Brief report on the Financial Statements for the period ending March, 2005 (consolidated)
May 19, 2005

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 closing of accounts: May 19, 2005
Adoption of American Accounting Standards:
None

1. Consolidated performance for the period ending March, 2005 (From April 1, 2004 to March 31, 2005)(1) Consolidated management performance (Note: Amounts are indicated with figures less than 1 million yen discarded.)
Sales amountOperating profit
Ordinary profit
Period ending
March 2005
Period ending
March 2004

Million yen％

Million yen％

Million yen％

156,175

0.9

1,391

-13.6

1,412

4.4

154,832

-5.7

1,609

-21.3

1,352

-22.6

Current net
earnings per
share

Current net profit

Current net earningper share after
making potential
share adjustments

Shareholders
Total capital
Sales amountcapitalOrdinary profit Ordinary profit
Current net profit
rate
rate
rate

Million yen％

Yen SenYen Sen

％

％

％

766

33.4

17.18

−

1.7

1.1

0.9

574

-43.5

12.18

−

1.3

1.0

0.9

Period ending
March 2005
Period ending
March 2004

Note: 1) Investment profit or loss on equity method
End of March 2005 15 million yen
End of March 2004 -66 million yen
End of March 2004 44,890,465 shares
2) Interim average number of shares (consolidated) End of March 2005 44,566,892 shares
3) Changes in accounting procedures: Made
4) Percentage indication of sales amount, operating profit, ordinary profit, and current net profit show increase or decrease
compared with previous period(2) Consolidated financial condition
Total assets

Shareholder's capitalMillion yen
Period ending
March 2005
Period ending
March 2004

Shareholders capital rate Shareholder's capital per share

Million yen

136,540

46,115

129,848

45,646

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

Yen Sen

33.8

1,024.98

35.2

1,036.29

End of March 2005 44,990,535 shares
End of March 2004 44,048,172 shares(3) Consolidated cash flow condition
Cash flow on sales
Cash flow on investment Cash flow on financial Period end balance of
cash and equivalent items
activities
activities
activities
Million yen
Period ending
March 2005
Period ending
March 2004

Million yen

Million yen

Million yen-8,744

4,921

406

22,712-2,347371-2,40026,118(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: −Number of affiliated company with equity method applied: −(5) Consolidation scope and situation on changes in equity method application
Consolidated (new): −(Excluded): − Equity method (new): −(Excluded): 1

2. Estimated of consolidated performance for the period ending March 2006 (From April 1, 2005 to March 31, 2006)
Sales amount
Ordinary profit
Current net profit
InterimMillion yen
62,000150,000

Million yen-1,7001,100Million yen-1,150550

Total period(Reference) 1)Estimated current net profit per share (for total period) 12.22 yen
2) Estimated amount of work order received (interim)
70,000 million yen
3) Estimated amount of work order received (full year) 152,000 million yen* Since the performance is estimated based on the information available as of theannouncing date, actual results can be different from estimated ones due to various factors.
For the items of the above performance estimate, see the attached material for consolidation at page 6.

1. Situation of the Corporate Group
Our corporate group (our company and our affiliated company) consists of our company and 11
subsidiary companies, mainly engaged in the business of designing, supervising, and execution ofelectrical, air conditioning, and plumbing/sanitation work. The position of our group relating tobusiness and the systematic chart of 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.,DAIDEN Koji Co., Ltd., DAIDEN Koji Corp., DAI-DAN Service Kansai Co., Ltd., Okayama
DAIDEN Setsubi Co., Ltd., Kyushu DAIDEN Setsubi Co., Ltd., Kumamoto DAIDEN Setsubi Co.,
Ltd., and DAI-DAN PHILIPPINES, INC. We sell facilities and equipment to MERINO O.D.D.
SDN BHD. and offer technical assistance to THAI O.D.D. CO., LTD.
Furthermore, CNA ENGINEERS PTE. LTD. sold its shares in November 2004 and, therefore, was
excluded from our affiliated company (with equity method applied).
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(Designing, supervising, and execution of facility construction works)

Electrical,
air-conditioning,plumbing/sanitation
work

Sales offacilities andequipment

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

DAI-DAN Co., Ltd.
Construction facility
work

Technical
assistanceElectrical,
air-conditioning,plumbing/sanitation
work
Subsidiary company
THAI O.D.D. CO.,LTD.

Works execution

Works execution

Electrical facility work

Electrical, air-conditioning, plumbing/sanitation work

Subsidiary companies
DAIDEN Koji Co., Ltd.
DAIDEN Koji Corp.

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.

Gas piping work
Subsidiary company
Kyo Gas Co., Ltd.

1

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 policy is to consider the return of our profits by dividend to our shareholders as top-priority
management measures and endeavor to build a solid financial constitution, thus paying dividends
stably and continuously to the shareholders.
(3) Concept and policy on reductions of investment units
Regarding the reductions of investment units, we carried out studies on this issue on the basis ofshareholders’ benefits. As a result, we think that we are in no situation to implement the reductions ofinvestment units at the current moment in terms of the level of stock price, number of shareholders,liquidity, cost-effectiveness, and others. However, we will continue studies on this issue.
(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 aiming to secure earnings necessary to achieve
continuous growth of out business taking the operating profit ratio on shareholders’ equity as ourtargeted management benchmark, through effective use of management resources.
For a specific strategy, we are stepping up the finding of potential customers throughproposal-oriented marketing activities that make use of technologies in our possession and, at the sametime, challenging further increase of order received for renewal works by making the relation withexisting customers more close.
In addition, we have strengthened our construction management framework, through which we aremaking effort to ensure safety and quality and also accomplish cost cutting, thus addressing theimprovement in our competitiveness.
As part of our attempt to strengthen our ability in these fields, we divided Engineering Division into
Production Engineering Division and Technical Development Division as of October 1, 2004 to
rearrange the organization, thus enabling us to cope further sensitively with customers’ needs andfacilitate faster and efficient mobilization of management resources including human resources.
Furthermore, in order to promote new procurement methods, we set up Purchase Department within
Production Engineering Division as of January 1, 2005.
As to challenges to environmental issues, since the Kyoto Protocol intended to prevent global
warming came into effect in February 2005, we will put far more effort into providing technologies
developed with consideration given to reduction in environmental burdens such as resource saving andenergy saving, resource recycling, cutting in construction wastes, and others. Particularly, we haveupgraded our ESCO business that capitalizes on our strengths as a total facility work contractor topush ahead with energy saving proposals.
Besides, by making use of our company-wide information system, we are pushing ahead with cost
cutting through putting together and increasing efficiency of indirect operations as well as trying to
upgrade on-site productivity and sharing information between sections.
As to the personnel system, we have revised our compensation system to output- and role-orientedcompensation system as of April 1, 2005, thus promoting the invigoration of the company
organization and the effective use of human resources under fair conditions.
(5) Basic concept regarding corporate governance and implementation status of measures
In order to keep up with cataclysmic changes in the management environment as well as promoting
complete compliance, we will aim to enhance our corporate governance system for quick andon-target decision making and operation performance on important managerial issue.
In order to ensure fair and efficient management, our company has adopted an auditing system tomake the following management organization effectively functional.
2

y

y

y

y

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.
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.
Management council
The management council has basic members consisting of directors selected and appointed by theboard of directors and temporary members selected and appointed according to subjects on theagenda. The council carries out a wide variety of studies on the planning of management policy
and measures and the check on their progress, and further the deliberation about corporate
management strategies and issues critical to company-wide management, thus bringing them up
for the board of directors, as occasion arises.
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.

As to the in-company control, our company defines the official authority for each department and officeorganization according to the official authority regulations to promote mutual supervision.
As to the in-company inspection system, In-company Inspection Department under the direct
jurisdiction of the president of our company carries out operation and account audits to properly keep
track of the company assets and the status of the progress of operations, thus promoting increase andimprovement of efficiency of the operations.
The corporate auditors not only attend the board of directors but also conduct field audits at ourheadquarters, business establishments, and subsidiary companies to achieve strict audits on the general
operation performance of our company.
As to accounting audits, we have been receiving proper audits according to generally-accepted
accounting standards by an audit corporation, KPMG AZSA & Co. selected and appointed as anaccounting auditor by our company. The certified public accountants to have audited our accounting are
Hikoyuki Miwa (four years with continuous audit) and Masahiro Miyahara (two years with the same),
who belong to the said audit corporation.
Furthermore, the compensation for KPMG AZSA & Co. of the current term includes 33 million yen forcompensation concerning audit certification under the attestation engagement and 1 million yen for othercompensation, amounting to a total of 34 million yen.

3. Management Record and Financial Standing(1) Management record
During the current term, economy in our country remained on a recovery trend regardless of the presenceof concerns including the slowdown of overseas economy, escalating crude oil price, andproduction/inventory adjustment of information-related products, and corporate earnings show a steady
growth.
Under these circumstances, in the construction industry, public investment remained on the decline eventhough private capital investment, which was driven by booming enterprises such as manufacturingindustry, showed an upward trend. Furthermore, due to a reduction in total construction investment, theeconomy continued to be in a severe situation.
In this kind of environment, our group companies made maximum concerted efforts together to secureorders and profits and, consequently, accomplished the consolidated record for the current term as shown
below.
The consolidated amount of work orders received of our corporate group increased 4.1% on the previous
consolidated accounting year to 151,481 million yen. The amount of work completed in creased 0.9% on
the previous consolidated accounting year to 156,175 million yen.
As for the profits, the operating profit declined 13.6% on the previous consolidated accounting year to3

1,391 million yen and the ordinary profit increased 4.4% on the previous consolidated accounting year
to 1,412 million yen. As a result, the net profit for the current term increased 33.4% on the previous
consolidated accounting year to 766 million yen.
(2) Financial standing
Status of cash flow
Cash and cash equivalent for the current consolidated accounting year (hereinafter referred to as “thefund”) declined 3,405 million yen (13.0%) on the previous consolidated accounting year to 22,712
million yen.
(Cash flow from sales activities)
Cash flow used in sales activities for the current consolidated accounting year declined 8,744 million
yen due to the advance payment of work-related fund, which declined 6,397 million yen on balance,compared with the decline of 2,347 million yen in fund for the previous consolidated accounting year.
(Cash flow from investing activities)
Cash flow used in investing activities for the current consolidated accounting year increased 4,921
million yen in the fund thanks to revenues through the redemption of beneficial interest in trust and thesell-off of investment securities and fixed assets, which increased 4,549 million yen on balance,compared with the increase of 371 million yen in fund for the previous consolidated accounting year.
(Cash flow from financing activities)
Cash flow used in financing activities for the current consolidated accounting year increased 406
million yen in the fund due to paid amount of dividends of 709 million yen, earnings be the sell-off oftreasury stock of 550 million yen, and expenditures for the return of loans having exceeded the earnings
by new borrowing by 604 million yen and others, which increased 2,806 million yen on balance,compared with the decline of 2,400 million yen for the previous consolidated accounting year.
Trend of cash flow index group
Shareholders’ equity ratio
Shareholders’ equity ratio at market value
Number of debt redemption years
Interest coverage ratio

Period ending
March 2001
28.5%
12.5%
7.2 years
7.5 times

Period ending
March 2002
30.1%
13.5%
−
−

Period ending
March 2003
31.8%
14.2%
2.0 years
27.1 times

Period ending
March 2004
35.2%
21.6%
−
−

Period ending
March 2005
33.8%
26.3%
−
−

Shareholder’s equity ratio:
Shareholder’s equity/Total assets
Shareholders’ equity ratio at market value: Aggregate market value of shares/Total assets
Number of debt redemption years:
Interest-bearing debt/Operating cash flow
Interest coverage ratio:
Operating cash flow/Interest paid
∗ Indexes are all calculated by financial values on a consolidated basis.
∗ For the operating cash flow, the cash flow from sales activities (interest-paid and before corporate tax,etc.) recorded in the Statement of consolidated cash flow is used. The interest-bearing debt is subject
to all debts, which bear interest, among those recorded in the Consolidated balance sheet. Furthermore,
for the interest paid, the amount of interest paid, which is recorded in the Statement of consolidated
cash flow, is used.
(3) Outlook for next term
In the construction industry, it is predicted that the overall investment in construction will move slow
and the economy will continue to be in a severe situation due to slow increase in private capital
investment and continued downturn in public investment, even though the private capital investment
remains on an upward trend.
Regarding the outlook for the next term of our corporate group, we expect the consolidated amount ofwork orders received of 152,000 million yen, completed work of 150,000 million yen, ordinary profits
of 1,100 million yen, and current net profit of 550 million yen.
(4) Business risk, etc.
The following section describes risks that may have significant influence of the judgment of investors
regarding the business of our corporate group. In this connection, our corporate group will recognize the4potential for these risks to occur and then make effort to prevent the risks from occurring and deal withthem if occurred.
1) Disasters and accidents
Our corporate group executes construction on the basis of safety-first and exerts its utmost effort inquality control. However, there may be cases where an unexpected disaster or accident in thecourse of construction occurs resulting in compensation for damage, defect liability, or else andfurther has influence on the performance.
2) Bad debts
Depending on the rapid worsening of earnings or financial situation of customers, part ofreceivables, etc. owned by our corporate group may become unrecoverable.
3) Fluctuations in country risk and exchange rate
Our corporate group has been expanding its overseas business centering on Southeast Asianmarkets. The group performance can be influenced by the occurrence of terrorism or politicalinstability, worsening of market conditions, or exchange rate fluctuations.

54. Consolidated Financial Statements, etc.
(1) Consolidated balance sheet(in millions of yen)
By period
Accounts

End of the current consolidated
accounting year
(As of March 31, 2005)

End of the previous consolidated
accounting year
(As of March 31, 2004)

Component
ratio

AmountAmount%(Assets)

Difference

Component
ratio%

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

22,73926,155-3,41558,646

48,13910,507

100

100

0

−

2,655

-2,65525,31921,307

4,012

915

704

211

Others

7,294

7,088

205

Allowance for bad debts

-251

- 219

-32

Beneficial interest in trust
Incomplete work expenditures
Deferred tax reserves

Total current assets

114,764

84.1

105,931

81.6

8,832

Fixed assets
Tangible fixed assets
Buildings and structures
Machinery and equipment, andtransportation equipment
Tools and facilities

2,876

3,249

-372

42

56

-13

146

153

-6

Land

1,920

2,049

-128

Total tangible fixed assets

4,986

5,508

-521

Intangible fixed assets
Consolidated adjustment
account

3

1

2

856

1,241

-385

860

1,242

-382

11,407

12,184

-776

129

182

-52

Deferred tax reserves

1,572

1,990

-418

Others

3,664

4,537

-872

Allowance for bad debts-845-1,729884

Total investments and otherassets15,92817,165-1,236

Total fixed assets

21,776

15.9

23,91618.4-2,140Total assets

136,540100.0

129,848

100.0

6,692

OthersTotal intangible fixed assets

Investments and other assets
Investment securities
Long-term loans receivables

6(in millions of yen)
By period
Accounts(Liabilities)

End of the current consolidated
accounting year
(As of March 31, 2005)
Component
Amountratio©

End of the previous
consolidated accounting year
(As of March 31, 2004)
Component
Amountratio%

Difference%

Current liabilities
Notes payable, work accounts
payableShort-term loans payable

56,52549,331

7,194

8,496

8,387

109

Corporate taxes, etc. payable

915

395

520

12,31613,990-1,673

76

76

0

592

−

592

4,427

5,403

-976

Incomplete work accounts received
Completed work compensation
reserves
Work loss reserves
OthersTotal current liabilities

83,35061.077,584

59.7

5,766

Fixed liabilities
Long-term loans payable

3,264

2,768

495

Reserves for retirement benefits
Reserves for directors’ retirement
benefits
Others

3,216

3,278

-61

470

465

4

3

12

-9

Total fixed liabilities

6,954

5.1

6,525

5.0

428

Total liabilities

90,305

66.1

84,110

64.7

6,194

119

0.1

91

0.1

28

Capital stock

4,479

3.3

4,479

3.4

−

Capital surplus

4,782

3.5

4,716

3.7

66

Retained earnings
Evaluation difference of othersecurities
Currency translation adjustment
account
Treasury stock

35,112

25.7

35,056

27.0

56

2,264

1.7

2,327

1.8

-63

-44

-0.0

-8

-0.0

-35

-478

-0.4

-925

-0.7

446

Total capital

46,11533.8

45,64635.2

469

Total liabilities, minority interest
equity and shareholders’ equity

136,540100.0

129,848

100.0

6,692

(Minority interest equity)
Minority interest equity(Shareholders’ equity)7

(2) Consolidated profit and loss statement(in millions of yen)
By period
Accounts

Completed work amountCompleted work costCompleted work gross profit
Selling expenses and general administrative expenses

Operating profit
Non-operating revenue
Interests received
Dividends received
Rent of real estate
Insurance claim received
Gain on foreign exchange
Consolidated adjustment account depreciation

Investment profit by equity method
OthersNon-operating expenses
Interest payable
Payment guarantee charge
Currency translation loss
Investment loss by equity method
OthersOrdinary profits
Special profits
Profit on sales of fixed assets
Profit on sales of investments in securities
Profit gained on withdrawal from employees’
pension fundProfit gained by returning provision for loss
on guarantees
Special losses
Loss on sales of fixed assets
Loss on retirement of fixed assets
Loss on sales of investments in securities
Evaluation loss on investments in securities
Evaluation loss on golf club membership rights

Amount transferred from allowance for bad
debts
OthersCurrent net profits before tax adjustments, etc.

Corporate tax, residence tax and business tax
Adjustment amounts such as for corporate taxes
Profit of minority interests
Current net profit

Current consolidated
accounting year
(From April 1, 2004
to March 31, 2005)

Amount156,175
144,316
11,85910,468
1,391
(285)
15
120
−
−
73
2
15
58
(264)
229
25
−
−
10
1,412
(995)
324
671

Previous consolidated
accounting year
(From April 1, 2003
to March 31, 2004)

Percentage
%
100.0
92.4
7.6
6.7
0.9
0.2

0.2

0.9
0.6

Amount154,832
142,096
12,736
11,126
1,609
(280)
28
102
60
60
−
2
−
25
(537)
223
39
202
66
5
1,352
(1,137)40
1,027

Difference

Percentage
%
100.0
91.8
8.2
7.2
1.0
0.2

0.3

0.9
0.7

1,343
2,220
-876
-657
-218
(5)
-13
17
-60
-60
73
−
15
32
(-272)
5
-14
-202
−66
4
59
(-142)
283
-356

−

28

-28

−

41

-41

（401）
134
118
2
8
109

0.2

（444）
35
19
−
45
24

0.3

（-42）
99
99
2
-36
85

−

320

-320

28
2,006
981
227
30
766

−
2,046
466
967
37
574

28
-40
514
-740
-6
191

8

1.3
0.6
0.2
0.0
0.5

1.3
0.3
0.6
0.0
0.4

(3) Statement of consolidated surplus(in millions of yen)
By period

Current consolidated accounting year
(From April 1, 2004
to March 31, 2005)

Previous consolidated accounting year
(From April 1, 2003
to March 31, 2004)

AmountAmountAccounts(Capital surplus)
Capital surplus balance at the
beginning of the period

4,716

4,716

Increase in capital surplus
balanceGain on disposal of treasury
stock

66

66

Capital surplus balance at theend of the term

−

−

4,782

4,716

35,05635,201(Retained earnings)
Retained earnings balance atthe beginning of the period
Retained earnings increased
amountNet profit for the current term

766

766

574

574

Retained earnings decreased
amountShareholders’ dividends
Directors’ bonuses

709

719

1

710

Retained earnings balance atthe end of the term

35,1129−719
35, 056(in millions of yen)

(4) Statement of consolidated cash flow
Accounts
I.

By period

Current consolidated accounting year
(From April 1, 2004 to March 31, 2005)
AmountCash flow on sales activities
Current net profit before tax adjustments, etc.
Depreciation expenses
Consolidated adjustment account depreciation amount
Increased 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
Other increased or decreased amounts of current liabilities
Sub-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 stock
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 beginningof period
VII. Balance of cash and cash equivalents at the end of
period10Previous consolidated accounting year
(From April 1, 2003 to March 31, 2004)
Amount

2,006
392
-2
-778

2,046
431
-2
707

-170

-404

-135
229
-15
8
-668
-189
118
-9,998

-131
223
66
45
-1,027-5
19
1,494-4,018

3,945

7,194

-4,879-1,673-2,786-434-1,814-8,136-2,071

136
-222
-522
-8,744

131
-223
-184
-2,347

-0
10
-99
99
-534
3,196
-27
544
-246
1,677
-40
67
-187
461
4,921

-0
10
-1,0981,098-2,655
‐
-153
31
-119
2,249
-201
273
-275
1,212
371

29,070-28,280
4,100-4,286
-37
550
-709
-0
406

20,005-19,908
3,500-4,756-519-720-0-2,40011-158-3,405-4,534

26,11830,65322,712

26,118

Basic important items for producing 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
CNA ENGINEERS PTE. LTD., to which the equity method was applied up to the previous
consolidated accounting year, sold its all shares in November 2004. Consequently, we applied theequity method to this company up to the first half of the current consolidated accounting year andexcluded it from the application scope of the equity method at the beginning of the second half.
Furthermore, we have no other non-consolidated subsidiary and affiliated companies to which theequity method is applied.
3. Items relating to the accounting year and others of consolidated subsidiaries
Out of the consolidated subsidiaries, MERINO O.D.D. SDN. BHD, THAI O.D.D. CO., Ltd. and
DAI-DAN PHILIPPINES, INC. close their account for the term on December 31.
In order to produce consolidated financial statements for the term, we use financial statements as ofDecember 31. As for important transactions arising between December 31 and the consolidated
account closing date for the term, we make adjustments 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 theconsolidated account 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
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 future
11compensation.
3) Work loss reserves
In order to provide against future loss caused by work orders received in hand, we record an
estimated amount of loss for works, which are highly likely to cause loss and the amount of
which can be reasonably estimated.
(Changes in accounting procedure)
As to loss estimated relevant to work orders received in hand, we conventionally treated it byreducing the amount of incomplete work expenditures. Since account processing to record thework loss reserves has become generally adopted, however, we changed to an accounting
procedure by which the loss estimated is recorded as work loss reserves in the liabilities (current
liabilities) section of the consolidated balance sheet, from the current consolidated accounting
year in order to clearly indicate the loss in the consolidated balance sheet. The changes inaccounting procedure have no influence on the profit and loss for the current consolidated
accounting year.
Furthermore, the amount, which was deducted from the incomplete work expenditures of theprevious consolidated accounting year, was 569 million yen.
4) Reserves for retirement benefits
In order to prepare for the payment of retirement benefits, we record an amount inaccordance 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, by contrast, we batchprocess past service obligation within the year of occurrence.
(Changes in accounting procedure)
Since the “Partial revision to “Accounting standards regarding retirement benefits”” (No. 3 ofCorporate accounting standards dated March 16, 2005) and the “Application Guideline
regarding the partial revision to “Accounting standards regarding retirement benefits”” (No. 7 ofCorporate accounting standards dated March 16, 2005) are become applicable to consolidated
accounting year ending March 31, 2005, we applied the said accounting standards andapplication guideline to the current consolidated accounting year onward to change theconventional accounting procedure for unrecognized pension assets. According to the changes inaccounting procedure, the current operating profits, ordinary profits, and net profits before tax
adjustment, etc, increased 166 million yen.
5) Reserves for directors’ retirement benefits
In order to prepare for the payment of directors’ retirement benefits, we reserve and record anamount required to pay at the end of the mid-term period in accordance with the bylaws of thecompany.
(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
As for the dividends received from non-listed stocks, since the amount of dividends isdetermined on the basis of market interest rates, in order to hedge risks of fluctuations in
the dividends receivable due to the market interest rate fluctuations, we have been using
derivatives.
Furthermore, we do not hold derivatives for speculation purpose.
12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 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
37 million yen
Unearned profit deducted amount
12 million yen
Total
24 million yen
2) Accounting of consumption tax and others
They are treated in accordance with a method exclusive of tax.
5. Items relating to evaluation of assets and liabilities of consolidated subsidiaries
The evaluation method of assets and liabilities of consolidated subsidiaries is in accordance withtotal market price evaluation method.
6. Items relating to depreciation of consolidated adjustment account
The consolidated adjustment account is depreciated by straight line method over 5 years.
7. Items relating to treatment of surplus appropriation accounts
The consolidated surplus calculation is made basing on surplus appropriation decided during theconsolidated accounting year.
8. Scope of funds in the consolidated cash flow statement
Funds (cash and cash equivalents) listed in the 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 aslight risk of price fluctuations.
(Changes in indication method)
Relating to consolidated profit and loss
Since the rent of real estate (8 million yen for the current consolidated accounting year) and theinsurance claim received (1 million yen for the current consolidated accounting year) of non-operating
revenues became of scare importance in terms of amount for the current consolidated accounting year,
these items are recorded in the “Others” section.

13

Notes[Relating to consolidated balance sheet](in millions of yen)

1. Accumulated amount of depreciation of tangible fixed
assets
2. Amount of transfer of endorsed notes receivable
3. Issued number of stocks

Current consolidated
accounting year

Previous consolidated
accounting year

4,813

4,962

18

37

45,963,803 shares

45,963,803 shares（Common stocks）
4. Number of treasury stocks owned by the consolidated
subsidiaries

973,268 shares

1,915,631 shares（Common stocks）
5. Shares of affiliated companies
Investments securities

–

458

27

27

1,007

1,858

245

88

361

491

379

197

676
(135)

−
(–)

6. 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 to return within 1
year.
Long-term loans
Liabilities of investing companies(Amount equivalent to investment ratio of ourcompany)

14

[Relating to 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)
Current consolidated
accounting year

Previous consolidated
accounting year

3,464

3,549

434

227

79

85

1,206

1,389

916
35

1,026

Amount of transferred from allowance for bad debts
Depreciation expenses

377

415

2. Total expenditures for research and development(Breakdown)

419

488

Selling costs and general administrative costs

419

488

3. Amounts transferred from allowance for bad debts,
included in evaluation loss on golf club membershiprights, etc.

67

23

Salaries and allowances to employees
Reserves for retirement benefits
Amount transferred from reserves for directors’
retirement benefits
Amount of computers
Communication and transportation expenses

426[Relating to consolidated cash flow statement]
The following table shows the relationship between the balance of cash and cash equivalents at the end offull-year period and the amount of accounts listed in the full-year consolidated balance sheet(in millions of yen)
Current consolidated
accounting year

Cash and deposit accounts
Securities accountTotal
Time deposits with time period more than 3 months
Securities other than add-on type bond investment
trustsCash and cash equivalent objects

Previous consolidated
accounting year

22,73926,155100

100

22,84026,255

-27

- 37

- 100

- 100

22,712

26,118[Relating to leases]
Since our company has gone through the electronic disclosing procedure according to the provision under 30-6
of Article 27 of the Securities Exchange Law, the description of this subject is omitted.

15

5. Securities(Current consolidated accounting year)
1. Held-to-maturity bonds with market value (March 31, 2005)(in millions of yen)Amount in the consolidatedbalance sheet(Those whose market value is above the amount in the
consolidated balance sheet)
Corporate bonds
200(Those whose market value is not above the amount in
the consolidated balance sheet)
–
Total

200

Market value

Balance

201

1

–

–

201

1

2. Other securities with market value (March 31, 2005)(in millions of yen)

Acquisition cost(Those whose amount in consolidated balance sheet isabove the acquisition cost)
Stocks4,063

Amount in the
consolidatedbalance sheet

Balance

8,060

3,996

3

1

8,064

3,997

474

-160

8,538

3,837

Bonds
Corporate bonds

2

Sub-total
4,066(Those whose amount in consolidated balance sheet is
not above the acquisition cost)
Stocks
634
Total

4,701

3. Other securities sold for the current consolidated accounting year (From April 1, 2004 to March 31, 2005)(in millions of yen)
Sale value

Total of sale profit

1,231

Total of sale loss

671

1

4. Contents of securities with no valuation at the market value and amount in the consolidated balance sheet(March 31, 2005)(1) Held-to-maturity bonds
Unlisted foreign bonds
0 million yen
Discount bank debentures
99 million yen(2) Other securities
Unlisted stocks (excluding over counter stocks)

16

2,668 million yen

5. Estimated amount of redemption for other securities with maturity and held-to-maturity (March 31, 2005)(in millions of yen)Over 1 year and Over 5 years andOver 10 years
Within 1 year
within 10 years
within 5 years(Held-to-maturity bonds)
Corporate bonds

100

200

–

–

Corporate bonds

–

2

–

–

Total

100

202

–

–

(Other Securities)
Bonds(Previous consolidated accounting year)
5. Held-to-maturity bonds with market value (March 31, 2004)(in millions of yen)Amount in the
consolidated balance sheet(Those whose market value is above the amount in the
consolidated balance sheet)
Corporate bonds
200(Those whose market value is not above the amount in
the consolidated balance sheet)
–
Total

200

Market value

Balance

201

1

–

–

201

1

2. Other securities with market value (March 31, 2004)(in millions of yen)

Acquisition cost(Those whose amount in consolidated balance sheet isabove the acquisition cost)
Stocks3,794

Amount in the
consolidatedbalance sheet

Balance

7,978

4,183

2

3

0

3,797
Sub-total(Those whose amount in consolidated balance sheet is
not above the acquisition cost)
Stocks
1,093

7,981

4,183

854

-238

Bonds
Corporate bonds

Total
4,890
8,835
(Note) As for other securities with market value, 6 million yen is treated as shrinkage losses.

3,945

3. Other securities sold for the current consolidated accounting year (From April 1, 2003 to March 31, 2004)(in millions of yen)
Sale value

Total of sale profit

2,800

1,027

Total of sale loss–

4. Contents of securities with no valuation at the market value and amount in the consolidated balance sheet(March 31, 2004)
5. Held-to-maturity bonds
Unlisted foreign bonds
0 million yen
Discount bank debentures
99 million yen
17

(2) Other securities
Unlisted stocks (excluding over counter stocks)

2,690 million yen

5. Estimated amount of redemption for other securities with maturity and held-to-maturity (March 31, 2004)(in millions of yen)Over 1 year and Over 5 years andOver 10 years
Within 1 year
within 10 years
within 5 years(Held-to-maturity bonds)
Corporate bonds

100

200

−

−

−

2

−

−

100

202

(Other Securities)
Bonds

Corporate bonds
Total

6. Relating to Derivatives
Since our company has gone through the electronic disclosing procedure according to the provision under30-6 of Article 27 of the Securities Exchange Law, the description of this subject is omitted.

7. Relating to Retirement Benefits
1. Outline of adopted retirement benefits system
Our company has set up such systems as corporate pension fund system and termination allowance plan,
which are defined benefit systems.
The domestic consolidated subsidiaries have adopted the retirement benefit scheme including but notlimited to the approved retirement annuity system in addition to the termination allowance plan.
2. Items relating to retirement benefits obligation(in millions of yen)
End of the current
consolidated accounting
year

End of the previous
consolidated
accounting year

a. Retirement benefits liabilities-15,787-15,736

b. Pension fund

13,485

13,487c. Unreserved retirement benefits liabilities (a + b)

-2,302-2,248–-1,662

1,683

3,152

-618

-758

2,597

2,519

-3,216-3,278d. Unrecognized pension assets (Note 1)
e. Unrecognized differences on mathematical
calculation
f. Unrecognized past service liabilities (decreased
liabilities)
g. Net amount in consolidated balance sheet (c +d +e+f)h. Prepaid pension costs
i. Reverses for retirement benefits (g - h) (Note 2)

Notes: 1. We applied the “Partial revision to “Accounting standards regarding retirement benefits”” (No. 3
of Corporate accounting standards dated March 16, 2005) and the “Application Guideline
regarding the partial revision to “Accounting standards regarding retirement benefits”” (No. 7 ofCorporate accounting standards dated March 16, 2005) and changed the accounting procedurefor unrecognized pension assets. According to this change, we regarded the unrecognizedpension assets that were incurred during the previous consolidated accounting year as differences18

in terms of unrecognized actuarial calculation generated at the beginning of the current
consolidated accounting year to depreciate them from the current consolidated accounting year.
2. As for the domestic consolidated subsidiaries, in order to calculate retirement benefits
liabilities relating to the termination allowance, the simple method was adopted.
3. Items relating to retirement benefits(in millions of yen)
Current consolidated
accounting year

a. Service costs(Note 1)

Previous consolidated
accounting year

494

513

b. Interest costs

308

449

c. Expected operational profitsd. Processed amount of differences on actuarial
calculatione. Processed amount of past service liabilities (Note 2)

-241

-166

217

376

–

-1,730f. Retirement benefits (a+b+c+d+e)g. Profit on the withdrawal from employees’ pension
fund
Total

779

-557

–

-28

779

-585

Notes:
1. Retirement benefits of consolidated subsidiaries adopting an easy method are recorded in the “ a.
Service costs” section.
2. Since we made a revision to the overall retirement benefit system in the previous consolidated
accounting year, the past service liabilities (deduction in amount of liabilities) were incurred.
However, we batch processed them in the previous consolidated accounting year.
4. Items relating to the basis of calculation of retirement benefits liabilities
Current consolidated
accounting year

Previous consolidated
accounting year

Period fixed amountbasis

Same as on the left

b. Discount rate

2.0％

Same as on the leftc. Expected operational profit rate

3.0％

Same as on the left

d. The number of years when amount of past
service liabilities is processed

Processed in a lump in
the occurrence year.

Same as on the left

e. The number of years when differences onmathematical calculation are processed.

10 years (Costs to beprocessed from next
consolidated accounting
year of each occurrence
year, in accordance withthe straight-line method
based on the given
number of years withinaverage residual service
years of employees at
the time of theoccurrence.)

a. Method of period allocation for estimatedamount of retirement benefits

19

Same as on the left

8. Those Relating to Tax Effect Accounting
1. Contents of main causes for occurrence of deferred tax assets and deferred tax liabilities(in millions of yen)
End of the current consolidated accounting year
Deferred tax assets
Surplus of transferred reserves for
retirement benefits
Repudiated evaluation loss on realestate3,447

End of the previous consolidated accounting year
Deferred tax assets
Surplus of transferred reserves for
retirement benefits
Repudiated evaluation loss on realestate

1,131

3,384
1,257

Work loss reserves

242

Repudiated write-down ofincomplete work expenditures

233

Reserve for bonuses

377

Surplus of transferred allowance forbad debt

301

Repudiated reserves for directors’
retirement allowance

192

Repudiated reserves for directors’
retirement allowance

190

Repudiated evaluation loss on golfclub membership rights

55

Repudiated evaluation loss on golfclub membership rights

116

Others613

Others843

Deferred tax asset sub-total
Amount of valuation reserves
Deferred tax asset total

6,060
-147
5,913

Deferred tax asset sub-total
Amount of valuation reserves
Deferred tax asset total

6,327
-156
6,170

Deferred tax liability
Profits from retirement benefits in
trust-1,656-65

Deferred tax liability
Profits from retirement benefits in
trust-1,661-68Entertainment expenses included inincomplete work expenditures

Entertainment expenses included inincomplete work expenditures-1,573-1,617

Evaluation difference of securities
Reserve from fixed asset reduction-63

Evaluation difference of securities
Reserve from fixed asset reduction-66

Others-65

Others-61

Deferred tax liability total
Deferred tax asset net amount-3,425
2,488

Deferred tax liability total
Deferred tax asset net amount20-3,4752,695

2. Contents of main items which became causes for critical difference where there is a critical difference
between the statutory effective tax rate and the burden rate of corporate taxes, etc. after application of tax
effect accounting.
Current consolidated accounting year
Statutory effective tax rate
(Adjustment)
Items not included in deductible
expenses permanently, such asentertainment and social expenses, etc.
Items not included in gross revenue
permanently, such as dividends
received, etc.
Taxation per capita basis forinhabitants tax
Amount of adjustment of taxable
income not applicable to tax effect
OthersBurden rate of corporate taxes, etc.
after application of tax effectaccounting

Previous consolidated accounting year
41.0% Statutory effective tax rate
(Adjustment)
Items not included in deductible
expenses permanently, such as
18.5
entertainment and social expenses,
etc.
Items not included in gross revenue-1.8 permanently, such as dividends
received, etc.
Taxation per capita basis for
4.1
inhabitant tax
Amount of adjustment of taxable-1.8
income not applicable to tax effect
1.0 Others
Burden rate of corporate taxes, etc.
61.0 after application of tax effectaccounting

42.0%

23.3

-1.8
3.9
1.2
1.5
70.1

9. Segment Information
1. Segment information by type of business
The current consolidated accounting year (April 1, 2004 to March 31, 2005) andthe previous consolidated accounting year (April 1, 2003 to March 31, 2004)
Since our corporate group is engaged in facility construction works, there are no business types otherthan this. Accordingly, segment information by business type is not described.
2. Segment information by location
The current consolidated accounting year (April 1, 2004 to March 31, 2005) andthe previous consolidated accounting year (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 amountThe current consolidated accounting year (April 1, 2004 to March 31, 2005) andthe previous consolidated accounting year (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.

10. Transactions with Related Parties
Non-applicable21