According to the Zhitong Finance App, NIRAKU (01245) announced that Shenzhen Kamiyokocho Restaurant Management Co., Ltd. (Shenzhen Kamiyokocho, a company incorporated in China) is an indirect non-wholly-owned subsidiary of the company and operates a Japanese food court (Yokocho) business located in the Shenye Shangcheng commercial building in Shenzhen, China. As of the date of this announcement, 100% of Shenzhen's shares were held by NPJ Hong Kong Limited (NPJ HongKong), while NPJ Hong Kong held 51% and 49% of the interests of the Group and its joint venture partners, respectively.
Shortly after opening in the third quarter of 2019, Yokocho was forced to suspend operations in early 2020 due to the COVID-19 outbreak. Over the past 3 years, China's long-term intermittent shutdown policy has had a profound impact on Yokocho's business. Although all epidemic measures have been lifted, Yokocho finally resumed operations in early 2023, but the business environment is still unstable, and its earnings have not improved. As a result, Kamiyokocho in Shenzhen continued to lose money.
After careful and thorough consideration, NPJ Hong Kong shareholders decided not to make additional investments in Kamiyokocho, Shenzhen, and jointly decided to terminate the business operations in Kamiyokocho, Shenzhen. Due to various leasing liabilities and liabilities of Kamiyokomachi, Shenzhen's Kamiyokomachi is currently insolvent.
On March 14, 2024, NPJ Hong Kong passed a board resolution and Shenzhen Kamiyokomachi passed a shareholder resolution to submit bankruptcy and liquidation proceedings against Shenzhen Kamiyokocho in accordance with Chinese law (this procedure). If the court issues a bankruptcy and liquidation order, Shenzhen Kamiyokomachi will appoint a liquidator, and the procedure will also officially commence.
For the year ended March 31, 2023, revenue from Kamiyokocho, Shenzhen accounted for less than 1% of the Group's total revenue. On March 31, 2023, Shenzhen Kamiyokomachi had net liabilities of approximately 183.8 million yen, while the Group's net asset value was approximately 19.294 billion yen. After evaluating the actual contribution and financial situation of Kamiyokomachi in Shenzhen and external environmental factors, the Group's management believes that terminating the business operations and liquidation of Kamiyokomachi in Shenzhen will improve the Group's financial situation. This move is in line with the overall interests of the company and its shareholders.
The board of directors believes that the termination of business operations in Kamiyokomachi, Shenzhen and this procedure will not have any significant adverse impact on the Group's other business operations and financial conditions, and is unaware of any other matters requiring shareholders' attention.