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semiannual2004/中面 06.8.22 11:11 AM ページ 2

Kanamoto at a Glance

Construction Equipment Rental Division
As a result of efforts to steadily locate and win small-scale construction
projects in the face of weak demand, the Company was able to achieve a
0.2% increase overall in construction equipment rental revenue comparedto the same period one year earlier.
As a result of the above activities, consolidated revenues fromconstruction-related business for the interim consolidated accounting
period under review declined by 3.3% to ￥28,265 million, and operating
income fell 17.9% to ￥1,511 million.

Information Products Division
Because demand shifted to low-priced

Information
Information
Products
Products
Division
Division

Steel
Steel
Sales
Sales
0.8%
Division
Division 8.2%

versions of existing products, even foritems such as engineering workstations,
Kanamoto’s Information Products Business
Division saw its rental revenue shrink by
19.0% compared to the same period of theprior consolidated fiscal year.

Steel Sales Division

Total revenues fell 56.5% year on year to

The market for steel and related￥241 million, generating an operating loss

products enjoyed a resurgence, withof ￥ 8 million compared to positive

steel material prices rising sharply for

operating income of ￥24 million one year

the first time in 17 years following theearlier.

collapse of Japan’s bubble economy.
Demand for steel materials in
Hokkaido, however, remained weakthroughout the winter months.
Nevertheless, although Steel Sales
Division revenue fell 11.8% from thelevel of the same period of the priorfiscal year to ￥2,449 million, the91.0%Construction
Construction
Equipment
Equipment
RentalRentalDivision
Division

division improved its operating loss by
98.5%, to ￥460,000.

CONTENTS
3

Financial Highlights

4

A Message from the President

6

Consolidated Balance Sheets

8

Consolidated Statements of Income

9

Consolidated Statements of Cash Flows
Segment Information
Outstanding Balance of Future Lease Payments(Consolidated)10

Non-Consolidated Balance Sheets

12

Non-Consolidated Statements ofIncomeOutstanding Balance of Future Lease
Payments (Non-Consolidated)

13

Management Indicator Data Graphs

14

Topics16

Shareholders’ Information
Branch Network

18

Board of Directors

semiannual2004/中面 06.8.22 11:11 AM ページ 3

Financial Highlights
Non-Consolidated Financial Position

Rental revenues and sales of goods
Operating income
Net income
Total shareholders' equity
Total assets

Per share of common stock:
Net income
Cash dividends

Thousands of
U.S. dollars
April 30,
2004

April 30,
2003

October 31,
2003

Millions of yen
April 30,
2004

￥ 30,643
1,647
704
31,625
95,383￥ 60,494
2,350
953
32,004
87,627￥ 29,726
1,342
994
32,95885,577$ 269,381
12,157901
298,670$ 775,511

Yen

U.S. dollars (Note)￥ 23.35
9.00￥ 31.30
18.00$ 0.300.08￥ 33,29
9.00

Note : U.S. dollar amounts have been translated from yen for convenience only, at the rate of ￥110.35=US$1, the approximate exchange rate on April 30, 2004.

=6 months ended April 30

Rental Revenues and Sales of Goods

4,000

3,000

(Millions of Yen)

1,341

0

1,551

1,505

29,72630,64329,977

31,23429,452

1,000

1,647

2,036

30,00015,000

2,255

2,000

2,350

2,771

45,000(Millions of Yen)

3,104

60,60661,03064,29560,000Operating Income

60,49475,000=12 months ended October 31

0
00

01

02

03

04

Net Income

00

01

02

03

04

Net Income per Share(Millions of Yen)

1,500

(Yen)

100

1,455
75

953

993

994

1,134

1,000

50

704

748

500

48.66
37.49

33.56

31.30

33.29

509

518

25

16.84
0

24.75
17.14

23.35

0
00

01

02

03

04

00

01

02

03

04
Semiannual Report 2004 3

semiannual2004/中面 06.8.22 11:11 AM ページ 4

A Message from the President
Basic policies concer ning business management
The Kanamoto Company group believes that adapting to changes in the business environment, developing the groupfirms on a sustainable basis and maximizing earnings contributes to the best results for all stakeholders. This is thereason Kanamoto has always made the centerpiece of its action agenda the concept “constantly seek innovation andstrive to energize the business.”
By offering each customer optimal solutions and services fine-tuned to its exact needs, based on rational rental
proposals that take maximum advantage of Kanamoto’s years of accumulated equipment rental knowledge andexperience, Kanamoto seeks to grow in a manner that will contribute fully to society.

Basic policies concer ning distribution of ear nings
To ensure the long-term, integrated expansion of shareholders’ profits, Kanamoto continues to focus comprehensively
on both capital investments and profitability based on its medium-term profit plan, general dividend trends and asound financial position. In particular, the Company remains committed to its policy of stable dividend growth.
At the same time, the Company utilizes its internal reserves by allocating funds for the introduction of rental
equipment assets that will serve as the source of future earnings.
To provide for a more flexible capital policy in the future, Kanamoto has established a program and policy for thepurchase of treasury stock.

Management indicators established as objectives
Because of the Company’s need to maintain a large inventory of assets, Kanamoto has always emphasized ROI (returnon investment) and cash flow. The Comany and seeks growth in EBITDA (earnings before interest, taxes,
depreciation and amortization) to meet its primary objective of establishing a solid management foundation.
For the new long-range management plan Kanamoto will launch in the fiscal year ending October 2004, the Company
will seek to attain the following numerical objectives in the fiscal year ending October 2006 and in the fiscal year
ending October 2008.
(Millions of yen, except net income per share)

Consolidated operating
results

Fiscal Year ending
October 2006

Fiscal Year ending
October 2008

Revenues

60,40063,340Ordinary income

3,350

5,370

57

93

Revenues

58,00060,600Ordinary income

3,160

5,070

EBITDA

18,02919,533

Net income per share (yen)Non-consolidated operating
results (Kanamoto Company)

Medium to long-ter m corporate management strategy
In “Metamorphose,” the Company’s new long-range management plan, Kanamoto will focus on enhancing operating
systems in the Construction Equipment Rental Division, the core business of Kanamoto and the Kanamoto group.
Kanamoto will also launch wide-ranging efforts to reinvigorate the Company, and create a stronger Kanamoto that iswell-equipped to survive in the face of a changed business environment, by the end of the fiscal year ending October
2008. To accomplish this plan we have established the following objectives.
①Earnings-focused management
Kanamoto will shift its focus away from a revenues-first approach and emphasize gross profit. Moreover, because
the Company has already completed the replacement of its large-scale construction equipment rental assets with thelatest emissions-controlled models designed to reduce pollution, Kanamoto will limit the introduction of new rental
assets and work to reduce depreciation and amortization expense.
The Company will continue to aggressively introduce small-scale construction equipment and inexpensive rental
assets, however, which boast high profit margins.
②Execute a bold scrap and build program
In the prior fiscal year, Hokkaido accounted for 41% of Kanamoto’s total revenues by region, with Honshu
4 Semiannual Report 2004

semiannual2004/中面 06.8.22 11:11 AM ページ 5

accounting for the remaining 59%. By making an aggressive effort to expand in Honshu, Kanamoto will implement
its flexible branch office location strategy to raise the percentage of revenues generated in Honshu to 65-70%. In
addition, by taking bolder measures to close or scale back the number of unprofitable branches, when opening new
branches the Company will concentrate on establishing lightly-equipped branches, particularly in the Tokyo
metropolitan area.
③Build a powerful marketing organization where customers are always Number One
By taking maximum advantage of its information systems, Kanamoto will implement marketing programs tothoroughly fulfill user needs. The Company will continue to reconfigure its asset composition to best suit theregional characteristics of each branch office, independently and autonomously of other branches, to create aposition in which Kanamoto’s presence is indispensable for its customers’ operations.
④Pursue Kanamoto’s alliance strategy
The Kanamoto group and its alliance firms currently have bases capable of providing products and services withuniform quality throughout Japan, from Hokkaido to Okinawa. By expanding the number of alliance firms andenhancing the alliance group’s capabilities, Kanamoto has strengthened its corporate cooperation as the Kanamotogroup and enhanced synergistic effects.
Even though business conditions will be extremely difficult during the initial two-year period of the new long-range
management plan, by pursuing the objectives mentioned above Kanamoto will continue to be recognized as theleading company in the construction equipment rental business. By maintaining its efforts to improve andstrengthen the Company’s financial position, Kanamoto will seek to create a firm that is evaluated positively by themarket.

Issues to be addr essed by the Company
Over the past several years total construction investment has fallen sharply, as public works spending has been
curtailed under the government’s financial restoration policy. For firms involved in the construction industry, thechange in the current business environment has been extremely severe and fosters little hope for a turnaround in
immediate conditions. This situation is reflected in the construction equipment rental industry as well, as the decline
in rental unit prices, user requests for discounts, and greater competition among firms continue unabated. Regardlessof a firm’s size, with each passing year operating margins at construction equipment rental firms have continued toshrink.
Nevertheless, as the use of construction equipment rentals by construction firms continues to grow, this presents
opportunities in which the construction equipment rental industry will be enable to maintain or even improve
profitability through appropriate asset investments and timely operation.
As the Kanamoto group, we regard this deterioration of the business environment as an opportunity. Kanamoto is
working to expand revenues by cooperating closely with other Kanamoto group firms and its alliance partners, from abusiness and asset management perspective. We are also focusing on increasing operating income by cutting various
costs and overhead. Together with reducing depreciation and amortization expense with strict controls on investments,
mainly for large-scale construction equipment, we are continually seeking to achieve lower-cost operations.
Kanamoto is also taking steps to improve the value of its corporate brand. To achieve this goal the Company willconcentrate on appropriate user support and the level of quality satisfaction, by creating a knowledge management
system and a maintenance standardization system that effectively utilize
the online system linking every Kanamoto branch office.
As the standard bearer for the construction equipment rental industry,
Kanamoto has taken up its mission and obligation with a strong sense ofcommitment and is working to develop the construction equipment rental
market and foster a sound industry in the face of a challenging
environment.

Kanchu Kanamoto
President and Chief Executive Officer

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semiannual2004/中面 06.8.22 11:11 AM ページ 6

Consolidated Balance Sheets[ As of April 30, 2004]
2004]

ASSETS
Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2003
(Unaudited)

October 31,
2003

April 30,
2004
(Unaudited)

April 30,
2004
(Unaudited)￥ 18,515￥ 11,921￥ 15,142$ 137,214

28

47

27

245

Notes and accounts receivable, trade21,533

21,412

19,551

177,176

Inventories

1,158

854

1,043

9,456

Deferred income taxes

249

261

284

2,570

Other current assets

2,617

2,395

2,419

21,925Less : Allowance for doubtful accounts

(574)

(489)

(561)

(5,089)43,52636,40137,905

343,497

Rental equipment

45,161

43,79038,318347,245

Building and structures

15,346

15,333

15,309138,728

Machinery and equipment

4,882

5,153

5,190

47,028(42,059)(42,361)(39,597)(358,832)

23,33021,915

19,220174,169

24,623

24,63824,651

223,394

2

2

11

101

47,95546,55543,882397,664

Investments in securities

3,508

3,573

3,822

34,632

Deferred income taxes

1,754

1,383

917

8,312

Other assets

1,741

1,662

1,697

15,381Less : Allowance for doubtful accounts

(567)

(564)

(618)

(5,600)Total investments and other assets

6,436

6,054

5,818

52,725￥ 97,917￥ 89,010￥ 87,605$ 793,886

Current assets :Cash and cash equivalents
Short-term investments

Total current assets

Property and equipment :Less : Accumulated depreciation

Land
Construction in progress
Total property and equipment

Investments and other assets :Note : U.S. dollar amounts have been translated from yen for convenience only, at the rate of ￥110.35=US$1, the approximate exchange rate on April 30, 2004.

6 Semiannual Report 2004

semiannual2004/中面 06.8.22 11:11 AM ページ 7

LIABILITIES AND SHAREHOLDERS’ EQUITY
Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2003
(Unaudited)

October 31,
2003

April 30,
2004
(Unaudited)

April 30,
2004
(Unaudited)

Short-term bank loans

￥ 853

￥ 713

￥ 935

$ 8,472

Current portion of long-term debt

20,13814,854

14,794

134,069

Notes and accounts payable, trade

10,81911,048

10,54095,512

Accrued income taxes

790

648

682

6,183

Accrued bonuses for employees

507

443

464

4,206

Other current liabilities

1,259

1,208

1,001

9,068

34,36628,91428,416

257,510Long-term debt

29,082

25,42324,718224,000

Accrued pension and severance costs

1,745

1,777

1,186

10,747

Other liabilities

981

918

239

2,166

31,80828,11826,143236,913

152

71

82

739

Common stock

8,597

8,597

8,597

77,904

Additional paid-in capital

9,720

9,720

9,720

88,087Retained earnings

13,536

13,40014,182

128,523

Net unrealized gain (loss) on other securities, net of taxes

(91)

367

644

5,835

Treasury stock

(171)

(177)

(179)

(1,625)31,591

31,90732,964

298,724￥ 97,917￥ 89,010￥ 87,605$ 793,886

Current liabilities :Total current liabilities

Non-current liabilities :Total non-current liabilities

Minority interests

Shareholders' equity :Total shareholders' equity

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semiannual2004/中面 06.8.22 11:11 AM ページ 8

Consolidated Statements of Income[ For the six months ended April 30, 2004]
2004]

Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2003
(Unaudited)

October 31,
2003

April 30,
2004
(Unaudited)

April 30,
2004
(Unaudited)

Rental revenues￥ 21,044￥ 40,724￥ 20,832$ 188,776

Cost of rentals

15,51430,92815,241138,115

Sales of goods

11,52722,962

10,124

91,747

Cost of sales

8,755

17,9707,831

70,964Gross profit

8,302

14,7887,884

71,444

Selling, general and administrative expenses

6,397

12,4806,305

57,139Operating income

1,905

2,308

1,579

14,305

39

82

27

248

Interest expenses

(212)

(398)

(172)

(1,563)

Others, net

(232)

(117)

608

5,513

1,500

1,875

2,042

18,503Current

766

1,036

644

5,832

Deferred

(101)

(55)

259

2,351

665

981

903

8,183

Income before minority interests

835

894

1,139

10,320Minority interests in subsidiaries

54

(20)

41

374

￥ 781

￥ 914

￥ 1,098$ 9,946

Yen

U.S.dollars (Note)

April 30,
2003
(Unaudited)

October 31,
2003

April 30,
2004
(Unaudited)

April 30,
2004
(Unaudited)￥ 25.88￥ 29.96￥ 36.75$ 0.33

Other income (expenses) :Interest and dividend income

Income before income taxes
Income taxes :Net income

Net income per share

Note : U.S. dollar amounts have been translated from yen for convenience only, at the rate of ￥110.35=US$1, the approximate exchange rate on April 30, 2004.

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Consolidated Statements of Cash Flows[ For the six months ended April 30, 2004]
2004]

Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2003
(Unaudited)

October 31,
2003

April 30,
2004
(Unaudited)

April 30,
2004
(Unaudited)

Cash flows from operating activities￥ 6,346￥ 10,359￥ 4,955$ 44,905

Cash flows from investing activities

(313)

(107)

120

1,086

Cash flows from financing activities(2,951)(13,764)(1,896)(17,185)

Net increase (decrease) in cash and cash equivalents

3,082(3,512)

3,179

28,806

Cash and cash equivalents at beginning of period

15,433

15,433

11,921

108,026

−

−

42

382

￥ 18,515￥ 11,921￥ 15,142$ 137,214

Total

Eliminations
andcorporate
items

Consolidated

Increase due to merger of unconsolidated subsidiary
Cash and cash equivalents at end of period

Segment Information[ For the six months ended April 30, 2004]
2004]

Construction
relatedbusiness

Steel related
business

Information
andcommunication
related andother business￥ 28,265$ 256,141￥ 2,450$ 22,198￥ 241$ 2,184￥ 30,956$ 280,523￥−$−￥ 30,956$ 280,523

￥−
$−

￥−
$−

￥−
$−

￥−
$−

￥−
$−

￥−
$−

￥ 28,265$ 256,141￥ 2,450$ 22,198￥ 241$ 2,184￥ 30,956$ 280,523￥−$−￥ 30,956$ 280,523

Operating expenses￥ 26,754$ 242,447￥ 2,450$ 22,202￥ 250$ 2,265￥ 29,454$ 266,914(￥ 77)($ 696)￥ 29,377$ 266,218

Operating profit￥ 1,511$ 13,694(￥ 0)( $ 4)(￥ 9)($ 81)￥ 1,502($ 13,609)

￥ 77
$ 696

￥ 1,579($ 14,305)

Sales
Outside customers
Intersegment
Total

Amounts shown in the table are millions of yen and thousands of U.S. dollars.

Outstanding Balance of Future Lease Payments (Consolidated)[ For the six months ended April 30, 2004]
2004]

Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2003
(Unaudited)

October 31,
2003

April 30,
2004
(Unaudited)

April 30,
2004
(Unaudited)￥ 5,147￥ 4,928￥ 5,850$ 53,016

Finance leases
Within one year
After one year
Total

15,531

16,288

17,101

154,968￥ 20,678￥ 21,216￥ 22,951$ 207,985￥ 1,897￥ 1,793￥ 1,614$ 14,628

Operating leases
Within one year
After one year
Total

3,291

3,239

2,266

20,539￥ 5,188￥ 5,032￥ 3,881$ 35,167
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semiannual2004/中面 06.8.22 11:11 AM ページ 10

Non-Consolidated Balance Sheets[ As of April 30, 2004]
2004]

ASSETS
Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2003
(Unaudited)

October 31,
2003

April 30,
2004
(Unaudited)

April 30,
2004
(Unaudited)￥ 17,513￥ 11,346￥ 14,464$ 131,074

Notes receivable, trade

12,998

10,148

10,821

98,064

Accounts receivable, trade

7,958

11,1597,921

71,779Inventories

417

376

531

4,809

Other current assets

2,832

2,627

2,751

24,932Less : Allowance for doubtful accounts

(573)

(490)

(570)

(5,164)

41,14535,16635,918

325,494

Rental equipment

43,93542,505

37,107336,269

Buildings

10,922

11,161

11,185

101,360

Structures

3,940

3,855

3,806

34,485

Machinery and equipment

4,748

5,039

5,074

45,985(40,784)(41,201)(38,413)(348,099)

22,761

21,35918,759170,000

24,247

24,382

24,382

220,949

2

2

11

97

47,01045,74343,152

391,046

Investments and other assets

7,786

7,488

7,333

66,452Less : Allowance for doubtful accounts

(558)

(770)

(825)

(7,481)

Total investments and other assets

7,228

6,718

6,508

58,971￥ 95,383￥ 87,627￥ 85,578$ 775,511

Current assets :CashTotal current assets

Property and equipment :Less : Accumulated depreciation

Land
Construction in progress
Total property and equipment

Investments and other assets :Note : U.S. dollar amounts have been translated from yen for convenience only, at the rate of ￥110.35=US$1, the approximate exchange rate on April 30, 2004.

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LIABILITIES AND SHAREHOLDERS’ EQUITY
Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2003
(Unaudited)

October 31,
2003

April 30,
2004
(Unaudited)

April 30,
2004
(Unaudited)￥ 9,761￥ 9,576￥ 10,356$ 93,847

Notes payable, trade

7,898

7,387

7,739

70,131

Accounts payable, trade

1,851

3,049

2,182

19,776

389

363

93

845

Accounts payable, other

6,695

5,785

4,716

42,732

Accrued income taxes

773

645

637

5,767

Accrued bonuses for employees

485

429

449

4,071

Other current liabilities

4,672

523

554

5,021

Total current liabilities

32,52427,757

26,726242,190

Long-term bank loans

22,78020,592

21,104

191,246

Long-term accounts payable, other

6,545

5,321

3,532

32,010Accrued pension and severance costs

1,732

1,777

1,185

10,736

176

176

73

659

31,233

27,86625,894

234,651

Common stock

8,597

8,597

8,597

77,904

Additional paid-in capital

9,720

9,720

9,720

88,087

Legal reserve

1,372

1,375

1,375

12,463Retained earnings

12,194

12,122

12,801116,006

(91)

367

644

5,835

Current liabilities :Current portion of long-term bank loans

Notes payable, otherNon-current liabilities :Other liabilities
Total non-current liabilities

Shareholders' equity :Net unrealized gain on securities
Treasury stock
Total shareholders' equity

(166)

(177)

(179)

(1,625)31,62632,00432,958298,670￥ 95,383￥ 87,627￥ 85,578$ 775,511

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Non-Consolidated Statements of Income[ For the six months ended April 30, 2004]
2004]

Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2003
(Unaudited)

October 31,
2003

April 30,
2004
(Unaudited)

April 30,
2004
(Unaudited)

Rental revenues￥ 20,090￥ 39,639￥ 20,087$ 182,029

Cost of rentals

15,11630,597

15,213

137,866

Sales of goods

10,553

20,856

9,639

87,352

Cost of sales

7,942

16,098

7,268

65,860Gross profit

7,585

13,8007,245

65,655

Selling, general and administrative expenses

5,937

11,4495,903

53,498Operating income

1,648

2,351

1,342

12,157

39

81

30

276

Interest expenses

(195)

(373)

(165)

(1,493)

Others, net

(142)

(202)

642

5,814

1,350

1,857

1,849

16,754Current

749

1,032

598

5,416

Deferred

(104)

(129)

257

2,328

645

903

855

7,744

￥ 705

￥ 954

￥ 994

$ 9,010

Yen

U.S.dollars (Note)

April 30,
2003
(Unaudited)

October 31,
2003

April 30,
2004
(Unaudited)

April 30,
2004
(Unaudited)￥ 23.35￥ 31.30￥ 33.29$ 0.30

Other income (expenses) :Interest and dividend income

Income before income taxes
Income taxes :Net income

Per share of common stock

Outstanding Balance of Future Lease Payments (Non-Consolidated)[ For the six months ended April 30, 2004]
2004]

Millions of yen

Thousands of
U.S. dollars (Note)

April 30,
2003
(Unaudited)

October 31,
2003

April 30,
2004
(Unaudited)

April 30,
2004
(Unaudited)

Within one year

￥ 4,778￥ 4,689￥ 5,614$ 50,871

After one year

15,12016,064

16,856

152,750￥ 19,897￥ 20,753￥ 22,470$ 203,621

Within one year

1,897

1,790

1,601

14,511After one year

3,291

3,239

2,242

20,320￥ 5,188￥ 5,028￥ 3,844$ 34,830

Finance Leases

Total
Operating Leases

Total

12 Semiannual Report 2004

semiannual2004/中面 06.8.22 11:11 AM ページ 13

Management Indicator Data Graphs
Cash FlowPCFR

EBITDA＋
EBITDA＋ Ratio

CF = Net income + Depreciation expense - (Cashdividends + Bonuses to directors and auditors)
PCFR =Total market capitalization ÷ CF = Stock Price ÷
Cash flow per share of common stock

EBITDA+ =Operating income + Depreciation expense + Other depreciation andamortization expense+ Low-price rental assets, and others(millions of yen)(millions of yen)（％）

10,000

6

8,000

5

6,000

4

4,000

3

2,000

2

0

EBITDA+ is an indicator used only for the construction equipment rental business andexcludes steel products and information products
5

15,0004

10,000

3

5,000

2

0

1
00

01

02

03

04

1
00

Net Income
PER

（％）

20,000=Annual=Interim=Anticipated=Annual=Interim

01

02

03

04

02

03

04

PBR
PBR = ROE × PER

PER = Total market capitalization at end of period ÷ Net Income(millions of yen)

（％）

（％）

2,000

40

1.0

1,500

30

0.75

1,000

20

0.5

500

10

0.25

0

0.0

0
00

01

02

03

04

Shareholders' Equity
Shareholders' Equity Ratio

00

01

ROE
ROE = Net income ÷ Shareholders' equity = EPS ÷ BPS

Shareholders' Equity Ratio = Shareholders' equity ÷ Total assets(millions of yen)（％）

40,00040

30,000

35

（％）

6

4
20,00030

10,000

25

2

20
00

01

02

03

0

04

00

01

02

03

04

Dividend per Share of Common StockROA
ROA = Net income ÷ Total assets
（％）

(yen)

2.0

20

1.5

15

1.0

10

0.5

5

0.0

0
00

01

02

03

04

00

01

02

03

04

Semiannual Report 2004 13

semiannual2004/中面 06.8.22 11:11 AM ページ 14

Topics[ November 1, 2003 - June 30, 2004]
2004]

Kanamoto Opens Two Offices in Shin-Kiba in Tokyo’s Koto Ward

Shin-Kiba Branch / Shutoken Aerial Equipment Branch

Kanamoto simultaneously opened the Shin-Kiba
Branch and the Shutoken Aerial Equipment Branch on
the same site in Tokyo’s Koto Ward on June 1, 2004.
Branch offices established in Tokyo in the past by
Kanamoto were small in size. With an average floor
space measuring approximately 900m 2, branches
focused mainly on a line-up of products such as small
construction equipment and hand tools. The newest
branches, on the other hand, are located in one ofTokyo’s 23 main wards and share a site covering
about 5,600m2. The branches have a storage yard that
can handle large-scale construction equipment, with amaintenance facility capable of providing medium
and large-scale repairs established as an annex.
Kanamoto can claim without boasting that few othercompanies in the industry have established a facility
in the Tokyo metropolitan area with this amount of
space.
Kanamoto has positioned both branches as its mostimportant bases for expanding the Company’s market
share in the Tokyo metropolitan area. So having a siteon this scale makes a good deal of sense.
Each base has a different objective and will focus on adifferent segment of the market. The Shin-Kiba
branch will aim at expanding Kanamoto’s market
share, by participating in harbor construction works in
the Tokyo Bay area and large-scale redevelopment
project-related construction, and through aggressive
business development as Kanamoto’s core branch in
the Tokyo metropolitan area. On the other hand, as its
name implies the Shutoken Aerial Equipment Branch
will be a base focusing on equipment for aerial works.
The goal of this branch will be to expand Kanamoto’s
share of construction equipment rentals for aerial
works such as Tokyo Metropolitan Expressway
maintenance, bridge construction, signboards,
painting and electrical works, and full-scale entry into
14 Semiannual Report 2004

markets where the Company has had a limited
presence so far, such as large-scale condominium andoffice building construction projects. The Shutoken
Aerial Equipment Branch was established throughtransfer of the construction equipment rental business
operations of Kanaya Lease Co., Ltd. (Yukio Kanaya,
President; Head Office: Urayasu, Chiba Prefecture),
as reported on May 10.
Kanamoto requested the traditional Shinto rites whenboth branches were established, which were
performed on June 15 in the second-floor main
conference room at the site. In the evening, Company
representatives and invited guests moved to Hotel
East 21 in Toyocho, Koto Ward, where customers andconstruction equipment manufacturers mingled toenjoy the announcement commemorating the branch
openings and a banquet hosted by Kanamoto.
During the banquet Kanchu Kanamoto, president of
Kanamoto Company, introduced and praised theoutstanding services provided for over 30 years by theofficers and employees of Kanaya Lease as thepredecessors of the Shutoken Aerial Equipment
Branch, and commented on the significance of the twosimultaneously established bases. Following these
remarks Yukio Kanaya, President of Kanaya Lease,
expressed his appreciation for customers' patronage
and his wish to see the Kanaya spirit of safety firstcontinued. Certainly, the Shutoken Aerial Equipment
Branch, the Shin-Kiba Branch and all of Kanamoto’s
branch offices will maintain the concept of safety
first, and both new branches are expected to generate
substantial activity in the future.

Shutoken Aerial Equipment Branch equipment yard

semiannual2004/中面 06.8.22 11:11 AM ページ 15

Kanamoto Opens Large-scale Base and Engaru Branch in Hokkaido

On June 1, the same day Kanamoto established its
Shin-Kiba Branch and the Shutoken Aerial Equipment
Branch in Tokyo, the Company began temporary
operations at its Engaru Branch (Engaru, Monbetsugun, Hokkaido) in Hokkaido. The branch began fullscale operations at the end of June.
The Engaru Branch was established by Kanamoto
succeeding to the construction equipment rental
business developed by Nakano Motors Co., Ltd.
(Hiroshi Nakano, President; Head Office: Ikutahara,
Monbetsu-gun, Hokkaido), a company which has
enjoyed friendly business relations with Kanamoto in
the same region. Nakano Motors decided to transfer
its equipment leasing operations in order to specialize
in its main business of selling construction equipment
and farm machinery and expand its repair businessservice.
Because Nakano Motors had an extremely large shareof construction equipment rentals in the Engaru areaand enjoyed an oligopoly position, Kanamoto
anticipates a substantial increase in its local market
dominance through operations of the Engaru Branch
after taking over Nakano Motors’ construction

equipmentr e n t a lbusiness.
Moreover, theEngaru Branchboasts a total
area in excess
of 9,000m 2 ,making it one of Kanamoto’s biggest branches interms of size. This is likely to catapult the branch to
the leading position in the eastern area of Hokkaido.
Kanamoto simultaneously closed its Maruseppu
Equipment Center with the opening of the Engaru
Branch, leaving the number of branches within the
Abashiri jurisdiction remained unchanged at eight.
Kanamoto will add the advantage of its scale to thebranch’s services to further boost customer
satisfaction, while continuing to value therelationships of trust formed with customers
throughout the region by Nakano Motors over 25
years.

Kanamoto Merges with Kanamoto Shikoku Co., Ltd.

Kanamoto recently completed a merger withKanamoto Shikoku Co., Ltd. (established June 2001;
Head Office: Takamatsu, Kagawa Prefecture), a
subsidiary company. Since April 2004, the former
joint venture has continued operations as one of
Kanamoto’s key locations in Shikoku as the
Takamatsu Branch of the Construction Equipment
Rental Division’s Kinki & Chubu Region.
The merger was completed as part of “Metamorphose,”the new long-range management plan Kanamoto iscurrently implementing, for the purpose of building
and enhancing a sales and marketing organization
where customers are always Number One. The merger
will enable Kanamoto to respond to customer requests

demand with even greater speed and flexibility than in
the past.
The Kanamoto Group will continue to provide
services of the highest quality following the merger.

The former head office of Kanamoto Shikoku Co., Ltd., is continuing business
operations as Kanamoto’s Takamatsu Branch.

Kanamoto Acquires Subsidiary Company Shares

In November 2003, Kanamoto acquired 30 shares(7.5%) of the stock of Daiichi Machine Industries Co.,
Ltd. (Head Office: Kanoya, Kagoshima Prefecture),
making the firm a consolidated subsidiary. Daiichi
Machine’s main business is construction equipment
rentals and the company has eight branch offices in
Kagoshima Prefecture.
Kanamoto also effected a merger with Taniguchi Co.,
Ltd., a subsidiary company, in August 2003 aspreviously reported.
As a result of these changes, the alliances ofKanamoto’s Construction Equipment Rental Divisionfunction more smoothly and have become one
cornerstone of Kanamoto’s business operations.
Kanamoto will continue to strengthen the sales andmarketing organization of the entire Kanamoto Groupin the future, and work to increase the Group’s market
share in the construction equipment rental industry.
Semiannual Report 2004 15

semiannual2004/中面 06.8.22 11:11 AM ページ 16

Shareholders’ Information[ As of June 30, 2004]
2004]

Company Name
Kanamoto Company, Ltd.
Head Office
1-19, Odori Higashi 3-chome
Chuo-ku, Sapporo, Hokkaido
060-0041 Japan
Established
October 28, 1964
Capitalization¥8.6 billion (Paid-in capital)
Listing Exchanges
Tokyo Stock Exchange, First Section
Sapporo Stock Exchange
Stock Code9678
Common Shares Issued andOutstanding
30,253,000 sharesFiscal Year-end
October 31
Revenues¥60,494 million(Fiscal year ended October 2003)
Number of Employees
1,109(Excluding directors and temporary
or part-time workers)
Principal Businesses
Rental of construction equipment,
Sale of steel products
Rental of engineering workstations and computer
peripherals

16 Semiannual Report 2004

Primary Lenders
The Bank of Tokyo-Mitsubishi
The Mitsubishi Trust and Banking Corporation
Mizuho Corporate Bank
Sumitomo Mitsui Banking Corporation
North Pacific Bank
The Norinchukin Bank
Hokkaido Shinren
Shinkin Central Bank
The Hokkaido Bank
UFJ Bank Limited
Principal Shareholders
ORIX Corporation
Taichu Kanamoto
Saburo Kanamoto
The Master Trust Bank of Japan, Ltd.
Komatsu
Kanamoto Capital Company
The Tokio Marine & Fire Insurance Company
North Pacific Bank
The Hokkaido BankJapan Trustee Service Bank, Ltd.

semiannual2004/中面 06.8.22 11:11 AM ページ 17

Branch Network[ As of June 30, 2004]
2004]

Our Growing Branch Network

Number of Branches
Hokkaido Region

Kanamoto
55

Kanamoto Alliance & Associate Firms
13

Total
68

Tohoku Region

39

1

40

Kanto & Shinetsu Region

30

3

33

Kinki & Chubu Region

14

2

16

Other Regions

−

39

39

Total

138

58

196

＊The number of Kanamoto branches in the Hokkaido Region includes three branches for the Steel Sales
Division, and the number of branches in the Kanto & Shinetsu Region includes one branch for the
Information Products Division.
＊Kanamoto opened 2 branches and closed 5 branches during the first half of fiscal 2004 (ends October
31,2004)

Construction Equipment Rental Division
Steel Sales Division
Information Products Division
Kanamoto Alliance & Associate Firms
Assist Co., Ltd. (9 branches)
Engaged in the rental of safety products such as signals or signs for the construction industry.

SapporoSRG Kanamoto Co., Ltd. (2 branches)
A joint venture between Kanamoto and SRG Takamiya Co., Ltd. that provides rentals of
temporary scaffolding.

Kanatech Co., Ltd. (5 branches)

Hokkaido Region

Designs, manufactures and sells modular housing units for construction use.

Kyushu Kensan Group (16 branches, 4 group companies including)Construction equipment rental company headquartered in Fukuoka Prefecture.

Daiichi Machine Industries Co., Ltd. (8 branches)
Construction equipment rental company headquartered in Kagoshima Prefecture.

Machida Kikou Co., Ltd. (14 branches)
Construction equipment rental company headquarteredin Okinawa Prefecture.

Tohoku Region

Active Technology Co., Ltd. (1 branch)Sells telecommunications-related equipment
such as wireless LAN devices.

Active Power Co., Ltd. (1 branch)Sells microturbine generators manufactured by
Capstone Corporation, a U.S. company, andsupplies these products to Kanamoto, among others.

Kinki & Chubu
RegionOsaka

Kanto & Shinetsu
RegionChugokuTokyo
KyushuShikoku
Okinawa

Semiannual Report 2004 17

semiannual2004/中面 06.8.22 11:12 AM ページ 18

Board Of Directors[ As of June 30, 2004]
2004]

Directors
Kanchu Kanamoto *Hidemitsu Washida *Yukio Sato *President
CEO

Executive Vice PresidentManager in Charge ofOperations Control Headquarters

Senior Corporate Officer
Manager, Business Coordination
Headquarters

Eichu Kanamoto *Nobuhito Utatsu *Tetsuo Kanamoto *Division Manager,
Administration Division
Manager in Charge of Credit
Management Division &Auditing Section

Division Manager,
Accounting Division

Division Manager,
Construction Equipment Rental Division
Regional Manager,
Kinki&Chubu Region
Construction Equipment
Rental Division

Hitoshi Narita *Kojiro Satsuma

Tadao Saika

Division Manager, Management
Planning Division
Office Chief, Secretarial Office

Asterisk indicates directors who hold the additional post of corporate officer.

18 Semiannual Report 2004

semiannual2004/中面 06.8.22 11:13 AM ページ 19

Corporate Officers
Hideki Nomiya

Keiichi Kitakata

Tatsuo Kanamoto

Business Coordination Headquarters
Manager in Charge of Steel Sales
Division

Division Manager, Research &Investment Division

Regional Manager, Tohoku Region
Construction Equipment Rental
Division

Masakazu Hirata

Hiroshi Kumagai

Yuichi Asano

Deputy Division Manager,
Construction Equipment Rental
Division
Division Manager, Used Products
Sales Division
Manager, Quality Assurance
Department

Division Manager, Information
System Division

Division Manager, Credit
Management Division
Manager, Auditing Section
Manager, Legal Section

Auditors
Toshizo Okumura

Shinroku Sawada

Kiyoshi OnishiStanding Corporate Auditor

Standing Corporate Auditor

Outside Corporate Auditor

Akio Hashimoto
Outside Corporate Auditor

Semiannual Report 2004 19

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