FinancialBandai Namco
Namco Bandai Holdings Annual Report 2006
1 Mar 200669 pages~139 min full read
Namco Bandai Holdings reported ¥450.8 billion in net sales and ¥35.7 billion in operating profit for its first full fiscal year following the 2005 merger.
The group missed internal financial targets due to inventory write-downs and deferred-tax-asset allowances caused by weakness in the amusement-facility and game-software markets.
Domestic sales accounted for 81% of total revenue, with a strategic mandate to increase the overseas share to 25% by FY 2009 and 50% in the long term.
Management aims for 15-20% operating margins across its five Strategic Business Units by leveraging an 'Entertainment Hub' model that integrates character merchandising with technology.
The company maintains a strong liquidity position with ¥113.2 billion in year-end cash and ¥31.8 billion in operating cash flow.
Governance is managed by a ten-member board and a series of standing committees, supported by ten new internal-control policies implemented starting in FY 2007.
Return on equity for the fiscal year was 5.8% for Bandai and 9% for Namco, with shareholders' equity totaling ¥243.6 billion.
The 2006 annual report presents the first full‑year results of the joint holding company formed by the September 2005 merger of Bandai and Namco, outlining a strategy that leverages cross‑business synergies across toys, hobby products, visual media, network services, amusement facilities and game software. Financial performance for fiscal 2006 reached ¥450.8 billion in net sales, ¥35.7 billion in operating profit and ¥14.2 billion in net income, delivering earnings of ¥54.4 per share and a ¥12 dividend, while return on equity fell to 5.8 % for Bandai and 9 % for Namco. The report notes that weaker amusement‑facility and game‑software markets forced inventory write‑downs and a deferred‑tax‑asset allowance, causing the group to miss its internal targets.
Revenue concentration remained heavily Japan‑centric, with roughly 81 % of sales generated domestically and 19 % from overseas markets. The medium‑term management plan targets a rise in overseas sales to 25 % of total revenue by FY 2009 and ultimately 50 % long‑term, supported by the “Entertainment Hub” model that integrates character merchandising with technology to create and distribute content across multiple channels. Projected additions include ¥5 billion in new toys and hobby sales and ¥30 billion from new amusement‑facility formats, with operating‑margin goals of 15‑20 % across the five Strategic Business Units.
Governance is structured around a ten‑member board, a four‑member statutory auditor board and a series of standing committees that oversee strategy, personnel, CSR, compliance and crisis management, complemented by ten internal‑control policies introduced from FY 2007. The consolidated balance sheet shows shareholders’ equity of ¥243.6 billion, strong operating cash generation of ¥31.8 billion, and a year‑end cash balance of ¥113.2 billion after
