Kenedix Reports Consolidated Interim Results; Revenue Increased 205%, Net Income Up 315%.Tokyo Tokyo (tō`kēō), city (1990 pop. 8,163,573), capital of Japan and of Tokyo prefecture, E central Honshu, at the head of Tokyo Bay. , Japan, Aug 10, 2006 - (JCN JCN Japan Corporate News JCN Journal of Cognitive Neuroscience JCN Journal of Cardiovascular Nursing JCN Journal of Christian Nursing JCN Job Control Number JCN Journal of Child Neurology JCN joint communications network (US DoD) Newswire) - Kenedix, Inc. (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). 1: 4321), a leading real estate financial advisor and asset manager, has announced consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: results for the first half through June June: see month. 30, 2006. In an ongoing strong economy where growth in the real estate investment market continued, Kenedix consolidated revenue increased 205.6% to 16,859 million yen, ordinary income rose 329.1% to 12,515 million yen and net income was up 315.1% to 7,140 million yen. "During this interim period, backed by favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. market conditions, we recorded profits from the sale of property, primarily development profits, and achieved a current profit about four times higher than for the same period of the previous year," said Ryosuke Honma, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Kenedix. "As a result, we have revised our projected results for fiscal 2006 overall upward by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 30%. We have also increased our projected year-end dividend Year-end dividend A special dividend declared at the end of a fiscal year that usually represents distribution of higher-than-expected company profits. year-end dividend See final dividend. per share to 2,500 yen, as we would like to enhance returns to our shareholders on a sustainable basis while achieving growth." Highlights of the term included a a public offering of stock in February February: see month. 2006 by the Japan Logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. Fund, Inc., which was formed jointly with Mitsui Mitsui: see zaibatsu. & Co., Ltd. and The Chuo Mitsui Trust & Banking Co., Ltd. This was followed in May by a public stock offering of Kenedix Realty realty n. a short form of "real estate." (See: real estate) REALTY. An abstract of real, as distinguished from personalty. Realty relates to lands and tenements, rents or other hereditaments. Vide Real Property. Investment Corp., which is managed by a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of the Group. In association with these fund procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. activities, the Group and private funds managed by the Group sold properties to these two REITs, and the assets of these REITs increased substantially. As of June 30, 2006, Japan Logistics Fund had assets of 69.3 billion yen and Kenedix Realty Investment had investments of 140.3 billion yen. As of June 30, 2006, total assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. at the Group, including these two REITs, amounted to 493.9 billion yen. During the first half of 2006, the Company acquired a 20% equity stake in an asset management company that invests in apartment buildings. This company is an affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. of U.S.-based Kennedy Wilson Wilson, city (1990 pop. 36,930), seat of Wilson co., E N.C., in a rich agricultural region; inc. 1849. It is a commercial and industrial center with a large tobacco market. Manufactures include textile goods (especially clothing), metal products, and processed foods. , Inc., the Company's former parent company. The investment is one element of action to rapidly expand overseas operations, a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. strategic goal of the Group. As of June 2006, this affiliate had assets under management of US$779 million (about 91.5 billion yen). These assets are not included in the above figure for Group's total assets under management. I) Consolidated Financial Summary for the First Half Ended June 30, 2006
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(millions yen)
First half ended June 30, Full year ended
2006 YoY % 2005 YoY% Dec. 2005 YoY%
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Consolidated Operating Results
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Revenue 16,859 205.6 5,517 86.9 13,958 130.6
Operating Income 13,367 298.4 3,354 101.4 9,140 186.5
Ordinary Income 12,515 329.1 2,916 88.3 8,113 196.8
Net Income
(after taxes) 7,140 315.1 1,720 86.3 4,757 191.2
Net Income per Share
(basic)(yen) 25,220.75 7,249.27 18,362.81
Net Income per Share
(diluted)(yen) 24,828.00 7,138.15 17,734.92
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Consolidated Financial Position
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As of June 31, Dec. 31,
2006 2005 2005
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Total Assets 100,024 61,682 95,593
Net Assets 35,021 11,123 28,561
Equity Ratio (%) 35.0 18.0 29.9
Net assets per share 123,043.04 46,662.13 100,815.44
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Cash Flows
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First half ended June 30, Full year ended
2006 2005 Dec. 2005
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Net Cash provided by (used in)
Operating Activities 25,245 (13,804) (25,247)
Net Cash provided by (used in)
Investing Activities (6,165) (1,651) (5,962)
Net Cash provided by (used in)
Financing Activities (16,671) 18,016 45,912
Cash and Cash Equivalents
at End of Period 21,612 6,983 19,178
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II) Results by Business Segment Real Estate Investment Advisory Business Performance mainly reflected an increase in acquisition fees due to the large volume of property acquisitions growth in gains on sales from properties held in principal investment following the completion and sale of development projects in which the Company has been participating, and an increase in profit distribution received from silent partnerships. The result was a 334.6% increase in revenue to 14,062 million yen and a 437.2% increase in operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. to 12,057 million yen. Asset Management Business Asset management fees increased along with growth in assets under management and there was an increase in incentive fees associated with private funds managed by the Group. As a result, revenue increased 60.8% to 2,234 million yen and operating income rose 29.5% to 1,162 million yen. Note Investment Management Business Operating results were somewhat lower than one year earlier. First-half revenue decreased 5.4% to 843 million yen and operating income was down 10.8% to 478 million yen. Although incentive fees increased, there were declines in earnings from the collection of notes and earnings from partnerships. III) Changes in Financial Position The Group purchases and holds real estate through consolidated subsidiaries for the purpose of building a portfolio of quality properties in its own account. These real estate acquisitions represent up-front up-front or up·front Informal adj. 1. Straightforward; frank. 2. Paid or due in advance: up-front cash. adv. investments for the purpose of generating a steady stream of earnings through the incorporation of these properties in real estate funds for pension funds and other investors. Since each property is held for a short period of time, the Group's total assets fluctuate considerably depending on the volume of principal investment properties at a particular time. Short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. bank loans are the primary source of funds used to purchase properties held by the Group. Consequently, these loans also fluctuate considerably depending on the volume of principal investment properties. The Company has established a commitment line to facilitate the stable and flexible procurement of funds as well as to permit participation in large projects. The Company has a 44.6 billion yen commitment line that was established as of the end of June 2006. In some cases, consolidated subsidiaries use non-recourse loans to procure To cause something to happen; to find and obtain something or someone. Procure refers to commencing a proceeding; bringing about a result; persuading, inducing, or causing a person to do a particular act; obtaining possession or control over an item; or making a person funds to acquire a property. Such loans are solely the responsibility of the subsidiary holding the property, and loan repayments can be no greater than an amount determined by the applicable property. Consequently, non-recourse loans should be excluded from consideration when analyzing the Company's debt-equity ratio. The following table presents changes in the debt-equity ratio.
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Dec.'03 Dec.'04 Dec.'05 Jun.'06
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Interest-bearing debt (1)
(Millions of yen) 4,922 27,022 59,562 53,141
[Non-recourse loans included] (2)
(Millions of yen) [-] [1,742] [11,049] [12,686]
Shareholders' equity (Net assets) (3)
(Millions of yen) 5,499 9,360 28,561 35,021
Debt-equity ratio(1)/(3)(%) 89.5 288.7 208.5 151.7
Debt-equity ratio net of
non-recourse loans((1)-(2))/(3)(%) [89.5] [270.1] [169.9] [115.5]
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IV. Cash Flow Position Cash and cash equivalents at the end of June 2006 totaled 21,612 million yen, 2,433 million yen more than at the end of December December: see month. 2005. Net cash provided by operating activities was 25,245 million yen, primarily due to proceeds from the sale of real estate for sale. In investing activities, cash was used mainly for purchases of investment securities and of stock and other investments in affiliated companies Affiliated Companies A situation that occurs when one company owns a minority interest (less than 50%) in another company. Also refers to companies that are related to each other in some way. Notes: An affiliated company is sometimes referred to as a subsidiary. . In financing activities, repayments of loans were the primary use of cash. Operating Activities Net cash provided by operating activities was 25,245 million yen compared with a negative cash flow of 13,804 million yen one year earlier. There were payments of 10,340 million yen for investments in partnerships, but proceeds from sales of real estate for sale exceeded payments for the purchase of real estate for sale by 40,406 million yen. Investing Activities Net cash used in investing activities was up 273.3% to 6,165 million yen. This was mainly due to 2,921 million yen in payment for purchase of investment securities, and 2,033 million yen in payment for capital investment in affiliates and other factors. Financing Activities Net cash used in financing activities was 16,671 million yen. One year earlier, financing activities provided net cash of 18,016 million yen. The difference was mainly due to the use of proceeds from the sale of real estate for sale to repay loans. During the first half of 2006, there were net payments of 19,180 million yen for the reduction of long-term and short-term loans. V. Outlook for the Full Year Although competition for acquiring properties is intensifying in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: , there is immense demand for real estate investments among pension funds and other institutions in Japan. As in the first half of 2006, the Group will focus on increasing assets under management to serve client investors, such as pension funds and other that have investment policies stressing stable, long-term returns. The Group will also move aggressively to participate in real estate developments and other projects with high profit margins. As explained in "3. Results of Operations and Financial Position (1) Summary of the First Half of 2006", capital gains exceeded the plan for the first half. The primary cause was sales of properties to two J-REITs managed by the Group following their stock offerings. In addition, the Group received incentive fees from private funds that sold properties to these two J-REITs. Due to the posting of a large volume of earnings in the first half, earnings in this period were far above the Group's forecast. On the other hand, there is a growing possibility that certain property that were to be sold in the second half will not be sold until 2007. The Group thus expects second half earnings to be less than the initial forecast. Furthermore, the Group is establishing a framework for the flexible procurement of funds through additional debt, such as by increasing its credit facility, in order to procure funds to purchase properties and for other needs. Based on this outlook, the Group expects that second half financial expenses will be greater than the initial forecast. Due to the above items, the Company is forecasting consolidated revenue of 22,000 million yen, ordinary income of 13,300 million yen and net income of 7,700 million yen. About Kenedix, Inc. Kenedix, founded in April 1995, initially introduced and promoted real estate auctions to Japanese Japanese (jăp'ənēz`), language of uncertain origin that is spoken by more than 125 million people, most of whom live in Japan. There are also many speakers of Japanese in the Ryukyu Islands, Korea, Taiwan, parts of the United States, and investors and financial institutions. Today, the Kenedix Group is an organization advanced in a broad range of real estate services and finance. The Group's overall goal is to maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. returns on investments, accomplished by leveraging the Group's comprehensive research skills and extensive knowledge of the real estate business to accurately analyze an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. and evaluate trends in a constantly changing market. Kenedix is working to become one of Japan's most prominent real estate asset managers, while building a highly stable and profitable corporate group. For more information, please visit www.kenedix.com. Source: Kenedix, Inc. Contact: Kenedix, Inc. Taiji Yoshikawa Chief Financial Officer +81-3-3519-2530 Copyright [c] 2006 JCN Newswire. All rights reserved. A division of Japan Corporate News Network K.K. |
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