AEON Stores Hong Kong : POSSIBLE DISCLOSEABLE TRANSACTION IN RELATION TO THE LEASE OF THE PREMISES FOR A NEW STORE

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

A E O N S T O R E S ( H O N G K O N G ) C O . , L I M I T E D

永 旺 ( 香 港 ) 百 貨 有 限 公 司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 984)

POSSIBLE DISCLOSEABLE TRANSACTION

IN RELATION TO

THE LEASE OF THE PREMISES FOR A NEW STORE

The Board is pleased to announce that on 14 May 2021, the Company, as tenant, signed the Lease in respect of the tenancy of the Premises for a term of six years commencing from the Tentative Commencement Date for operating its new retail businesses therein.

The Lease is still subject to the execution by the Landlord. Upon execution by the Landlord, the Lease shall become legally binding on the Landlord and the Company.

Pursuant to HKFRS 16, following the conclusion of the Lease, the Company shall recognise the Premises as a right-of-use asset. Therefore, the transaction contemplated under the Lease will be regarded as an acquisition of asset by the Company under the Listing Rules. The value of right -of-use asset to be recognised by the Group under the Lease amounted to approximately HK$76.8 million.

As the highest applicable percentage ratio as defined under the Listing Rules in respect of the transaction contemplated under the Lease based on the value of the right-of-use asset to be recognised by the Group pursuant to HKFRS 16 is more than 5% and below 25%, the Lease when entered into constitutes a discloseable transaction for the Company and is subject to the notification and announcement requirements but exempt from shareholders' approval requirement under Chapter 14 of the Listing Rules.

INTRODUCTION

The Board is pleased to announce that on 14 May 2021, the Company, as tenant, signed the Lease in respect of the tenancy of the Premises for a term of six years commencing from the Tentative Commencement Date for operating its new retail businesses therein.

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The Lease is still subject to the execution by the Landlord. Upon execution by the Landlord, the Lease shall become legally binding on the Landlord and the Company.

The Lease

The principal terms of the Lease are as follow:

INFORMATION OF THE PARTIES

The Group is principally engaged in the operation of general merchandise stores in Hong Kong and the PRC.

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The Landlord and the Agent are principally engaged in property leasing and property agency activities, respectively.

To the best of the Directors' knowledge, information and belief ha ving made all reasonable enquiries, the Agent, the Landlord and their respective ultimate beneficial owner(s) are Independent Third Parties independent of the Company and its connected persons.

REASONS FOR AND BENEFITS OF THE LEASE

The principal business of the Group is the operation of retail businesses through chain stores under the trade names of "AEON STYLE", "AEON" and "AEON SUPERMARKET" in Hong Kong and the PRC. Due to the nature of its retail businesses, the Group has to enter into tenancy agreements for the leasing of retail stores from time to time. Each of the retail stores, especially sizable stores like the Premises, contributes to and maintains the Group's scale of operation which in turn benefits the Group in lowering the overall operation costs, in enhancing the Group's negotiations with its business partners and in expending its store network and market shares.

The terms of the Lease, including the rental charge, were determined after arm's length negotiations between the Parties and with reference to the open market rent of comparable properties and the rental payment made for other retail stores operated by the Group. The entering into of the Lease is necessary for the operation of the retail business in the ordinary and usual course of business of the Group. Therefore, the Board considers that the terms of the Lease are on normal commercial terms and are fair and reasonable and the entering into of the Lease is in the interests of the Company and the Shareholders as a whole.

IMPLICATIONS UNDER THE LISTING RULES

Pursuant to HKFRS 16, following conclusion of the Lease, the Company shall recognise the Premises as a right-of-use asset. Therefore, the transaction contemplated under the Lease will be regarded as an acquisition of asset by the Group under the Listing Ru les. The value of right-of-use asset to be recognised by the Group under the Lease amounted to approximately HK$76.8 million.

As the highest applicable percentage ratio as defined under the Listing Rules in respect of the transaction contemplated under the Lease based on the value of the right-of-use asset to be recognised by the Group pursuant to HKFRS 16 is more than 5% and below 25%, the Lease when entered into constitutes a discloseable transaction for the Company and is subject to the notification and announcement requirements but exempt from shareholders' approval requirement under Chapter 14 of the Listing Rules .

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As at the date of this announcement, the Executive Directors are Mr. Isei Nakagawa, Mr. Chak Kam Yuen, Mr. Takenori Nagashima and Mr. Shinya Hisanaga; the Non -executive Directors are Ms. Yuki Habu, Mr. Akinori Yamashita and Mr. Isao Sugawara; and the Independent Non-executive Directors are Ms. Chan Yi Jen Candi Anna, Ms. Lo Miu Sheung, Betty, Mr. Chow Chi Tong and Mr. Hideto Mizuno.

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