P E ACEJAPAN

HA RMO N Y

ANNUAL REPORT 2005
For the year ended March 31, 2005

S UM

Corporate Profile

Since its establishment in 1947, Hanwa has contributed to the development of the Japanese
economy as a trading company handling industrial materials, such as steel — the company’s
leading product — and non-ferrous metals, food products, lumber, machinery, petroleum,chemical products, and cement. Our steel division in particular is equipped with quay andwarehouse transportation facilities as well as complete processing sites that enable us toboth handle large quantities purchased from major steel manufacturers and to cater to thespecial needs of our customers. This is why we have long been known in Japan as a “steel
trading company.”
Recently, with the changes and diversification of the domestic market, we havedemonstrated new capabilities as a trading company by handling seafood products, rides foramusement parks, and non-ferrous metal recycling. We have created numerous businesses
in these fields that command the top market share. The basic strategies underlying suchsuccess are internationalization, business diversification, and value enhancement.
Hanwa’s ideal function as a trading company is to be more than just a distributor. Based on
our insight of the international market and information-gathering capabilities, we aim todevelop new products, as well as coordinate ventures among businesses. As a trading company
with such operating skills at our disposal, we will continue to develop new unique businesses.

About the CoverContents

The Chinese character for the syllable wa
of Hanwa’s name has four meanings inJapanese: Japan, harmony, sum (as inaddition) and peace.
These key words capture the essence ofHanwa’s ideals: to trade products that meetthe needs of customers through a business
relationship with the countries of the world,
incorporating new ideas into the products tobring peace and harmony to people’s lives.

Financial Highlights ......................................................... 1
Letter to Stakeholders .................................................... 2
Review of Operations ..................................................... 8
Our Ethical Principles ...................................................... 12
Topics ................................................................................... 14
Management Discussion and Analysis ..................... 16
Five-Year Summary .......................................................... 18
Financial Section ............................................................... 19
Corporate Data ................................................................. 39
Board of Directors and Investor Information ......... 40

HANWA CO., LTD., AND CONSOLIDATED SUBSIDIARIES

Financial Highlights
For the years ended March 31, 2005 and 2004

Thousands of
U.S. dollars

Millions of yen

For the year:
Net sales
Operating income
Net income
At year-end:
Total assets
Total stockholders’ equity

2005

2004

2005

2004

¥

933,956 ¥
22,091
13,704751,964 $ 8,696,862 $ 7,002,179
12,666
205,708
117,944
5,662
127,61052,724¥

376,521 ¥72,875

293,528 $ 3,506,109 $ 2,733,290
57,757
678,601
537,825

Yen

U.S. dollars

2005

Per share data:
Net income
Cash dividends

¥

2004

64.03
9.00

2005

26.43 $
6.00

2004

0.596 $
0.084

0.246
0.056

Note: The U.S. dollar amounts represent translations, for convenience only, of yen amounts at the rate of ¥107.39=$1.00.

Net sales

Operating income

Net income(Millions of yen)

(Millions of yen)

(Millions of yen)

1,000,000

933,956

22,091

23,00013,70414,00020,000751,964
682,964

12,666
10,257

5,907

5,662

’03

’04

10,000

0

0

’03

’04

’05

0

’03

’04

1

’05

’05

Letter to Stakeholders

Dear Stakeholders,
We are pleased to report that Hanwa Co., Ltd. and its
consolidated subsidiaries posted excellent growth in sales
and profits in the year ended March 2005. Consolidated
net sales increased 24.2% year-on-year to ¥934.0 billion,
while operating income soared 74.4% to ¥22.1 billion, arecord high. Net income was boosted by extraordinary
gains on the return of the substitutional portion of
employee pension funds to the Japanese government.
Even allowing for extraordinary losses for impairment of
fixed assets, net income soared 142.1% to ¥13.7 billion.
We also recorded significant improvements in two key
performance indicators. Return on equity (ROE) was
21.0%, a rise of 10.8 points over the previous year, andthe net debt-equity ratio improved by 10 points to 170%.

Management Policy

Management Targets

Becoming an enterprise that is regarded and supportedby all of its stakeholders as being a “Valued Enterprise”
that makes contributions to both the international society
and to the local community is a key policy objective of
the Company.
Based on this philosophy, we have pursued theprinciple of placing customers above all else and being
responsive in meeting the changing needs of the market.
To achieve this, we have oriented the Company to be a
“trading company with a presence” that emphasizes a
proposal style sales approach that enhances value added
as products passes through the distribution chain
expanding business opportunities in order to enhance“win - win” relationship with our customers.

To strengthen the Company’s focus on enterprise value
and the quality of the balance sheet, we have included
Net D/E ratio, which is widely used as a measure offinancial stability to the return on assets (ROA), and ROE
as target management benchmarks. For fiscal year
ending March 31, 2007 based on the New Mid-term
Business Plan, which has been implemented since 2004,
are as follows:

Dividend Policy
Returning profits to stockholders is one of our highest
management priorities. Our basic policy is to distributedividends in line with performance on the basis of ROE
and payout ratio, while retaining internally the funds
needed to strengthen the business going forward and toensure ongoing financial soundness.

2

Targeted Management Index

FY2006 (ending March 31, 2007)

ROA

2.1%

ROE

10.0%

Net D/E Ratio120%• Promotion of the waste paper recycling business andinternational expansion of resin raw materials• Expansion of general merchandise and reinforcement of
the logistics function

Medium- and Long-term Strategy, andManagement Issues
In May 2004, we established a Mid-term Business Plan
that covers a 3-year period from FY2004 through FY2006.
It sets a number of management goals and describes theinitiatives that will be taken to achieve them.

(B) Strengthening of the international business,investment of resources in China and ASEAN
markets(A) Strengthening of the core business andcustomer-oriented, proposal-driven marketing
Steel business• Strengthening of the engineering and processing
functions in the construction and housing fields,
promotion of proposal-driven marketing• Strengthening of sales channels in the field ofautomotive, household appliances, industrial andconstruction equipment, development of new
merchandise• Strengthening of the coil center’s function and allianceswith leading processors• Investment, acquisitions and partnerships to expand thetrade right• Strengthening of functions of distribution centers andalliances with other companies for physical distribution• Development of business with automotive industries in
China and ASEAN countries centering on theInternational Automotive Team
• Setting up of coil centers in Thailand and South China
and expansion of the network of processing functions• Strengthening of operations in Vietnam, India, Russia
and Eastern Europe• Strengthening of international procurement functions
and establishment of control systems such as securing
quality• Establishment of risk management systems for sales indomestic Chinese market• Seizing of business opportunities in light of theaccelerating trend toward FTA and identification ofpromising merchandise

Nonferrous metal business• Exploitation of new sources of resources, entry to ore
resources business• Focus on ferroalloys, light metals and raw materials forsolar batteries• Expansion of exporting raw materials to China(C) Strengthening of the recycling business andnew development• Collection of resources from the viewpoint of “urban
mining” and sales to the optimum consumption area
• Expansion of items handled in terms of variety andquantity and establishment of an efficient purchasenetwork• Strengthening of handling of merchandise covered by
the Basel Convention and recycling of industrial waste

Food products business• Strengthening of the processed food business overseas
and establishment and fostering of product sales
operations• Strengthening of handling Japanese domesticallycaught seafood(D) Fostering of new businesses and expansion of
peripheral businesses• Fostering of a business incubation team (BIT) andcultivation of new fields through industry-academiagovernment cooperation• Downstream approach capitalizing on the credit
function of hanwa-steel.com and expansion ofmerchandise• Expansion of sales of timber products throughenhancement of hanwa-lumber.com

Petroleum and chemicals business• Development of business for practical application of
new energy, such as cogeneration business and fuel cellbusiness• Strengthening of trading of petroleum products trade inAsia3

(E) Improvement of productivity of sales &marketing• Seeking for rational business processing led by the
Operation IT Promotion Committee andimplementation• Enrichment of IT platform for greater flexibility• Information sharing through cooperation crossing overdepartments and establishment of an information
network for higher profitability• Promotion of empowerment with the aim of vitalizing
marketing and improving profitability(F) Human resources (HR) policy and flexible
investment policy to underpin the growthstrategy
Human resources policy• Fostering of human resources and recruitment forsustainable growth
1) Enrichment of the training system and program(training for specific objectives and fostering
executives, training of selected human resources
and local employees of overseas subsidiaries)2) Diversification of recruitment• Promotion of performance-based remuneration andestablishment of a rational evaluation system
Investment policy• Setting ¥10 billion of appropriation budget for priority
investment• Pursuit of a system enabling swift judgment of risks andspeedy investment

Corporate Social Responsibility (CSR)
We created a CSR Committee in March 2004 to oversee related activities. We regard activities that fulfill our
responsibilities to society as an integral part of efforts to raise the value of the corporate brand.
Outline of the CSR Committee
Board of Directors

IR and PR activities

Managing Directors
Committee
Hanwa Scholarship Program

CSR Committee

Students from overseas Aid

Comprehensive
Donation activities

Environment Enhancement Committee

Compliance Committee

NPO & NGO

Catch All Controls Committee

Harassment Consultation OfficeInternship System

Volunteer Activity Support

Activities to enhance
employees’ awareness of CSR

4

The Board of Directors meets as a rule once a month
to oversee important business plans and proposals
concerning the Hanwa Group, and to deliberate anddecide all key business policies.
The Managing Directors Committee, which iscomposed of the president, senior managing directors
and managing directors, reports to the Board of Directors
on all matters related to significant business decisions
affecting the Hanwa Group. As the senior policy
execution body in the company, this committee ischarged with carrying out policies in line with thebusiness strategy determined by the Board of Directors.
The Managing Directors Committee meets as a rule twicea month.
Chaired by the president, the Director Evaluation
Committee is charged with assessing commitments madeby directors and making overall performance evaluations
on a mutual basis. Director remuneration andassignments reflect the level of evaluation, in line withmeritocratic principles.

Corporate Governance
Basic corporate governance policy
We aim to fulfill its social responsibilities as a good
corporate citizen so that it can earn and retain therespect of stakeholders and be recognized as a valuable
enterprise. We work to establish a high degree oftransparency in management systems to ensure full legal
and regulatory compliance and respect for social norms.
Corporate governance structures
We have adopted the system of corporate auditors as
stipulated in the Commercial Code of Japan. The Board
of Auditors is responsible for overseeing and auditing theperformance of the Board of Directors, whose members
are elected by the General Shareholders’ Meeting, as
well as the Managing Directors Committee, which is themain body responsible for execution of policy bysubordinate company structures. The Board of Auditors
reports to the General Meeting of Shareholders.

5The following diagram illustrates the corporate
governance structures and internal control systems for
the Hanwa Group.

General Shareholders’ Meeting
election/dismissal

proposals

Board ofDirectors

President

coordination

Board ofAuditors

oversight/
audit

guidance

cooperation

Senior/managing
directors

Disclosure
Committee

Compliance
Committee

Directors

Audit Office

Managing directors

Internal
controls
Operatingdivisions

Independent
auditors

accounting audit

Operationalorganization
remuneration
evaluation

reportPresident
Senior managing
directors

oversight/audit

Director
Evaluation
Committee

Investment
ReviewCommittee

Managing
Directors
Committee

election/dismissal

Operating bases(Japan/overseas)

Administrative
divisions

Catch All
Controls
Committee

counsel/advice

Legal firms

6stance from top management to ensure operational
audits are accurate and objective. Corporate auditors
exchange opinions as appropriate with the president andexecutives in charge of each operating division and also
provide their opinions as auditors at meetings of theBoard of Directors.
Hanwa retains the contractual services of KPMG Azsa
& Co. as independent auditors for conducting third-party
audits of its operations as required by the Commercial
Code of Japan and the Securities and Exchange Law.

Internal control systems
The Audit Office, which reports to the Managing
Directors Committee, is responsible for internal audits
and management controls. Accounting, legal and othercontrol functions also play a role in internal control
systems.
Risk management
Bodies such as the Compliance Committee and theCatch All Controls Committee provide a consultative role
to general management and executive structures on risk
management and related issues. This is supplemented byadvice from external legal counsel on specific matters.
The Legal and Credit Dept. oversees credit, legal andregulatory risks.

Corporate governance reforms in fiscal 2004
Major disclosure failures within corporate Japan in thepast year prompted the Tokyo Stock Exchange to issue arequest that all listed companies revise their internal
regulations to help regain investor confidence. We
formulated an internal disclosure policy in February 2005
in response to this request to strengthen internal controls
governing the timely disclosure of corporate information.
We also established the Disclosure Committee. This
committee has since submitted written oaths signed by
the president to the Tokyo Stock Exchange and the
Osaka Securities Exchange that commit Hanwa to thetimely disclosure of corporate information and certify thestatus of the company’s internal control systems.

Internal and independent auditing systems
The Audit Office conducts internal audits of Hanwa
operating bases in Japan and domestic Hanwa Groupsubsidiaries. Internal audits primarily assess financial
accounting matters and monitor compliance issues.
Internal audit reports are compiled on a monthly basis
and submitted to the president. The Audit Office also
reports as required to the Managing Directors
Committee. Corporate auditors cooperate extensively
with the Audit Office, helping its staff to produce internal
audit reports as stipulated by the Board of Auditors.
Monitoring of accounting and compliance issues foroverseas operations is conducted mainly by the Overseas
Administrative Dept., which issues reports to all directors
on a monthly basis and reports to the Board of Directors
on the status of overseas operations every six months.
This office also compiles reports as requested by the
Board of Auditors.
Audits by the Board of Auditors serve a preventative
function and aim to stop any illegal acts or breaches oflegal compliance, internal control and risk management
systems. These audits are dialog-based and provide anauditing and oversight function for policy execution bysenior management. Corporate auditors also attend
meetings of the Board of Directors, the Managing
Directors Committee and other important businessmeetings. Aided by the insight of the independent
auditors, corporate auditors maintain an independent

We shall continue to bolster our approach to corporate
governance through strengthened senior management
structures.

August 2005

Shuji Kita
President
Hanwa Co., Ltd.
北 修爾
取締役社長
阪和興業株式会社

7

Review of Operations
For the years ended March 31, 2005

Net sales by Product (Billions of yen)
Lumber, machinery, and other ¥48 (5.1%)
Petroleum and chemicals ¥156 (16.7%)

Steel bars and shapes ¥209 (22.4%)

Net sales¥934(100.0%)Foods ¥82 (8.8%)

Steel plates and sheets ¥214 (22.9%)
Special steels,
wire products, steel pipes, andsteelmaking raw materials ¥125 (13.4%)

Non-ferrous metals ¥100 (10.7%)

Steel related products ¥548 (58.7%)

¥934
48
15

Lumber, machinery, and other6
Petroleum and chemicals

¥752
43

¥683
44
11

13

5

82

10

6

Foods

0
Non-ferrous metals

85
92

12

5

21

4

Special steels,
wire products, steel pipes, andsteelmaking raw materials

80
65
97
75
Steel plates and sheets
15

6

1

62

20

8

0

5

15

’03

’04

13

9

Steel bars and shapes’05

Steel (Domestic)
Review
Production levels across manufacturingindustry posted sustained growth, led by
the automotive, shipbuilding andconstruction machinery sectors. Privatesector construction demand for steelrose significantly, reflecting a surge incapital investment by manufacturers
together with the development of
shopping malls and retail stores. The risein demand resulted in a tight supply
situation throughout the year,
particularly for steel sheets such as hotrolled sheets, cold-rolled sheets andgalvanized sheets, causing prices toincrease sharply.
In such market condition, Hanwa’s
domestic steel operations recorded
significantly higher sales and profits with
developing rational inventory controls
bringing the international steel market
into view, developing relationships withusers by securing supplies in the tightmarket and building up its downstream
processing and service operations.
Outlook
Although demand from Japanesemanufacturing industries is projected toremain strong, Hanwa anticipates
further weakness in the civil engineering
sector amid a prolonged downturn inpublic-sector investment. Demand trends
in the construction industry also appear
uncertain from the second half onward.
On the supply side, there are signs ofmajor change. Hanwa plans to adopt acautious stance in its purchasing,marketing and inventory management,
while keeping a close watch on global
economic and other external factors andmovements in international steel prices.
Meanwhile, Hanwa also aims to makefurther progress in building andreinforcing its core support role within
the Japanese steel industry through thedevelopment of e-commerce capabilities
as well as enhanced storage, distribution
and processing capacities for steel
products.

Steel (Overseas)
Review
Supply and demand in the global
industry steel both recorded brisk
growth in the year ended March 31,
2005, mainly due to continued strong
economic expansion in China. Crude
steel production maintained a headygrowth pace, despite restraint policy
announced by the Chinese governmentin April 2004 in an attempt to cool the
economy. In September 2004, China
became a net exporter of steel, marking
a major shift in the global market.
Soaring steel prices seemed to soften
in the early part of 2004, but thenstaged a recovery. In overall terms, pricelevels remained extremely firm in theyear to March 2005. Prices rose sharply
in the latter half of the year, prompting
fresh market concerns.
Supply was generally tight in themarket for Japanese steel exports due tothe strength of demand across all
domestic sectors and from Japanesefirms based overseas. Prices for steel
sheets, a major component of exports,rose by around US$100/ton comparedwith levels at the end of March 2004.
In volume terms, Hanwa posted
slightly lower steel exports from Japanese
blast furnace mills to users based
overseas. Sales value increased, however,
due to the effect of higher prices.

9

Outlook
Evidence of an ongoing inventory
curtailment in Europe and U.S. markets
emerged at the start of 2005. There
were also signs of an impending glut
across certain product variety in Asianmarkets toward the end of March 2005.
Warning signals are flashing as Chinese
steelmakers continue to bring new
capacity on stream, particularly for steel
sheets. On the other hand, demandremains firm overall across all Asianmarkets. Variations in trade inventory
levels promise to be a key market
indicator going forward.
Hanwa established new operatingbases in Wuhan, China in September
2004 and in Ho Chi Minh City, Vietnam
in April 2005. Hanwa is also considering
expansion into India.

High market price levels combinedwith effective measures to build up thesales network and assess market
conditions to produce a year-on-year
gain in segment sales of 25% to¥99,507 million.

Non-Ferrous Metals & Metal Alloys
Review
Having risen sharply in 2003, nonferrous metal prices on the London
Metal Exchange also maintained asteady upward pace in 2004. Robust
demand for materials from China andhigh global stainless steel productionlevels helped push up prices for copper,
aluminum, nickel, chrome and other raw
materials for stainless steel production.
Supply seems remain tight in the spot
market for these materials through mostof the first half of 2005. This is becauseof the difficulties involved in raisingproduction quickly although various
development projects are underway thatpromise to bring new mining andsmelting capacity on stream in due
course. In the ferroalloy market,
however, prices entered a correction inlate 2004, having earlier overshot.
Hanwa recorded steady growth on a
volume basis in its recycled aluminumand copper operations. The operational
focus also expanded to include highervalue-added metals. Volumes of stainlesssteel scrap and other special metal scrap
also posted steady growth as a result of
buoyant stainless steel production levels.
In ferroalloys, Hanwa continued tostrengthen its trading network forsupplying blast furnace and special metal
mills. Hanwa has agreed to participate toacquire the chrome business ofSamancor Ltd. in South Africa by Kermas
Ltd.(UK) in the latter half of the year. By
this participation the agreement granted
Hanwa various sales rights in Japan and
China. In solar cell-related products,
Hanwa posted higher trading volumes inintermediate items such as wafers,
which have now become a stableearnings generator.

OutlookRaw material supply conditions are
expected to improve in the latter half of2005 as various development projects
around the world come to fruition. An
influx of hedge fund investment and theimbalances in supply and demand has
been a factor in pushing up commodity
prices. But there are twin threats of aU.S. economic downturn plus a coolingoff of demand from China. A sudden
drop in prices from recent highs could
not be ruled out if hedge funds andother investors were to make majoralterations to trading positions by thesaid threats.
Using information gathered in Japan
together with intelligence from overseas
operations, Hanwa plans to expand thevolume of its international metals
trading, focusing primarily on Russia,
Kazakhstan and South Africa as well as
in China and ASEAN.
In Japan, Hanwa aims to construct anefficient collection system to supply
recycling operations in aluminum,
copper and special metals. This will allow
Hanwa to differentiate its business andadd higher value, while at the same timemaking its operations less sensitive tomarket price fluctuations.
In stainless steel scrap and nickel
scrap, Hanwa plans to expand sales toChina and rebuild a scrap metal
distribution network to supply Asianmarkets.
In ferroalloys, as part of ongoing
efforts to boost sales to blast furnace,electric furnace and special metal mills,
Hanwa plans to focus on selling chromeand chrome ore sourced from Samancor
to users in China and Japan.
In the metal silicon sector, Hanwa is
working to expand sales of silicone andpoly-silicon while also maintaining sales
for aluminum smelting industries. In thesolar cell materials sector, Hanwa plansin particular to increase imports andexports of wafers.
Overall, Hanwa has aggressive
expansion plans for its non-ferrous metaland ferroalloy operations, both in Japanand overseas. Besides cultivating new
businesses, Hanwa also aims to expand
into peripheral businesses.

10

Food ProductsReview
Trading volumes of common fish
catches such as mackerel, horsemackerel and salmon rose. Buoyant
prices for these fish also ensured a solid
earnings contribution.
Trading volumes and profits both
declined, however, with higher-priced
items such as crab and herring roe,which suffered a fall in demand due toa downturn in consumption. Food safetyissues such as the use of antibiotics inmarine products and the threat of bird
flu had a negative impact on demandfor eel and chicken, while restrictions on
fishing grounds imposed regional
limitations on trade in octopus andcapelin. But trading volumes in shrimp
did rebound, and the processed Chinesemarine produce business also generated
solid growth and healthy profits.
OutlookConsumption of mackerel, horsemackerel, salmon and other common
fish catches is rising in the EU, Russia
and China. The increased purchasing
power of buyers in these markets isspurring fiercer competition to securefish supplies, and Hanwa expects
purchase prices to remain high in thissegment. This will tend to depress
earnings from these products. In
addition, Hanwa expects the supply glutin shrimp to weigh on prices anddemand for crab to remain weak due todepressed consumption levels. Hanwa
plans to continue expanding trade inprocessed foods to help stabilize profits
in this difficult business environment.
Another key focus in this sector is toboost sales of processed products torestaurants and retailers.

Petroleum and Chemicals

LumberMachinery

ReviewPrices for petroleum products surged inJapan in response to the sudden, steep
increase in crude oil prices associatedwith strong Chinese demand. Hanwa
posted significantly higher revenues
from sales to users as a result. Bothvolumes and value of the trading rose as
Hanwa took advantage of pricing trends.
Sales of bunker oil also expanded due tostrong demand in China, Korea andother Asian markets.
Imports of chemicals and resins
stalled as prices of plastics in markets
outside Japan soared. Sales of paper
products increased compared with theprevious year in most categories, notably
exports of protective interleaving paperfor stainless steel surfaces and volumesof used paper.

Review
Volumes of timber products imported
from Russia, China and Chile rose
sharply. At the same time, trading
volumes of raw materials for laminatedboard imported from Scandinavia also
increased. Additional gains came fromincreased direct trade with leading
Japanese pre-cut beam plants.
On the down side, the effects of theclampdown by the authorities on illegal
logging in Indonesia generated
persistent instability in supplies ofimported plywood throughout the year.

Review
Leisure facilities: Hanwa began supplying
some novel products in this sector
during the year, including Japan’s largest
Christmas tree fixture for a theme parkin the Kansai area and an indoor musicalfountain for a theme park in Hokkaido.
Indoor family entertainment facilities
were delivered to another sevenlocations around Japan.
Industrial machinery: Hanwa delivered
steel fabrication equipment tosteelmakers located in Shanghai, China
and in southwest Japan. Other
completed transactions included
environmental machinery for a waste
treatment facility in Kyushu, Japan.

Outlook
Crude oil prices show no signs of easing.
We plan to continue trying to pass onhigher prices to customers, while also
seeking to expand business with existingclients and develop new trading
relationships. In the face of high prices,
Hanwa plans to encourage pricesensitive users to switch to alternative
energy sources such as biofuels. Futures
trading and imports also offer
opportunities for diversification within
the sector.
In chemicals, we are concentrating on
two main categories: “Recycle & Retail”
and Resin raw materials. Sales expansion
efforts are focusing on recycled plastics,
synthetic resins and related products(including triangle trade), bags and othersundry items for general merchandisingretailers, and lubricating oil.

OutlookHanwa plans to continue focusing on
expanding sales of timber products inJapan imported from Romania, China
and Russia. The sale of Russian logs to
China and Japan represents anotheropportunity for expanded trade.
Hanwa aims to increase trade withmajor Japanese pre-cut beam plants,
particularly in medium-dimension gluelaminated beam. Another focus is toexpand trading volumes for raw
materials such as laminar and “genban”or blank. In the plywood market, Hanwa
plans to focus on securing imports ofhardwood plywood from Malaysia, while
also concentrating on marketing
imported structural beams in
combination with domesticallymanufactured softwood panel.

11

Outlook
Leisure facilities: Competition tends toease in the leisure machinery industry
with the withdrawal of some firms fromthe sector. With no sign yet of demand
for large outdoor entertainment
attractions leveling out, Hanwa plans tofocus on the development and sale ofmachinery for indoor family
entertainment facilities. The Chinese
market also offers potential businessdevelopment opportunities.
Industrial machinery: Although thecompany expects the financial restraints
imposed by the Chinese government tohave negative repercussions on other
Asian economies, Hanwa plans tocontinue focusing on increasing exportsof steel fabrication machinery andequipment for processing steel sheet
and other auto fabrication components
such as tailored blanks. In the Japanesemarket, Hanwa plans to focus on sellingsteel processing machinery, particularly
environmental recycling equipment.

Our Ethical Principles

In accordance with the policy of the company incorporated
into Corporate Creed and the “Charter of Corporate
Behavior” established by Nippon Keidanren, Hanwa Co., Ltd.
draws up, under the Corporate Policy, the Corporate EthicalStandards and the Ethical Standards of Behavior as guidelines
for employee behaviors in order to promote legal, fair andsensible corporate conducts.

Corporate Ethical Standards
Hanwa Co., Ltd. hereby draws up the following ethicalstandards as basic concept for constantly recognizing its
required social role and responsibility and establishing highcorporate ethical framework under its policy of the company.
Its all directors, officers and employees shall comply with andperform these standards in its daily business activities.

Corporate Creed

1. Compliance with regulations and social rules

Confidence

Hanwa Co., Ltd. complies with laws, regulations, internationalrules and other social rules, and promotes corporate activities
in accordance with social common sense.

Each director, officer and employee should recognize that
confidence is the foundation of company existence, observe
correct business practices and build up confidence of our
stakeholders and society through everyday business.

2. Fair corporate activities
Hanwa Co., Ltd. does business activities realizing that a fairand free competition is the basic rule of the market economy,
and maintains sound and highly transparent relationship withthe government and public administration.

Honesty
Always be aware that honesty is the basis of earning
confidence, and try to act with fair and high openness, andcomplete its own assignments with honesty and responsibility.

3. Contribution to the industry society
Hanwa Co., Ltd. develops its business activities based on both
short and long term perspectives, and contributes to thedevelopment of the industry society by active cultivation andcreation of business chances.

Originality
Originality is the basis of progress and improvements. Under
the current diversified circumstance, constantly absorb new
information, improve efficiency, and fulfill its responsibility withcourage, not being obsessed with traditional ideas.

4. Active information disclosure
Hanwa Co., Ltd. fully recognizes high interests of society incorporate activities, widely communicates with not only its
shareholders but also society, and maintains its corporatetransparency with fair and active information disclosures.

Cooperation
Always respect other person’s position with a heart ofcooperation in local communities and international societies.
Try to keep in harmony with society through decent businessconducts and make an open and vigorous work place.

5. Consideration for environment
Hanwa Co., Ltd. constantly acknowledges that considerationfor environment is a part of its social responsibilities and deals
with environmental issues from the worldwide point of view
voluntarily and actively.

Contribution
Widely contribute to society through business under soundcompany activities, and try to promote environmental
conservation as a part of its social responsibility.

6. Global harmonization
Hanwa Co., Ltd. as an international entity respects local
cultures and customs abroad, and promotes its managements
to contribute to developments of local areas.

Corporate Policy

7. Establishment of free and vigorous work
environment• Earn confidence with honesty and efforts.
• Be a specialist in the field with its vigor and guts.
• Improve efficiency with its originality and cooperation• Promote corporate business and build happy homes• Recognize its responsibility and contribute to society

Hanwa Co., Ltd. respects its employees’ individual charactersand personalities, ensures prosperous work environments,
recognizes team works as the foundation of corporate activities,
and achieves free, vigorous and creative corporate culture.

128. Promotion of active social actions as “a good
corporate entity”.

Corporate Ethical Standards of Behavior
Under the spirits of the Corporate Ethical Standards, Hanwa
Co., Ltd. hereby draws up the following ethical standards of
behavior as concrete guidelines to ensure high corporate ethics
through everyday business. Its all directors, officers andemployees shall comply with these standards in their activities.

Hanwa Co., Ltd. integrates corporate and public benefits,
widely returns its achievements gained through corporate
activities and makes social contributions voluntarily andactively in every aspect.

9. Thorough familiarization of ethical standards anddevelopment of in-house framework

1. Comply with laws, regulations, international rules, social
customs and in-house rules in accordance with the policy ofthe management, and maintain high ethics.

Hanwa Co., Ltd. thoroughly familiarizes the persons concernedwith these standards to effectively implement the rule by its
managements’ active involvement and develop its in-houseframework for more efficient and effective operations.

2. Give consideration to human rights and exclude unjust
discriminations, abuses, harassments, etc..

10. Prevention of recurrence of misconducts andappropriate information disclosure

3. Promote contribution to society and support volunteer
activities.

Hanwa Co., Ltd. always checks its effectiveness in
implementation of these standards. In the event any
misconduct against these standards happens, Hanwa Co., Ltd.
discloses relevant information, explains the circumstancepromptly and properly to society and prevent recurrence ofsuch misconducts by investigating cause of such misconducts.

4. Strengthen and maintain communication with local
communities, and cooperate with social developments.
5. Observe environmental related laws and regulations andoperate its business considering global environment.
6. Do not conduct unjust dealings such as insider deals of shares.
7. Confront resolutely antisocial forces and refrain from any
profit-offering, etc.
8. Stay away from conducts contradicting company’s profit andmaintain sound relationship with its customers.
9. Comply with laws and regulations and stay within the extent
socially permitted in giving clients presents andentertainments.
10. Make appropriate, fair and proper accounting books andrecords, and follow accounting related laws andregulations.
11. Conduct an in-house audit appropriately and always
check contents of contracts and actual conditions ofdealings with clients.
12. Draw up external documents such as contracts and inhouse memorandums properly and keep such documentsin accordance with company regulations.
13. Manage information carefully and maintain soundinformation network.
14. Give due consideration to issues of safety and hygiene inmanaging business activities and labor services.
15. Emphasize in-house education and develop expertise andcreativity.
16. Maintain vigorous work environment with fair personnel
evaluation.
17. Encourage employees to report, notify and consult, andpromote open and highly transparent business activities.

13Topics

1. Establishment of Overseas Bases
In September 2004, Hanwa established its 11th operating basein China in the city of Wuhan, the provincial capital of Hubei.
Wuhan is a major center for the steel and auto industries in
China. The region has well-developed infrastructure and threenationally designated economic development zones, in line with
the Chinese central government’s plan to develop the west of
the country. Many leading companies are expected to establish
operations in this area as a result. Several Japanese automakers
have already invested in local operations in and around Wuhan.

In April 2005, Hanwa also established a representative office in
Ho Chi Minh City, Vietnam. Japanese manufacturers areinvesting heavily in Vietnam, attracted by competitively low
costs and a skilled local workforce. Investment levels are likely torise as the domestic market grows and as the country’s
infrastructure develops. Hanwa is already a major importer ofmarine produce from Vietnam. Plans also call for expansion of
Hanwa’s local operations to encompass steel, non-ferrous
metals and lumber.

2. Hanwa Celebrates Ten Years in Canada
In April 2005, Hanwa established a new representative office inWien, Austria. Hanwa has imported increasing quantities ofEuropean lumber in recent years. The Wien office will direct
Hanwa’s growing business in timber products sourced from
Europe.

Hanwa’s operations in Canada celebrated the tenth anniversaryof their establishment in September 2004. The celebrations weremarked with a ceremony attended by Japanese consular officials.
Canadian suppliers are major trading partners of Hanwa in
lumber and marine products. Hanwa first established an office in
Vancouver in 1994 as part of Hanwa American Corporation.
Hanwa Canada Corporation was later formed in 2000.

14

3. Hanwa Web Site Renewed and Upgraded

4. Participating Chrome Businessin South Africa

Internet usage has spread rapidly since the end of the 1990s.
Web sites are an effective means of disclosing corporate
information and facilitating communication. Hanwa’s web site,which originally went online in May 1996, underwent a fullscale renewal in November 2004. The quality of the site was
upgraded in six major respects:
1) Improved corporate image for Hanwa
2) Better site navigation
3) Increased range of investor-oriented information
4) Redesigned recruitment site5) Revised site design to boost hit rates6) Addition of inquiry function to facilitate two-way
communication

Kermas Ltd (UK) group has acquired chrome business ofSamancor Ltd, the largest chrome products producer based inSouth Africa.
Hanwa entered an agreement to invest U.S.$36 million(approx. ¥4 billion) in the business. With the official approval of
the acquisition by the government of the republic of South
Africa on May 25, the contractual proceedings were completed
between the parties on June 1, 2005.
With this deal, Hanwa has obtained distribution rights forthe chrome products, used as raw material of stainless steels,
for Japan except the sales channel through existing
distributorship given to particular joint venture with Samancor.
As for the chrome ore, Hanwa is appointed as the sole
distributor for both Japan and China. Hanwa will focus on
expansion of the chrome ore business in China where thedemand is expected to grow in the future.

15

Management Discussion and Analysis

Economic overview
The global economy was buoyed during the fiscal year ended
March 2005 by increased demand for energy, reflecting asustained and robust recovery. Higher energy demand andpolitical instability in Iraq were major factors prompting thesurge in crude oil prices. China’s government responded tobreak-neck growth with credit-restriction and other policy
measures aimed at cooling its economy, which sparked fears
of a possible collapse in steel prices within the Chinese
market. Market concerns also reflected pervasive global
instability. The Japanese economy grew strongly in the firsthalf of the year, supported by robust private-sector capital
investment and signs of a pick-up in consumer spending.
Growth stalled in the second half, however, amid a correctionin production levels in the electronics and other IT-relatedindustries and a significant deceleration in the export sector
under the impact of curtailed fixed-asset investment levels in
China.

Sales by Business Segment
Steel: Private-sector capital investment levels in large-scale retaildevelopments, factories, warehouses and other facilities wererobust, boosting demand for steel. Measures adopted bysteelmakers also helped to support general price levels. Sales ofsteel bars posted solid growth. Although tight supply conditions
for steel sheet and plate resulted in some procurement
challenges, the segment recorded excellent results due to a
combination of high market prices, strong demand within theautomotive, shipbuilding and construction machinery sectors
and steady growth in exports to China and Southeast Asia. Sales
increased 33.9% year-on-year to ¥548.1 billion.
Non-Ferrous Metals: With China continuing to generate hugedemand for materials, international prices for nickel, aluminumand other metals fluctuated significantly during the year,
reflecting the activities of global hedge funds and otherspeculative investors. High summer temperatures in Japan in
2004 increased demand for aluminum cans, boosting volumesof aluminum scrap handled by Hanwa. Combined with the
expansion of Hanwa’s ferroalloy trading network and accurate
assessment of market pricing trends, these effects led to a
25.0% rise in segment sales compared with the previous yearto ¥99.5 billion.
Foods: Depressed domestic demand for farmed shrimp, amajor product for Hanwa, offset higher volumes of common
fish catches such as salmon and mackerel. Segment sales
declined 2.8% on a year-on-year basis to ¥82.2 billion.
Petroleum and Chemicals: International crude oil prices rose
sharply during the year, reflecting higher demand for energy
caused by a resurgent global economy and supply-related
uncertainties due to the instability in Iraq and other factors. Oil
supply fell in Japan during the year as domestic refiners took
some capacity off stream for repairs. Partly reflecting Hanwa’s
aggressive business development policies, segment sales
increased 15.2% year-on-year to ¥155.7 billion.
Other: Higher trading volumes helped to offset lower market
prices in Hanwa’s lumber operations. Segment sales rose
11.9% year-on-year to ¥48.4 billion.

Earnings
We responded to highly changeable business conditions inJapan and overseas markets with a trained operational
development focus. Supported by high market prices, net salesrose 24.2% year-on-year in the fiscal year ended March 2005
to ¥934.0 billion. On a consolidated basis, operating income
soared 74.4% to ¥22.1 billion as a result of the boost to profit
margins provided by high prices for steel products and nonferrous metals. We recorded gain on transfer of substitutional
portion of employees' pension fund as well as loss on
impairment of long-lived assets and income taxes, eliminatedthe accumulated operating losses for tax purposes, net income
rose 142.1% to ¥13.7 billion.

16

Cash FlowsNet cash used in operating activities amounted to ¥13.3 billion,
an increase in cash outflow of ¥6.5 billion compared with theprevious year. This was mainly attributable to a year-on-yearincrease of ¥39.9 billion in trade receivables associated withhigher sales and vigorous marketing activities.
Net cash used in investing activities amounted to ¥0.7
billion, a decrease in cash outflow of ¥0.3 billion comparedwith the previous year. Key factors included net investment of¥2.3 billion in property and equipment and in investment
securities of trading partners, and a net decrease in time
deposits of ¥1.6 billion.
Net cash provided by financing activities totaled ¥23.5
billion, compared with a net cash outflow of ¥10.9 billion in theprevious year. This change was mainly due to a subtle shift in
Hanwa’s financing approach. In line with the goal of aggressive
business management adopted in the mid-term business plan,
Hanwa focused on managing the net debt-equity ratio rather
than explicit debt reduction. Adopting a dynamic approach tooperating capital demands, Hanwa moved to secure long-termborrowings at minimal risk while interest rates were atfavorably low levels.

Outlook
The primary determinants of global economic trends are likely
to remain the U.S. economy, the Middle East situation and
China’s voracious demand for materials, which has driven
commodity prices higher. Currency movements are also an
important factor for the export-reliant Japanese economy. The
business environment for Japanese trading companies such as
Hanwa is likely to remain testing, characterized by rapid change
and high uncertainty.
We plan to pursue an aggressive strategy of businessexpansion in its core operations of steel, non-ferrous metals,
foods, petroleum and chemicals. The company also seeks toexpand earnings through profitable opportunities in othersectors. Plans call for investment of resources into thedevelopment of new businesses in established and peripheral
areas to create enterprises that will support the company’s
future operating base.

17

HANWA CO., LTD. AND CONSOLIDATED SUBSIDIARIES

Five-Year Summary
For the years ended March 31

Millions of yen
except number of employees

Thousands of
U.S. dollars

2005

2004

2003

2002

2001

933,956 ¥
22,091
13,704751,964 ¥
12,666
5,662

682,964 ¥10,257
5,907

625,614 ¥
6,517
3,587

689,106 $ 8,696,862
10,283
205,708
1,945
127,610(13,341)(6,850)3,269

19,327

2,731(124,229)(731)(1,004)

836

1,352

41,635(6,807)

23,523(10,873)(10,115)(14,630)(52,208)

219,043

At year-end:
Cash and cash equivalents
Total assets
Total stockholders’ equity

17,658376,52172,8758,390
293,52857,75727,808281,557
52,74835,183
284,515
49,18827,701
288,175
25,448164,4293,506,109
678,601

Number of employees

1,424

1,285

1,239

1,136

1,177

For the year:
Net sales
Operating income
Net income¥

Net cash provided by (used in)operating activities
Net cash provided by (used in)investing activities
Net cash provided by (used in)financing activities

2005

Yen

2005

Per share data:
Net income
Cash dividends
Stockholders’ equity¥

64.03 ¥
9.00
343.82

2004

26.43 ¥
6.00
272.67

U.S. dollars

2003

2002

27.91 ¥
5.00
249.302001

16.95 ¥
5.00
232.402005

9.19 $—
120.23%2005

Key financial ratios:
Return on assets
Return on equity
Net debt/equity ratio

2004

4.1
21.0
170

2.0
10.2
180

2003

2002

2.1
11.6
180

Note: 1. The U.S. dollar amounts represent translations, for convenience only, of yen amounts at the rate of ¥107.39=$1.00.
2. Net debt/equity ratio=Net interest-bearing debt / equity.
Net interest-bearing debt=Interest-bearing debt – cash.

18

2001

1.3
9.6
200

0.6
7.4
470

0.596
0.084
3.202

Financial Section

Contents
Consolidated Balance Sheets ........................................................................................... 20
Consolidated Statements of Income ............................................................................. 22
Consolidated Statements of Stockholders’ Equity ................................................... 23
Consolidated Statements of Cash Flows ..................................................................... 24
Notes to Consolidated Financial Statements ............................................................. 25
Independent Auditors’ Report ......................................................................................... 38
19

HANWA CO., LTD. AND CONSOLIDATED SUBSIDIARIES

Consolidated Balance Sheets
As at March 31, 2005 and 2004

Thousands of
U.S. dollars (Note 1)

Millions of yen

Assets2005

Current assets:
Cash and cash equivalents
Receivables:
Trade notes and accounts:
Unconsolidated subsidiaries and affiliates
Other
Loans:
Unconsolidated subsidiaries and affiliates
Other
Allowance for doubtful receivables
Inventories
Deferred tax assets-current (Note 8)
Other current assets (Note 5)
Total current assets¥

17,658 ¥2004

8,390 $

2005

164,429 $2004

78,1263,864
200,221

4,001
145,863

35,981
1,864,429

37,257
1,358,255

3,019
7
(721)
63,527
1,855
21,883311,313

2,214
8
(835)
50,562
2,370
17,162229,735

28,11265(6,714)
591,554
17,273203,772
2,898,901

20,61774(7,775)
470,826
22,069159,810
2,139,259

1,239
16,2501,240
12,377

11,537
151,318

11,547
115,253195
545
10,316(1,430)27,115325
806
10,780(2,041)
23,487

1,816
5,075
96,061(13,316)
252,491

3,026
7,505
100,382(19,005)
218,708

Property and equipment (Note 5):
Land (Note 9)
Buildings and structures
Other
Accumulated depreciation
Total property and equipment

22,68720,0807,536(12,925)
37,37824,352
19,936
6,527(11,184)
39,631

211,258
186,982
70,174(120,356)
348,058

226,763
185,641
60,778(104,144)
369,038

Other assets:
Deferred tax assets — noncurrent (Note 8)
Intangibles and other assets (Note 5)
Total other assets
Total

20
695
715
376,521 ¥

10
187
93
665
6,472
6,192
675
6,659
6,285
293,528 $ 3,506,109 $ 2,733,290

Investments and non-current receivables:
Investment securities (Notes 3 and 5):
Unconsolidated subsidiaries and affiliates
Other
Loans receivable:
Unconsolidated subsidiaries and affiliates
Other
Other investments and non-current receivables
Allowance for doubtful receivables
Total investments and non-current receivables¥

See accompanying Notes to Consolidated Financial Statements.

20

Thousands of
U.S. dollars (Note 1)

Millions of yen

Liabilities, Minority Interest and Stockholders’ Equity

2005

Current liabilities:
Short-term loans (Note 6)Long-term debt due within one year (Note 6)
Trade notes and accounts payable:
Unconsolidated subsidiaries and affiliates
Other
Accrued bonuses to employees
Income taxes payable
Other current liabilities
Total current liabilities¥

Non-current liabilities:
Long-term debt due after one year (Note 6)
Employees’ severance and retirement benefits (Note 7)
Directors’ retirement benefits
Reserve for loss on sale-repurchase agreement of landDeferred tax liabilities — noncurrent (Note 8)
Other non-current liabilities
Total non-current liabilities

2004

2005

2004

472,130 $
158,767

603,846
9,777

50,702 ¥17,05064,847 $1,050

769
117,225
1,653
5,873
27,138220,410

1,759
92,591
1,555
81
13,968
175,851

7,161
1,091,582
15,392
54,689252,705
2,052,426

16,380862,194
14,480754
130,068
1,637,499

71,880
88
494
4,012
3,343
2,721
82,53848,675
2,468
466
2,819
2,653
2,303
59,384

669,336819
4,600
37,35931,13025,338768,582453,254
22,982
4,340
26,25024,704
21,445552,975

698

536

6,500

4,991

Contingent liabilities (Note 12)
Minority interest
Stockholders’ equity (Note 9):
Common stock,
Authorized: 570,000,000 shares
Issued: 211,663,200 shares
Capital surplus
Retained earnings
Land revaluation difference
Net unrealized holding gains on securities
Foreign currency translation adjustments
Treasury stock, at cost: 170,060 shares (99,130 in 2004)
Total stockholders’ equity
Total

¥

21

45,651
1
23,912
1,653
3,871(2,164)(49)
72,875376,521 ¥

45,651
425,096
425,096—9—11,451
222,665
106,630
1,616
15,392
15,0482,282
36,046
21,250(3,225)(20,151)(30,031)
(18)
(456)
(168)
57,757
678,601
537,825
293,528 $ 3,506,109 $ 2,733,290

HANWA CO., LTD. AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Income
For the years ended March 31, 2005 and 2004

Thousands of
U.S. dollars (Note 1)

Millions of yen

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income

¥

2005

2004

2005

2004

933,956 ¥888,767
45,18923,09822,091

751,964 $ 8,696,862 $ 7,002,179
718,314
8,276,069
6,688,835
33,650420,793313,344
20,984215,085
195,400
12,666
205,708
117,944

Other income (expenses):
Interest and dividend income
Interest expense
Foreign exchange gain
Gain on transfer of substitutional portion of employees’ pension fund
(Note 2 and 7)
Gain on sale of investment securities of unconsolidated subsidiaries
Loss on impairment of long-lived assets (Note 14)
Provision for loss on sale-repurchase agreement of land
Foreign exchange loss on common stock reduction of consolidated subsidiary
Loss on loans receivable
Provision for doubtful receivables
Loss on write-down of investment securities
Loss on sale of property and equipment
Other, net

1,825(2,174)331

781(2,026)113

16,994(20,244)
3,082

7,273
(18,866)
1,052

1,912
360
(1,175)(1,193)(1,558)
—
—
—
—
(551)

—
—
(4,590)
(307)
—
(71)
(403)
(234)
(411)
(1,094)17,804
3,352(10,941)(11,109)(14,508)————(5,130)——(42,741)(2,859)—(661)(3,753)(2,179)(3,827)(10,187)

Income before income taxes and minority interest

19,8684,424

185,008

41,196

5,877
104
5,981

(65)
(1,263)(1,328)54,726968
55,694(605)(11,761)(12,366)(183)
13,704 ¥(90)
5,662 $

(1,704)
127,610 $(838)
52,724

Income taxes (Note 8):
Current
Deferred

Minority interest in income of consolidated subsidiaries
Net income

¥

Yen

2005

Net income per share
Cash dividends per share¥

See accompanying Notes to Consolidated Financial Statements.

2264.03 ¥
9.00

U.S. dollars (Note 1)

2004

26.43 $
6.00

2005

0.596 $
0.084

2004

0.246
0.056

HANWA CO., LTD. AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity
For the years ended March 31, 2005 and 2004

Thousands
Number of sharesof common stock

Balance at March 31, 2003
Net income
Cash dividends
Transfer of land revaluationdifference
Unrealized holding gains
on securities
Adjustments from translationof foreign currency
financial statements
Treasury stock
Balance at March 31, 2004
Surplus from sale oftreasury stock
Net income
Increase arising from
inclusion in consolidation
Cash dividends
Bonuses to directors
Transfer of land revaluationdifference (Note 9)
Unrealized holding gains
on securities
Adjustments from translationof foreign currency
financial statements
Treasury stock
Balance at March 31, 2005

Millions of yen

Common stock

Capital surplus

211,663 ¥ 45,651 ¥————Retained earnings

Land revaluationdifference

Unrealized
holding gains
on securities

— ¥
—
—

9,991 ¥
5,662
(1,058)(419) ¥——

Foreign currencytranslation
adjustments

Treasury stock(385) ¥——

(2,079) ¥
—
—

(11)
—
—

—

—

—

(3,144)

2,035

—

—

—

—

—

—

—

—

2,667

—

—

—
—
211,663——
45,651—————
11,451

—
—
1,616

—
—
2,282

(1,146)—(3,225)

—
(7)
(18)

—
—

—
—

1
—

—
13,704

—
—

—
—

—
—

—
—

—
—
—

—
—
—

—
—
—

133
(1,269)
(70)

—
—
—

—
—
—

—
—
—

—
—
—

—

—

—

(37)

37

—

—

—

—

—

—

—

—

1,589

—

—

1,061
—
(2,164) ¥

—
(31)
(49)

—
—
—
—
211,663 ¥ 45,651 ¥Common stock

Balance at March 31, 2003
Net income
Cash dividends
Transfer of land revaluation difference
Unrealized holding gains on securities
Adjustments from translation offoreign currency financial statements
Treasury stock
Balance at March 31, 2004
Surplus from sale oftreasury stock
Net income
Increase arising from
inclusion in consolidation
Cash dividends
Bonuses to directors
Transfer of land revaluationdifference (Note 9)
Unrealized holding gains on securities
Adjustments from translation offoreign currency financial statements
Treasury stock
Balance at March 31, 2005————
1 ¥ 23,912 ¥Capital surplus$ 425,096 $
—
—
—
—

—
—
1,653 ¥——
3,871 ¥

Thousands of U.S. dollars (Note 1)
Unrealized
Land revaluation
holding gains
Retained earnings
difference
on securities

Foreign currencytranslation
adjustments

Treasury stock— $ 93,035 $ (3,902) $ (3,585) $ (19,359) $—52,724————(9,852)————(29,277)
18,950—————24,835
—

(103)
—
—
—
—

—
—
425,096—————
106,630——
15,048——21,250(10,672)—(30,031)

—
(65)
(168)

—
—

9
—

—
127,610

—
—

—
—

—
—

—
—

—
—
—

—
—
—

1,238
(11,817)
(652)

—
—
—

—
—
—

—
—
—

—
—
—

—
—

—
—

(344)
—

344
—

—
14,796

—
—

—
—

—
—
$ 425,096 $

—
—
—
—
9,880
—
—
—
—
—
9 $ 222,665 $ 15,392 $ 36,046 $ (20,151) $See accompanying Notes to Consolidated Financial Statements.

23

—
(288)
(456)

HANWA CO., LTD. AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Cash Flows
For the years ended March 31, 2005 and 2004

Thousands of
U.S. dollars (Note 1)

Millions of yen

2005

Cash flows from operating activities:
Income before income taxes
Adjustments to reconcile income before income taxes to net cash
provided by (used in) operating activities
Depreciation
Loss on impairment of long-lived assets
Decrease in allowance for doubtful receivables
Interest and dividend income
Interest expense
Gain on transfer of substitutional portion of employees’ pension fundGain on sale of investment securities of unconsolidated subsidiaries
Loss on write-down of investment securities
Provision for loss on sale-repurchase agreement of land
Loss on sale of property and equipment
Foreign exchange loss on common stock reduction of
consolidated subsidiary
Increase in trade receivables
Increase in inventories
Increase in trade notes and accounts payable
Increase in deposits received
Other, net
Sub total
Cash flows during the year for:
Interest and dividends received
Interest paid
Income taxes paid
Net cash used in operating activities
Cash flows from investing activities:
Decrease (increase) in time deposits, net
Proceeds from redemption and sale of securities
Additions to property and equipment
Proceeds from sale of property and equipment
Additions to investment securities
Proceeds from redemption and sale of investment securities
Additions to loans receivable
Repayment of loans receivable
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Decrease in short-term loans, net
Proceeds from long-term debt
Repayments of long-term debt
Payment of cash dividends
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase arising from inclusion in consolidation
Cash and cash equivalents at end of year
See accompanying Notes to Consolidated Financial Statements.

24

¥

¥

2004

2005

2004

19,868 ¥4,424 $

185,008 $41,196

2,023
1,175
(729)
(1,825)
2,174(1,912)
(360)
—
1,193
—

2,008
4,590
(72)
(781)
2,026
—
—
234
307
411

18,838
10,941(6,788)(16,994)
20,244(17,804)(3,352)—
11,109—18,69842,741(670)(7,273)
18,866
—
—
2,179
2,859
3,827

1,558
(55,919)(13,005)
25,1185,599
2,154(12,888)—(16,054)(15,795)
12,156415
797(5,334)

14,508(520,710)(121,101)
233,895
52,137
20,058(120,011)—(149,493)(147,081)
113,195
3,864
7,422(49,670)

1,802(2,112)(143)(13,341)798(2,017)(297)(6,850)16,780(19,666)(1,332)(124,229)

7,431(18,782)(2,766)(63,787)

1,618—(1,438)509(1,522)552(1,195)
935
(190)
(731)

(1,711)108(1,265)
157
(418)
813
(178)
967
523
(1,004)

15,066—(13,390)
4,740(14,173)
5,140(11,128)
8,707(1,769)(6,807)(15,933)
1,006(11,779)
1,462(3,892)
7,570(1,658)9,005
4,870(9,349)(14,397)
40,255(1,050)(1,262)(23)
23,523
(378)
9,073
8,390
195
17,658 ¥(9,579)(134,063)(89,198)
28,750374,849
267,716(29,003)(9,777)(270,072)(1,034)(11,752)(9,629)
(7)
(214)
(65)
(10,873)
219,043(101,248)(691)(3,520)(6,434)(19,418)
84,487(180,818)
27,80878,126258,944—1,816—
8,390 $ 164,429 $
78,126

HANWA CO., LTD. AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements

1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of Hanwa
Co., Ltd. (the “Company”) and its consolidated subsidiaries havebeen prepared in accordance with the provisions set forth in theJapanese Securities and Exchange Law and its related accounting
regulations, and in conformity with accounting principles
generally accepted in Japan (“Japanese GAAP”), which are
different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards.
The accounts of overseas subsidiaries are based on theiraccounting records maintained in conformity with generally
accepted accounting principles prevailing in the respective
countries of domicile. The accompanying consolidated financial
statements have been restructured and translated into English(with some expanded descriptions and the inclusion of
consolidated statements of stockholders’ equity) from theconsolidated financial statements of the Company prepared inaccordance with Japanese GAAP and filed with the appropriate
Local Finance Bureau of the Ministry of Finance as required by
the Securities and Exchange Law. Some supplementary
information included in the statutory Japanese language
consolidated financial statements, but not required for fairpresentation, is not presented in the accompanying consolidated
financial statements.
The translation of the Japanese yen amounts into U.S. dollars
are included solely for the convenience of readers outside Japan,
using the prevailing exchange rate at March 31, 2005, whichwas ¥107.39 to U.S.$1.00. The convenience translations should
not be construed as representations that the Japanese yenamounts have been, could have been, or could in the future be,converted into U.S. dollars at this or any other rate of exchange.

2. Significant accounting policies
Consolidation — The consolidated financial statements include
the accounts of the Company and its eleven (ten in 2004)
significant subsidiaries (together “the Companies”). The
accounts of certain consolidated subsidiaries have been included
on the basis of fiscal periods ended three months or less prior to
March 31, and significant transactions after their year-ends areappropriately adjusted in consolidation.
Intercompany transactions and accounts have been
eliminated. The Company doesn’t apply the equity method,
because non-consolidated subsidiaries and affiliated companies
are immaterial.
Cash and cash equivalents — In preparing the consolidated
statements of cash flows, cash on hand, readily-available
deposits and short-term highly liquid investments with maturities
not exceeding three months at the time of purchase areconsidered to be cash and cash equivalents.
Allowance for doubtful receivables — The allowance for
doubtful receivables is provided to cover possible losses oncollection. With respect to normal trade accounts receivable, it isstated at an amount based on the actual rate of historical bad
debts, and for certain doubtful receivables, the uncollectible
amount has been individually estimated.
The allowance for doubtful receivables of overseas
consolidated subsidiaries is determined by estimates ofmanagement.
Securities — The Companies classify securities as (a) securities
held for trading purposes (hereafter, “trading securities”), (b)debt securities intended to be held to maturity (hereafter, “heldto-maturity debt securities”), (c) equity securities issued bysubsidiaries and affiliated companies, and (d) all other securities
that are not classified in any of the above categories (hereafter,“available-for-sale securities”).
The Companies do not hold trading securities and held-tomaturity debt securities. Equity securities issued by subsidiaries
and affiliated companies, which are not consolidated or
accounted for using the equity method, are stated at movingaverage cost. Available-for-sale securities with available fairmarket values are stated at fair market value. Unrealized gains
and unrealized losses on these securities are reported, net of
applicable income taxes, as a separate component ofstockholders’ equity. Realized gains on sale of such securities arecomputed using moving-average cost. Other available-for-salesecurities are stated at moving average cost.
Inventories — Inventories are principally stated at the lower ofcost or market value. Cost is determined by the moving average
cost method or the specific identification cost method.
Property and equipment — Property and equipment are
carried at cost. Recognized loss on impairment of long-lived
assets have been deducted from acquisition costs. Depreciation
is principally provided on the declining balance method overestimated useful lives. Major renewals and improvements arecapitalized. Maintenance, repairs and minor renewals are
expensed as incurred.
Software costs — The Companies include software inintangible and other assets, and depreciate it using the straightline method over the estimated useful life of five years.
Bonuses — The Company and its domestic consolidated
subsidiaries follow the Japanese practice of paying bonuses to
employees in June and December. As at the balance sheet date,the bonus liabilities are estimated and accounted for on an
accrual basis.
Bonuses to directors, which are subject to approval at thestockholders’ meeting, are accounted for as an appropriation ofretained earnings.
Income taxes — The Companies recognize tax effects of loss
carry forwards and temporary differences between the carrying
amounts of assets and liabilities for tax and financial reporting.
The asset and liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts
used for income tax purposes.
The Company and its wholly owned domestic subsidiaries fileconsolidated tax returns.
With the promulgation of the “Revision of the Local Tax Law”
(Legislation No.9, 2003) on March 31, 2003, the tax bases forassessing enterprise taxes comprise “amount of income”,“amount of added value” and “amount of capital” commencing
April 1, 2004. Enterprise taxes based on “amount of added
value” and “amount of capital” are ¥277 million ($2,579
thousand) and, are included in “Selling general andadministrative expenses” commencing this fiscal year pursuant
to “Practical Solutions on Presentation for Size-BasedComponents of Corporate Enterprise Tax on the Income
25subsidiaries are translated at average rates except fortransactions with the Company, which are translated at the rates
used by the Company.
The Companies report foreign currency translation
adjustments in stockholders’ equity.
Finance leases — Finance leases which do not transfer
ownership and do not have bargain purchase provisions areaccounted for in the same manner as operating leases inaccordance with Japanese GAAP.
Derivatives and hedge accounting — The Company states
derivative financial instruments at fair value and recognizeschanges in the fair value as gains or losses unless derivative
financial instruments are used for hedging purposes.
If derivative financial instruments are used as hedges andmeet certain hedging criteria, the Company defers recognitionof gains or losses resulting from changes in fair value ofderivative financial instruments until the related losses or gains
on the hedged items are recognized.
Also, if interest rate swap agreements are used as hedges andmeet certain hedging criteria, the net amount to be paid or
received under the interest rate swap agreement is added to or
deducted from the interest on the assets or liabilities for which
the swap agreement was executed.
The following summarizes hedging derivative financial
instruments used by the Company and items hedged:
Hedging instruments:
Interest rate swap agreements
Commodity futures contracts
Hedged items:
Interest expense on borrowings
Inventories and commitments
The Company evaluates hedge effectiveness by comparing the
cumulative changes in cash flows or the changes in fair value ofhedged items and the corresponding changes in the hedging
derivative instruments.
Reclassifications — Certain reclassifications have been made toprior-year amounts to conform to the current-year presentation.
Amounts per share — Computations of net income per shareof common stock are based on the weighted average number ofshares outstanding during each period. Diluted net income pershare is not disclosed because potentially dilutive securities are
not issued. The Commercial Code of Japan requires that thedeclaration of dividends be approved at the general meeting ofstockholders held after the end of the fiscal year. Therefore, cash
dividends per share shown in the consolidated statements ofincome reflect the dividends approved after the end of the fiscal
year.
Change in accounting policy — Commencing in the year
ended March 31, 2004, the Company and its subsidiaries
adopted early the new Japanese accounting standard for
impairment of long-lived assets (“Opinion Concerning
Establishment of Accounting Standard for Impairment of LongLived Assets” issued by the Business Accounting Deliberation
Council of Japan on August 9, 2002) and the Implementation
Guidance for Accounting Standard for Impairment of Long-Lived
Assets (the Financial Accounting Standard Implementation
Guidance No. 6 issued by the Accounting Standards Board ofJapan on October 31, 2003). As a result, net income before
income taxes and minority interest for the year ended March 31,
2004 decreased by ¥4,590 million ($42,741 thousand)compared with what would have been reported if the new
accounting standard had not been adopted early.

Statement” (Accounting Standards Board, Practical Solution
Report No.12 issued on February 13, 2004).
Retirement benefits — Substantially all employees of theCompany and its consolidated domestic subsidiaries are coveredby qualified funded pension plans. The amount of the retirement
benefit is, in general, based on length of service, base salary at
the time of retirement, and cause of retirement. Annual
contributions, which consist of normal cost and amortization ofprior service cost are charged to income when paid.
The liabilities and expenses for severance and retirement
benefits are determined based on the amounts actuariallycalculated using certain assumptions.
As the pension assets exceed the deduction of unrecognizedactuarial differences and unrecognized prior service cost fromprojected benefit obligation in the Company, such excess
amount is included in “other investments and non-current
receivables” in the year ended March 31, 2005.
Directors and statutory auditors are not covered by theseplans. However, the liability for retirement benefits represents
management’s estimate of the amounts payable to them at thebalance sheet date if they retired at that date. Amounts payable
to directors and statutory auditors upon retirement are subject
to the approval of stockholders.
Employees of Japanese companies are compulsorily includedin the Welfare Pension Insurance Scheme operated by thegovernment. Employers are legally required to deduct
employees’ welfare pension insurance contributions from their
payroll and to pay them to the government together with
employers’ own contributions. For companies that haveestablished their own Employees’ Pension Fund, which meets
certain legal requirements, it is possible to transfer a part of theirwelfare pension insurance contributions (referred to as the“substitutional portion” of the government’s Welfare Pension
Insurance Scheme) to their own Employees’ Pension Fund under
the government’s permission and supervision.
Based on the newly enacted Defined Benefit Corporate
Pension Law, the Company decided to restructure their
Employees’ Pension Fund and were permitted by the Minister of
Health, Labor and Welfare on September 25, 2003 to bereleased from their future obligation for payments for thesubstitutional portion of the Welfare Pension Insurance Scheme.
On January 1, 2005, the Company obtained approval from the
Minister of Health, Labor and Welfare with respect to applicationof the transfer to the Japanese government of the substitutional
portion of benefit obligation for employee services provided inprior years and related pension plan assets. Pension assets forthe substitutional portion maintained by the Employees’ Pension
Fund are to be transferred back to the government’s scheme.
The effects of the transfer are disclosed in the Note 7.
Employees’ severance and retirement benefits.
Reserve for loss on sale-repurchase agreement of land —Reserve for loss on sale-repurchase of land reflects an estimateof possible losses based on an exercise of a sale-repurchaseagreement under which the Company sold land to theOrganization for Promoting Urban Development.
Translation of foreign currencies — Receivables and payables
denominated in foreign currencies are translated into Japanese
yen at the year-end rates.
Balance sheets of consolidated overseas subsidiaries aretranslated into Japanese yen at the year-end rates except for
stockholders’ equity accounts, which are translated at thehistorical rates. Income statements of consolidated overseas
26

3. Securities(A) The following tables summarize acquisition costs and book values (fair values) of available-for-sale securities with available fairvalues as of March 31, 2005 and 2004:

March 31, 2005
Acquisition cost

Securities with book values exceeding acquisition costs:
Equity securities¥
Other securities:
Equity securities¥

Difference

Acquisition cost

6,556 $

46,597 $107,645 $

61,048

395 ¥

367 ¥

(28) $

3,678 $

3,418 $

(260)

Millions of yen¥

Difference

11,560 ¥Acquisition cost

Securities with book values exceeding acquisition costs:
Equity securities¥

Thousands of U.S. dollars
Book value

5,004 ¥March 31, 2004

Other securities:
Equity securities

Millions of yen
Book value

Thousands of U.S. dollars

Book value

Difference

Acquisition cost

Book value

Difference

3,917 ¥

7,804 ¥

3,887 $

36,475 $72,670 $36,195

332 ¥

293 ¥

(39) $

3,091 $

2,728 $

(363)

(B) The following tables summarize book values of securities whose fair values are not determinable as of March 31, 2005 and 2004:(a) Equity securities issued by unconsolidated subsidiaries and affiliated companies
Millions of yen
2005
Book value

Equity securities issued by unconsolidated subsidiaries and affiliated companies

Thousands of U.S. dollars

2004
Book value

2005
Book value

2004
Book value¥

1,239 ¥

1,240 $

11,537 $

11,547¥2,323 ¥
2,000
4,323 ¥

2,280 $
2,000
4,280 $

21,631 $
18,62440,255 $21,231
18,62439,855(b) Available-for-sale securities
Unlisted stocks (excluding over-the-counter securities)
Other
Total

¥

(C) Total sales of available-for-sale securities in the years ended March 31, 2005 and 2004 amounted to ¥121 million ($1,127
thousand) and ¥832 million ($7,747 thousand), which resulted in net losses of ¥13 million ($121 thousand) and net gains of¥25 million ($233 thousand), respectively.

27

4. Derivatives
purpose of using derivatives is to reduce market risks associatedwith assets, liabilities and interest rates, market risks of thederivatives are effectively offset. As the counterparties toderivatives are limited to major financial institutions, theCompany does not anticipate any losses arising from credit risk.
Derivatives entered into by the Company have been inaccordance with internal policies which regulate theauthorization and credit limit amount. Each derivativetransaction is periodically reported to the management, where
evaluation and analysis of derivatives are made.
The contracts or notional amounts of derivatives which are
shown in the following table do not represent the amounts
exchanged by the parties and do not measure the Company’s
exposure to credit or market risks.

The Company enters into foreign exchange forward contracts
and currency option agreements, in its normal business, tohedge foreign exchange risk associated with certain assets andliabilities denominated in foreign currencies. The Company
enters into foreign exchange forward contracts, currency swap
agreements and interest rate swap agreements as hedges
against bonds and loans denominated in foreign currencies. The
Company also enters into commodity futures contracts andcommodity swaps as a means of hedging risks associated withcertain inventories and commitments.
It is the Company’s policy to use derivatives only for the
purpose of reducing market risks associated with assets andliabilities.
Derivatives are subject to market risk and credit risk. Since the

The following tables summarize market value information as of March 31, 2005 and 2004, of derivatives for which hedge accounting
has not been applied:

March 31, 2005
Currency related

Millions of yen
Contract ornotional amountForeign exchange forward contracts:
Selling
U.S. dollars
Other currencies
BuyingU.S. dollars
Other currencies
Currency swap agreements:
Japanese yen received for U.S. dollars
Currency option agreements:
Selling
Put
U.S. dollars
Euro
BuyingCall
U.S. dollars
Euro¥

Thousands of U.S. dollars
Net recognized
gains (losses)

Fair value

Contract ornotional amount

Net recognized
gains (losses)

Fair value

7,306 ¥
653

7,482 ¥
664

(176) $
(11)

68,032 $
6,081

69,671 $
6,183(1,639)(102)

10,642
1,235

10,893
1,256

251
21

99,097
11,500101,434
11,6962,337
196

13,389427

427

124,676

3,976

3,976

—

—

—

—

—

—

—

—

—

—

—

—

—
<—>
—
<—>
—
<—>
—
<—>

—

Total

¥

Notes: The figures in < > represent option premiums for currency option agreements.

28

—
512

—
<—>
—
<—>
—
<—>
—
<—>

—
$

—
4,768

Commodity related

Millions of yen
Contract ornotional amount

Futures:Petroleum
Selling
BuyingFrozen seafoods
Selling
BuyingNon-ferrous metals
Selling
BuyingCommodity swaps
Petroleum
Selling
Buying
Total¥

Fair value

Contract ornotional amount6,231 ¥
5,796

(90) $
714

57,184 $47,32358,022 $53,972

(838)
6,649

13
7

12
7

1
—

121
65

112
65

9
—

5,938
3,464

6,199
3,602

(261)
138

55,29432,25657,72433,541(2,430)
1,285

668
3,032

(63)
216

(63)
216
655

6,220
28,234

(587)
2,011

(587)
2,011
6,099

¥

$

Millions of yen
Contract ornotional amount¥

BuyingCall
U.S. dollars

2,206 ¥
10

2,191 ¥
924,094
1,566

23,485
1,532

11,490Contract ornotional amount

20,402 $
84

(609)
(34)

224,360
14,582

218,689
14,265(5,671)
(317)

999

999

106,993

9,303

9,303

50

(38)

466

(354)

46

(13)

428

(121)

1

(4)

9

(37)

9

Total

¥

15 $
1

Net recognized
gains (losses)

Fair value

20,542 $
93

203
<5>
506
<16>

Euro

Thousands of U.S. dollars
Net recognized
gains (losses)

Fair value

608
<12>
1,518
<33>

Euro

Net recognized
gains (losses)

Fair value

6,141 ¥
5,082

March 31, 2004
Currency related
Foreign exchange forward contracts:
Selling
U.S. dollars
Other currencies
BuyingU.S. dollars
Other currencies
Currency swap agreements:
Japanese yen received for U.S. dollars
Currency option agreements:
Selling
Put
U.S. dollars

Thousands of U.S. dollars
Net recognized
gains (losses)

5,662
<112>
14,135
<307>
1,890
<46>
4,712
<149>

(7)
310

140
9

84

(65)
2,887

$

Notes: The figures in < > represent option premiums for currency option agreements.

Commodity related

Millions of yen
Contract ornotional amount

Futures:Petroleum
Selling
BuyingFrozen seafoods
Selling
BuyingNon-ferrous metals
Selling
BuyingTotal¥

Thousands of U.S. dollars
Net recognized
gains

Fair value

Contract ornotional amount

Net recognized
gains

Fair value

1,695 ¥
6,737

1,699 ¥
6,867

(4) $
130

15,784 $62,734

15,821 $63,944

(37)
1,210

—
6

—
6

—
—

—
56

—
56

—
—

14,36913,321

14,31813,73251411
588

133,802124,043

133,327
127,870

475
3,827
5,475

¥
29

$

5. Pledged assets
At March 31, 2005 and 2004, assets pledged as collateral for short-term loans of ¥292 million ($2,719 thousand) and ¥396 million($3,687 thousand), respectively, and guarantees were as follows:
Thousands of
U.S. dollars

Millions of yen

2005

Other current assets
Investment securities
Property and equipment, net of accumulated depreciation
Intangibles
Total

¥

¥

2004

10 ¥
2,729
436
57
3,232 ¥

10 $
3,817
342
69
4,238 $

2005

2004

93 $
25,412
4,060
531
30,096 $93
35,5433,185
643
39,464

6. Short-term loans and long-term debt
Weighted average interest rates applicable to short-term loans
outstanding at March 31, 2005 and 2004 were 1.36% and1.13%, respectively.
Long-term debt at March 31, 2005 and 2004, consisted of the following:Thousands of
U.S. dollars

Millions of yen

2005

Loans from banks, with weighted average interest rates of 0.90% and0.94% at March 31, 2005 and 2004, respectively, maturing seriallythrough 2010
Less amounts due within one year

¥
¥

2004

88,930 ¥17,05071,880 ¥49,725 $1,050
48,675 $

2005

2004

828,103 $158,767
669,336 $463,0319,777
453,254

The annual maturities of long-term debt outstanding at March 31,
2005, were as follows:

Years ending March 31,
Millions of yen

2006
2007
2008
2009
2010

¥

Total

¥

17,050 $26,45050
22,62522,75588,930 $Thousands of
U.S. dollars

158,767
246,299466
210,680
211,891
828,103

7. Employees’ severance and retirement benefits
The liabilities for severance and retirement benefits included in the liability section of the consolidated balance sheets as of March 31,
2005 and 2004, consisted of the following:Thousands of
U.S. dollars

Millions of yen

Projected benefit obligation
Less fair value of pension assets
Unrecognized actuarial differences
Unrecognized prior service cost
Prepaid pension cost
Liability for severance and retirement benefits

¥

¥
30

2005

2004

2005

2004

20,622 ¥(14,556)(5,388)(1,111)521
88 ¥23,059 $(13,031)(8,696)720
416
2,468 $

192,029 $(135,543)(50,172)(10,346)
4,851
819 $

214,722(121,343)(80,976)
6,705
3,874
22,982

Included in the consolidated statements of income for the years ended March 31, 2005 and 2004, are severance and retirement
benefit expenses comprised of the following:Thousands of
U.S. dollars

Millions of yen

2005

Service costs -benefits earned during the year
Interest cost on projected benefit obligation
Expected return on plan assets
Amortization of actuarial difference
Amortization of prior service cost
Additional retirement benefits
Severance and retirement benefit expenses
Gain on transfer of substitutional portion of employees’ pension fund
Total

¥

¥

Prior service cost and actuarial differences are amortized orrecognized over stated years that do not exceed the average

469 ¥
445
(396)
648
(25)
28
1,169
(1,912)(743) ¥

2004

591 $
488
(330)
617
(60)
40
1,346
—
1,346 $

2005

4,367 $
4,144
(3,688)
6,034
(233)
261
10,885(17,804)(6,919) $

2004

5,503
4,544
(3,073)
5,746
(559)
373
12,534—
12,534

remaining service period of active employees expected to receive
benefits under the plan.

Assumptions used for the years ended March 31, 2005 and 2004, are as follows:

Discount rate
Expected rate of return on plan assets
Amortization period of prior service costs
Amortization period of actuarial differences
As explained in Note 2, on January 1, 2005, the Company
obtained approval from the Minister of Health, Labor andWelfare with respect to application of the transfer to theJapanese government of the substitutional portion of benefit

2005

2004

2.0%
3.0%
14 years
14 years

2.0%
3.0%
14 years
14 years

obligation for employee services provided in prior years andrelated pension plan assets.
As a result, the Company recognized a gain of ¥1,912 million($17,804 thousand) for the year ended March 31, 2005.

8. Income taxes
The Company is subject to a number of taxes based on income,which, in the aggregate, indicate aggregate statutory income

tax rates in Japan of approximately 40.7% and 42.1% for theyears ended March 31, 2005 and 2004, respectively.

The following table summarizes the significant differences between the aggregate statutory income tax rate and the Company’s
effective tax rate for financial statement purposes for the years ended March 31, 2005 and 2004:

Statutory tax rate
Tax effect of permanent differences
Valuation allowance recognized for deferred tax assets
Tax effect of unrealized intercompany profit
Difference of tax rates for consolidated subsidiaries
Other
Effective tax rate

31

2005

2004

40.7%
(0.4)
(9.7)
—
(0.4)
(0.1)
30.1%

42.1%
4.7
(76.9)
2.8
(2.1)
(0.6)
(30.0)%

Significant components of the Companies’ deferred tax assets and liabilities as of March 31, 2005 and 2004 are as follows:
Thousands of
U.S. dollars

Millions of yen

2005

Deferred tax assets:
Net operating loss carryforwards
Temporary differences pertaining to a consolidated subsidiary
Loss on impairment of long-lived assets
Temporary differences pertaining to investments
in consolidated companies
Reserve for loss on sale-repurchase agreement of land
Accrued bonuses to employees
Other
Total deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Net unrealized holding gains on securities
Land revaluation difference
Other
Total deferred tax liabilities
Net deferred tax assets (liabilities)

¥

¥

2004

2005

2004

— ¥
23,961
2,258

2,014 $
23,9861,867— $223,121
21,02618,754
223,354
17,385

—
1,632
672
4,106
32,629(29,678)
2,951

781
1,147
631
3,642
34,068(31,471)
2,597—
15,197
6,258
38,234
303,836(276,357)
27,4797,273
10,681
5,876
33,913
317,236(293,053)
24,183

2,656
1,134
629
4,419
(1,468) ¥

1,566
1,109
195
2,870
(273) $

24,732
10,5605,857
41,149(13,670) $14,582
10,327
1,816
26,725(2,542)

Deferred tax assets and deferred tax liabilities are included in the consolidated balance sheets at March 31, 2005 and 2004,
respectively, as follows:
Thousands of
U.S. dollars

Millions of yen

2005

Current assets: Deferred tax assets
Non-current assets: Deferred tax assets
Current liabilities: Deferred tax liabilities
Non- current liabilities: Deferred tax liabilities¥

1,855 ¥
20
—
3,343

2004

2,370 $
10
—
2,653

2005

17,273 $187—
31,1302004

22,06993—
24,704

9. Stockholders’ equity
The maximum amount that the Company can distribute as
dividends is calculated based on the non-consolidated financial
statements of the Company in accordance with the Commercial
Code.

Under the Commercial Code of Japan, the entire amount of theissue price of shares is required to be accounted for as capital,
although a company may, by resolution of its Board of Directors,
account for an amount not exceeding one-half of the issue priceof the new shares as additional paid-in capital, which is included
in capital surplus.
The Commercial Code provides that an amount equal to atleast 10% of cash dividends and other cash appropriations shallbe appropriated and set aside as a legal earnings reserve until
the total amount of legal earnings reserve and additional paid-in
capital equals 25% of common stock. The legal earnings reserve
and additional paid-in capital may be used to eliminate or reducea deficit by resolution of the stockholders’ meeting or may becapitalized by resolution of the Board of Directors. On condition
that the total amount of legal earnings reserve and additional
paid-in capital remains being equal to or exceeding 25% ofcommon stock, they are available for distribution by the
resolution of stockholders’ meeting. Legal earnings reserve is
included in retained earnings in the accompanying financial
statements.

Land revaluation difference — Pursuant to the Law
Concerning Land Revaluation, the Company revaluated land
used for business activities at March 31, 2002.
Unrealized gain (loss) on land revaluation is recorded as land
revaluation difference in a separate component of stockholders’equity of the accompanying consolidated balance sheets until
realized. The amounts are shown net of applicable income tax.
The revaluation of the land was determined based on adeclared land value in accordance with Article 2, Paragraph 1, of
the Enforcement Ordinance Concerning Land Revaluation, andthe appraisal value made by certified real estate appraisers inaccordance with Article 2, Paragraph 5 of the same Ordinancewith certain necessary adjustments.
As of March 31, 2005, the carrying amount of the land after
the above one-time revaluation exceeded the market value by¥1,944 million ($18,102 thousand).
32

10. Leases
Finance leases
As lessee
Total lease payments, including financing charges, under financeleases that do not transfer ownership of the leased property to

the Company and its consolidated subsidiaries for the years
ended March 31, 2005 and 2004, were ¥348 million ($3,241
thousand) and ¥338 million ($3,147 thousand), respectively.

Pro forma information of leased property such as acquisition cost, accumulated depreciation, obligations under finance leases,
depreciation expense and interest expense of finance leases that do not transfer ownership of the leased property to the lessee on an“as if capitalized” basis as of and for the years ended March 31, 2005 and 2004, were as follows:

As of March 31, 2005
Acquisition
cost

Other property and equipment
Other investments
Total

¥
¥

1,309 ¥
151
1,460 ¥

As of March 31, 2004
Acquisition
cost

Other property and equipment
Other investments
Total

¥
¥

Millions of yen
Accumulated
depreciation

Net leased
property

602 ¥
52
654 ¥
Millions of yen
Accumulated
depreciation

1,227 ¥
129
1,356 ¥

707 $
99
806 $

Net leased
property

709 ¥
28
737 ¥

Depreciation expense and interest expense of finance leases that
do not transfer ownership of the leased property are notreflected in the accompanying consolidated statements ofincome. Depreciation expense, computed by the straight-line
method, was ¥323 million ($3,008 thousand) and ¥276 million

Acquisition
cost

Thousands of U.S. dollars
Accumulated
depreciation

12,189 $1,406
13,595 $Acquisition
cost

518 $
101
619 $

5,606 $
484
6,090 $

Thousands of U.S. dollars
Accumulated
depreciation

11,426 $1,201
12,627 $Net leased
property

6,583
922
7,505

Net leased
property

6,602 $
261
6,863 $

4,824
940
5,764

($2,570 thousand) for the years ended March 31, 2005 and2004, respectively. Interest expense, computed by the interest
method, was ¥21 million ($196 thousand) and ¥19 million ($177
thousand) for the years ended March 31, 2005 and 2004,
respectively.

Obligations, excluding financing charges, under such non-capitalized finance leases as of March 31, 2005 and 2004, were as follows:
Thousands of
U.S. dollars

Millions of yen

2005

Due within one year
Due after one year
Total

¥

2004

300 ¥
521
821 ¥

¥

2005

261 $
405
666 $

2004

2,794 $
4,851
7,645 $

2,431
3,771
6,202

Operating leases
As Lessee
Obligations under operating leases as of March 31, 2005 and 2004, were as follows:
Thousands of
U.S. dollars

Millions of yen

2005

Due within one year
Due after one year
Total

¥
¥

33

2004

40 ¥
51
91 ¥

2005

45 $
92
137 $

2004

372 $
475
847 $

419
857
1,276

11. Segment information
Industry segment information
The Companies’ operations are classified into five industry
segments as follows:
Steel: Steel bars and shapes, steel plates and sheets, special
steels, wire products, steel pipes, and steelmaking raw
materials

Non-ferrous metals: Nickel, copper, aluminium, lead, zinc, tin,
antimony, and other alloys
Foods: Frozen seafoods and meat products
Petroleum and chemicals: Petroleum products, chemical
products, and cement
Other business: Machinery, lumber, and other.

Segment information by business category for the years ended March 31, 2005 and 2004, is as follows:Year ended March 31, 2005
Steel

Net sales
Costs and expenses
Operating income
AssetsDepreciation
Loss on impairment oflong-lived assets
Capital expenditure¥¥¥

Non-ferrous
metalsMillions of yen
Petroleum
Other
and chemicals
business

Foods

99,507 ¥96,524
2,983 ¥
27,950 ¥90

82,187 ¥80,755
1,432 ¥
30,998 ¥36

155,727 ¥
153,518
2,209 ¥
26,797 ¥20

48,385 ¥46,9101,475 ¥
12,075 ¥489

933,956 ¥
906,974
26,982 ¥324,109 ¥
1,958

1,129
866

30
41

—
13

—
8

—
455

1,159
1,383

Year ended March 31, 2005
Steel

Net sales
Costs and expenses
Operating income
AssetsDepreciation
Loss on impairment oflong-lived assets
Capital expenditure

Total

548,150 ¥529,267
18,883 ¥
226,289 ¥1,323

Non-ferrous
metals$ 5,104,293 $4,928,457$ 175,836 $$ 2,107,170 $
12,320926,595 $
898,818
27,777 $
260,266 $
838

10,513
8,064

279
382

Thousands of U.S. dollars
Petroleum
Other
and chemicals
business

Foods

Total

Corporate

Consolidated— ¥ 933,956
4,891
911,865(4,891) ¥ 22,091
52,412 ¥ 376,521
65
2,023
16
155

Corporate

1,175
1,538

Consolidated

765,313 $ 1,450,107 $ 450,554 $ 8,696,862 $— $ 8,696,862
751,979
1,429,537
436,819
8,445,610
45,544
8,491,154
13,334 $ 20,570 $ 13,735 $ 251,252 $ (45,544) $ 205,708
288,649 $ 249,530 $ 112,441 $ 3,018,056 $ 488,053 $ 3,506,109
335
186
4,554
18,233605
18,838—121—
75

Corporate costs and expenses mainly consist of expenses ofadministrative departments.

—
4,237

10,792
12,879149
1,443

10,941
14,322

Corporate assets mainly consist of cash and cash equivalents,
investment securities and assets of administrative departments.

34

Year ended March 31, 2004
Steel

Net sales
Costs and expenses
Operating income
AssetsDepreciation
Loss on impairment oflong-lived assets
Capital expenditure¥¥¥

Non-ferrous
metalsMillions of yen
Petroleum
Other
and chemicals
business

Foods

Corporate

79,633 ¥78,164
1,469 ¥
27,654 ¥86

84,572 ¥83,427
1,145 ¥
30,996 ¥45

135,126 ¥
133,862
1,264 ¥
18,334 ¥19

43,243 ¥40,492
2,751 ¥
12,060 ¥357

751,964 ¥734,908
17,056 ¥252,956 ¥
1,939

4,547
981

43
25

—
33

—
16

—
754

4,590
1,809

Year ended March 31, 2004
Steel

Net sales
Costs and expenses
Operating income
AssetsDepreciation
Loss on impairment oflong-lived assets
Capital expenditure

Total

409,390 ¥398,963
10,427 ¥163,912 ¥1,432

Non-ferrous
metalsThousands of U.S. dollars
Petroleum
Other
and chemicals
businessFoods$ 3,812,180 $
3,715,085$
97,095 $$ 1,526,325 $
13,335

741,531 $727,852
13,679 $257,510 $801

42,341
9,135

400
233

Total

Consolidated— ¥ 751,964
4,390
739,298(4,390) ¥ 12,666
40,572 ¥ 293,528
69
2,008
—
62

Corporate

4,590
1,871

Consolidated

787,522 $ 1,258,273 $ 402,673 $ 7,002,179 $— $ 7,002,179
776,860
1,246,503
377,056
6,843,356
40,8796,884,235
10,662 $ 11,770 $ 25,617 $ 158,823 $ (40,879) $ 117,944
288,630 $ 170,723 $ 112,301 $ 2,355,489 $ 377,801 $ 2,733,290
419
177
3,324
18,056642
18,698
—
307

—
149

Corporate costs and expenses mainly consist of expenses ofadministrative departments.
Corporate assets mainly consist of cash and cash equivalents,
investment securities and assets of administrative departments.

—
7,021

42,741
16,845—577

42,741
17,422

Regional segment information
The Companies operate mainly within Japan, so regional
segment information is not disclosed.

Overseas net sales
Overseas net sales include exports and offshore sales by theCompany and its consolidated subsidiaries, excluding sales byforeign subsidiaries to Japan.
Overseas net sales of the Companies for the years ended March 31, 2005 and 2004, were as follows:Year ended March 31, 2005
Asia

Overseas net sales
Percentage of consolidated net sales¥

129,483 ¥13.9%

Millions of yen
Other
areas

13,124 ¥
1.4%

Total

Asia

Thousands of U.S. dollars
Other
areas

142,607 $ 1,205,727 $
15.3%

Total

122,209 $ 1,327,936“Asia” consists principally of sales to China, South Korea, Thailand and Singapore.
“Other areas” consist principally of sales to the U.S.A. and Germany.
Year ended March 31, 2004
Asia

Overseas net sales
Percentage of consolidated net sales¥

Millions of yen
Other
areas

112,062 ¥14.9%

8,462 ¥
1.1%

Total

120,524 $ 1,043,505 $16.0%“Asia” consists principally of sales to China, South Korea, Thailand and Singapore.
“Other areas” consist principally of sales to the U.S.A..

35

Asia

Thousands of U.S. dollars
Other
areas

Total

78,797 $ 1,122,302

12. Contingent liabilities
At March 31, 2005 and 2004, the Companies were contingently liable as follows:
Thousands of
U.S. dollars

Millions of yen

2005

As endorsers of export letters of credit and notes discounted
As guarantors of indebtedness

¥

2004

3,765 ¥
1,493

2005

10,646 $
1,516

2004

35,059 $13,90399,134
14,117

13. Related party transactions
Transactions with close relatives of a director of the Company for the years ended March 31, 2005 and 2004, were as follows:
Thousands of
U.S. dollars

Millions of yen

Type of transaction

2005

Real-estate
Rents received

¥

2004

6 ¥

2005

6 $

2004

56 $

56

14. Impairment of long-lived assetsof the business entity to which the assets belong. As a result of
these procedures, loss on impairment of long-lived assets of¥1,175 million ($10,941 thousand) and ¥4,590 million ($42,741
thousand) for the years ended March 31, 2005 and 2004,
respectively, were recognized, in other expenses in the
consolidated statements of income.

Due to the continuous decline in land prices in Japan, theCompanies reduced the carrying amount of the long-lived assetsthat were impaired to the recoverable amount. To assess therecoverable amount of the long-lived assets, appraised prices are
principally used as the basis for the measurement. For the
purpose of recognition and measurement, the Companies
grouped the long-lived assets, principally based on the location

The following tables summarize the allocation of loss on impairment of long-lived assets in the year ended March 31, 2005 and 2004,
respectively.

Year ended March 31, 2005
Location

PurposeNarashino, Chiba
Suminoe, OsakaAma, Aichi
Kurokawa, Miyagi
Shima, Mie
Total

Logistics center
Logistics center
Logistics center
Logistics center
Idle assets

Land

¥

¥

Location

PurposeNarashino, Chiba
Suminoe, OsakaAma, Aichi
Kurokawa, Miyagi
Shima, Mie
Total

Logistics center
Logistics center
Logistics center
Logistics center
Idle assets

674 ¥
359
119
8
15
1,175 ¥

Land

$

$

36

6,276 $
3,343
1,108
74
140
10,941 $Millions of yen
Buildings andStructures
Other

— ¥
—
—
—
—
— ¥

Total

— ¥
—
—
—
—
— ¥

Thousand of U.S. dollars
Buildings andStructures
Other

— $
—
—
—
—
— $

674
359
119
8
15
1,175

Total

— $
—
—
—
—
— $

6,276
3,343
1,108
74
140
10,941

Year ended March 31, 2004
Location

PurposeNarashino, Chiba
Suminoe, OsakaAma, Aichi
Kurokawa, Miyagi
Total

Logistics center
Logistics center
Logistics center
Logistics center

Land

¥

¥

Location

PurposeNarashino, Chiba
Suminoe, OsakaAma, Aichi
Kurokawa, Miyagi
Total

Logistics center
Logistics center
Logistics center
Logistics center

Land

$

$

15. Subsequent events
At the ordinary general meeting of stockholders of the Company
held on June 29, 2005, the following appropriation of retained
earnings was approved:
Millions of yen

Cash dividends (¥9 per share)
Bonuses to directors
Transfer to legal reserve

2,456 ¥
1,429
304
32
4,221 ¥¥

1,903 $
160
206

Thousands of
U.S. dollars

17,720
1,490
1,918

37

22,870 $13,3062,831
298
39,305 $Millions of yen
Buildings andStructures
Other

— ¥
92
75
—
167 ¥

Total

202 ¥
—
—
—
202 ¥

Thousand of U.S. dollars
Buildings andStructures
Other

— $
857
698
—
1,555 $

1,881 $———
1,881 $

2,658
1,521
379
32
4,590

Total

24,751
14,163
3,529
298
42,741

Independent Auditors’ Report

To the Stockholders and Board of Directors of
Hanwa Co., Ltd.:We have audited the accompanying consolidated balance sheets of Hanwa Co., Ltd. (aJapanese corporation) and subsidiaries as of March 31, 2005 and 2004, and the related
consolidated statements of income, stockholders’ equity and cash flows for the years thenended, expressed in Japanese yen. These consolidated financial statements are the responsibilityof the Company’s management. Our responsibility is to independently express an opinion onthese consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in allmaterial respects, the consolidated financial position of Hanwa Co., Ltd. and subsidiaries as ofMarch 31, 2005 and 2004, and the consolidated results of their operations and their cash flows
for the years then ended, in conformity with accounting principles generally accepted in Japan.
Without qualifying our opinion, we draw attention to Note 2 to the consolidated financial
statements. Effective March 31, 2004, Hanwa Co., Ltd. and its subsidiaries adopted the newJapanese accounting standard for impairment of long-lived assets.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect tothe years ended March 31, 2005 and 2004 are presented solely for convenience. Our audit also
included the translation of yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made on the basis described in Note 1 to the consolidated financial
statements.

Osaka, Japan
June 29, 2005

38

Corporate Data

Company Name: Hanwa Co., Ltd. 阪和興業株式会社
Address: Osaka Head OfficeHanwa Bldg., 4-3-9 Fushimi-machi, Chuo-ku, Osaka 541-8585, Japan
Tel: 81-6-6206-3000 Fax: 81-6-6206-3365
Tokyo Head Office
New Hanwa Bldg., 1-13-10 Tsukiji, Chuo-ku, Tokyo 104-8429, Japan
Tel: 81-3-3544-2171 Fax: 81-3-3544-2351
Nagoya Branch Office
NHK Nagoya Broadcasting Center Bldg.,
1-13-3, Higashisakura, Higashi-ku, Nagoya 461-8614, Japan
Tel: 81-52-952-8800 Fax: 81-52-952-9300
Employee: 898
Independent Auditor: KPMG AZSA & Co.
Domestic Offices
OFFICE
TohokuKyushuADDRESS
Sendai Daiichi Seimei Tower Bldg., 4-6-1 Ichiban-cho, Aoba-ku, Sendai 980-0811, Japan
Takeyama Hakata Bldg., 1-13-6, Hakataeki Higashi, Hakata-ku, Fukuoka 812-0013, JapanTELEPHONE
81-022-227-7981
81-092-471-7121

FAX
81-022-227-7969
81-092-471-7060

TELEPHONE

FAX

1-201-363-4500
1-206-622-2102
1-713-978-7904
1-949-955-2780/2781
1-604-876-1175
57-1-618-2059

1-201-346-9890
1-206-622-6464
1-713-978-7790
1-949-955-2785
1-604-876-1085
57-1-618-2056

Overseas Offices
OFFICEADDRESS

North and South America
New York
Parker Plaza, 6th Floor, 400 Kelby Street, Fort Lee, New Jersey 07024, U.S.A.
Seattle900 4th Avenue, Suite 1640, Seattle, Washington 98164, U.S.A.
HoustonSuite 515, 9800 Richmond Avenue, Houston, Texas 77042, U.S.A.
Los Angeles
1920 Main Street, Suite 1020, Irvine, California 92614, U.S.A.
VancouverSuite 502, 1001 West Broadway Vancouver, British Columbia, V6H 4B1, Canada
BogotaCarrera 9A No. 99-02, Oficina 804, Edificio CITIBANK Bogota, D.C. Colombia
Asia
Seoul
Beijing
Qingdao
DalianShanghai
Chongqing
FuzhouGuangzhou
Wuhan
DongguanZhongshan
Hong Kong
Taipei
Kaohsiung
Bangkok
Kuala Lumpur
Singapore
Tawau
Ho Chi Minh
Jakarta
MumbaiRoom 2501-1, Korea World Trade Center Bldg., 159-1, Samsung-Dong, Kangnam-ku, Seoul, 135-729, R.O.Korea
82-2-551-5387
82-2-551-5575
Room 512-516, Beijing Fortune Building, 5 Dong San Huan Bei-lu, Chaoyang District, Beijing 100004, P.R.China 86-10-6590-8331~33
86-10-6590-8340
Crowne Plaza Qingdao, Room No.601, Hongkong Middle Road 76, Qingdao City, Shangdon Province 266071, P.R.China
86-532-577-9990
86-532-577-9630
Senmao Bldg., 13F, 147 Zhongshan Street, Dalian, Liaoning Province 116011, P.R.China
86-411-8368-6954
86-411-8368-6934
Room 905/906, Aetna Tower,No.107 Zhunyi Road, Shanghai 200335, P.R.China
86-21-6237-5260/5265~7 86-21-6237-5268/5269
Room 2203, Metropolitan Tower, 68 Zhon Rong Lu, Central District, Chongqing 400010 P.R.China
86-23-6381-1101
86-23-6381-7385
Room 2501, Lippo Tianma Plaza, No.1 Wu Yi Road, Fuzhou City, Fujian Province, P.R. China
86-591-83354165
86-591-83345202
Unit 3006-3007,30th Floor, Dong Shan Plaza, 69 Xian Lie Zhong Road, Guangzhou City,
86-20-8732-0451
86-20-8732-0402
Guangdong Province 510095, P.R. China
Room 18H, Credit Cooperative Building, No. 618 Jianshe Road, Wuhan 430015, P.R.China
86-27-8549-7132
86-27-8578-7196
Longxi Industrial Zone, Zhouxi Management Area, Nan Cheng District, Dongguan, Guangdong Province 511715 P.R.China
86-769-240-6418
86-769-240-6448
Unit 1909-1910, 19th Floor, Bank Of China Tower, 18 Zhongshan 3rd Road, Zhongshan, Guangdong Province P.R.China
86-760-332-0706
86-760-332-0696
Unit 3201-3 32nd Floor, Vicwood Plaza, 199 Des Voeux Road Central, Hong Kong852-25450110
852-25422544
Room 303 3rd Floor. No. 79, Chung Shan North Road Sec.2, Taipei, Taiwan, R.O.C.
886-2-2560-2214~17886-2-2571-0693
Room B, 17th Floor, No.7 Su-Wei 4th Road, Kaohsiung, Taiwan, R.O.C.
886-7-338-5508~10
886-7-338-5433
17th Floor, Vorawat Bldg., 849 Silom Road, Bangrak, Bangkok, 10500 Thailand
66-2-635-1230
66-2-635-1220/1221
Suite 8-12B-3, Level 14 (12B), Menara Olympia 8, Jalan Raja Chulan, 50200 Kuala Lumpur, Malaysia
60-3-2078-2311
60-3-2078-2380
20 Cecil Street, #20-06/07 Equity Plaza, Singapore, 049705
65-6536-7822
65-6536-7855
P.O. Box 1231 91037 Tawau, Sabah, Malaysia
60-89-750016~7
60-89-750019
7/C Office Service International Centre, No. 8 Nguyen Hue Street, District 1, Ho Chi Minh City, Vietnam
84-8-8225715/29/36
84-8-8225725
Menara Cakrawala 5th Floor Jalan M.H. Thamrin 9, Jakarta, 10340 Indonesia
62-21-3902293
62-21-3902294
E-mail: rafinancec/o MR. A.J. Dave, 12B Chaitrangan Kanchan Galli, Off Law College RD., Pune-411004, Maharashtra, India
91-20-3090-3983@sify.com

Europe, Africa and Middle East
London5th Floor, Finland House, 56 Haymarket, London, SW1Y 4RN. U.K.
Wien
Landstrasser Hauptstrasse 71/2 A1030 Wien, Austria
Tehran6th Floor, Building, No.10 8th Street, Mirzaye-Shirazi Avenue, Tehran 15967, Iran
Kuwaitc/o Al-Sabih Engineering & Trading Co. P.O. Box No. 1366, Safat 13014, Kuwait
RiyadhP.O. Box 68974, Riyadh 11537, Saudi Arabia
Jeddahc/o Office No. 219, Kaki Center P.O. Box 1224, Jeddah 21431, Saudi Arabia

39

44-20-7839-4448
43-1-717-28-200
98-21-890-3537
965-243-7259
966-1-478-3022
966-2-661-0796

44-20-7839-3994
43-1-717-28-110
98-21-890-4723
965-243-7263
966-1-479-2459
966-2-661-0796

Board of Directors

Investor Information(As of July 1, 2005)(As of March 31, 2005)

President

Date of Establishment
April 1947

Shuji Kita

北修爾

Stated Capital¥45,651 million ($425,096 thousand)Senior Managing Directors

Takashi Kyui
Hironari Furukawa
Noriyuki Hanafusa

休井

匡

古川

弘成

花房

伯行

Number of Shares of Common Stock Issued
211,663,200 shares
Number of Stockholders
21,471

Managing Directors

Tatsuyuki Yamasaki
Shinsuke Kitamura
Tetsuro Akimoto

山崎

達之

北村

信輔

秋元

哲郎

Stock Exchange Listings
The First Section of the Tokyo Stock Exchange
The First Section of the Osaka Stock Exchange

東田

和四

横田

和夫

Transfer Agent
The Sumitomo Trust and Banking Co., Ltd.

大本

博

西

吉史

北

卓治

多田

孝治

馬締

和久

川西

英夫

豊田

雅孝

Directors

Kazushi HigashidaKazuo Yokota
Hiroshi Omoto
Yoshifumi Nishi
Takuji Kita
Takaharu Tada
Kazuhisa Majime
Hideo Kawanishi
Masataka Toyoda
Hiroshi Serizawa
Hiroaki Tsujinaka
Hiroshi Ebihara

芹澤

浩

辻仲

弘明

海老原

弘

Corporate Auditors

Shosaburo Bando
Hironari Masago
Toshiaki Taguchi
Hajime Yosano

坂東祥三郎
真砂

博成

田口

敏明

与謝野

肇

40

http://www.hanwa.co.jp

Printed in Japan