vendor and its affiliates on or before the Completion Date to offset in full the negative net asset value if any, of Dalian Parkson and Shenyang Parkson.

– 10 –

LETTER FROM THE BOARD

TERMINATION RIGHTS

If any or all of the above-mentioned conditions cannot be fulfilled within the Stipulated Period, the Purchaser is entitled to either:

(a) extend the Stipulated Period;
(b) waive any or all of the relevant conditions and proceed to the Completion, such waiver(s), if any, must be reviewed and approved by the Independent Board Committee; or
(c) terminate the Sale and Purchase Agreement. In this respect, the Vendor shall return all the monies (including the deposit) received under the Sale and Purchase Agreement to the Purchaser within 5 Business Days from the date of termination and thereafter, the Sale and Purchase Agreement shall be null and void and neither party shall have any claims against each other save for any antecedent breach.

If any party deliberately breaches any of the provisions thereof, the innocent party is entitled to:

(i) give notice to the defaulting party to remedy the breach within 10 Business Days upon receipt of the said notice failing which the innocent party is entitled to terminate the Sale and Purchase Agreement. In this respect, the innocent party is entitled to claim from the defaulting party a sum equivalent to the deposit as penalty; or
(ii) complete the Acquisition by way of specific performance.

COMPLETION

Completion shall take place on the Completion Date after the conditions precedent to the Sale and Purchase Agreement have been duly fulfilled or waived by the Purchaser.

INFORMATION ON THE VENDOR

The Vendor, a wholly owned subsidiary of PHB, a controlling shareholder of the Company, is the legal and beneficial owner of the entire issued share capital of Victor Crest and Serbadagang. Victor Crest is the legal and beneficial owner of the entire issued share capital of Wide Crest, which in turn is the legal and beneficial owner of the entire issued share capital of Wide Field, Parkson Venture and Sea Coral. Parkson Venture and Serbadagang are the current legal and beneficial owner of the 50% and 45.91% equity interest in Qingdao Parkson respectively, Wide Field is the current legal and beneficial owner of the 100% equity interest in Shenyang Parkson, and Sea Coral is the current legal and beneficial owner of the 100% equity interest in Dalian Parkson. Parkson Venture will be the legal and beneficial owner of the 95.91% equity interest in Qingdao Parkson on or before the Completion Date pursuant to the Qingdao Parkson Transfer. The Vendor and PHB are principally engaged in the business of investment holding, The Vendor’s investment cost, including the provision of debts in Qingdao Parkson, Dalian Parkson and Shenyang Parkson is approximately RMB307.7 million, RMB40.0 million and RMB40.0 million respectively.

– 11 –

LETTER FROM THE BOARD

INFORMATION ON THE COMPANY AND THE PURCHASER

The Company and its subsidiaries are principally engaged in the operation of 52 department stores situated in prime locations in 35 cities in the PRC. The Group offers a wide range of merchandise in those department stores, including fashion and apparel, cosmetics and accessories, household, electrical goods and groceries.

The Purchaser is a 100% direct subsidiary of the Company primary acting as an investment holding company to invest in the department store business in the PRC.

HISTORICAL FINANCIAL INFORMATION OF VICTOR CREST, QINGDAO PARKSON, DALIAN PARKSON AND SHENYANG PARKSON

Victor Crest, an investment holding company established on 15 April 2005, is an indirect owner of 95.91% equity interest in Qingdao Parkson (after the Qingdao Parkson Transfer), 100% equity interest in Dalian Parkson and 100% equity interest in Shenyang Parkson. Qingdao Parkson, established on 26 August 1994 is the owner and operator of Qingdao Parkson Store and Yantai Parkson Store, Qingdao Parkson also owns the Qingdao Property which is currently occupied by Qingdao Parkson Store. Dalian Parkson, established on 15 April 2005, is the owner and operator of a Dalian Parkson Store. Shenyang Parkson, established on 28 November 2003, is the owner and operator of Shenyang Parkson Store.

Set out below is the historical financial information of Victor Crest for the 2 years ended 30 June 2011 and 30 June 2012 prepared under the International Financial Reporting Standards, as well as the historical financial information of Qingdao Parkson, Dalian Parkson and Shenyang Parkson respectively for the 2 years ended 31 December 2010 and 2011 prepared and audited under PRC generally accepted accounting principles:

Victor Crest

	Financial Year ended 30 June (HK$)	Financial Year ended 30 June (HK$)
Year	2011	2012
	(unaudited)	(unaudited)
Net profit/(loss) before tax	(15,067.00)	(9,142.44)
Net profit/(loss) after tax	(15,067.00)	(9,142.44)
Total Assets	7.77	7.77
Net Assets Value	(26,301.94)	(35,444.38)

– 12 –

LETTER FROM THE BOARD

Qingdao Parkson

Financial Year ended 31 December (RMB’000)

Year		2010			2011
			Excluding			Excluding
		Discontinued	discontinued		Discontinued	discontinued
	Audited	operation3	operation	Audited	operation3	operation
Gross Sales
Proceeds1	589,529	10,524	579,005	608,228	7,795	600,433
Operating
Revenues2	192,839	8,455	184,384	192,420	7,423	184,997
Net profit/(loss)
before tax	5,425	(8,082)	13,507	5,121	(20,713)	25,834
Net profit/(loss)
after tax	1,821	(8,082)	9,903	3,813	(20,713)	24,526
Total Assets	406,313	n.a.	n.a.	394,192	n.a.	n.a.
Net Assets Value	199,296	n.a.	n.a.	203,109	n.a.	n.a.

Dalian Parkson

	Financial Year ended 31 December (RMB’000)	Financial Year ended 31 December (RMB’000)
Year	2010	2011
Gross Sales Proceeds1	194,344	222,473
Operating Revenues2	67,446	78,319
Net profit/(loss) before tax	(6,902)	(196)
Net profit/(loss) after tax	(6,902)	(196)
Total Assets	38,949	42,402
Net Assets Value	(23,551)	(23,747)

Shenyang Parkson

	Financial Year ended 31 December (RMB’000)	Financial Year ended 31 December (RMB’000)
Year	2010	2011
Gross Sales Proceeds1	321,906	395,189
Operating Revenues2	76,455	88,974
Net profit/(loss) before tax	7,601	15,555
Net profit/(loss) after tax	7,601	15,555
Total Assets	54,822	80,842
Net Assets Value	(58,992)	(43,436)

(1) “Gross sales proceeds” includes the direct sales, gross sales proceeds from concessionaire sales, rental income and other operating revenue.
(2) “Operating revenues” includes the direct sales, commission from concessionaire sales, rental income and other operating revenue. Gross sales proceeds from concessionaire sales are not recognised. Operating revenues need not be included in the audit report issued under the PRC generally accepted accounting principles, the numbers were extracted from the management accounts prepared under the PRC generally accepted accounting principles.

– 13 –

LETTER FROM THE BOARD

(3) The discontinued operation refers to Laoshan Extra Store, which was owned and operated by Qingdao Parkson. Laoshan Extra Store ceased operation on 31 October 2011.
(4) Qingdao Parkson owns the Qingdao Property which has a net book value of approximately RMB212.7 million base on the audited accounts as at 31 December 2011. In comparison to the valuation of RMB380.0 million carried out by the Valuer, there is an unrecorded revaluation gain of approximately RMB167.3 for Qingdao Property, which if taken into account will increase the adjusted net asset value of Qingdao Parkson as at 31 December 2011 to approximately RMB370.4 million. Based on the management accounts as at 30 June 2012, the net asset value of Qingdao Parkson was approximately RMB213.3 million and the net book value of Qingdao Property was approximately RMB205.6 million. In comparison to the valuation of RMB380.0 million, this give rise to an unrecorded revaluation gain of approximately RMB174.4 million, which if taken into account will increase the adjusted net asset value of Qingdao Parkson to approximately RMB387.7 million as at 30 June 2012.
(5) As one of the conditions precedent to the Completion, the Vendor has agreed to the execution of unconditional deed of assignment in favour of the Purchaser for the debts owing by Victor Crest, Wide Crest, Wide Field, Sea Coral, Dalian Parkson and Shenyang Parkson to the Vendor and its affiliates on or before the Completion Date to offset in full the negative net asset value if any, of Dalian Parkson and Shenyang Parkson.

REASONS FOR AND BENEFITS OF THE ACQUISITION

Qingdao city is one of the major seaport, tourism and industrial centre of China and located in the eastern Shandong province of the PRC. In 2011, Qingdao city has over 7.6 million population, with a reported GDP of RMB661.5 billion and GDP per capital of RMB86,325. The retail market size of Qingdao for the year 2011 was approximately RMB223.3 billion and enjoyed an annual compounded growth rate of more than 16% in the past 5 years. The urban disposable income per capita of Qingdao for the year 2011 was RMB28,567, an increase of 14.3% from the year 2010.

Yantai city is located in the northeastern Shandong province of the PRC; it is the second largest industrial city in Shandong, next only to Qingdao. In 2011, Yantai has over 6.5 million population, with a reported GDP of RMB490.7 billion and GDP per capita of RMB70,339. The retail market size of Yantai for the year 2011 was approximately RMB161.6 billion and enjoyed an annual compounded growth rate of more than 17% since the year 2004. The urban disposable income per capita of Yantai for the year 2011 was RMB26,542, an increase of 9.4% from the year 2010.

Dalian city is the second largest city in Liaoning province, next only to the provincial capital (Shenyang). In 2011, Dalian has over 5.9 million population, with a reported GDP of RMB615.0 billion and GDP per capita of RMB91,287. The retail market size of Dalian for the year 2011 was approximately RMB192.5 billion and enjoyed an annual compounded growth rate of more than 15% since the year 2004. The urban disposable income per capita of Dalian for the year 2011 was RMB24,276, an increase of 14.0% from the year 2010.

Shenyang city is the provincial capital city of Liaoning province. In 2011, Shenyang has over 7.2 million population, with a reported GDP of RMB591.5 billion and GDP per capita of RMB72,637. The retail market size of Shenyang for the year 2011 was approximately RMB242.7 billion and enjoyed an annual compounded growth rate of more than 16% since the year 2003. The urban disposable income per capita of Shenyang for the year 2011 was RMB23,326, an increase of 13.5% from the year 2010.

– 14 –

LETTER FROM THE BOARD

In line with the Group’s business strategy, the management believes that the Acquisition will not only immediately enhance the growth and profitability of the Group, the integration of the stores into the Group’s operation will create immediate synergies which will allow a quick improvement to the operation and profitability of the acquired stores. Furthermore, the Acquisition will also provide more flexibility for the Group to carry out its expansion plan to consolidate its position in the respective cities.

The Directors believe that the terms of the Acquisition are fair, reasonable and in the normal commercial terms and are in the interests of the Company and the Shareholders as a whole.

DISCLOSEABLE AND CONNECTED TRANSACTION

The Vendor is a wholly-owned subsidiary of PHB, a substantial shareholder of the Company. Hence, the Vendor is a connected person to the Company by virtue of Rule 14A.11(4) of the Listing Rules. Accordingly, the Acquisition constitutes a connected transaction for the Company under the Listing Rules. As the relevant percentage ratio calculation for the Acquisition exceeds 5% but fall below 25%, pursuant to Chapter 14 and Chapter 14A of the Listing Rules, the Acquisition constitutes a discloseable and connected transaction for the Company which is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules and the reporting, announcement and the Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Tan Sri Cheng Heng Jem and Cheng Yoong Choong are deemed to be interested in the Acquisition as they are the indirect substantial shareholders of PHB. Both of them have been abstained from voting on the Board resolution(s) in relation to the Acquisition.

Furthermore, as PHB is a substantial shareholder of the Company and the ultimate holding company of the Vendor, PHB and its associates are deemed to have a material interest in the Acquisition. Accordingly, PHB and its associates are required to abstain from voting in the EGM to be held for the approval of the Acquisition. As at the Latest Practicable Date, PHB controls and beneficially owns directly or indirectly 1,448,270,000 shares of the Company, which represent 51.53% of the issued share capital of the Company.

Relevant details of the Acquisition will also be included in the next published annual report and accounts of the Company in accordance with Rule 14A.45 of the Listing Rules.

EGM

The Company will convene the EGM at The Executive Centre, Seminar Room 1, Level 3, Three Pacific Place, 1 Queen’s Road East, Hong Kong on Friday, 28 September 2012 at 9:00 a.m. to consider and, if thought fit, approve the Acquisition and all transactions contemplated in the Sale and Purchase Agreement. A notice of the EGM is set out on page 63 of this circular.

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LETTER FROM THE BOARD

A form of proxy for use at the EGM is enclosed with this circular. Such form of proxy is also published on the websites of Hong Kong Exchanges and Clearing Limited (www.hkexnews.hk) and of the Company (www.parksongroup.com.cn). In the event you are not able to attend the meeting, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return it to the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong as soon as possible but in any event no later than 48 hours before the time scheduled for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM nor at any adjourned meeting should you so wish.

Pursuant to Rule 13.39(4) of the Listing Rules, the vote of the Independent Shareholders taken at the EGM to approve the Acquisition and all transactions contemplated in the Sale and Purchase Agreement will be taken by poll, the results of which will be announced after the EGM.

ADVICE

Your attention is drawn to the letter from the Independent Board Committee as set out on page 17 of this circular which contains its advice to the Independent Shareholders in respect of the Sale and Purchase Agreement.

Your attention is also drawn to the letter of advice received from Investec, the independent financial adviser to the Independent Board Committee and the Independent Shareholders as set out on pages 18 to 33 of this circular which contains, among other things, its advice to the Independent Board Committee and the Independent Shareholders in relation to the terms of the Sale and Purchase Agreement and the principal factors and reasons considered by it in arriving at its advice.

ADDITIONAL INFORMATION

Your attention is also drawn to the general information as set out in Appendix II of this circular and the procedures to demand a poll at the EGM as set out in Appendix III of this circular.

By Order of the Board

PARKSON RETAIL GROUP LIMITED Cheng Yoong Choong Managing Director

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3368)

13 September 2012

To the Independent Shareholders

Dear Sir or Madam,

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF 95.91% EQUITY INTEREST IN QINGDAO PARKSON, 100% EQUITY INTEREST IN DALIAN PARKSON AND 100% EQUITY INTEREST IN SHENYANG PARKSON

We refer to the circular issued by the Company to its shareholders and dated 13 September 2012 (the “Circular”) of which this letter forms part. Terms defined in the Circular have the same meanings when used in this letter unless the context otherwise requires.

We have been appointed as the Independent Board Committee to consider the terms of the Acquisition and to advise the Independent Shareholders in connection with the Acquisition as to whether, in our opinion, its terms are fair and reasonable so far as the Independent Shareholders are concerned and whether the Acquisition is in the interests of the Company and the Shareholders as a whole. Investec has been appointed as the independent financial adviser to advise us in this respect.

We wish to draw your attention to the letter from the Board and the letter from Investec as set out in the Circular.

Having considered the principal factors and reasons considered by, and the advice of, Investec as set out in its letter of advice, we consider that the terms of the Acquisition are on normal commercial terms which are fair and reasonable so far as the interests of the Independent Shareholders are concerned and that the Acquisition is in the interests of the Company and Shareholders as a whole. Accordingly, we would recommend the Independent Shareholders to vote in favour of the ordinary resolution to approve the Acquisition at the EGM.

Yours faithfully, KO Tak Fai, Desmond Werner Josef STUDER YAU Ming Kim, Robert Independent Board Committee

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LETTER FROM INVESTEC

Set out below is the text of the letter of advice from Investec to the Independent Board Committee and the Independent Shareholders prepared for inclusion in this Circular.

==> picture [160 x 35] intentionally omitted <==

Investec Capital Asia Ltd Room 3609, 36/F, Two International Finance Centre 8 Finance Street, Central, Hong Kong 香港中環金融街8號國際金融中心二期36樓3609室 Tel/電話: (852) 3187 5000 Fax/傳真: (852) 2501 0171 www.investec.com

13 September 2012

To the Independent Board Committee and the Independent Shareholders of Parkson Retail Group Limited

Dear Sirs,

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF 95.91% EQUITY INTEREST IN QINGDAO PARKSON, 100% EQUITY INTEREST IN DALIAN PARKSON, AND

100% EQUITY INTEREST IN SHENYANG PARKSON

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the Sale and Purchase Agreement, details of which are set out in the letter from the Board (the “Letter from the Board”) contained in the circular to the Shareholders dated 13 September 2012 (the “Circular”), of which this letter forms part. This letter contains our advice to the Independent Board Committee and the Independent Shareholders in respect of the Sale and Purchase Agreement and the transactions contemplated thereunder. Unless the context otherwise requires, terms used in this letter have the same meanings as those defined in the Circular.

Pursuant to the Deed of Non-competition, PHB and the Vendor have granted the Company, inter alia, an option to acquire the interest in their retail businesses in the PRC. The Company decided to exercise the said option to acquire the 100% equity interest in Victor Crest, which indirectly owns the 95.91% equity interest in Qingdao Parkson, the 100% equity interest in Dalian Parkson and the 100% equity interest in Shenyang Parkson, from the Vendor.

On 27 August 2012, the Company, through its wholly owned subsidiary, entered into the Sale and Purchase Agreement in which the Vendor agreed to sell and the Purchaser agreed to purchase the entire issued share capital in Victor Crest. Victor Crest is the sole legal and beneficial owner of the entire equity interest in Wide Crest, which in turn is the sole legal and

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LETTER FROM INVESTEC

beneficial owner of the entire equity interest in Parkson Venture, Sea Coral and Wide Field. Parkson Venture and Serbadagang are the current legal and beneficial owners of the 50% and 45.91% equity interest in Qingdao Parkson respectively, Sea Coral is the current legal and beneficial owner of the 100% equity interest in Dalian Parkson and Wide Field is the current legal and beneficial owner of the 100% equity interest in Shenyang Parkson. Parkson Venture will be the legal and beneficial owner of the 95.91% equity interest in Qingdao Parkson on or before the Completion Date pursuant to the Qingdao Parkson Transfer.

As the relevant percentage ratio calculation for the Acquisition exceed 5% but fall below 25%, pursuant to Chapter 14 of the Listing Rules, the Acquisition constitutes a discloseable transaction for the Company which is subject to the reporting and announcement requirements. The Vendor is a wholly-owned subsidiary of PHB, a controlling Shareholder of the Company. Pursuant to Chapter 14A of the Listing Rules, the Vendor is deemed a Connected Person. As such, the Acquisition also constitutes a connected transaction for the Company pursuant to Chapter 14A of the Listing Rules which is subject to Independent Shareholders’ approval requirements.

As PHB is a controlling Shareholder and the ultimate holding company of the Vendor, PHB and its associates are deemed to have a material interest in the Acquisition. Accordingly, PHB and its associates are required to abstain from voting in the EGM to be held for the approval of the Acquisition.

THE INDEPENDENT BOARD COMMITTEE

The Board currently consists of two executive Directors, namely Datuk Cheng Yoong Choong and Mr. Chew Fook Seng; one non-executive Director, namely Tan Sri Cheng Heng Jem; and three independent non-executive Directors, namely Mr. Ko Tak Fai, Desmond, Mr. Werner Josef Studer and Mr. Yau Ming Kim, Robert.

The Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Ko Tak Fai, Desmond, Mr. Werner Josef Studer and Mr. Yau Ming Kim, Robert, has been established to consider the terms of the Sale and Purchase Agreement and the transactions contemplated thereunder and to advise the Independent Shareholders as to whether the terms of the Sale and Purchase Agreement and transactions contemplated thereunder are fair and reasonable and in the interests of the Company and the Independent Shareholders as a whole.

We have been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in these respects and to give our opinion in relation to the Sale and Purchase Agreement for the Independent Board Committee’s consideration when making its recommendation to the Independent Shareholders.

Apart from the normal advisory fee payable to us in connection with our appointment, with the approval of the Independent Board Committee, as the independent financial adviser to the Independent Board Committee and the Independent Shareholders, no arrangement exists whereby we shall receive any other fees or benefits from the Company.

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LETTER FROM INVESTEC

BASIS AND ASSUMPTIONS OF THE ADVICE

In formulating our advice, we have relied solely on the statements, information, opinions and representations for matters relating to the Group contained in the Circular and the information and representations provided to us by the Group and/or its senior management staff and/or the Directors. We have assumed that all such statements, information, opinions and representations for matters relating to the Group contained or referred to in the Circular or otherwise provided or made or given by the Group and/or its senior management staff and/or the Directors and for which it is/they are solely responsible were true and accurate and valid at the time they were made and given and continue to be true and valid as at the date of the Circular. We have assumed that all the opinions and representations for matters relating to the Group made or provided by the Directors and/or the senior management staff of the Group contained in the Circular have been reasonably made after due and careful enquiry. We have also sought and obtained confirmation from the Group and/or its senior management staff and/or the Directors that no material facts have been omitted from the information provided and referred to in the Circular.

We consider that we have reviewed all currently available information and documents which are available to enable us to reach an informed view and to justify our reliance on the information provided so as to provide a reasonable basis for our opinions. We have no reason to doubt the truth, accuracy and completeness of the statements, information, opinions and representations provided to us by the Group and/or its senior management staff and/or the Directors and their respective advisers or to believe that material information has been withheld or omitted from the information provided to us or referred to in the aforesaid documents. We have not, however, carried out an independent verification of the information provided, nor have we conducted an independent investigation into the business and affairs of the Company or any of its subsidiaries.

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LETTER FROM INVESTEC

PRINCIPAL FACTORS CONSIDERED

In formulating our opinion regarding the Sale and Purchase Agreement, we have taken into consideration the following principal factors:

1. Background information

(i) Information of the Group

The principal business activities of the Group are the operation and management of a network of department stores in the PRC. The Group operates 52 department stores in 35 cities in the PRC. The following sets out the financial information of the Group for the financial years ended 31 December 2010 and 2011, which is extracted from the Company’s annual report for the year ended 31 December 2011 (the “2011 Annual Report”), and the financial information of the Group for the six months ended 30 June 2012, which is extracted from the Company’s interim results announcement for the six months ended 30 June 2012:

			For the six
			months
	For the	year ended	ended
	31 December		30 June
	2010	2011	2012
	RMB in	RMB in	RMB in
	million	million	million
	(audited)	(audited)	(unaudited)
Revenue	3,819	4,364	2,317
Other operating
revenues	581	574	302

Total operating revenues	4,400	4,938	2,619
Total operating expenses	(2,932)	(3,429)	(1,949)
Profit from operations	1,468	1,509	670


Profit for the
year/period	1,024	1,153	539

Revenue for the year ended 31 December 2011 was approximately RMB4,364 million, representing an increase of approximately 14.3% over the same period for the previous year. The increase was mainly attributable to the growth of same store sales of approximately 11.4%, the opening of new department stores during the year ended 31 December 2011 and the inclusion of full year sales results of department stores opened in the previous year.

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LETTER FROM INVESTEC

Profit for the year increased by approximately 12.6% for the year ended 31 December 2011 to approximately RMB1,153 million, which reflected the growth in turnover and the reduction in finance costs after refinancing high yield notes with syndicated loan which commanded a lower interest rate.

As stated in the 2011 Annual Report, the Group has adopted an expansion strategy through a combination of opening new stores and acquiring strategic locations to capitalise on the booming domestic consumption market.

For the six months ended 30 June 2012, the revenue of the Group amounted to approximately RMB2,317 million which represented an increase of approximately 6.4% compared to the same period in the previous year. Profit for the period decreased by approximately 10.4% compared to the same period in the previous year to approximately RMB539 million due to the tougher operating environment and higher operating expenses contributed by the new stores opened.

(ii) Information of Victor Crest, Qingdao Parkson, Dalian Parkson and Shenyang Parkson

Victor Crest is an investment holding company and the indirect owner of the 95.91% equity interest in Qingdao Parkson (after the Qingdao Parkson Transfer), the 100% equity interest in Dalian Parkson and the 100% equity interest in Shenyang Parkson. Qingdao Parkson operates the Qingdao Parkson Store and the Yantai Parkson Store. Dalian Parkson operates the Dalian Parkson Store and Shenyang Parkson operates the Shenyang Parkson Store.

Summarised below is the historical financial information of Victor Crest for the years ended 30 June 2011 and 2012 prepared under the International Financial Reporting Standards, and Qingdao Parkson, Dalian Parkson and Shenyang Parkson for the years ended 31 December 2010 and 2011 prepared and audited (save for the operating revenues as explained under note 3 below) under PRC generally accepted accounting principles:

Victor Crest

	For the	year ended
	30	June
Year	2011	2012
	HK$	HK$
	(unaudited)	(unaudited)
Net profit/(loss) before tax	(15,067.00)	(9,142.44)
Net profit/(loss) after tax	(15,067.00)	(9,142.44)
Total Assets	7.77	7.77
Net Assets Value	(26,301.94)	(35,444.38)

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LETTER FROM INVESTEC

Qingdao Parkson

	For the	year ended
	31 December
Year	2010	2011
	RMB’000	RMB’000
	(audited)	(audited)
Gross sales proceeds (notes 1, 2)	579,005	600,433
Operating revenues (notes 1, 3)	184,384	184,997
Net profit/(loss) before tax (note 1)	13,507	25,834
Net profit/(loss) after tax (note 1)	9,903	24,526
Total Assets	406,313	394,192
Net Assets Value	199,296	203,109
Dalian Parkson
	For the	year ended
	31 December
Year	2010	2011
	RMB’000	RMB’000
	(audited)	(audited)
Gross sales proceeds (note 2)	194,344	222,473
Operating revenues (note 3)	67,446	78,319
Net profit/(loss) before tax	(6,902)	(196)
Net profit/(loss) after tax	(6,902)	(196)
Total Assets	38,949	42,402
Net Assets Value	(23,551)	(23,747)
Shenyang Parkson
	For the	year ended
	31 December
Year	2010	2011
	RMB’000	RMB’000
	(audited)	(audited)
Gross sales proceeds (note 2)	321,906	395,189
Operating revenues (note 3)	76,455	88,974
Net profit/(loss) before tax	7,601	15,555
Net profit/(loss) after tax	7,601	15,555
Total Assets	54,822	80,842
Net Assets Value	(58,992)	(43,436)

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LETTER FROM INVESTEC

Notes:

(1) Excludes the discontinued operation of Qingdao Parkson, which refers to the Laoshan Extra Store. Laoshan Extra Store ceased operation on 31 October 2011.
(2) Gross sales proceeds include the direct sales, gross sales proceeds from concessionaire sales, rental income and other operating revenue.
(3) Operating revenues include the direct sales, commission from concessionaire sales, rental income and other operating revenue. Gross sales proceeds from concessionaire sales are not recognised. As operating revenues are not required to be included in the audit report issued under the PRC generally accepted accounting principles, the numbers were extracted from the management accounts prepared under the PRC generally accepted accounting principles.

The management of the Company noted that the increase in net profit before tax of Qingdao Parkson, after excluding the discontinued operation, from approximately RMB13.5 million for the year ended 31 December 2010 to approximately RMB25.8 million for the year ended 31 December 2011 was due to the increase in gross sales proceeds of approximately RMB21.4 million, which was mainly generated by the Yantai Parkson Store. The management of the Company considers that the Qingdao Parkson Store and Yantai Parkson Store would contribute to the growth of the Group as evidenced by the improved operating performance in recent years.

While Dalian Parkson incurred a loss for the year ended 31 December 2011, the net loss after tax of approximately RMB0.2 million for the year represented a significant improvement from the net loss after tax of approximately RMB6.9 million for the previous year. The negative net assets value of approximately RMB23.7 million as at 31 December 2011 represented accumulated losses from previous years. The management of the Company believes that Dalian Parkson offers sound business prospects given its improvement in operating performance.

Shenyang Parkson recorded net profit after tax of approximately RMB15.6 million for the year ended 31 December 2011, as compared to a net profit of approximately RMB7.6 million for the previous year. The management of the Company understands that the improvement in net profit was mainly due to the increase in gross sales proceeds during the year. The management of the Company understands that such an increase was closely related to the economic improvement, in particular, the growth in disposable income and retail market size in Shenyang. The negative net assets value of approximately RMB43.4 million as at 31 December 2011 represented accumulated losses from previous years.

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LETTER FROM INVESTEC

While Dalian Parkson and Shenyang Parkson were in a negative net assets value position as at 31 December 2011, one of the conditions precedent to the Completion is the execution of an unconditional deed of assignment in favour of the Purchaser for the debts owing by Victor Crest, Wide Crest, Wide Field, Sea Coral, Dalian Parkson and Shenyang Parkson to the Vendor and its affiliates on or before the Completion Date to offset in full the negative net assets value if any, of Dalian Parkson and Shenyang Parkson (the “Unconditional Deed”). The combination of debts to be assigned under the Unconditional Deed would cover the aggregate negative net assets value of Dalian Parkson and Shenyang Parkson as at Completion Date.

(iii) Reasons for and benefits of the Acquisition

Qingdao is one of the major seaport, tourism and industrial centres of the PRC and located in the Shandong province of the PRC. In 2011, Qingdao had a population of over 7.6 million, with reported GDP of approximately RMB661.5 billion and GDP per capita of RMB86,325. The retail market of Qingdao amounted to approximately RMB223.3 billion in 2011, registering an annual compounded growth rate of more than 16% in the past five years. The urban disposable income per capita of Qingdao for 2011 was RMB28,567, representing an increase of approximately 14.3% from 2010.

Yantai is the second largest industrial city in the Shandong province of the PRC. In 2011, Yantai had a population of over 6.5 million, with reported GDP of approximately RMB490.7 billion and GDP per capita of RMB70,339. The retail market of Yantai amounted to approximately RMB161.6 billion in 2011, registering an annual compounded growth rate of approximately 15% since 2004. The urban disposable income per capita of Yantai in 2011 was RMB26,542, representing an increase of approximately 9.4% from the previous year.

Dalian is the second largest city in the Liaoning province of the PRC. In 2011, Dalian had a population of over 5.9 million, with reported GDP of approximately RMB615.0 billion and GDP per capita of RMB91,287. The retail market of Dalian amounted to approximately RMB192.5 billion in 2011, registering an annual compounded growth rate of more than 15% since 2004. The urban disposable income per capita of Dalian in 2011 was RMB24,276, representing an increase of approximately 14.0% from the previous year.

Shenyang is the provincial capital city of the Liaoning province of the PRC. In 2011, Shenyang had a population of over 7.2 million, with reported GDP of approximately RMB591.5 billion and GDP per capita of RMB72,637. The retail market of Shenyang amounted to approximately RMB242.7 billion in 2011, registering an annual compounded growth rate of more than 16% since 2003. The urban disposable income per capita of Shenyang in 2011 was RMB23,326, representing an increase of approximately 13.5% from the previous year.

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LETTER FROM INVESTEC

As stated in the “Letter from the Board”, the management of the Company believes that the Acquisition is in line with the Group’s business strategy and would enhance the growth and profitability of the Group. The management of the Company also believes that the integration of the stores under the Acquisition would create synergies with the Group’s operation which would allow improvement to the operation and profitability of the stores under the Acquisition. The management of the Company also believes that the Acquisition would provide additional flexibility of the Group to carry out its expansion plan to consolidate its position in the respective cities.

Taking into account the Deed of Non-competition and the Group’s adoption of an expansion strategy through a combination of opening new stores and acquiring strategic locations to capitalise on the domestic consumption market as stated in the 2011 Annual Report, we concur with the management of the Company that the Acquisition is in line with the Group’s business strategy and is in the ordinary and usual course of business of the Group.

2. Terms of the Sale and Purchase Agreement

Date 27 August 2012

Parties

Vendor: East Crest International Limited

Purchaser: Grand Parkson Retail Group Limited

Assets to be acquired

100% equity interest in Victor Crest, which indirectly owns:

95.91% equity interest in Qingdao Parkson
100% equity interest in Dalian Parkson
100% equity interest in Shenyang Parkson

Consideration

The total Consideration for the Acquisition is RMB420,000,001, which comprises:

(a) RMB340,000,000 for the 95.91% equity interest in Qingdao Parkson;
(b) RMB80,000,000 for the 100% equity interest in Shenyang Parkson; and
(c) RMB1 for the 100% equity interest in Dalian Parkson.

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LETTER FROM INVESTEC

The Consideration shall be satisfied and fully paid by cash as follows:

(a) Within 3 Business Days from the date of the Sale and Purchase Agreement, the Purchaser shall pay to the Vendor in cash as deposit, amounting to the sum of RMB42,000,000;
(b) Within 3 Business Days after the Completion Date, the Purchaser shall pay to the Vendor RMB252,000,000 in cash; and
(c) Within 90 days after the Completion Date, the Purchaser shall pay to the Vendor RMB126,000,001 in cash.

The deposit is payable in US$ calculated by reference to the middle rate published by the People’s Bank of China for the conversion of RMB to US$ on 3 Business Days preceding the day of the Sale and Purchase Agreement and the balance of the Consideration shall be paid in US$ calculated by reference to the middle rate published by the People’s Bank of China for the conversion of RMB to US$ on 3 Business Days preceding the date of payment.

As stated in the “Letter from the Board”, the consideration is determined after arm’s length negotiations between the Vendor and the Purchaser with reference to (i) the adjusted net assets value of Qingdao Parkson after incorporating the estimated revaluation gain on the Qingdao Property with reference to the valuation carried out by the Valuer; (ii) the historical profit earnings of Shenyang Parkson and the valuation carried out by the Valuer; and (iii) the historical losses of Dalian Parkson.

Evaluation of the Consideration

In assessing the fairness and reasonableness of the Consideration, the Valuer has been appointed to evaluate the market value of (i) the Qingdao Property; and (ii) the 100% equity interest in Shenyang Parkson as at 30 June 2012.

(i) The 100% equity interest in Qingdao Parkson

The Valuer has been appointed to evaluate the market value of the Qingdao Property, which was in turn adopted to calculate the adjusted net assets value of Qingdao Parkson.

The Qingdao Property is owned by Qingdao Parkson and includes a commercial building with a total gross floor area of approximately 76,013 m[2] . The commercial building is mainly used by Qingdao Parkson for the operation of the Qingdao Parkson Store, while a portion of the property with a total useable floor area of approximately 6,731 m[2] is leased by Qingdao Parkson to various tenants at a rental of approximately RMB5.5 million per annum.

We have reviewed the valuation report of the Qingdao Property prepared by the Valuer as set out in Appendix I to this Circular. We have also discussed with the Valuer and understand that the Valuer has adopted the direct

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LETTER FROM INVESTEC

comparison approach in assessing the market value of the Qingdao Property. In adopting the direct comparison approach, the Valuer has made reference to recent transactions for similar properties in the local area and adjusted for the differences between the comparable properties and the Qingdao Property. The Valuer has also capitalised the net rental income to be derived from the existing tenancies and reversionary market value upon the expiration of the existing tenancies with reference to comparable market transactions for the leased portion of the Qingdao Property in assessing the value of the Qingdao Property. We understand from the Valuer that the approach adopted is commonly used for arriving at the market value of properties similar to the Qingdao Property. Based on our discussion with the Valuer, we consider that the approach adopted by the Valuer to be appropriate.

As assessed by the Valuer, the market value of the Qingdao Property is approximately RMB380 million as at 30 June 2012.

As discussed in the Letter from the Board, the adjusted net assets value of Qingdao Parkson amounted to RMB370.4 million as at 31 December 2011 after adjusting for the estimated revaluation gains from the Qingdao Property based on the assessment by the Valuer, and the corresponding net assets value of the 95.91% equity interest in Qingdao Parkson was approximately RMB355.3 million. The Consideration attributable to the acquisition of the 95.91% equity interest in Qingdao Parkson of RMB340,000,000 represents a discount of approximately 4.3% to the corresponding adjusted net assets value.

Notwithstanding the Consideration for the Qingdao Parkson was made with reference to, amongst other things, the market value of the Qingdao Property, we note that Qingdao Parkson is operating a profitable business with a net profit after tax of approximately RMB24.5 million for the year ended 31 December 2011 and audited net assets value of approximately RMB203.1 million as at 31 December 2011. Based on the management accounts as at 30 June 2012, the net assets value of Qingdao Parkson further increased to approximately RMB213.3 million. Further analysis of the reasonableness of the Consideration attributable to the acquisition of the 95.91% equity interest in Qingdao Parkson is set out under the heading “Comparison with comparable companies” below.

(ii) The 100% equity interest in Shenyang Parkson

As Shenyang Parkson does not own any properties, the Valuer has been appointed to evaluate the market value of the 100% equity interest in Shenyang Parkson. We understand from the Valuer that the assessment of the market value of Shenyang Parkson is based on the operation of the Shenyang Parkson Store in order to derive the value of the equity interest in Shenyang Parkson.

We have reviewed the valuation report prepared by the Valuer. We have also discussed with the Valuer and understand that the Valuer has considered three different generally accepted valuation methods, namely the market

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LETTER FROM INVESTEC

approach, the cost approach and the income approach in arriving at the market value of the 100% equity interest in Shenyang Parkson. Based on our discussion with the Valuer, the Valuer considers that it is inappropriate to adopt the income approach and the cost approach for the purpose of valuing the 100% equity interest in Shenyang Parkson. Given that the income approach involves estimation risk under a rapidly changing retail environment and a precise projection on the business of Shenyang Parkson may not be ascertained, and the cost approach does not consider the going concern of Shenyang Parkson , the Valuer considers the market approach as the only appropriate approach for the purpose of valuing the 100% equity interest in Shenyang Parkson. Based on our discussion with the Valuer, we consider that the adoption of the market approach to value the 100% equity interest in Shenyang Parkson to be appropriate.

Based on our discussion with the Valuer, in assessing the market value of the 100% equity interest in Shenyang Parkson, we note that the Valuer has identified comparable companies listed on the Shenzhen Stock Exchange and the Shanghai Stock Exchange focusing on retail business in the PRC which report positive earnings to infer meaningful multiples for comparison . In addition, we also note that the Valuer has taken into consideration the asset size, profitability, gross and net profit margin, growth rate, return on equity and gearing of the comparable companies. Accordingly, the Valuer has selected five comparables for the purpose of valuation. On this basis, we concur with the Valuer’s view that the comparables selected are a fair and representative sample for the valuation of Shenyang Parkson. Please refer to the valuation report of Shenyang Parkson as set out in Appendix I to the Circular for further details.

By adopting the market approach, the Valuer has selected the enterprise value (“EV”) to earnings before interest, taxes, depreciation and amortisation (“EBITDA”) multiple (“EV/EBITDA”) of the comparables as the appropriate multiple as EV/EBITDA reflects the going concern and the growth expectation of the comparables and provides direct reference on the market value as a group of comparable companies. In addition, the Valuer has applied a marketability discount to arrive at the market value of 100% equity interest in Shenyang Parkson to reflect the differences in liquidity between Shenyang Parkson, which is a private company, and the comparables, which are public companies. The Valuer has confirmed that the methodology of EV/EBITDA and the marketability discount are commonly used in the valuation of retail businesses.

As assessed by the Valuer, the market value of 100% equity interest in Shenyang Parkson is valued at approximately RMB95.9 million as at 30 June 2012. The Consideration attributable to the acquisition of the 100% equity interest in Shenyang Parkson of RMB80,000,000 represents a discount of approximately RMB15.9 million, or 16.6%, to the market value as assessed by the Valuer.

– 29 –

LETTER FROM INVESTEC

Despite Shenyang Parkson had a negative net assets value of approximately RMB43.4 million as at 31 December 2011, one of the conditions precedent to the Completion is the execution of the Unconditional Deed which would offset in full the negative net assets value of Shenyang Parkson.

In addition, we also note that Shenyang Parkson is operating a profitable business with a net profit after tax of approximately RMB15.6 million for the year ended 31 December 2011. Further analysis of the reasonableness of the Consideration attributable to the acquisition of the 100% equity interest in Shenyang Parkson is set out under the heading “Comparison with comparable companies” below.

(iii) the 100% equity interest in Dalian Parkson

In relation to the acquisition of the 100% equity interest in Dalian Parkson, we note that Dalian Parkson incurred a net loss after tax of approximately RMB0.2 million for the year ended 31 December 2011, which represented a significant improvement from the net loss after tax of approximately RMB6.9 million for the previous year. We also note that while Dalian Parkson had a negative net assets value of approximately RMB23.7 million as at 31 December 2011, one of the conditions precedent to the Completion is the execution of the Unconditional Deed which would offset in full the negative net assets value of Dalian Parkson. We have discussed with the management of the Company and understand that Dalian Parkson has no material contingent liabilities and commitments other than the rental contract for the store space leased for the operation of the Dalian Parkson Store. Dalian Parkson has the right to terminate the rental contract by submitting a six-month prior notice or if the accumulated losses for two consecutive years exceed a pre-determined level. Hence, the acquisition of the 100% equity interest in Dalian Parkson at a nominal consideration of RMB1 will have negligible impact to the liabilities of the Group and allows the Company to operate an established department store.

Given that (i) the operating performance of Dalian Parkson has improved significantly in recent years; (ii) Dalian Parkson has the right to terminate the rental contract by submitting a six-month prior notice or if losses reach a pre-determined level; (iii) one of the conditions precedent to the Completion is the execution of the Unconditional Deed; and (iv) the acquisition of the 100% equity interest in Dalian Parkson at a nominal consideration of RMB1 will have negligible impact to the liabilities of the Group, we concur with the Directors’ view that the acquisition of the 100% equity interest in Dalian Parkson to be fair and reasonable and is in the interest of the Company and the Shareholders as a whole.

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LETTER FROM INVESTEC

Comparison with comparable companies

To further evaluate the Consideration payable for the 95.91% equity interest in Qingdao Parkson and the 100% equity interest in Shenyang Parkson, we have also compared the price to earnings multiple (“P/E”) and the price to book value multiple (“P/B”) of listed companies on the Main Board of the Stock Exchange which are engaged in the operation of department stores in the PRC (together the “Comparables”) against the P/E and P/B of the Acquisition represented by the Consideration attributable to the acquisition of the 95.91% equity interest in Qingdao Parkson and the 100% equity interest in Shenyang Parkson respectively.

		Closing price
		as at the date
		of the Sale	Historical	Historical
	Stock	and Purchase	earnings	book value
	Code	Agreement	per share	per share	P/E	P/B
		HK$	HK$	HK$	times	times
PCD Stores (Group)
Limited	331	0.61	0.09	0.69	6.8	0.9
New World Department
Store China Limited	825	4.12	0.51	4.04	8.1	1.0
Maoye International
Holdings Limited	848	1.42	0.15	1.21	9.5	1.2
Intime Department Store
(Group) Company
Limited	1833	8.02	0.50	4.01	16.0	2.0
Golden Eagle Retail
Group Limited	3308	14.98	0.77	2.89	19.5	5.2
The Company	3368	6.65	0.50	2.29	13.3	2.9
Average					12.2	2.2
Maximum					19.5	5.2
Minimum					6.8	0.9
Qingdao Parkson					14.5	1.7
					(Note 1)	(Note 1)
Shenyang Parkson					5.1	N/A
					(Note 2)	(Note 3)

Notes:

(1) the P/E and P/B of Qingdao Parkson were calculated based on the Consideration attributable of RMB340,000,000 and the proportionate audited net profit after tax excluding discontinued operation and net assets value of the 95.91% equity interest in Qingdao Parkson for the year ended 31 December 2011 respectively.
(2) the P/E of Shenyang Parkson was calculated based on the Consideration attributable of RMB80,000,000 and the audited net profit after tax of Shenyang Parkson for the year ended 31 December 2011.
(3) Shenyang Parkson had negative net assets value as at 31 December 2011.

– 31 –

LETTER FROM INVESTEC

As shown in the above table, the P/E of the Comparables ranges from approximately 6.8 times to approximately 19.5 times and the average P/E is 12.2 times. The P/E of the Consideration attributable to the acquisition of the 95.91% equity interest in Qingdao Parkson of 14.5 times is above the average but still within the range of P/E of the Comparables, while the P/E for the Consideration attributable to the acquisition of the 100% equity interest in Shenyang Parkson of 5.1 times is below the minimum of the Comparables.

The P/B of the Comparables ranges from approximately 0.9 times to approximately 5.2 times and the average P/B is 2.2 times. The P/B for the Consideration attributable to the acquisition of the 95.91% equity interest in Qingdao Parkson of 1.7 times is below the average of the P/B of the Comparables.

While Shenyang Parkson had negative net assets value as at 31 December 2011, one of the conditions precedent to the Completion is the execution of the Unconditional Deed which would offset in full the negative net assets value of Shenyang Parkson.

3. Possible financial effects of the Acquisition

Upon Completion of the Acquisition, Victor Crest, Dalian Parkson and Shenyang Parkson would become indirect wholly-owned subsidiaries of the Company and Qingdao Parkson would become a 95.91% owned subsidiary of the Company and their respective financial results, assets and liabilities would be consolidated into the Group’s financial statements.

On the basis that, upon Completion, the Consideration is satisfied by cash according to the terms set out in the Sale and Purchase Agreement, the consolidation of the assets into the Group’s financial statement will be partly offset by the decrease in “Cash and cash equivalents” by an amount equivalent to the Consideration. Based on the unaudited aggregated cash and cash equivalents and deposits with licensed banks of the Group of approximately RMB4,451 million as at 30 June 2012 as set out in the interim results announcement of the Company for the six months ended 30 June 2012, the management of the Company believes that the Group has sufficient internal resources to finance the Acquisition.

The Company expects that the Acquisition would give rise to goodwill which would be determined on the Completion Date based on difference between the Consideration and the net assets value acquired as at the Completion Date. The extent to which any impairment provision for goodwill might be required in the Group’s future financial statements would depend on the assessment as to whether any impairment on goodwill may be necessary.

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LETTER FROM INVESTEC

4. Our view

Taking into account the background to, and reasons for, the Sale and Purchase Agreement, including (i) the Group’s intention to acquire strategic locations to capitalise on the booming domestic market; (ii) the recent performance of Qingdao Parkson, Dalian Parkson and Shenyang Parkson; (iii) the Consideration attributable to the acquisition of the 95.91% interest in Qingdao Parkson represents a discount to the corresponding adjusted net assets value after adjusting for the estimated revaluation gain on the Qingdao Property based on the assessment by the Valuer; (iv) the Consideration attributable to the acquisition of the 100% interest in Shenyang Parkson represents a discount to the market value as assessed by the Valuer; (v) the acquisition of the 100% equity interest in Dalian Parkson at a nominal consideration of RMB1 will have negligible impact to the liabilities of the Group and allows the Company to operate an established department store; and (vi) the P/E and P/B calculated in respect of the Consideration are either below or within the range of the Comparables, we concur with the view of the Directors that the entering into of the Sale and Purchase Agreement is in the interests of the Company and Independent Shareholders as a whole.

RECOMMENDATION

Having considered the above principal factors and reasons, we are of the opinion that the terms of the Sale and Purchase Agreement (including the Consideration) are on normal commercial terms, in the ordinary and usual course of business of the Group and are fair and reasonable so far as the Independent Shareholders are concerned. We also consider that the Sale and Purchase Agreement to be in the interests of the Group and the Independent Shareholders as a whole. Therefore, we would recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour for the ordinary resolution to approve the Sale and Purchase Agreement at the EGM.

Yours faithfully For and on behalf of Investec Capital Asia Limited Jimmy Chung Executive Director

– 33 –

LETTER FROM THE VALUER 1

APPENDIX I

Vigers Appraisal & Consulting Limited International Assets Appraisal Consultants

10th Floor, The Grande Building 398 Kwun Tong Road Kowloon Hong Kong

24 August 2012

The Directors

Parkson Retail Group Ltd.

Level 28, Three Pacific Place, 1 Queen’s Road East, Hong Kong

Dear Sirs,

In accordance with the instruction from 百盛商業集團有限公司 Parkson Retail Group Limited (the “Group”), we have appraised the market value of Shenyang Parkson Department Store (“Shenyang Parkson” or the “Company”) as at 30 June 2012 (the “Appraisal Date”).

The purpose of this report is to provide an independent opinion on the market value of the Company as at the Appraisal Date for the purpose of the acquisition of 100% interest in Shenyang Parkson by the Group (the “Acquisition”).

BACKGROUND

Shenyang Parkson

The Company is established under the laws of People’s Republic of China (“PRC”). Shenyang Parkson located at No. 21 Zhonghua Road, Heping District, Shenyang, the PRC (“Shenyang Parkson”). The Company does not engage in any business other than its retail operation in Shenyang Parkson. The Company positioned themselves at the middle to middle-upper class of the retail market and offers a wide range of merchandise which can be broadly categorized into three categories namely “fashion, footwear and apparel”, “cosmetics, jewelry and accessories” and “household, electrical goods and others”.

Shenyang Parkson offers wide range of product lines that includes fashion for women, menswear, housewares, footwear and necessities. The retail sales comprises of (i) direct sales, where the stores invests in the inventory and (ii) concessionaire sales, which is a business model similar to consignment of which the stores enter into agreements with certain owners/distributors of branded goods (know as concessionaires), who are permitted to occupy designated areas in the stores and to establish their own sales counters for their products, the brand owners/distributors invest in the inventory and the store receives commission calculated based on a fixed percentage of the sales generated from such brands.

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LETTER FROM THE VALUER 1

APPENDIX I

Retail Sales Market in Shenyang[1]

Shenyang is located in the central part of Liaoning Province in Northeast China. Shenyang is administratively at the sub-provincial level with direct jurisdiction over 9 districts, 1 county-level cities and 3 counties. It has a total area of about 13,000 sq. km., 3,495 sq. km. of which is the urban area. Shenyang has a total permanent population of 7.227 million and a total population of 5.191 million in the urban area.

In 2011, total retail sales of consumer product in Shenyang had reached RMB242.69 billion or 17.5% increase against 2010, in which RMB237.47 billion was generated by urban markets or 17.6% increase against 2010 and RMB5.22 billion by rural markets, or 12.2% increase against 2010. The total retail sales of enterprises above designated size in wholesale and retail trade by category of main commodities had recorded RMB120.85 billion, or 23.7% increase as compared to 2010.

Consumption on furniture and building material had the highest growth, 74.2%, in 2011; consumption on jewelry products came second, which recorded growth of 40.8%; consumption on tele-communication products were in the third position and the growth were 31%.

BASIS AND METHODOLOGY OF VALUATION

We have been asked to evaluate the market value of the 100% interest of Shenyang Parkson (the “Interest”). Market value is defined as the estimated amount for which an asset should exchanged 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 arriving at our opinion of value, we make reference to three generally accepted approaches to value, namely; the Market Approach, the Cost Approach and the Income Approach.

Market Approach considers prices recently paid for similar assets, with adjustments made to indicate market prices to reflect condition and utility of the appraised assets relative to the comparable market transactions.

Cost Approach considers the cost to reproduce or replace in new condition the assets appraised in accordance with current market prices for similar assets, with allowance for accrued depreciation as condition or obsolescence present, whether arising from physical, functional or economic causes.

Income Approach is the conversion of expected periodic benefits of ownership into an indication of value. It is based on the principle that an informed buyer would pay no more for asset than an amount equal to the present worth of anticipated future benefits (income) from the same or equivalent asset with similar risk.

1 Source: Shenyang Government, Shenyang Statistic Bureau, Wikipedia

– 35 –

LETTER FROM THE VALUER 1

APPENDIX I

Determination of the Valuation Approach

Taking account of the above, we consider the market approach would be appropriate for the valuation of the Company. We considered that the income approach may have limitation in the case as it will be subject to the estimation risk under a rapidly changing retail environment and hence the Company considers a precise projection on the business may not be ascertained as at the valuation date. Secondly, the market approach have the benefit on reflecting the going concern of the business operation of the Company, the market information and sentiment on the valuation date, and thus include revenue growth or profitability expected by market participants. Cost approach will not be considered since this approach fails to consider the going concern of the Company.

Information Reviewed

As part of our analysis we have been furnished with information prepared by the Group, including but not limited to the following:

The business nature of the Company and the Vendor, business licenses, background and relevant information of the Company;
Audited financial statements of the Company for the financial year end at 2009 to 2011;
The management account from June 2011 to June 2012;
Historical capital spending and capital structure of the Company;
Fixed asset register of the Company as at 30 June 2012;
Market position, competitive advantages and disadvantages of the Company and deflection to other competitors, if any;
Relevant operational and financial information in relation to the Company, such as operational performance indicators and descriptions, research on background of other comparable companies, their business profiles, financial results, etc..

We have reviewed the information required, which is considered sufficient for the issue of the valuation report of the type in question and we believe no material factor has been intentionally omitted or withheld from the given information in order to reach an informed view.

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LETTER FROM THE VALUER 1

APPENDIX I

Valuation Method

We consider that the use of the enterprise value (EV) to earnings before interest, taxes, depreciation and amortization (EBITDA) multiples is an appropriate valuation methodology for the valuation of the Interest since the method reflects the going concern of the Company and provides direct reference on the market value from a group of comparable companies in the market.

The valuation is derived from applying (i) an estimated EV to EBITDA (“EV/EBITDA”) multiple of a group of listed companies operating in comparable business, adjusted for the uniqueness of the subject being valued, (ii) the EBITDA of the Company reflected in the financial statement for the year ended 30 June 2012 with appropriate adjustments.

Before arriving at our opinion of value, we have considered, inter alia, the following factors:

the nature of the business and the history of the Company;
the economic outlook of the PRC, the Company in general;
the general outlook of the retail industry in Shenyang, the PRC;
the composition of revenue and earnings quality of the retail business and other comparable companies in retail business;
future challenge and developments in the retail business;
the financial condition of the Company; and
the specific risks associated with the Company.

Assumptions

In preparing this appraisal, a number of assumptions have been made in giving our opinion on the market value of the Company. The following assumptions are considered to be applicable to the appraisals in connection with the Company and have a significant effect on this appraisal. These assumptions formed the basis in arriving at our opinion of value. The major assumptions adopted in this valuation are as follows:

There will be no material adverse change in the political, legal, fiscal or economic condition in the PRC and other regions in which the Company operate;
The Company will retain the key management, competent personnel and technical staff to support its ongoing operation;
Market trend and conditions for the Company in related areas will not deviate significantly from the economic forecasts in general. Consumer behaviour will have no significant change throughout the valuation period;

– 37 –

LETTER FROM THE VALUER 1

APPENDIX I

The valuation assumed the operation period of the Company will run into indefinite future, that is, we assume that the business licenses of the Company, lease of the store can be renewed, or relevant administrative procedure in relation to the renewal of business can be properly carried out. We further assume the area for the retail operation of the Company and subleasing remain its existing state throughout the valuation period;
As per discussion with the Group, a lease extension agreement (the “Lease Extension Agreement”) would be signed before the Acquisition. As the Lease Extension Agreement has not been signed as at the Appraisal Date, we have been relying on the information about the adjusted EBITDA provided by the Group with regard to the new lease terms which shall be effective from 1 January 2012. The adjusted EBITDA is solely based on such information provided. The copy of the Lease Extension Agreement was signed on 20 August 2012 and provided by the Group as a counter reference on this assumption;
We assumed that the general management practice of the Company after the Acquisition, including but not limited to accounting policy and dividend policy, will have no significant deviation from the current practice adopted by the Company;
The valuation assumed that the core income stream of the Company remain from the retail operation of the Company. The valuation will not consider the non-operating income such as interest income, other investment and have not made any estimates on imponderables, or disaster which may affect the future income.

We have assumed the reasonableness of the information provided and relied to a considerable extent on such information in arriving at our opinion of value.

Valuation Considerations

Our investigation has covered the earnings multiples of companies engaged in retail business in China. We consider EV/EBITDA as the appropriate method to evaluate the market value of the Company being valuated since: (I) the valuation shall first to appraise the EV of the Company. The measurement of benefit stream shall make reference to the cash flow to the firm. Under this premise, EBITDA is an appropriate as compared to other measurement, since it represents the operating cash flow contributed to a company subject to minimal accounting effect across border. Thus the ratio, EV/EBITDA provide more comparable results (II) Since EV/EBITDA ratio deduced the value of the Company on the basis of their earning power, this ratio can appropriately reflect the going concern and the growth expectation in relation to the retail business.

– 38 –

LETTER FROM THE VALUER 1

APPENDIX I

In the construction of comparables, we have considered the following factors in order to provide appropriate comparison. First, the comparables shall be in the same industry as the subject company being apprised. We thus select only companies have their operation focus in retail business. Second, the comparables shall report positive earnings so to infer meaningful multiples for comparison. Third, we have selected companies who have their core operation in the PRC. This is due to the subject company is operating in the PRC and hence any comparables operate other than in the PRC may have discrepancy due to country factor, especially the growth prospect of the retail industry in PRC is substantially different from other countries. Moreover, by constructing a comparables of the PRC comparable, the difference on financial reporting and tax difference can also be eliminated. Thus provides consistent comparison against the Company being apprised.

We will also make adjustments on the conclusion of EV/EBITDA multiple, where appropriate; such as the marketability of the Company interest; or other possible factors which may affect the value of the Company to form our opinion. We have included companies which listed on the Shenzhen Stock Exchange and Shanghai Stock Exchange which are principally engaged in retail business.

Analysis of Comparables

Our first consideration is to identify the relevance of the business engaged by the companies in the comparables. We may not consider those companies which have higher weighting in non-retails business. We may also not consider companies with negative earnings or an observable outlier. In order to determine an estimated EV/EBITDA ratio for the Company, we have considered several factors as our basis of conclusion: (i) the asset size of the Company, which showed substantial difference against the comparables. In our investigation, we noted that most of the comparables currently owned the properties of which their retail business operated in. In contrast to the comparables, Shenyang Parkson does not owned the property but paying rent for the operating area being occupied. Such difference in operation will be considered in the estimation of EV/EBITDA ratio. (ii) EBITDA to sales, which represents the key indicator on the profitability and is highly correlated to the value of a retail business. In the valuation, we will also consider the gross profit margin, EBIT margin, EBITDA margin and net profit margin. (iii) The growth rate, which is one of the factor implicitly considered by the market and was factored into the EV/EBITDA ratio. In general, we expect a higher growth will result a higher EV/EBITDA ratio. (iv) The gearing and the related return on equity. Higher gearing generally help increase the return to equity if it is under normal leverage. However, as the gearing increase, the liquidity risk also increases. Thus the gearing will have dual impact on value of the business. On an acceptable leverage, the value of equity increase as a result of lower cost of capital. On the high side, the liquidity risk increase and hence reduces the equity value.

– 39 –

LETTER FROM THE VALUER 1

APPENDIX I

Having considered above factors, we observed that Xian Kaiyuan Investment Group Company Limited, Zhongxing Shenyang Commercial Building Group Co., Ltd., Guangzhou Grandbuy Co., Ltd., Hangzhou Jiebai Group Co., Ltd. and Beijing Wangfujing Department Store (Group) Co., Ltd. can provide better reference on the EV/EBITDA ratio. Having considered the EV/EBITDA multiple of the comparables, in this valuation, we have adopted a EV/EBITDA ratio of 7.54x, which is the average of the EV/EBITDA ratio of the comparables. The following are the details of the comparables:

		EV/EBITDA
		multiple at
Company	Stock Code	30 June 2012
Xian Kaiyuan Investment Group	000516 CH Equity	11.45
Company Limited
Zhongxing Shenyang Commercial	000715 CH Equity	4.83
Building Group Co., Ltd.
Guangzhou Grandbuy Co., Ltd.	002187 CH Equity	4.88
Hangzhou Jiebai Group Co., Ltd.	600814 CH Equity	10.10
Beijing Wangfujing Department Store	600859 CH Equity	6.44
(Group) Co., Ltd.

Source: Bloomberg, annual report of the companies, and adjustments (if any).

Valuation based on the EV would require the exclusion of debt amount to arrive the equity value. Since the value concluded from multiples represents the operating value of the Company, we have also considered the non-operating cash position of the Company.

The EV/EBITDA ratio inferred by the comparables represent the value of equity interest in a freely transferable status. The Company, however, a closely held company that is not ready tradable on open market. We shall include marketability discount to reflect the illiquidity nature of the Company shares. With reference to the Company cash generating ability and the holding period as a result of the lease, a marketability discount of 40% would be considered.[2]

OPINION OF VALUE

Based on the aforesaid investigation, analysis and appraisal method employed, it is our opinion that, as of 30 June 2012, the market value of the 100% interest of Shenyang Parkson is reasonably stated as RENMINBI Ninety Five Million Nine Hundred Eight Thousand RMB95,908,000 ONLY.

The opinion of value was based on generally accepted appraisal procedures and practices that rely extensively on the use of numerous assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained.

2 Source: Business Appraisal Practice published by the Institute of Business Appraisers

– 40 –

LETTER FROM THE VALUER 1

APPENDIX I

The opinion was based on the management discussion, assumptions and representations, in oral or writing. The projection or estimates set out in the valuation formed part of the assumptions. We were furnished with limited financial information and other documents germane to the valuation. These data had been utilised without further verification as correctly representing the results and future prospects of the operation and the financial condition of the subject. No responsibility is assumed for the accuracy of the provided information. The opinion of value is subject to change if any of the assumptions provided by the management is not reasonable or proper made, and we reserve the right to change or withdraw our opinion without any liabilities.

This report to the client is for the specific purpose to which it refers, and should not be the only factor to be reference by the client. We have not been engaged to make specific sales or purchase recommendation. The use of the report will not supplant other due diligence which the company or the concerned parties should conduct in reaching business decision regarding the subject of valuation.

The valuation procedure did not require us to conduct legal due diligence on the legality and formality of the subject and its related legal documents, and it should be the responsibility of the legal advisor to the management of the company. Thus, no responsibility or liability is assumed from our report to the origin and continuity of the subject. We have not inspected the original documents filed in the relevant authorities to verify ownership of the subject. We need to state that we are not legal professional and are not qualified to ascertain the titles and to report any encumbrances that may be registered against the subject. No responsibility or liability is assumed in relation to those opinions or copies of document provided (if any).

In accordance with our standard practice, this report is for the use of the party to whom it is addressed and no responsibility is accepted to any third party for the whole or any part of the contents of this report.

We hereby certify that we have neither present nor prospective interests in the assets or the value reported.

Yours faithfully, For and on behalf of

VIGERS APPRAISAL & CONSULTING LTD.

Raymond Ho Kai Kwong	Favian Kam Man Yin
Registered Professional Surveyor	Chartered Financial Analyst
MRICS, MHKIS, MSc(e-com)	CFA, MBA
China Real Estate Appraiser	Executive Director
Managing Director

Note: Mr. Raymond Ho Kai Kwong, Chartered Surveyor, MRICS, MHKIS, MSc(e-com), China Real Estate Appraiser, has over twenty five years’ experience in undertaking valuations of properties in Hong Kong and has over twenty two years’ experience in valuation of properties in the PRC, Macau, Taiwan and Asia-Pacific region. And he has over ten years’ experience in business valuation.

– 41 –

LETTER FROM THE VALUER 2

APPENDIX I

Vigers Appraisal & Consulting Limited International Assets Appraisal Consultants

10th Floor, The Grande Building 398 Kwun Tong Road Kowloon Hong Kong

24 August 2012

The Directors

Parkson Retail Group Ltd.

Level 28, Three Pacific Place, 1 Queen’s Road East, Hong Kong

Dear Sirs,

Re: Valuation of the whole of Basement Levels 1 to 5 and Levels 1 to 12, 27 and 46 to 48, No. 44-60 Zhongshan Road, Shinan District, Qingdao City, Shandong Province, the PRC.

In accordance with Parkson Retail Group Limited (the “Company”) instructions for us to value the captioned property interests held by its subsidiaries (together referred to as the “Group”) 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 as at the 30 June 2012 (“date of valuation”) for the purpose of incorporating into the public circular.

Our valuation is our opinion of the market value of the property interests which we would define market value as intended to mean “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”.

We have valued the property using direct comparison approach and made reference to the recent transactions for similar properties in the locality. Adjustments have been made for the differences between the comparable properties and the subject property. We have also assessed the value of the leased portion of the property on the basis of capitalization of net rental income derived from the existing tenancies and reversionary market value upon the expiration of the existing tenancies with reference to comparable market transactions.

– 42 –

LETTER FROM THE VALUER 2

APPENDIX I

Our valuation has been made on the assumption that the owner sells the property interests on the open market in its existing state without the benefit of a deferred terms contract, leaseback, joint venture, management agreement or any similar arrangement which would serve to increase the value of the property interests. In addition, no forced sale situation in any manner is assumed in our valuation.

We have not caused title searches to be made for the captioned property at the relevant government bureau in the PRC. We have been provided with certain extracts of title documents relating to the property. 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. We have relied on the legal opinion (“the PRC Legal Opinion”) provided by the Group’s PRC legal advisor, 北京市競天公誠律師事務所 (Jingtian & Gongcheng) on valuing the property.

In valuing the property interest, we have assumed that the owner has free and uninterrupted rights to use, occupy or assign the property interest for the whole of the unexpired term of the respective land use rights. Furthermore, we have also assumed that all consents, approvals and licences from relevant PRC government authorities for development of the property interest were granted without any onerous conditions or undue delay.

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 interests 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.

We have not carried out investigations on site to determine the suitability of ground conditions and services etc. for any future development, nor have we undertaken any ecological or environmental surveys.

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 property. 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 neither for any charges, mortgages or amounts owing on the property interests nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the property interests are free from encumbrances, restrictions and outgoings of an onerous nature which could affect their values.

– 43 –

LETTER FROM THE VALUER 2

APPENDIX I

Our valuation is prepared in accordance with the HKIS Valuation Standards on Properties (First Edition 2005) published by The Hong Kong Institute of Surveyors (HKIS) and the requirements set out in Chapter 5 and Practice Notes 12 and 16 to the Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited.

Unless otherwise stated, all monetary amounts stated are in Renminbi. The exchange rate used in valuing the property in the PRC as at 30 June 2012 was RMB1.00 = HK$1.22. There has been no significant fluctuation in the exchange rates for RMB against Hong Kong Dollars between that date and the date of this letter.

We enclosed herewith our valuation certificate.

Yours faithfully,

For and on behalf of

Vigers Appraisal & Consulting Limited Raymond Ho Kai Kwong Registered Professional Surveyor MRICS MHKIS MSc(e-com) China Real Estate Appraiser Managing Director

Note: Mr. Raymond Ho Kai Kwong, Chartered Surveyor, MRICS MHKIS MSc(e-com), China Real Estate Appraiser, has over twenty five years’ experience in undertaking valuations of properties in Hong Kong and has over twenty two years’ experience in valuations of properties in the PRC, Macau, Taiwan and Asia-Pacific region.

– 44 –

LETTER FROM THE VALUER 2

APPENDIX I

VALUATION CERTIFICATE

Property interests held by the Group for owner occupation in the PRC

Property

Description

Particulars of Occupancy

Market Value in existing state as at 30 June 2012

The whole of The property comprises the whole of Basement Levels Basement Levels 1 to 5 and Levels 1 1 to 5 and Levels to 12, 27 and 46 to 48 of a 49-storey 1 to 12, 27 and commercial building completed in 46 to 48, about 2001 located at Zhongshan No. 44-60 Road, a traditional commercial district Zhongshan Road, of Qingdao city. Shinan District, Qingdao City, The property has a total gross floor Shandong area of approximately 76,013.22 sq.m. Province, The breakdown of gross floor area of the PRC. property is as follows:

The property comprises the whole of Basement Levels 1 to 5 and Levels 1 to 12, 27 and 46 to 48 of a 49-storey commercial building completed in about 2001 located at Zhongshan Road, a traditional commercial district of Qingdao city.

Portion of the property with a RMB380,000,000 total useable floor area of about 6,731 sq.m. is leased to (equivalent to various tenants with the latest approximately term being expired on 25 HK$463,600,000) December 2014 at current rental of about RMB5,486,000 per annum. The remaining portion of the property is owner-occupied by Qingdao Parkson (青島第一百盛有限公司).

		Approx.
Floor		Gross
Level	Use	Floor Area
		(sq.m.)
B2 to B5	Car Park	19,680.28
B1 to L8	Retail	42,035.59
L9 to L11	Office	10,383.33
L12, L27	Store	3,914.02
and L46	room
to L48

Total		76,013.22

The property is occupied as a department store, retail shops, offices, store rooms and car parks.

The property is held under land use rights expiring on 3 April 2045. For the land use and designated building usage, refer to Note 1 below.

Upon our site inspection, the external building condition of the property was fair.

Notes:

Pursuant to seven Real Estate Ownership Certificates (Document Nos: Qing Fang Di Quan Shi Zi Di No. 133665, 133662, 133664, 156320, 156319, 156318 and 156316), the land use rights of the property has been granted to Qingdao Parkson (青島第一百盛有限公司) for a term expiring on 3 April 2045.

– 45 –

LETTER FROM THE VALUER 2

APPENDIX I

As stipulated, the ownership of the property with a total gross floor area of approximately 76,013.22 sq.m. is vested in Qingdao Parkson (青島第一百盛有限公司). The particulars of the property are as follows:

				Designated
	Real Estate Ownership	Approximate		Building
Floor Level	Certificate No.	Gross Floor Area	Land Use	Usage
		(sq.m.)
B2-B5	Qing Fang Di	19,680.28	Residential	Commercial
	Quan Shi Zi Di
	No. 133665
B1-L8	Qing Fang Di	42,035.59	Residential	Commercial
	Quan Shi Zi Di
	No. 133662
L9-L12	Qing Fang Di	12,596.51	Not stated	Commercial
	Quan Shi Zi Di
	No. 133664
L27	Qing Fang Di	867.41	Commercial	Office
	Quan Shi Zi Di
	No. 156320
L46	Qing Fang Di	293.64	Commercial	Office
	Quan Shi Zi Di
	No. 156319
L47	Qing Fang Di	340.51	Commercial	Office
	Quan Shi Zi Di
	No. 156318
L48	Qing Fang Di	199.28	Commercial	Office
	Quan Shi Zi Di
	No. 156316

Total		76,013.22

The PRC legal opinion states, inter alia, the following:
(i) The ownership of the property is legally vested in Qingdao Parkson (青島第一百盛有限公司).
(ii) Qingdao Parkson (青島第一百盛有限公司) is legally entitled to use, occupy, transfer, lease, mortgage or dispose of the property.
(iii) The property is not subject to mortgage or any other material encumbrances.
The property was inspected by Mr. Kaka Li on 25 July 2012. Kaka was graduated in Tongji University, has nine years’ experience in valuation of properties in the PRC.

– 46 –

GENERAL INFORMATION

APPENDIX II

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement in this circular misleading.

DISCLOSURE OF INTERESTS

Directors and chief executives of the Company

As at Latest Practicable Date, the interests and short positions of the Directors and chief executives of the Company in the shares, underlying shares and/or debentures, as the case may be, of the Company or any its associated corporations (within the meaning of the SFO) which 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 which any such Director or chief executive is taken or deemed to have under such provisions of the SFO) or which were required to be entered into the register required to be kept by the Company under section 352 of the SFO or which were otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (“Model Code”) in the Listing Rules, were as follows:

(a) Long positions of Tan Sri Cheng Heng Jem in the share capital of the Company:

		Name of	Name of	Number and	Approximate
Name of	Nature of	Registered	Beneficial	Class of	Percentage of
Corporation	Interest	Owner	Owner	Securities	Shareholding
Company	Corporate	PRG	PRG Corporation	1,438,300,000	51.18%2
	interest1	Corporation		ordinary shares
		Limited (“PRG
		Corporation”)
Company	Corporate	East Crest	East Crest	9,970,000	0.35%2
	interest1	International		ordinary shares
		Limited (“East
		Crest”)

Notes:

Tan Sri Cheng Heng Jem, together with his wife, Puan Sri Chan Chau Ha alias Chan Chow Har, through their interest and a series of companies in which they have a substantial interest, are entitled to exercise or control the exercise of more than one-third of the voting power at general meetings of PHB. Since PHB is entitled to exercise or control the exercise of 100% of the voting power at general meeting of PRG Corporation through East Crest, pursuant to the SFO, he is deemed to be interested in both the 1,438,300,000 Shares held by PRG Corporation and the 9,970,000 Shares held by East Crest in the Company.
Based on the issued and paid up share capital of the Company as at the Latest Practicable Date.

– 47 –

GENERAL INFORMATION

APPENDIX II

(b) Long positions of Tan Sri Cheng Heng Jem in the share capital of the Company’s associated corporations (as defined in the SFO):

Name of		Name of	Name of		Approximate
Associated	Nature of	Registered	Beneficial	Number and Class	Percentage of
Corporation	Interest	Owner	Owner	of Securities	Shareholding
PHB	Beneficial	Tan Sri Cheng	Tan Sri Cheng	518,769,868	47.83%
	interest and	Heng Jem	Heng Jem	ordinary shares
	corporate	together with	together with
	interest	his spouse	his spouse
		Chan Chau Ha	Chan Chau Ha
		alias Chan	alias Chan
		Chow Har	Chow Har
		directly, and	directly, and
		through a	through a
		series of	series of
		controlled	controlled
		corporations	corporations
East Crest	Corporate	PHB	PHB	1 ordinary share	100%
	interest
Puncak Pelita	Corporate	PHB	PHB	2 ordinary shares	100%
Sdn Bhd	interest
Parkson	Corporate	PHB	PHB	2 ordinary shares	100%
Vietnam	interest
Investment
Holdings Co.,
Ltd.
Parkson	Corporate	PHB	PHB	2 ordinary shares	100%
Properties	interest
Holdings Co.,
Ltd.
Prime Yield	Corporate	PHB	PHB	1 ordinary share	100%
Holdings	interest
Limited
PRG	Corporate	East Crest	East Crest	1 ordinary share	100%
Corporation	interest
Smart	Corporate	East Crest	East Crest	1 ordinary share	100%
Spectrum	interest
Limited
Victor Crest	Corporate	East Crest	East Crest	1 ordinary share	100%
	interest
Park Avenue	Corporate	East Crest	East Crest	250,002 ordinary	100%
Fashion Sdn.	interest			shares
Bhd.

– 48 –

GENERAL INFORMATION

APPENDIX II

Name of		Name of	Name of		Approximate
Associated	Nature of	Registered	Beneficial	Number and Class	Percentage of
Corporation	Interest	Owner	Owner	of Securities	Shareholding
Serbadagang	Corporate	East Crest	East Crest	2 ordinary shares	100%
	interest
Parkson Retail	Beneficial	East Crest	East Crest	458,433,300	67.68%
Asia Limited	interest and			ordinary shares
	corporate
	interest
Parkson	Corporate	Parkson	Parkson	2 ordinary shares	100%
HCMC	interest	Vietnam	Vietnam
Holdings Co.,		Investment	Investment
Ltd.		Holdings Co.,	Holdings Co.,
		Ltd.	Ltd.
Parkson	Corporate	Parkson	Parkson	2 ordinary shares	100%
HaiPhong	interest	Vietnam	Vietnam
Holdings Co.,		Investment	Investment
Ltd.		Holdings Co.,	Holdings Co.,
		Ltd.	Ltd.
Parkson TSN	Corporate	Parkson	Parkson	2 ordinary shares	100%
Holdings Co.,	interest	Vietnam	Vietnam
Ltd.		Investment	Investment
		Holdings Co.,	Holdings Co.,
		Ltd.	Ltd.
Parkson	Corporate	Parkson	Parkson	2 ordinary shares	100%
Properties	interest	Properties	Properties
NDT		Holdings Co.,	Holdings Co.,
(Emperor) Co.,		Ltd.	Ltd.
Ltd.
Parkson	Corporate	Parkson	Parkson	1 ordinary share	100%
Properties	interest	Properties	Properties
Hanoi Co., Ltd		Holdings Co.,	Holdings Co.,
		Ltd.	Ltd.
Dyna Puncak	Corporate	Prime Yield	Prime Yield	2 ordinary shares	100%
Sdn. Bhd.	interest	Holdings	Holdings
		Limited	Limited
Wide Crest	Corporate	Victor Crest	Victor Crest	1 ordinary share	100%
	interest
Qingdao	Corporate	Parkson	Parkson	116,670,000	95.91%
Parkson	interest	Venture	Venture	registered capital	(In aggregate)
				(RMB)
		Serbadagang	Serbadagang	107,126,394
				registered capital
				(RMB)

– 49 –

GENERAL INFORMATION

APPENDIX II

Name of		Name of	Name of		Approximate
Associated	Nature of	Registered	Beneficial	Number and Class	Percentage of
Corporation	Interest	Owner	Owner	of Securities	Shareholding
Dalian Tianhe	Corporate	Serbadagang	Serbadagang	60,000,000	60%
Parkson	interest			registered capital
Shopping				(RMB)
Centre Co.,
Ltd.
Parkson	Corporate	Parkson Retail	Parkson Retail	50,000,002	100%
Corporation	interest	Asia Limited	Asia Limited	ordinary shares
Sdn. Bhd.
Parkson	Corporate	Parkson Retail	Parkson Retail	1 ordinary share	100%
Myanmar Co	interest	Asia Limited	Asia Limited
Pte Ltd
Centro Retail	Corporate	Parkson Retail	Parkson Retail	2 ordinary shares	100%
Pte Ltd	interest	Asia Limited	Asia Limited
PT. Tozy	Corporate	Parkson Retail	Parkson Retail	13,000 common	100%
Sentosa	interest	Asia Limited	Asia Limited	shares	(In aggregate)
		Centro Retail	Centro Retail	5,000 common
		Pte Ltd	Pte Ltd	shares
Parkson HBT	Corporate	Parkson TSN	Parkson TSN	2,100,000 capital	100%
Properties Co	interest	Holdings Co	Holdings Co	(USD)
Ltd		Ltd	Ltd
Idaman Erajuta	Corporate	Dyna Puncak	Dyna Puncak	2 ordinary shares	100%
Sdn. Bhd.	interest	Sdn. Bhd.	Sdn. Bhd.
Magna Rimbun	Corporate	Dyna Puncak	Dyna Puncak	2 ordinary shares	100%
Sdn Bhd	interest	Sdn. Bhd.	Sdn. Bhd.
Wide Field	Corporate	Wide Crest	Wide Crest	2 ordinary shares	100%
	interest
Sea Coral	Corporate	Wide Crest	Wide Crest	1 ordinary share	100%
	interest
Parkson	Corporate	Wide Crest	Wide Crest	14,800,000 ordinary	100%
Venture	interest			shares
Parkson	Corporate	Parkson	Parkson	1 ordinary share	100%
Cambodia	interest	Corporation	Corporation
Holdings Co.,		Sdn. Bhd.	Sdn. Bhd.
Ltd.
Kiara Innovasi	Corporate	Parkson	Parkson	3,000,000 ordinary	60%
Sdn. Bhd.	interest	Corporation	Corporation	shares
		Sdn. Bhd.	Sdn. Bhd.

– 50 –

GENERAL INFORMATION

APPENDIX II

Name of		Name of	Name of		Approximate
Associated	Nature of	Registered	Beneficial	Number and Class	Percentage of
Corporation	Interest	Owner	Owner	of Securities	Shareholding
Parkson Online	Corporate	Parkson	Parkson	2 ordinary shares	100%
Sdn Bhd	interest	Corporation	Corporation
		Sdn. Bhd.	Sdn. Bhd.
Parkson	Corporate	Parkson	Parkson	30,000,920	100%
HaiPhong Co.,	interest	Corporation	Corporation	capital (USD)
Ltd.		Sdn. Bhd.	Sdn. Bhd.
Parkson	Corporate	Parkson	Parkson	10,340,000	100%
Vietnam Co.,	interest	Corporation	Corporation	capital (USD)
Ltd.		Sdn. Bhd.	Sdn. Bhd.
Festival City	Corporate	Idaman Erajuta	Idaman Erajuta	500,000 ordinary	100%
Sdn. Bhd.	interest	Sdn. Bhd	Sdn. Bhd	shares
Megan Mastika	Corporate	Magna Rimbun	Magna Rimbun	2 ordinary shares	100%
Sdn Bhd	interest	Sdn Bhd	Sdn Bhd
Shenyang	Corporate	Wide Field	Wide Field	40,000,000 registered	100%
Parkson	interest			capital (RMB)
Dalian Parkson	Corporate	Sea Coral	Sea Coral	40,000,000 registered	100%
	interest			capital (RMB)
Parkson	Corporate	Parkson	Parkson	1,000 ordinary	100%
(Cambodia)	interest	Cambodia	Cambodia	shares
Co., Ltd		Holdings Co.,	Holdings Co.,
		Ltd.	Ltd.
Parkson	Corporate	Parkson	Parkson	10,000 capital	100%
Vietnam	interest	Vietnam Co.,	Vietnam Co.,	(USD)
Management		Ltd.	Ltd.
Services Co.,
Ltd.
Parkson Hanoi	Corporate	Parkson	Parkson	3,360,000 capital	70%
Co., Ltd.	interest	Vietnam Co.,	Vietnam Co.,	(USD)
		Ltd.	Ltd.

– 51 –

GENERAL INFORMATION

APPENDIX II

(c) Short positions of Tan Sri Cheng Heng Jem in the share capital of the Company’s associated corporations (as defined in the SFO):

Name of		Name of	Name of	Number and	Approximate
Associated	Nature of	Registered	Beneficial	Class of	Percentage of
Corporation	Interest	Owner	Owner	Securities	Shareholding
PHB	Corporate	Tan Sri Cheng	Tan Sri Cheng	40,000,142	3.69%
	interest	Heng Jem	Heng Jem	ordinary shares
		together with	together with
		his spouse	his spouse
		Chan Chau Ha	Chan Chau Ha
		alias Chan	alias Chan Chow
		Chow Har	Har directly,
		directly, and	and through a
		through a	series of
		series of	controlled
		controlled	corporations
		corporations

(d) Long positions of Datuk Cheng Yoong Choong in the share capital of the Company:

		Name of
		Beneficiary/	Subject	Number and	Approximate
Name of	Nature of	Registered	Matter/Name of	Class of	Percentage of
Corporation	Interest	Owner	Beneficial Owner	Securities	Shareholding2
Company	Beneficial	Datuk Cheng	Option to subscribe	1,125,000	0.04%
	interest	Yoong Choong	for shares1	ordinary shares
	Beneficial	Datuk Cheng	Datuk Cheng	800,000	0.02%
	interest	Yoong Choong	Yoong Choong	ordinary shares

Notes:

Offer was made on 1 March 2010 pursuant to the Company’s share option scheme adopted on 9 November 2005.
Based on the issued and paid up share capital of the Company as at the Latest Practicable Date.
(e) Long positions of Datuk Cheng Yoong Choong in the share capital of the Company’s associated corporations (as defined in the SFO):

Name of		Name of		Number and	Approximate
Associated	Nature of	Registered	Name of Beneficial	Class of	Percentage of
Corporation	Interest	Owner	Owner	Securities	Shareholding
PHB	Beneficial	Datuk Cheng	Datuk Cheng Yoong	2,964,350	0.27%
	interest	Yoong Choong	Choong	ordinary shares

– 52 –

GENERAL INFORMATION

APPENDIX II

(f) Long positions of Chew Fook Seng in the share capital of the Company:

				Number and	Approximate
Name of	Nature of	Name of		Class of	Percentage of
Corporation	Interest	Beneficiary	Subject Matter	Securities	Shareholding2
Company	Beneficial	Chew Fook	Option to subscribe	1,253,000	0.04%
	interest	Seng	for shares1	ordinary shares

Notes:

Offer was made on 1 March 2010 pursuant to the Company’s share option scheme adopted on 9 November 2005.
Based on the issued and paid up share capital of the Company as at the Latest Practicable Date.
(g) Long positions of Werner Josef Studer in the share capital of the Company:

		Name of
		Beneficiary/	Subject Matter/	Number and	Approximate
Name of	Nature of	Registered	Name of Beneficial	Class of	Percentage of
Corporation	Interest	Owner	Owner	Securities	Shareholding2
Company	Beneficial	Werner Josef	Option to subscribe	75,000	Less than
	interest	Studer	for shares1	ordinary shares	0.01%
Company	Beneficial	Werner Josef	Werner Josef	68,000	Less than
	interest	Studer	Studer	ordinary shares	0.01%

Notes:

Offer was made on 1 March 2010 pursuant to the Company’s share option scheme adopted on 9 November 2005.
Based on the issued and paid up share capital of the Company as at the Latest Practicable Date.
(h) Long positions of Werner Josef Studer in the share capital of the Company’s associated corporations (as defined in the SFO):

Name of		Name of		Number and	Approximate
Associated	Nature of	Registered	Name of Beneficial	Class of	Percentage of
Corporation	Interest	Owner	Owner	Securities	Shareholding
PHB	Beneficial	Werner Josef	Werner Josef	103,284	0.01%
	interest	Studer	Studer	ordinary shares

– 53 –

GENERAL INFORMATION

APPENDIX II

(i) Long positions of Ko Tak Fai, Desmond in the share capital of the Company:

				Number and	Approximate
Name of	Nature of	Name of		Class of	Percentage of
Corporation	Interest	Beneficiary	Subject Matter	Securities	Shareholding2
Company	Beneficial	Ko Tak Fai,	Option to subscribe	75,000	Less than
	interest	Desmond	for shares1	ordinary shares	0.01%

Notes:

Offer was made on 1 March 2010 pursuant to the Company’s share option scheme adopted on 9 November 2005.
Based on the issued and paid up share capital of the Company as at the Latest Practicable Date.
(j) Long positions of Yau Ming Kim, Robert in the share capital of the Company:

				Number and	Approximate
Name of	Nature of	Name of		Class of	Percentage of
Corporation	Interest	Beneficiary	Subject Matter	Securities	Shareholding2
Company	Beneficial	Yau Ming	Option to subscribe	75,000	Less than
	interest	Kim, Robert	for shares1	ordinary shares	0.01%

Notes:

Offer was made on 1 March 2010 pursuant to the Company’s share option scheme adopted on 9 November 2005.
Based on the issued and paid up share capital of the Company as at the Latest Practicable Date.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors or chief executives of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which are 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 or short positions which they were taken or deemed to have under such provisions of the SFO), or are required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

– 54 –

GENERAL INFORMATION

APPENDIX II

Substantial shareholders of the Group

As at Latest Practicable Date, so far as the Directors are aware, each of the following persons, not being a Director or chief executive of the Company, had interests and short positions in the Company’s shares which falls to be disclosed to the Company and the Stock Exchange under the provisions of Division 2 and 3 of Part XV of the SFO:

				Percentage of
				shareholding
	Long/Short		Number of	(direct or
Name of Shareholder	position	Nature of Interest	Shares	indirect)
PRG Corporation	Long	Beneficial owner	1,438,300,000	51.18%
PHB	Long	Corporate interest	1,448,270,0001	51.53%
Puan Sri Chan Chau Ha alias	Long	Interest of spouse	1,448,270,000	51.53%
Chan Chow Har2
JPMorgan Chase & Co.	Long	Beneficial interest,	337,073,0193	11.99%
		Investment manager
		and Custodian
	Short	Beneficial interest	3,037,115	0.11%
T.Rowe Price Associates, Inc.	Long	Beneficial interest	251,623,500	8.95%
and its affiliates
Deutsche Bank	Long	Beneficial interest,	196,606,0134	7.00%
Aktiengesellschaft		Investment manager,
		Person having a
		security interest in
		shares and Custodian
	Short	Beneficial interest and	135,288,4814	4.81%
		Person having a
		security interest in
		shares
Pangkor Investments	Long	Beneficial interest and	189,516,679	6.74%
(Cayman Islands) Limited		other
Genesis Assets Managers, LLP	Long	Investment manager	174,903,439	6.22%

Notes:

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

– 55 –

GENERAL INFORMATION

APPENDIX II

The capacities of JPMorgan Chase & Co. in holding the 337,073,019 Shares (Long position) and 3,037,115 Shares (Short position) were as to 7,961,545 Shares (Long position) and 3,037,115 Shares (Short position) as beneficial owner, 62,220,421 Shares (Long position) as investment manager and 266,891,053 Shares (Long position) in the lending pool as custodian. The interest of JPMorgan Chase & Co. was attributable on account through a number of its wholly-owned subsidiaries.
The capacities of Deutsche Bank Aktiengesellschaft in holding the 196,606,013 Shares (Long position) and 135,288,481 Shares (Short position) were as to 11,531,866 Shares (Long position) and 6,409,481 Shares (Short position) as beneficial owner, 1,589,500 Shares (Long position) as investment manager, 182,361,200 Shares (Long position) and 128,879,000 Shares (Short position) as person having a security interest and 1,123,447 Shares (Long position) in the lending pool as custodian. The interest of Deutsche Bank Aktiengesellschaft was attributable on account through a number of its wholly-owned subsidiaries.

As at the Latest Practicable Date, as far as the Directors are aware, each of the following persons, not being a Director or 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 meeting of a member of the Group other than the Company:

		Percentage of
		equity
Substantial Shareholder	Member of the Group	interest held
Xinjiang Youhao1	Xinjiang Parkson	49%
Wuxi Sunan Investment2	Wuxi Parkson	40%
Chongqing Wanyou3	Chongqing Parkson	30%
Guizhou Shengqi Enterprise4	Guizhou Parkson	40%
Shanghai Nine Sea Industry	Shanghai Lion Property5	71%
Shanghai Nine Sea Industry	Shanghai Nine Sea Parkson6	29%

Notes:

新疆友好(集團)有限公司 (Xinjiang Friendship (Group) Co., Ltd.), owns 49% of the equity interest of Xinjiang Youhao Parkson Development Co., Ltd. (“Xinjiang Parkson”).
無錫蘇南投資擔保有限公司 (Wuxi Sunan Investment Guarantee Co., Ltd.), owns 40% of the equity interest of Wuxi Sanyang Parkson Plaza Co., Ltd. (“Wuxi Parkson”).
重慶萬友經濟發展有限責任公司 (Chongqing Wanyou Economic Development Co., Ltd.), owns 30% of the equity interest of Chongqing Wanyou Parkson Plaza Co., Ltd. (“Chongqing Parkson”).
(i) 貴州神奇實業有限公司 (Guizhou Shenqi Enterprise Co., Ltd.), owns 40% of the equity interest of Guizhou Shenqi Parkson Retail Development Co., Ltd. (“Guizhou Parkson”).
(ii) 張沛 (Zhang Pei), 張之君 (Zhang Zhi Jun) and 張婭 (Zhang Ya), own 30%, 40% and 30% of the equity interest in Guizhou Shenqi Enterprise, respectively, representing a 12%, 16% and 12% indirect equity interest in Guizhou Parkson.
Shanghai Lion Property is a cooperative joint 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 subsidiary of the Company. Shanghai Nine Sea Industry is entitled to 71% of the voting rights in the board of Shanghai Lion Property and 65% of its distributable profits. The Group is entitled to 29% of the voting rights in the board of Shanghai Lion Property and 35% of its distributable profits.

– 56 –

GENERAL INFORMATION

APPENDIX II

Shanghai Nine Sea Parkson Plaza Co., Ltd. (“Shanghai Nine Sea Parkson”) is a cooperative joint venture enterprise established under the laws of the 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 Sea Parkson and a pre-determined distribution of income from Shanghai Nine Sea Parkson. The Group is entitled to 71% of the voting rights in the board of Shanghai Nine Sea Parkson and 100% of its distributed profit after deducting the aforesaid pre-determined distribution of income attributable to Shanghai Nine Sea Industry.

Datuk Cheng Yoong Choong and Mr Chew Fook Seng are directors of PRG Corporation, a company which has an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO. Save as disclosed above and so far as the Directors and the chief executives are aware, as at the Latest Practicable Date, no other person had an interest or short position in the Company’s shares or underlying shares (as the case may be), which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or was otherwise 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 the Group.

DIRECTORS’ INTERESTS IN COMPETING BUSINESSES

As at the Latest Practicable Date, none of the Directors and Directors of the Company’s subsidiaries, or their respective associates had interests in businesses, other than being a director of the Company and/or its subsidiaries and their respective associates, which compete or are likely to compete, either directly or indirectly, with the businesses of the Company and its subsidiaries as required to be disclosed pursuant to the Listing Rules, except for the interests held by Tan Sri Cheng Heng Jem in (through PHB) 5 Parkson branded department stores in the PRC which are managed by the Group. These 5 Parkson branded department stores are Qingdao Parkson Store, Yantai Parkson Store, Dalian Parkson Store and Shenyang Parkson Store which form part of the Acquisition, as well as Tianhe Parkson Store which does not form part of the Acquisition. Details of those 5 Parkson branded department stores are set out in the prospectus of the Company issued on 17 November 2005. As mentioned earlier, the Company possessed an option/right of first refusal to acquire all and any of the 5 Parkson branded department stores as and when it deems fit.

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GENERAL INFORMATION

APPENDIX II

DIRECTORS’ INTEREST IN CONTRACTS OF SIGNIFICANCE

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 of the Company had a material interest, whether directly or indirectly, except for the following connected transactions in which Tan Sri Cheng Heng Jem 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-	PHB	PHB grant to the Company a call
competition		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 52 of the
		Company’s annual report for the
		financial year 2011).
Trademark license	Smart Spectrum	Smart Spectrum Limited (a wholly-
agreement	Limited (novated	owned subsidiary of PHB) grant to
	by Parkson	Shanghai Lion Investment (an
	Corporation Sdn.	indirect wholly-owned subsidiary of
	Bhd.)	the Company) an exclusive license
		to use certain trademarks, including
		the “Parkson” and “Extra”
		trademarks (details are set out in
		page 53 of the Company’s annual
		report for the financial year 2011).
Management	Qingdao Parkson,	Shanghai Lion Investment to provide
consultancy	Dalian Parkson	management consultancy services to
agreements	and Shenyang	Qingdao Parkson, Dalian Parkson
	Parkson	and Shenyang Parkson respectively
		for a tenor of 10 years (details are
		set out in pages 53 to 54 of the
		Company’s annual report for the
		financial year 2011).

Details of the connected transactions above are set out in “Connected Transactions” section of the Company’s annual report for the financial year 2011.

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GENERAL INFORMATION

APPENDIX II

DIRECTORS’ SERVICE CONTRACTS

Datuk Cheng Yoong Choong and Mr Chew Fook Seng have each entered into a service contract with the Company on 9 November 2005 under which they agreed to act as Executive Directors for a term of three years. The said service contracts were extended on 9 November 2008 and 9 November 2011 respectively for a further period of three years. The appointment may be terminated before such expiry by not less than three months’ written notice. Datuk Cheng Yoong Choong will receive an annual Director’s fee of HK$200,000 under the service contract. Mr Chew Fook Seng will receive an annual salary with bonus and incentive payment at the discretion of the Board and an annual Director’s fee of HK$200,000.

Tan Sri Cheng Heng Jem has signed a new letter of appointment dated 9 November 2011 under which he agreed to act as a Non-executive Director for a period of three years and will receive an annual Director’s fee of HK$200,000.

Mr Ko Tak Fai, Desmond and Mr Werner Josef Studer have each signed a new letter of appointment dated 9 November 2011 with the Company under which they agreed to act as Independent Non-executive Directors for the period of one year and shall continue thereafter subject to a maximum of three years unless terminated in accordance with the terms of the appointment letters. Mr Yau Ming Kim, Robert has signed a letter of appointment dated 27 December 2009 with the Company under which he agreed to act as Independent Non-executive Director, with the same terms as the other two Independent Non-executive Directors. The annual Director’s fee for each Independent Non-executive Director is HK$200,000.

Save as disclosed above, none of the Directors has, nor is it proposed that any of them will have, a service contract with the Company or any of its subsidiaries which is not determinable by the Company or any of its subsidiaries, as the case may be, within one year without payment of compensation (other than statutory compensation).

DIRECTORS’ INTERESTS IN THE ASSETS

None of the Directors have any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leases to any member of the Group since 31 December 2011, the date to which the latest published audited financial statements of the Company were made up.

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 2011 (being the date to which the latest published audited financial statements of the Group were made up).

EXPERT

(a) The following sets out the qualification of the expert which has given its opinion or advice as contained in this Circular.

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GENERAL INFORMATION

APPENDIX II

Name of Expert

Qualification

Investec Capital Asia Limited A corporation licensed to carry on Type 1 (“Investec”) (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO Vigers Appraisal & Consulting Ltd. Independent Valuer (“Vigers”) Jingtian & Gongcheng Registered law firm in the PRC

(b) Investec, Vigers and Jingtian & Gongcheng do not have any shareholdings, direct or indirect, in any member of the Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.
(c) Investec, Vigers and Jingtian & Gongcheng do not have any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Group, or which are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2011, the date to which the latest published audited financial statements of the Company were made up.
(d) Investec, Vigers and Jingtian & Gongcheng have given and have not withdrawn its written consent to the issue of this circular with the inclusion of their respective letter and reports and references to their respective name in the form and context in which they are included.
(e) Save for the report of Vigers which is dated 24 August 2012, the letter and recommendation of Investec is given as of the date of this circular for incorporation herein.

LITIGATION

No member of the Group is at present engaged in any litigation or arbitration of material importance to the Group and no litigation or claim of material importance to the Group is known to the Directors or the Company to be pending or threatened by or against any member of the Group.

MISCELLANEOUS

(a) The English text of this circular shall prevail over the Chinese text.
(b) The registered office of the Company is situated at c/o M&C Corporate Services Limited, P.O. Box 309, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands.

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GENERAL INFORMATION

APPENDIX II

(c) The head office and principal place of business of the Company is situated at 7th Floor, Parkson Shopping Centre (Sun Palace), Qisheng Middle Street, Northeast of 3rd Ring Road, Chaoyang District, Beijing 100028, PRC.
(d) The principal place of business of the Company in Hong Kong is situated at Level 28, Three Pacific Place, 1 Queen’s Road East, Hong Kong.
(e) The Hong Kong share registrar and transfer office of the Company is Tricor Investor Services Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.
(f) The secretary of the Company is Mrs. Seng Sze Ka Mee, Natalia, who is a Fellow of The Institute of Chartered Secretaries and Administrators (FCIS), The Hong Kong Institute of Chartered Secretaries (FCS), The Hong Kong Institute of Directors (FHKIoD) and The Taxation Institute of Hong Kong (FTIHK). Mrs Seng also holds a Master’s degree in Business Administration (Executive) from City University of Hong Kong (EMBA) and a Practitioner Endorsement (PE) issued by The Hong Kong Institute of Chartered Secretaries.
(g) The qualified accountant of the Company is Mr. Wong Kang Yean Clarence, who is a fellow member of the Association of Chartered Certified Accountants and a chartered accountant with the Malaysian Institute of Accountants.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection at the principal place of business in Hong Kong of the Company at Level 28, Three Pacific Place, 1 Queen’s Road East, Hong Kong during normal business hours from the date of this circular up to and including 15 October 2012.

(a) the Sale and Purchase Agreement;
(b) the service contracts and letters of appointment referred to in the section headed “Directors’ Service Contracts”;
(c) the memorandum and articles of association of the Company;
(d) the letter from the Independent Board Committee, the text of which is set out on page 17 of this circular;
(e) the letter from Investec to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 18 to 33 of this circular; and
(f) the letter issued by Vigers, the text of which is set out in Appendix I of this circular.

– 61 –

PROCEDURES TO DEMAND POLL AT GENERAL MEETING

APPENDIX III

According to the Articles of Association of the Company, at any general meeting, a resolution put on the vote at the meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is duly demanded or otherwise required under the Listing Rules. A poll may be demanded by:

(a) the chairman of the meeting; or
(b) at least 5 members present in person (or in the case of a corporation, by its duly authorised representative) or by proxy and who are entitled to vote; or
(c) any member or members present in person (or in case of a corporation, by its duly authorised representative) or by proxy and representing in aggregate not less than one-tenth of the total voting rights of all members having the right to attend and vote at the meeting; or
(d) any member or members present in person (or in the case of a corporation, by its duly authorised representative) or by proxy and holding shares conferring a right to attend and vote at the meeting on which there have been paid up sums in aggregate equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

– 62 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

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

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 3368)

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of Parkson Retail Group Limited (“Company”) will be held at The Executive Centre, Seminar Room 1, Level 3, Three Pacific Place, 1 Queen’s Road East, Hong Kong on 28 September 2012, Friday, at 9:00 a.m. for the purpose of considering and, if thought fit, passing with or without amendments, the following resolutions of the Company:

“ THAT the sale and purchase agreement dated 27 August 2012 (“Sale and Purchase Agreement”) (a copy of which has been produced to the meeting marked “A” and signed by the chairman of the meeting for the purpose of identification) entered into between East Crest International Limited as the vendor and Grand Parkson Retail Group Limited as the purchaser for the sale and purchase of the 95.91% equity interest in Qingdao No.1 Parkson Co., Ltd, 100% equity interest in Dalian Parkson Retail Development Co., Ltd and the 100% equity interest in Shenyang Parkson Shopping Plaza Co., Ltd. and other transactions contemplated therein be and are hereby approved, and the directors of the Company be and are hereby authorised to take such steps as they may consider necessary, appropriate, desirable or expedient to implement or give effect to the terms of the Sale and Purchase Agreement including but not limited to signing, executing and, where applicable, affixing the common seal of the Company (in accordance with its Articles of Association) onto the relevant documents in relation thereto and if necessary, with such amendments as the directors may deem fit.”

By order of the Board PARKSON RETAIL GROUP LIMITED Cheng Yoong Choong Managing Director

13 September 2012

Notes:

(a) The resolutions at the meeting will be taken by poll pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and the results of the poll will be published on the websites of Hong Kong Exchanges and Clearing Limited (www.hkexnews.hk) and of the Company (www.parksongroup.com.cn).

(b) A member entitled to attend and vote at the Extraordinary General Meeting is entitled to appoint a proxy (who must be an individual) to exercise all or any of his right to attend, speak and vote in his stead. A proxy need not be a member of the Company.

(c) In order to be valid, a form of proxy, together with any power of attorney or other authority, if any, under which it is signed, or a notarially certified copy thereof, must be deposited at the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the Extraordinary General Meeting or any adjourned meeting (as the case may be).
(d) A form of proxy for use in connection with the Extraordinary General Meeting is enclosed and such form is also published on the websites of Hong Kong Exchanges and Clearing Limited (www.hkexnews.hk) and of the Company (www.parksongroup.com.cn).

– 63 –

AI assistant

Parkson Retail Group Limited — Proxy Solicitation & Information Statement 2012

50826_rns_2012-09-12_dfc4a093-7e49-4e40-bb31-f0f5163f1642.pdf

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

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF 95.91% EQUITY INTEREST IN QINGDAO PARKSON, 100% EQUITY INTEREST IN DALIAN PARKSON AND

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

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

NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

LETTER FROM THE BOARD

THE SALE AND PURCHASE AGREEMENT

Date

Parties

Assets to be acquired

CONSIDERATION AND CONDITIONS FOR THE ACQUISITION

Consideration

LETTER FROM THE BOARD

Conditions

TERMINATION RIGHTS

COMPLETION

INFORMATION ON THE VENDOR

INFORMATION ON THE COMPANY AND THE PURCHASER

HISTORICAL FINANCIAL INFORMATION OF VICTOR CREST, QINGDAO PARKSON, DALIAN PARKSON AND SHENYANG PARKSON

Victor Crest

LETTER FROM THE BOARD

Qingdao Parkson

Financial Year ended 31 December (RMB’000)

Dalian Parkson

Shenyang Parkson

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE ACQUISITION

LETTER FROM THE BOARD

DISCLOSEABLE AND CONNECTED TRANSACTION

EGM

LETTER FROM THE BOARD

ADVICE

ADDITIONAL INFORMATION

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

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF 95.91% EQUITY INTEREST IN QINGDAO PARKSON, 100% EQUITY INTEREST IN DALIAN PARKSON AND 100% EQUITY INTEREST IN SHENYANG PARKSON

DISCLOSEABLE AND CONNECTED TRANSACTION ACQUISITION OF 95.91% EQUITY INTEREST IN QINGDAO PARKSON, 100% EQUITY INTEREST IN DALIAN PARKSON, AND

100% EQUITY INTEREST IN SHENYANG PARKSON

INTRODUCTION

LETTER FROM INVESTEC

THE INDEPENDENT BOARD COMMITTEE

BASIS AND ASSUMPTIONS OF THE ADVICE

PRINCIPAL FACTORS CONSIDERED

1. Background information

Victor Crest

Qingdao Parkson

LETTER FROM INVESTEC

LETTER FROM INVESTEC

(iii) Reasons for and benefits of the Acquisition

LETTER FROM INVESTEC

2. Terms of the Sale and Purchase Agreement

Parties

Assets to be acquired

Consideration

Evaluation of the Consideration

LETTER FROM INVESTEC

(ii) The 100% equity interest in Shenyang Parkson

LETTER FROM INVESTEC

LETTER FROM INVESTEC

(iii) the 100% equity interest in Dalian Parkson

Comparison with comparable companies

LETTER FROM INVESTEC

3. Possible financial effects of the Acquisition

4. Our view

RECOMMENDATION

Vigers Appraisal & Consulting Limited International Assets Appraisal Consultants

The Directors

Parkson Retail Group Ltd.

BACKGROUND

Shenyang Parkson

Retail Sales Market in Shenyang[1]

Parkson Retail Group Limited Proxy Solicitation & Information Statement 2012