On January 9, OKURA HOLDINGS (01655.HK) announced that its Japanese-style pachinko arcade (“K's Plaza Ohato”) located at 10-5 Motofuna-cho, Nagasaki-shi, Nagasaki-ken, Japan (“this plot”) will close on January 14, 2024. The company's management decided to close K's Plaza Ohato, taking full account of the deterioration in K's Plaza Ohato's operating and financial performance since the outbreak of COVID-19 in Japan in January 2020, and the overall customer flow has continued to be sluggish since the beginning of 2020. Management believes that compared to several of the Group's other Japanese pachinko game arcades, K's Plaza Ohato's customer flow has gradually rebounded in the year ended June 30, 2023. However, despite the Group's relentless promotion of K's Plaza Ohato's Japanese pachinko and Japanese slot machine games, K's Plaza Ohato's customer flow recovery is still slow. As a result, this Japanese pachinko game hall continues to record losses from its business operations. Considering the overall unfavorable operating pattern of the Japanese pachinko industry, the intense competitive environment, and the increasing competition for other forms of entertainment in Japan, management believes that resources will be concentrated on SenkuraDejima (previously known as Big Apple), another Japanese pachinko game hall adjacent to the group's K's Plaza Ohato. Dejima) and other more promising Japanese pachinko game arcades are more beneficial to the group by improving the customer experience at the game arcades and closing the underperforming Japanese pachinko game arcades to reduce further business operation losses. Since the plot and the building built on it (“the building”) are owned by the Group, management is considering leasing the building after closing K's Plaza Ohato to generate rental income, which can serve as a stable source of cash flow and revenue for the Group.
The directors believe that in the long run, closing K's Plaza Ohato to improve the use of resources and streamlining operations and potentially leasing the building will help stabilize and improve the Group's financial performance, and meet the overall best interests of the Group and shareholders.
According to the information currently available to the Group, it is expected that the Group will close K'sPlaza Ohato for the year ended June 30, 2024 and confirm insignificant losses on the sale of property, plant and equipment. Other than as disclosed above, the Board considers that the closure of K's Plaza Ohato has had no significant adverse effect on the Group's business operations and financial position. Following the closure of K's Plaza Ohato, the Group will operate 10 Japanese pachinko game arcades in Kyushu, Kanto, Kansai, and the Chinese regions of Japan.