Brief Report on the Mid-term Financial Statements for the Period Ending March 2005 (Consolidated)
November 18, 2004

Name of listed company: DAI-DAN Co., Ltd.
Listed Stock Exchanges: Tokyo and Osaka
Code No.:1980
Location of Head Office: Osaka Pref.
(URL http://www.daidan.co.jp)
Representative of Company: Toshikazu ANDO, President
Inquiries to be addressed to: Goh TAJIMA, Director & General Manager of General Administration Division
Tel. (06) 6441 - 8231

Date of Directors’ meeting on mid-term closing accounts: November 18, 2004
Adoption of American Accounting Standards:
None

1. Consolidated performance for the mid-term period ended September, 2004 (From April 1, 2004 to September 30, 2004)(1) Consolidated management performance (Note: Amounts are indicated with figures less than 1 million yen discarded.)
Sales amountOperating profit
Ordinary profit
Mid-term period
ended Sept. 2004
Mid-term period
ended Sept. 2003
Period ended
March 2004

Million yen％

Million yen％

Million yen％

54,673

-8.0

-1790

−

-1709

−

59,417

17.4

-1791

−

-1998

−

154,832

1,609

Current net profit (mid-term)

Mid-term period
ended Sept. 2004
Mid-term period
ended Sept. 2003
Period ended
March 2004

1,352

Current net earnings per
share (mid-term)

Current net earning per share after
making potential share adjustments(mid-term)

Million yen％-1,249−-28.31-1,603−-35.61

−

12.81

−

574

Yen SenNote: 1) Investment profit or loss on equity method

Yen Sen−Mid-term period ended September 2004:15 million yen,
Period ended March 2004 :2) Interim average number of shares (consolidated)

Mid-term period ended September 2003 : -38 million yen,

-66 million yen

Mid-term period ended September 2004 : 44,123,615 sharesMid-term period ended September 2003: 45,014,893 shares
Period ended March 2004

44,890,465 shares

3) Changes in accounting procedures: None
4) Percentage indications of sales amount, operating profit, ordinary profit, and mid-term (current) net profit show increase or decrease comparedwith previous mid-term perio(2) Consolidated financial condition
Total assets
Shareholder's capitalMillion yen
Mid-term period
ended September
2004
Mid-term period
ended September
2003
Period ended
March 2004

Shareholders capital rate Shareholder's capital per share

Million yen%

Yen Sen

124,827

43,97935.2

976.59130,611

43,59633.4

968.62

129,848

45,64635.2

1,036.29

Note: Issued number of shares at the end of period (consolidated)

Mid-term period ended September 2004 : 45,033,407 shares
Mid-term period ended September 2003 : 45,008,983 shares
Period ended March 2004:(3) Consolidated cash flow condition
Cash flow on sales
Cash flow on investment Cash flow on financial
activities
activities
activities
Million yen
Mid-term period
ended September
2004
Mid-term period
ended September
2003
Period ended
March 2004

Million yen

44,048,172 shares
Period end balance of
cash and equivalent items

Million yen

Million yen-5,5452,654

276

23,543-9,804604-2,05819,308-2,347371-2,40026,118(4) Consolidation scope and items relating to application of equity method
Number of consolidated subsidiaries: 11
Number of non-consolidated subsidiaries with equity method applied: None
Number of affiliated company with equity method applied: 1(5) Consolidation scope and situation on changes in equity method application
Consolidated (new): None

(Excluded): None

Equity method (new): None

(Excluded): None

2. Estimated of consolidated performance for the period ending March 2005 (From April 1, 2004 to March 31, 2005)
Sales amount
Ordinary profit
Current net profit
Million yen

Million yen

Million yen

155,000
1,500
650
Total period(Reference) ①Estimated current net profit per share (for total period) 14.43 yen② Extimated amount of work order received 156,000 million yen* Since the consolidated performance is estimated based on the information available as of theannouncing date, actual results can be different from the estimated ones due to various factors.
For the items of the above performance consolidated estimate, see information on page 4 in the attached material for consolidation.

1

1. Situation of the Corporate Group
Our corporate group consists of our company, 11 subsidiary companies and 1 affiliated company,
mainly engaged in the business of designing, supervising, and execution of electrical, air conditioning,and plumbing/sanitation work. The position of our group relating to business and the systematic chartof our business are as follows:(1) Position of our group relating to business
Facility construction works
Electrical, air-conditioning, and plumbing /sanitation work
Part of the work of orders received by us is relegated to DAI-DAN Service Kanto Co., Ltd.,DAI-DAN Service Kansai Co., Ltd., DAIDEN Koji Co., Ltd., DAIDEN Koji Corp., Okayama
DAIDEN Setsubi Co., Ltd., Kyushu DAIDEN Setsubi Co., Ltd., Kumamoto DAIDEN Setsubi Co.,
Ltd., and DAI-DAN PHILIPPINES, INC. Furthermore, CNA ENGINEERS PTE LTD. also takes
charge of construction work, from which we purchase facilities and equipment. We sell facilities andequipment to MERINO O.D.D. SDN BHD. and offer technical assistance to THAI O.D.D.CO.,LTD.
Gas piping work
Kyo Gas Co., Ltd. executes the gas piping work for orders placed by Osaka Gas Co., Ltd. andreceives only a few orders from our company.
(2) Systematic chart of business

Customers

Electrical, air-conditioning,plumbing/sanitation work

Subsidiary company
MERINO O.D.D.
SDN.BHD.

Electrical, air-conditioning,plumbing/sanitation work

Subsidiary company
THAI O.D.D.
CO., LTD.

Sales offacilities andequipment

DAI-DAN Co., Ltd.

Works execution,
manufacturing andsales of facilities
and equipment

Electrical, airconditioning facility work

Construction facility work
Technical
assistanceWorks execution

Electrical, air-conditioning,plumbing/sanitation work
Subsidiary companies
DAI-DAN Service Kanto Co., Ltd.
DAI-DAN Service Kansai Co., Ltd.
Okayama DAIDEN Setsubi Co., Ltd.
Kyushu DAIDEN Setsubi Co., Ltd.
Kumamoto DAIDEN Setsubi Co., Ltd.
DAI-DAN PHILIPPINES, INC.

1

Works execution

Affiliated company(with equity method
applied for)CNA ENGINEERS
PTE LTD.

Gas piping work
Electrical facility
Subsidiary companies
DAIDEN Koji Co., Ltd.
DAIDEN Koji Corp.

Subsidiary company
Kyo Gas Co., Ltd.

2. Management Policies(1) Basic policy on management
Our company, as a general facility work company, enforces a basic management policy of“challenging to create a new value and contributing to the achievement of more favorable global
environment and the progress of society at all times” and provides customers with technologies andservices, which are ahead of their needs, thus working toward upgrading the corporate value.
Furthermore, the company has an on-target grasp of changes in the industrial structure and conducts
the speedy and practical management with an eye toward becoming a vigorous company.
(2) Basic policy on distribution of profits
Our basic, consistent policy is to endeavor to build a solid financial constitution and return profits
stably and continuously to our shareholders to live up to their expectations.
(3) Concept and policy on reductions of investment units
Regarding the reductions of investment units, we would like to carry out continued studies on thisissue on the basis of shareholders’ benefits, while assessing the level of stock price, number ofshareholders, liquidity, cost-effectiveness, and others.
(4) Medium- and long-term management strategy
In accordance with the medium-term management plan “CHALLENGE NEW-DAIDAN 77”, which
has been carried out since April 2003, we are making a company-wide concerted effort with an eye
toward securing revenues, by which the company will accomplish the continuous development.
To be more specific, through taking customers’ needs in advance to push ahead with engineeringdevelopment and step up proposal-oriented marketing activities, we are struggling to find newcustomers and further strengthen our ties with existing customers, thus challenging the increase oforders received. Concurrently, we are focusing on order-taking activities for renewal works on thebasis of our strong points, i.e., technologies for integrating electrical, air conditioning, andplumbing/sanitation works into total facilities.
Furthermore, we have strengthened our construction management framework and pushed ahead withnew procurement methods through which we have ensured safety and quality and also accomplishedcost cutting, thus addressing the improvement in our competitiveness.
As part of our attempt to strengthen our ability in these fields, we divided Engineering Division into
Construction Engineering Division and Technical Development Division as of October 1, 2004 to
rearrange the organization, thus enabling us to cope further carefully with customers’ needs andflexibly and efficiently put management resources including human resources.
The demonstration experiment building, which was completed in our Technical Research Institute lastyear in order to accomplish compatibility between quality ensuring and cost cutting, has been put intofull-scale operation, enabling us to cope with a wide variety of needs from customers which require to
use the demonstration experiment.
We can now forecast that the Kyoto Protocol aiming the prevention of global warming goes into
effect. Under these circumstances, we are further focusing on environmental issues. As to theconstruction field, we are working toward providing technologies, promoting the recycling, andreducing wastes, with consideration given to environmental conservation such as resource and energy
saving. In particular, we have been strengthening the ESCO business on the basis of our strong
capability as a general facility construction company and also moving ahead on energy saving
proposal.
By taking advantage of the company-wide information system that we completed reshaping last April,through enhanced productivity on site and the sharing of information among sections, we arechallenging to enhance site productivity, create revenues with information sharing throughout
in-company operations, integrate and increase in efficiency of indirect operations, and reduce
expenditures.
As to personnel affairs aspect, we continued examination to establish the pay-for-performance
program for the fair and just pay and benefits for our employees. Under fair conditions, we will pushahead with invigorating the company organization and making the best possible use of humanresources.
Furthermore, we are taking operating profit ratio to shareholders’ equity as our management
benchmark.
2

(5) Basic concept regarding corporate governance and implementation status of measures
In order to keep up with cataclysmic changes in the management environment, we are carrying out
extensive studies on critical issues involved in the management, making quick and fair decisions, andimplementing measures as soon as decided.
To be more specific, we are making the following management system effectively functional.
1) Management council
The management council is held twice every month, in principle. The council carries out a wide
variety of studies on the planning of management policy and measures and the check on theirprogress, and further the deliberation about corporate management strategies and issues critical tocompany-wide management, thus bringing them up for the board of directors, as occasion arises.
2) Board of directors
The board of directors is held once every month or extraordinarily as occasion arises. The board of
directors makes decisions regarding critical issues involved in the management including issues
under discussion by the management council and, at the same time, monitors the progress ofoperations.
3) Board of corporate auditors
We make it as an established practice that four auditors (including two outside auditors) hold theboard of corporate auditors before the board of directors is held and carefully examine the issues
discussed by the board of directors, and turn up the board of directors to present their suggestions.
4) Meeting of branch office managers
In order to harmonize the company-wide operations, the meeting of branch office managers is
being held every month, where not only management policies and measures are presented, but also
the progress of operations is checked and a variety of issues in branch offices are discussed, thus
making efforts to make immediate solutions.

33. Management Record and Financial Standing(1) Overview of the current mid-term period
In the construction industry, private construction investment has been showing an upward trend. In
contrast, public investment has been expected to significantly decline, which has led to the overall
decline in the construction investment. Under these circumstances, the economy has continued to be in asevere situation.
The consolidated amount of work orders received of our corporate group increased 5.4% on the previous
mid-term period to 69,534 million yen. The amount of work completed declined 8.0% on the previous
mid-term period to 54,673 million yen.
As for the profits, since the works were completed with a concentration in the latter half of the period,
operating loss totaled 1,790 million yen (1,791 million yen for the previous mid-term period), ordinary
loss totaled 1,709 million yen (1,998 million yen for the previous mid-term period). The net loss for the
mid-term period totaled 1,249 million yen (1,603 million yen for the previous mid-term period).
(2) Financial standing
Status of cash flow
Cash and cash equivalent for the current mid-term period (hereinafter referred to as “the fund”) increased
21.9% on the previous mid-term period and declined 9.9% on the previous consolidated accounting year
to 23,543 million yen.
(Cash flow from operating activities)
Cash flow used in operating activities for the current mid-term period declined 5,545 million yen in thefund due to the net loss for the mid-term period before taxes, etc. of 1,707 million yen and advancepayments of work-related fund (increased 4,259 million yen on the previous mid-term period).
(Cash flow from investing activities)
Cash flow used in investing activities for the current mid-term period increased 2,654 million yen in thefund thanks to revenues of 3,196 million yen through the redemption of beneficial interest in trust(increased 2,050 million yen on the previous mid-term period).
(Cash flow from financing activities)
Cash flow used in financing activities for the current mid-term period increased 276 million yen(increased 2,335 million yen on the previous mid-term period) in the fund thanks to revenues of 549
million yen from the sales of treasury stock, revenues of 221 million yen through slight increase inborrowing and declined 484 million yen in the fund due to paid amount of dividends.
Regarding stock dividends for the current mid-term, we paid an ordinary dividend of 5 yen per stock inthe current mid-term period same as in the previous mid-term period, according to our basic policy on
the profit sharing.
(3) Outlook for the full-year period
In the construction industry, even though the private construction investment has continued to rise, thisinvestment shows slowdown in the rising rate. Furthermore, since the public investment is still on a
downward trend, it is predicted that overall construction investment will remain on the downward trend.
Consequently, we make a prediction that we will have another tough time in the future. .
Regarding the outlook for the full-year period of our corporate group, we expect the consolidated amountof work orders received of 156,000 million yen, completed work of 155,000 million yen, ordinary profits
of 1,500 million yen, and current net profit of 650 million yen.
Regarding the term-end stock dividends, we will pay an ordinary dividend of 5 yen and a special
dividend of 6 yen per stock, a total of 11 yen per stock for the period, according to our basic policy on
the profit sharing. Since an ordinary dividend of 5 yen per stock was paid for the mid-term period, thetotal dividend for the entire period will amount to 16 yen per stock.

44. Mid-term period Consolidated Financial Statements, etc.
(1) Mid-term period consolidated balance sheet(in millions of yen)
By period

Accounts

Outstanding at the end of thecurrent mid-term consolidated
accounting period(As of September 30, 2004)

AmountComponent
ratio

Outstanding at the end of theprevious mid-term
consolidated accounting period(As of September 30, 2003)

Amount%(Assets)

Component
ratio

Summary consolidatedbalance sheet of the previous
consolidated fiscal year
(As of March 31, 2004)

Amount%Component
ratio%

Current assets
Cash on hand and in banks
Note receivables, completed
work accounts receivables
Securities

19,35523,58026,15540,031

37,267

48,139

100

599

100

Beneficial interest in trust
Incomplete work
expenditures
Others

−

−

2,655

32,54535,58421,307

8,190

9,830

7,793

Allowance for bad debts

-238

-193

-219

Total current assets

101,44581.3

105,209

80.6

105,931

81.6

Fixed assets
Tangible fixed assets

5,408

5,495

5,508

Intangible fixed assets

1,068

1,378

1,242

Investments
assets

16,905

18,527

17,165Investment securities

11,592

11,617

12,184

Others

6,606

8,140

6,709

Allowance for bad debts-1,293-1,230-1,729Total fixed assets

23,381

18.7

25,401

19.4

23,916

18.4

Total assets

124,827100.0

130,611100.0

129,848

100.0

and

other

5

(in millions of yen)
By period
Accounts

Outstanding at the end of thecurrent mid-term consolidated
accounting period(As of September 30, 2004)

Component
ratio

Amount(Liabilities)

Outstanding at the end of theprevious mid-term consolidated
accounting period(As of September 30, 2003)

Amount%Component
ratio

Summary consolidatedbalance sheet of the previous
consolidated fiscal year
(As of March 31, 2004)

Amount%Component
ratio%

Current liabilities
Notes payable, work accounts
payableShort-term loans payable
Incomplete work accounts
received
Completed work compensation
reserves
OthersTotal current liabilities

39,06143,87149,331

8,436

8,268

8,387

20,25921,652

13,990

74

86

76

6,272

6,220

5,798

74,10459.4

80,09961.3

77,584

59.7

Fixed liabilities
Long-term loans payable

2,941

2,489

2,768

Reserves for retirement benefits
Reserves for directors’ retirement
benefits
Reserves for liabilities guarantee
loss
Others

3,270

3,669

3,278

430

423

465

−

210

−

7

51

12

Total fixed liabilities

6,651

5.3

6,843

5.3

6,525

5.0

Total liabilities

80,755

64.7

86,942

66.6

84,110

64.7

92

0.1

71

0.0

91

0.1

Capital stock

4,479

3.6

4,479

3.4

4,479

3.4

Capital surplus

4,781

3.8

4,716

3.6

4,716

3.7

Retained earnings
Evaluation difference of othersecurities
Currency translation
adjustment accountTreasury stock

33,321

26.7

33,103

25.4

35,056

27.0

1,895

1.5

1,682

1.3

2,327

1.8

-48

-0.0

26

0.0

-8

-0.0

-450

-0.4

-410

-0.3

-925

-0.7

Total capital
Total liabilities, minority
interest equity andh h ld ’it

43,97935.2

43,59633.4

45,64635.2

124,827100.0

130,611100.0

129,848

100.0(Minority interest equity)
Minority interest equity(Shareholders’ equity)6(2) Mid-term period consolidated profit and loss statement(in millions of yen)
Summary of consolidated
profit and loss statement of
the previous fiscal year forconsolidated accounting

The current mid-term
consolidated accounting
periodThe previous mid-term
consolidated accounting
period(From April 1, 2004
to September 30, 2004)(From April 1, 2003
to September 30, 2003)

AmountPercentage

AmountPercentage

AmountPercentage

Completed work amount

54,673%100.0

59,417%100.0

154,832%
100.0

Completed work cost

50,82193.0

55,49793.4

142,096

91.8

3,851

7.0

3,920

6.6

12,7368.2

By period
Accounts

Completed work gross profit
Selling expenses and general administrative expenses

Operating profits (- : Loss)
Non-operating revenue（From April 1, 2003
to March 31, 2004）

5,642

10.3

5,711

9.6

11,126

7.2-1,790-3.3-1,791

-3.0

1,609

1.0

(213)

0.4

(133)

0.2

(280)

0.2

Interests received

6

21

28

Dividends received

71

52

102

Rent of real estate

4

32

60

Insurance claim received

1

13

60

Currency translation profit

99

−

−

Consolidated adjustment account depreciation

1

1

2

Investment profit by equity method

15

−

−

Others121225Non-operating expenses(132)Interest payable

109

115

223

Currency translation loss

161

202

Investment loss by equity method

−
−

38

66

Others22

24

45

Ordinary profits (- : Loss)
Special profits

0.2

(339)

0.6

(537)

-1,709-3.1-1,998

-3.4

1,352

0.9

(73)

0.1

(96)

0.2

(1,137)

0.7

Profit on sales of fixed assets

37

37

40

Profit on sales of investments in securities

19

9

1,027

15

23

−

−

26

28

−

−

41

Profit gained by returning allowance for bad debts
Profit gained on withdrawal from employees’
pension fundProfit gained by returning provision for loss on
guarantees
Special losses
Loss on sales of fixed assets

(71)

0.1

26

(398)

0.7

9

(444)

45

8

19

Evaluation loss on investments in securities

−
−
−

32

45

Amount transferred from allowance for bad debts
Mid-term period net loss before tax adjustments,
etc. (-)
Current net profits before tax adjustments, etc.

-1,707

8

24

340

320

-3.1

-2,2990.3

35

Loss on retirement of fixed assets
Evaluation loss on golf club membership rights

0.3

-3.9

−

−

−

−

−

−

2,046

1.3

Corporate tax, residence tax and business tax

117

0.2

96

0.2

466

0.3

Adjustment amounts such as for corporate taxes

-579

-1.0

-810

-1.4

967

0.6

3

0.0

17

0.0

37

0.0

-1,249-2.3-1,603

-2.7

−

−

−

−

−

−

574

0.4

Profits of minority interests

Mid-term period net loss (-)
Current net profit

7(3) Statement of mid-term period consolidated surplus(in millions of yen)
By period
Accounts

The current mid-term
consolidated accounting period

The previous mid-term
consolidated accounting period

The previous consolidated fiscal
year(From April 1, 2004
to September 30, 2004)(From April 1, 2003
to September 30, 2003)(From April 1, 2003
to March 31, 2004)

AmountAmountAmount(Capital surplus)
Capital surplus balance atthe beginning of the

4,716

4,716

4,716

Increased amount incapital surplus balance
Profits through disposal oftreasury stocks

65

Capital surplus balance atthe end of the mid-term
period (the term period)

−

65

−

−

−

4,781

4,716

4,716

35,05635,20135,201(Retained earnings)
Retained earningsbalance at the beginning
Retained earnings
increased amountNet profit for the current
term
Retained earnings
decreased amount
Shareholders’ dividends
Directors’ bonuses
Mid-term period net loss
Retained earnings balance atthe end of the mid-term period(the term period)

−

−

−

−

574

484

494

719

1

−

−

1,249

1,734

1,603

33,321

2,098
33,103

8

−

574

719
35,056

(4) Statement of mid-term period consolidated cash flows
By period
Accounts

Cash flow on sales activities
Mid-term period net profit before tax adjustments,
etc. (- : Net loss)
Depreciation expenses
Consolidated adjustment account depreciation
amountIncreased or decreased amount of allowance for bad
debts
Increased or decreased amount of reserves for
retirement benefits and reserves for directors’
retirement benefits
Earned interest and dividends received
Interest paid
Investment profit or loss by equity method
Evaluation loss on investments in securities
Profit or loss on sales of investments in securities
Profit or loss on sales of fixed assets
Loss on retirement of fixed assets
Increased or decreased amount of sales credits
Increased or decreased amount of incomplete work
expenditures
Increased or decreased amount of procurement
credits
Increased or decreased amount of incomplete work
received amount
OthersSub-total
Received amount of interests and dividends
Paid interest amountPaid amount of corporate tax, etc.
Cash flow on sales activities
II. Cash flow on investment activities
Expenditures by depositing of time deposits
Revenue by pay back of time deposits
Expenditures by acquiring of securities
Revenue by sales of securities
Expenditures by acquiring of beneficial interest in
trust
Revenue by redemption of beneficial interest in trust
Expenditures by acquiring of tangible fixed assets
Revenue by sales of tangible fixed assets
Expenditures by acquiring of investment securities
Revenue by sales of investment securities
Expenditures by loans
Revenue by recovery of loans
Expenditures by acquiring of other fixed assets
Revenue by sales of other fixed assets
Cash flow on investment activities
III. Cash flow on financial activities
Revenue by short-term loans
Expenditures by return of short-term loans
Revenue by long-term loans
Expenditures by return of long-term loans
Expenditures by acquiring of treasury stock
Revenue by sales of treasury stocks
Paid amount of dividends
Paid dividend to minority interests
Cash flow on financial activities
IV. Translation difference relating to cash and cash
equivalents
V. Increased or decreased amount of cash and cash
equivalents
VI. Balance of cash and cash equivalents at the
beginning of period
VII. Balance of cash and cash equivalents at the endof mid-term period (term end)(in millions of yen)

The current mid-term
consolidated
accounting period(From April 1, 2004
to September 30, 2004)
Amount

The previous mid-term
consolidated
accounting period(From April 1, 2003
to September 30, 2003)
Amount-1,707-2,299

2,046

205

214

431

-1

-1

-2

-380

290

707

-42

-56

-404

-78
109
-15
−
-19
-11
45
10,865

-73
115
38
32
-9
-27
8
9,959

-131
223
66
45
-1,027-5
19
1,494-11,245-10,326

3,945-10,270-10,339-4,879

6,269

4,875

-2,786

1,163-5,11377-109-399-5,545-2,035-9,63473-111-131-9,804-1,814-2,071
131
-223
-184
-2,347

−
−
-49
49

−
−
-1,048548-0
10-1,098
1,098

-534

−

-2,655

3,196
-23
39
-167
20
-46
44
-70
196
2,654

−
-11
0
-58
683
-108
136
-179
642
604

−
-153
31
-119
2,249
-201
273
-275
1,212
371

10,998-10,518
2,050-2,308
-9
549
-484
-0
276

5210
-5,3601,150-2,556-5−-495-0-2,05820,005-19,908
3,500-4,756
-519
−
-720
-0
-2,400

37

-86

-158

-2,575-11,344-4,534

26,11830,65330,65323,543

19,308

26,118The previous
consolidated fiscal year
(From April 1, 2003
to March 31, 2004)
AmountI.

9

Basic items for producing mid-term period consolidated financial statements
1. Items relating to scope of consolidation
Eleven (11) subsidiaries are included in the consolidated financial statements.
Names of major consolidated subsidiary companies are described in “Section 1. Situation of the
Corporate Group”
2. Items relating to application of the equity method
Number of affiliated companies with equity method applied: 1 company
Company Name:
CNA ENGINEERS PTE LTD.
The mid-term account closing date of the above affiliated company is different from the consolidated
mid-term account closing date, but the mid-term financial statements for the mid-term accounting
period of the company concerned are used.
3. Items relating to the mid-term period account closing date and others of consolidated
subsidiaries
Out of the consolidated subsidiaries, following three subsidiaries close their account for the
mid-term period on June 30.
MERINO O.D.D.SDN.BHD.
THAI O.D.D.CO.,LTD.
DAI-DAN PHILIPPINES, INC.
In order to produce consolidated financial statements for the mid-term period, we use mid-term
financial statements as of the mid-term account closing date. As for important transactions arising
between June 30 and the consolidated account closing date for the mid-term period, we makeadjustments required for the consolidated account.
4. Items relating to accounting procedure basis(1) Valuation basis and method applied to important assets
1) Securities
Held-to-maturity bonds:
Depreciable cost method (Straight-line method)
Other securities
With market valueMarket price method based on the market price as of the
mid-term consolidated accounting period closing date(Valuation differences are treated according to full capital
direct accounting method, and sale cost is calculated
according to the moving average method.)With no market value
Cost method based on the moving average method
2) Derivative:
Market price method
3) Inventories
Incomplete work expenditures
Cost method based on the specific identification method
Materials and supplies
Cost method based on the moving average method(2) Depreciation and amortization method applied to important depreciable assets
1) Tangible fixed assets
Our company and domestic consolidated subsidiary companies
Buildings (excluding accessory equipment) Straight-line method
OthersDeclining balance method
Overseas consolidated subsidiary companies Straight-line method
Furthermore, the following section shows the depreciation periods of major assets.
Buildings and structures
15 to 50 years
2) Intangible fixed assets
Straight-line method
Furthermore, as to software of the company’s own use, the straight-line method based onin-company applicable period (i.e., five years) is applied.
(3) Recording basis applied to important allowances and reserves
1) Allowance for bad debts
In order to provide against bad debts due to failure in recovery of completed work accounts
due, loans receivable, and others, we review the recoverability of general credits based on
10the past actual percentage of credit losses and particular credits such as those having bad
debts risk based on individual cases, thus recording anticipated unrecoverable amount.
2) Allowance for completed work compensation
This is provided for the purpose of defect compensation for completed works. We record anamount for works to be compensated based on past results plus possibility of futurecompensation.
3) Reserves for employees’ retirement benefits
In order to prepare for the payment of employees’ retirement benefits, we record an amountthat is deemed to have incurred as of the end of this current consolidated accounting
mid-term period in accordance with the estimates of debt obligations for retirement benefits
and pension assets at the end of current consolidated accounting year.
As for differences on the mathematical calculation, we shall treat them using an amountproportioned by the specific identification method with a specified number of years (i.e., 10
years) within the employees’ average remaining length of service at the time of theoccurrence of the differences while in each consolidated accounting year, from the accountsettled for next consolidated accounting year of the occurrence.
4) Reserves for directors’ retirement benefits
In order to prepare for the payment of directors’ retirement benefits, we reserve and record
an amount required to pay at the end of the mid-term consolidated accounting period in
accordance with the bylaws of the company.
5) Reserves for liabilities guarantee loss
In order to prepare for losses incurred by liabilities guarantee, in consideration of financing
standing and others of guarantees, we record an estimated amount of losses.
(4) Important leases treating method
Financing leases other than those by which ownership rights of the leased property can be transferredto the lessee are treated in accordance with a method relating to ordinary leases.
(5) Important hedge accounting method
1) Hedge accounting method:2) Hedging means and targets• Hedging means:• Hedging items:

Deferred hedging treatment has been adopted.
Interest swap transactions
Interest expenses for long-term loans
Dividends receivable of non-listed stocks

3) Hedging policy
In order to hedge risks associated with interest rate fluctuations, we have been using
derivatives to prepare for interest expenses for long-term loans. Furthermore, as for thedividends received from non-listed stocks, since the amount of dividends is determined on
the basis of market interest rates, we have been using derivatives to hedge the fluctuation
risk of the dividends receivable associated with the market interest rate fluctuations.
Furthermore, we do not hold derivatives for speculation purpose.
4) Evaluation method of hedging availability
Hedging availability is evaluated by means of ratio analysis between the cumulative totalof cash flow fluctuations for hedging items and the cumulative total of cash flow
fluctuations for hedging means.
(6) Other important items for the mid-term period consolidated financial statements
1) Completed works amount recording basis
Work completion basis is adopted. For part of works, however, we adopt deferred payment
standards under Corporation Tax Law, thus counting the amount equivalent to profits
corresponding to uncollected amount in the completed work costs to reschedule the profits.
Furthermore, our overseas consolidated-subsidiaries record the completed works amounton the work progressing basis.
Unearned profit realized amount
12 million yen
Unearned profit deducted amount−million yen
Total
12 million yen
112) Accounting of consumption tax and others
They are treated in accordance with a method exclusive of tax.

5. Scope of funds in the mid-term period consolidated cash flow statement
Funds (cash and cash equivalents) listed in the mid-term period consolidated cash flow statement
include currency on hand, bank money, time deposits of which maturities come within 3 months
after the acquisition date, and short-term investments with no fixed maturity or redemption date,ease of cash-out, and taking a slight risk of price fluctuations.
Notes[Relating to mid-term period consolidated balance sheet](in millions of yen)

Outstanding at the endof current mid-term
consolidated accounting
periodOutstanding at the endof previous mid-term
consolidated
accounting period

Outstanding at theend of previous
consolidated
accounting period

4,983

4,933

4,962

17

36

37

27

27

27

1,551

1,397

1,858

−

0

88

443

488

491

226

369

197

1. Accumulated amount of depreciation of
tangible fixed assets
2. Amount of transfer of endorsed notes
receivable
3. Pledged assets and secured liabilities(1) Assets given as security
Time deposit
Investment securities(2) Liabilities for the above
Work payable
Long-term loans expecting toreturn within 1 year.
Long-term loans[Relating to mid-term period consolidated profit and loss statement]
1. The following section describes important expense items and amount out of the selling and generaladministrative expenses.
(in millions of yen)

Salaries and allowances to employees

Outstanding at the endof current mid-term
consolidated accounting
periodOutstanding at the endof previous mid-term
consolidated
accounting period

Outstanding at theend of previous
consolidated
accounting period

1,863

1,880

3,549

Reserves for retirement benefits

298

415

227

Amount transferred from reserves for
directors’ retirement benefits
Amount of computers

39

42

85

626

753

1,389

475

531

1,026

175

−

426

198

204

415

−

8

23

Communication and transportation
expenses
Amount of transferred from allowancefor bad debts
Depreciation expenses
2. Amounts transferred from allowancefor bad debts, included in evaluation
loss on golf club membership rights,
etc.

12

3. Seasonal variations of the amount of completed works
As for amount of completed works with our corporate group, since the stock of works completed during thesecond half of the fiscal year is more than that during the first half as normal business pattern of thecompany, there is a significant difference in the amount of completed works between the first and second
halves of the consolidated fiscal year, thus resulting in seasonal variations of the performance between thefirst and second halves of the fiscal year.
The amount of completed works for 1 year through the end of the current mid-term consolidated accounting
period is as follows.
Second half of the previous consolidated fiscal year
95,414 million yen
Current mid-term consolidated accounting period
54,673 million yen
Total
150,088 million yen
4. Paid amount of taxes and adjustment amount such as for corporate taxes for the mid-term consolidated
accounting period were accounted by the amount for the current mid-term consolidated accounting
period presuming that reserves for reduction on fixed assets are reversed by the disposal ofpredetermined profits in the current consolidated fiscal year.
[Relating to mid-term consolidated cash flow statement]
The following table shows the relationship between the balance of cash and cash equivalents at the end of
the mid-term period (at the end of full-year period) and the amounts of accounts listed in the mid-term period
consolidated balance sheet (full-year consolidated balance sheet)(in millions of yen)

Cash and deposit accounts
Securities accountTotal
Time deposits with time period more than 3monthsSecurities other than add-on type bondinvestment trusts
Cash and cash equivalent objects

Current
mid-term
consolidated
accounting
periodPrevious
mid-term
consolidated
accounting
periodPrevious
consolidated
accounting year

23,58019,355

26,155

100

599

100

23,68019,95526,255

-37

-47

-37

-100

-599

-100

23,543

19,308

26,118[Relating to leases]
Since we have been proceeding with online discovery procedure in accordance with the provisions
under Article 27-30-6 of the Securities and Exchange Law, the reference relating to leases is omitted

13

5. Relating to Securities
The following section describes securities at the end of the mid-term consolidated accounting period (as of
September 30, 2004).
1. Securities with market value(in millions of yen)
Category

Recording amount in
the mid-term
consolidated balance
sheetMarket value

Balance(1) Held-to-maturity bounds

1 Corporate bonds

Total
Category

200
200
Acquisition cost

201

1

201

1

Recording amount in
the mid-term
consolidated balance
sheet

Balance(2) Other securities

1 Stocks

4,956

8,177

3,220

2

3

0

102

93

-8

5,061

8,273

3,212

2 Bonds

Corporate bonds
3 Others

Total

2. Contents of main securities with no valuation at the market value(in million of yen)Amount in the mid-term
consolidated balance sheet(1) Held-to-maturity bonds
1 Discount bank debentures
2 Unlisted foreign bonds
Total(2) Other securities
1 Unlisted stocks (excluding over-the-counter
stocks)
Total

14

99
0
100
2,686
2,686

The following section describes securities at the end of the previous mid-term consolidated accounting
period (as of September 30, 2003).
1. Securities with market value(in millions of yen)
Category

Recording amount in
the mid-term
consolidated balance
sheetMarket value

Balance(1) Held-to-maturity bonds

1 Corporate bonds

Total
Category

200
200
Acquisition cost

200

0

200

0

Recording amount in
the mid-term
consolidated balance
sheet

Balance(2) Other securities

1 Stocks

5,277

8,134

2,857

2

3

0

155

148

-6

5,435

8,286

2,850

2 Bonds

Corporate bonds
3 Others

Total(Note) As for other securities with market value, 6 million yen is treated as shrinkage losses.
2. Contents of main securities with no valuation at the market value(in millions of yen)Amount in the mid-term
consolidated balance sheet(3) Held-to-maturity bonds
1 Discount bank debentures
2 Corporate bonds
3 Unlisted foreign bonds
Total(4) Other securities
1 Unlisted stocks (excluding over-the-counter
stocks)
Total

15

99
499
0
599
2,644
2,644

The following section describes securities at the end of the previous fully-year consolidated accounting
period (as of March 31, 2004).
1. Securities with market value(in millions of yen)
Category

Recording amount in
the mid-term
consolidated balance
sheetMarket value

Balance(1) Held-to-maturity bonds

1 Corporate bonds

Total
Category

200
200
Acquisition cost

201

1

201

1

Recording amount in
the mid-term
consolidated balance
sheet

Balance(2) Other securities

1 Stocks

4,887

8,832

3,945

2

3

0

4,890

8,835

3,945

2 Bonds

Corporate bonds
Total(Note) As for other securities with market value, 6 million yen is treated as shrinkage losses.
2. Contents of main securities with no valuation at the market value(in millions of yen)Amount in the mid-term
consolidated balance sheet(1) Held-to-maturity bonds
1 Discount bank debentures
2 Unlisted foreign bonds
Total(2) Other securities
1 Unlisted stocks (excluding
over-the-counter stocks)
Total

99
0
100
2,690
2,690

16

6. Relating to Derivatives
Since the company applies hedge accounting even though the company enters into derivatives such as
interest rate swaps, notes relating to the derivatives are not provided.

7. Segment Information
1. Business segments information
For the current mid-term consolidated accounting period (April 1, 2004 to September 30, 2004), theprevious mid-term consolidated accounting period (April 1, 2003 to September 30, 2003) and theprevious full-year consolidated accounting period (April 1, 2003 to March 31, 2004),
Since our corporate group is engaged in facility construction works, there are no business types otherthan those. Accordingly, segment information by business type is not described.
2. Geographic segments information
For the current mid-term consolidated accounting period (April 1, 2004 to September 30, 2004), theprevious mid-term consolidated accounting period (April 1, 2003 to September 30, 2003), and theprevious full-year consolidated accounting period (April 1, 2003 to March 31, 2004),
Since the total sales amount of all segments of "Japan" exceeds 90%, description of segment
information by location is omitted.
3. Overseas sales
For the current mid-term consolidated accounting period (April 1, 2004 to September 30, 2004), theprevious mid-term consolidated accounting period (April 1, 2003 to September 30, 2003), and theprevious full-year consolidated accounting period (April 1, 2003 to March 31, 2004),
Since overseas sales amount is less than 10% of the total consolidated sales, description of overseas
sales is omitted.

17