Brief Report on the Mid-term Financial Statements for the Period Ending March 2006 (Consolidated)
November 17, 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 accounts: November 17, 2005
Adoption of American Accounting Standards:

None

1. Consolidated performance for the mid-term period ended September, 2005 (From April 1, 2005 to September 30, 2005)(1) Consolidated management performance (Note: Amounts are indicated with figures less than 1 million yen discarded.)
Sales amountOperating profit
Ordinary profit
M illion y en％

M illion yen％

M illion yen％

59,8649.5-1,398－-1,196－54,673-8.0-1,790－-1,709－Mid-term period
ended Sept. 2005
Mid-term period
ended Sept. 2004
P eriod ended
March 2005

156,175

1,391

Current net profit (mid-term)

1,412

Current net earnings per
share (mid-term)

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

Yen SenYen Sen

M illion y en

％

-997

－

-22.18－-1,249－-28.31－

Mid-term period
ended Sept. 2005
Mid-term period
ended Sept. 2004
P eriod ended

766

March 2005

－

17.18

Mid-term period ended September 2005: - million yen,

Note: 1) Investment p rofit or loss on equity method

P eriod ended March 2005 :Mid-term period ended September 2004 : 15 million yen,

15 million yen

Mid-term period ended September 2005 : 44,984,195 shares

2) Interim average number of shares (consolidated)

P eriod ended March 2005

Mid-term period ended September 2004: 44,123,615 shares

44,566,892 shares

3) Changes in accounting procedures: None
4) Percentage indications of sales amount, op erating p rofit, ordinary p rofit, and mid-term (current) net profit show increase or decrease comparedwith p revious mid-term period.

(2) Consolidated financial condition
Total assets

Shareholder's capital

M illion yen
Mid-term period
ended Sept. 2005
Mid-term period
ended Sept. 2004
P eriod ended
March 2005

Shareholders capital rate

M illion yen

Shareholder's capital per share%

Yen Sen131,449

45,63034.7

1,014.54

124,827

43,97935.2

976.59136,540

46,11533.8

1,024.98

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

M id-term period ended Sep tember 2005 : 44,976,550 shares
M id-term period ended Sep tember 2004 : 45,033,407 shares
Period ended M arch 2005:(3) Consolidated cash flow condition
Cash flow on sales
Cash flow on investment
activities
activities
M illion yen
Mid-term period
ended Sept. 2005
Mid-term period
ended Sept. 2004
P eriod ended
March 2005

Cash flow on financial
activities

M illion yen

44,990,535 shares

Period end balance of
cash and equivalent items

M illion yen

M illion yen

1,511

455

-1,95022,771-5,5452,654

276

23,543-8,744

4,921

406

22,712(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: None

(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 2006 (From April 1, 2005 to March 31, 2006)
Sales amount
Ordinary profit
Current net profit
M illion yen

Total period

150,000

M illion yen
830

M illion yen
430(Reference) ①Estimated current net profit per share (for total period) 9.56 yen② Estimated amount of work order received 152,000 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 5 in the attached material for consolidation.

1. Situation of the Corporate Group
Our corporate group (our company and its affiliated company) consists of our company and 11
subsidiary companies, mainly engaged in the business of designing, supervising, and executing
electrical, air conditioning, and plumbing/sanitation works.
The position of our corporate group relating to business 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.,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, we sell facilities and equipment to
MERINO O.D.D. SDN. BHD. and provide 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(Designing, supervising, and executing 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 an integrated facility work contractor, enforces a basic management policy of“challenging to create new values 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
speedy and practical management with an eye toward becoming a vigorous company.
(2) Basic policy on distribution of profits
We make it a basic policy to consider returning our profits to our shareholders through profit sharing
as a top-priority management policy, thus working toward building a sound financial structure andfurther paying stable and continual dividends to them.
(3) Concept and policy on reductions of investment units
Regarding the reductions of investment units, after reviewing this subject from the standpoint ofshareholders’ benefits, we believe that we are in no situation to carry out these reductions at this timein terms of the level of stock price, number of shareholders, liquidity, cost-effectiveness, and others.
However, we will perform continued studies on the reductions of investment units.
(4) Medium- and long-term management strategy and challenges
In accordance with the medium-term management plan “CHALLENGE NEW-DAIDAN 77”, which
has been carried out since April 2003, we aim at securing revenues through the effective use ofmanagement resources for continued business expansion. In this connection, we take the operating
profit on shareholders’ equity as a targeted management benchmark.
To achieve the aim, we take a specific strategy of stepping up proposal-oriented marketing operations
through making use of technologies owned by the company to find new customers and further
strengthen our ties with existing customers, thus challenging the expansion of business. Above all, we
focus on marketing operations to secure orders for renewal works through the incorporation of our
total facility engineering technologies for electrical, air conditioning, and plumbing/sanitation works
into those operations.
To achieve order increase for hospital facilities that are in the company’s speciality, we obtained alicense for the distributor of medical devices with high concentrations in management at our major
business establishments.
In October last year, we divided Engineering Division into Production Engineering Division andTechnical Development Division and further decided to hold communications conferences of the
managers of construction engineering departments from the major business establishments hosted by
the Production Engineering Division on a monthly basis from this year. Thus, we rearranged to theorganization through which we would sensitively cope with customers’ needs and facilitate faster andmore effective mobilization of our management resources including human resources. This will enable
us to not only secure safety and quality of our products but also achieve cost cutting, leading to an
upgraded customer satisfaction and enhanced competitiveness.
In addition, we are pushing ahead with a new procurement system at the Procurement Department of
Production Engineering Division, which was set up in January this year.
To address environment concern, since the Kyoto Protocol designed to prevent global warming
entered into force in February 2005, we will make further effort to actively respond to new energy
technologies, provide technologies developed with consideration given to a reduction in environmental
burden such as resource saving and energy saving, recycle resources, and reduce construction wastes.

2

In particular, we have stepped up the ESCO business capitalizing on our strengths as the integrated
facility work contractor, moving ahead with approaches to energy saving.
Furthermore, through making use of the company-wide information system, we are conducting
productivity improvement on site and sharing information among departments, and also facilitatingcost-cutting activities by combining and streamlining indirect operations.
As to the personnel system, we are pushing ahead with invigorating the corporate organization andmaking effective use of human resources while fairly handling the company members by theperformance- and role-oriented pay system, the revision to which was made in April this year.
(5) Basic concept regarding corporate governance and implementation status of measures
In order to achieve thorough compliance with the corporate governance and at the same time keep up
with tough changes in the management environment, we will enhance the framework of corporate
governance for quick and accurate decision-making on essential business challenges.
To ensure fair and effective management, we have adopted an auditing system to make themanagement organizations shown below operate effectively.
Ÿ

Ÿ

Ÿ

Ÿ

Board of directors
The board of directors is held once every month or extraordinarily as occasion arises. The board of
directors makes decisions regarding essential 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 primary members consisting of directors elected by the board of
directors and temporary members elected according to the substance to be deliberated andconducts a wide variety of reviews on the planning of management policy and measures and thecheck on their progress, and further deliberates on corporate management strategies and essential
issues regarding to the overall 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 held
every month, where not only management policies and measures are presented, but also theprogress of operations is checked and a variety of issues in each branch are discussed, thus making
efforts to make immediate solutions.

As to the company’s internal control, we define the work responsibilities and assigned departments
according to the official authority regulations to construct a framework through which each department
performs its proper operations. Furthermore, important management information is promptly submitted
and reported to the board of directors.
As to the internal inspection system, Internal Inspection Division under the direct jurisdiction of thepresident 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 picking out points at issue and making
suggestions about improvement of them on an as-needed basis. At the same time, the results of theaudits are reported to the President and the board of directors.

3

The corporate auditors attend not only the board of directors but also the meeting of branch managers as
occasion arises to work for keeping track of the status of progress of the operations of each branch. They
also conduct field audits at our headquarters, business establishments, and subsidiary companies toachieve strict audits on the overall operation performance of our company.
As to accounting audits, we have been receiving proper audits in accordance with generally accepted
accounting standards by an audit corporation, KPMG AZSA & Co. selected and appointed as anaccounting auditor by our company. The certified public accountants that have audited our accounting
are Hikoyuki Miwa (four and a half years with continuous audit) and Masahiro Miyahara (two and a halfyears with the same), who belong to the said audit corporation.

3. Management Record and Financial Standing(1) Overview of the current mid-term period
During the current mid-term period, economy in our country remained on a recovery trend regardless ofthe presence of causes for concerns such as steep rises of crude oil and raw material prices, as corporate
earnings turned up through steady personal consumption and capital investment.
In the construction industry, however, even though private capital investment was strong, public
investment remained on the substantial decline. Furthermore, due to intensified competition resulting
from a reduction in total construction investment, the economy continued to be in a severe situation.
Under these circumstances, our corporate group made maximum concerted efforts to secure orders andprofits. As a result, the group accomplished the consolidated record for the current term as shown below.
The consolidated amount of work orders received by our corporate group totaled 67,387 million yen(decrease of 2,147 million yen on the previous mid-term period). The amount of work completed totaled
59,864 million yen (increase of 5,190 million yen on the previous mid-term period).
As for the profits, since the works were completed with a concentration in the latter half of the period,
operating loss totaled 1,398 million yen (decrease of 392 million yen on the previous mid-term period),
ordinary loss totaled 1,196 million yen (decrease of 512 million yen on the previous mid-term period).
The net loss for the mid-term period totaled 997 million yen (decrease of 251 million yen on theprevious mid-term period).
(2) Financial standing
Status of cash flow
Cash and cash equivalent for the current mid-term consolidated accounting period (hereinafter referred toas “the fund”) increased 59 million yen on the previous consolidated accounting year to 22,771 million
yen.
(Cash flow from sales activities)
Cash flow used in sales activities for the current mid-term consolidated accounting period increased
1,511 million yen (increase of 7,056 million yen on the previous mid-term consolidated accounting
period) in the fund due to decrease of 15,239 million yen in sales credit and increase of 6,798 million
yen in incomplete work received amount, even though the mid-term period net loss before tax
adjustments, etc. totaled 1,286 million yen.

4

(Cash flow from investing activities)
Cash flow used in investing activities for the current mid-term consolidated accounting period increased
455 million yen in the fund (decrease of 2,199 million yen on the previous mid-term consolidated
accounting period) thanks to the sell-off of fixed assets and others.
(Cash flow from financing activities)
Cash flow used in financing activities for the current mid-term consolidated accounting period
decreased 1,950 million yen (decrease of 2,226 million yen on the previous mid-term consolidated
accounting period) in the fund due to paid amount of dividends of 494 million yen and the return ofloans having exceeded the earnings by new borrowing by 1,443 million yen and others.
Trend of cash flow index group

Shareholders’ equity ratio
Shareholders’ equity ratio at market value
Number of debt redemption years
Interest coverage ratio

Mid-term period
endingSeptember 2003
33.4%
17.8%
−
−

Period ending
March 2004
35.2%
21.6%
−
−

Mid-term period
endingSeptember 2004
35.2%
21.0%
−
−

Period ending
March 2005
33.8%
26.3%
−
−

Mid-term period
endingSeptember 2005
34.7%
27.3%
7.3 years
14.0 times

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 after 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 the full-year period
In the construction industry, it is predicted that the economy will continue to be in a severe situation
since the whole construction investment is flat.
Regarding the outlook for the full-year period of our corporate group, we expect the consolidated
amount of work orders received of 152,000 million yen, completed work of 150,000 million yen,ordinary profits of 830 million yen, and current net profit of 430 million yen.
Regarding the term-end stock dividends, according to our basic policy on the profit sharing, 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 forthe period. Since an ordinary dividend of 5 yen per stock was paid for the mid-term period, the total
dividend for the full-year period will amount to 16 yen per stock.

5

(4) Business risk, etc.
The following section describes risks that may have significant influence on the judgment of investors
regarding the business of our corporate group. In this connection, our corporate group will recognize thepotential for these risks to occur and then make efforts to prevent the risks from occurring and deal withthem if occurred.
1) Seasonal variation of performance
Our corporate group completes works with many concentrated in the second half of the accounting
year, while the selling expenses and general administrative expenses are almost evenly spent in thefirst and second halves of the accounting year. Consequently, the group performance for the firsthalf has a tendency to result in operating loss.
2) Unrecoverable sales credits
Depending on the rapid worsening of the earning or financial standing of customers, part of sales
credits owned by our corporate group can turn unrecoverable.
3) Steep rises of prices of materials and supplies
If it is hard to pass steeply risen prices of equipment and materials on to contract amounts, theseprices can have influence on our corporate group performance.
4) Underperforming work
If any underperforming work results from an unexpected increase of construction cost or else arisingin the course of construction, it can have influence on our corporate group performance.
5) Decline in values of owned assets due to their declined market prices
For immovable properties or securities owned by the company, if they should be treated as
shrinkage loss due to decline in their market prices, that can have influence on our corporate groupperformance.
6) Disasters and accidents
Our corporate group executes construction on the basis of safety-first and exerts its utmost effort inquality control. However, if an unexpected disaster or accident occurs in the course of construction,
it can result in compensation for damage, defect liability, or else and further have influence on thegroup performance.
7) Fluctuations in country risk and exchange rate
Our corporate group has been expanding its overseas business centering on Southeast Asian markets.
The group performance can be influenced by the occurrence of terrorism or political instability,
worsening of market conditions, or exchange rate fluctuations.

6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, 2005)

AmountComponent
ratio

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

Amount%(Assets)

Component
ratio

Summary consolidatedbalance sheet of the previous
consolidated accounting year
(As of March 31, 2005)

Amount%Component
ratio%

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

22,79823,58022,73943,35837,26758,646

100

100

100

Incomplete work
expenditures

36,03932,54525,319Others

7,741

8,190

8,210

Allowance for bad debts

-228

-238

-251

Total current assets

109,810

83.5

101,445

81.3

114,76484.1

Fixed assets
Tangible fixed assets

4,065

5,408

4,986

Intangible fixed assets

733

1,068

860

13,546

11,592

11,407

Others

4,125

6,606

5,366

Allowance for bad debts-831-1,293-845

Total investments andother assets

16,84016,905

15,928

Total fixed assets

21,63916.5

23,381

18.7

21,776

15.9

Total assets

131,449

100.0

124,827100.0

136,540

100.0

Investments and otherassetsInvestment securities7

(in millions of yen)
By period
Accounts

Outstanding at the end of thecurrent mid-term consolidated
accounting period(As of September 30, 2005)

Component
ratio

Amount(Liabilities)

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

Component
ratio

Amount%Summary consolidatedbalance sheet of the previous
consolidated accounting year
(As of March 31, 2005)

Component
ratio

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

45,67439,061

56,525

7,601

8,436

8,496

19,115

20,25912,316

94

74

76

892

−

592

5,908

6,272

5,342

79,286

60.3

74,10459.4

83,350

61.0

Fixed liabilities
Long-term loans payable

2,715

2,941

3,264

Reserves for retirement benefits
Reserves for directors’ retirement
benefits
Others

3,193

3,270

3,216

492

430

470

4

7

3

Total fixed liabilities

6,406

4.9

6,651

5.3

6,954

5.1

Total liabilities

85,69365.2

80,75564.7

90,305

66.1

125

0.1

92

0.1

119

0.1

Capital stock

4,479

3.4

4,479

3.6

4,479

3.3

Capital surplus

4,782

3.6

4,781

3.8

4,782

3.5

Retained earnings
Evaluation difference of othersecurities
Currency translation
adjustment accountTreasury stock

33,61825.6

33,321

26.7

35,112

25.7

3,264

2.5

1,895

1.5

2,264

1.7

-25

-0.0

-48

-0.0

-44

-0.0

-488

-0.4

-450

-0.4

-478

-0.4

Total capital

45,63034.7

43,97935.2

46,115

33.8

Total liabilities, minority
interest equity andshareholders’ equity

131,449

100.0

124,827100.0

136,540

100.0(Minority interest equity)
Minority interest equity(Shareholders’ equity)8

(2) Mid-term period consolidated profit and loss statement(in millions of yen)
Summary of consolidated
profit and loss statement of
the previous consolidated
accounting year

The current mid-term
consolidated accounting
periodThe previous mid-term
consolidated accounting
period(From April 1, 2005
to September 30, 2005)(From April 1, 2004
to September 30, 2004)

AmountPercentage

AmountPercentage

AmountPercentage

Completed work amount

59,864%100.0

54,673%100.0

156,175%
100.0Completed work cost

56,19093.9

50,821

93.0

144,316

92.4

3,674

6.1

3,851

7.0

11,859

7.6

5,072

8.4

5,642

10.3

10,468

6.7-1,398-2.3-1,790

-3.3

1,391

0.9

(327)

0.5

(213)

0.4

(285)

0.2

By period
Accounts

Completed work gross profit
Selling expenses and general administrative expenses

Operating profits (- : Loss)
Non-operating revenue（From April 1, 2004
to March 31, 2005）

Interests received

6

6

15

Dividends received

72

71

120

Insurance claim received

116

1

1

Currency translation profit

120

99

73

−
−

1

2

Investment profit by equity method

15

15

Others101756Consolidated adjustment account depreciation

Non-operating expenses(125)Interest payable

107

OthersOrdinary profits (-)
Special profits

0.2

(132)

0.2

109

17

(264)

22

35

-1,196-2.0-1,709

-3.1

1,412

0.9

(265)

0.4

(73)

0.1

(995)

0.6

Profit on sales of fixed assets

237

37

324

Profit on sales of investments in securities

10

19

671

Profit gained by returning allowance for bad debts
Special losses
Loss on sales of fixed assets

17
(355)

−

15
0.6

(71)

0.1

(401)

196

26

134

5

45

118

Loss on sales of investments in securities−
18

Evaluation loss on golf club membership rights

−
135
−

−
−
−
−
−

2

Evaluation loss on investments in securities

Loss on retirement of fixed assets

Shrinkage loss
OthersMid-term period net loss before tax adjustments,
etc. (-)
Current net profits before tax adjustments, etc.

0.2

229

0.2

8
109

−
28

-1,286-2.2-1,707

-3.1

−

−

−

−

−

2,006

1.3

Corporate tax, residence tax and business tax

100

0.2

117

0.2

981

0.6

Adjustment amounts such as for corporate taxes

-398

-0.7

-579

-1.0

227

0.2

9

0.0

3

0.0

30

0.0

-997

-1.7

-1,249

-2.3

−

−

−

−

−

−

766

0.5

Profits of minority interests

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

9(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
accounting year

(From April 1, 2005
to September 30, 2005)(From April 1, 2004
to September 30, 2004)(From April 1, 2004
to March 31, 2005)

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

4,782

4,716

4,716

Increased amount incapital surplus balance
Profits through disposal oftreasury stocks

0

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

65

0

65

66

66

4,782

4,781

4,782

35,11235,05635,056(Retained earnings)
Retained earningsbalance at the beginningof the period
Retained earnings
increased amountNet profit for the current
term
Retained earnings
decreased amount
Shareholders’ dividends
Directors’ bonuses
Mid-term period net loss

Retained earningsbalance at the end of the
mid-term period (theterm period)

−

−

−

−

766

766

494

484

709

1

1

1

997

1,249

1,493

33,6181,734

33,32110−

710

35,112

(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
Shrinkage loss
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, 2005
to September 30, 2005)

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

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

AmountAmountAmount-1,286-1,707

2,006

186

205

392

0

-1

-2

-1

-380

-778

-1

-42

-170

-79
107
−
135
18
-10
-40
5
15,239

-78
109
-15
−
−
-19
-11
45
10,865

-135
229
-15
−
8
-668
-189
118
-9,998-10,723-11,245-4,018-10,851-10,270

7,194

6,798

6,269

-1,673

2,887
2,384
79
-107
-844
1,511

1,163
-5,11377-109-399-5,545-434-8,136
136
-222
-522
-8,744

−
−
-49
49

−
−
-49
49

-0
10
-99
99

−

-534

-534

−
-26
786
-466
15
-7
28
-137
263
455

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

3,196
-27
544
-246
1,677
-40
67
-187
461
4,921

9,743
-10,156
750-1,779
-10
0
-494
-2
-1,95010,998-10,518
2,050-2,308
-9
549
-484
-0
276

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

41

37

11

59

-2,575-3,40522,712

26,118

26,11822,771

23,54322,712

I.

11

Basic important 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
No non-consolidated or affiliated companies apply to the equity method.
In addition, we sold all shares of CNA ENGINEERS PTE LTD. in November 2004. Consequently,
we applied the equity method to this company until the previous mid-term consolidated accounting
period and exempted it from the application scope of the equity method at the beginning of thesecond half of the previous consolidated accounting year.
3. Items relating to the mid-term period account closing date and others of consolidated
subsidiaries
Out of the consolidated subsidiaries, the 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.

12

(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 futurecompensation.
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.
As to loss estimated relevant to work orders received in hand, we conventionally treated it byreducing the amount of incomplete work expenditures. However, we made a change to an
accounting procedure by which the loss estimated is recorded as work loss reserves in theliabilities (current liabilities) section of the consolidated balance sheet, from the second half ofthe previous consolidated accounting year.
This change was made to review the processing of estimated loss relevant to work orders
received in hand in the second half of the previous consolidated accounting year and to change
the recording section in the consolidated balance sheet, thus treating the loss by reducing theamount of incomplete work expenditures for the previous mid-term consolidated accounting
period. Therefore, even if the accounting procedure that was changed during the previous
mid-term consolidated accounting period is applied to, there will be no influence on the profit
and loss.
Furthermore, the amount, which was deducted from the incomplete work expenditures of theprevious mid-term consolidated accounting period, was 936 million yen.
4) 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 the current mid-term consolidated
accounting 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 will treat them using an amountproportioned by the specific identification method with a specified number of years (i.e., ten
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.
Since the second half of the previous consolidated accounting year, we have 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 of Corporate
accounting standards dated March 16, 2005) and made a change to the accounting procedure forunrecognized pension assets. This change produced a decrease of 83 million yen in the operating
loss, ordinary loss, and mid-term net loss before tax adjustment, etc. for the current mid-term
consolidated accounting period, compared to those recorded by applying the same accounting
procedure as that for the previous mid-term consolidated accounting period.
5) Reserves for directors’ retirement benefits
In order to prepare for the payment of directors’ retirement benefits, we reserved andrecorded an amount required to pay at the end of the mid-term consolidated accounting
period in accordance with the bylaws of the company.
(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.

13

(5) Important hedge accounting method
1) Hedge accounting method:

Preferential treatment has been adopted.

2) Hedging means and targets• Hedging means:• Hedging targets:Interest swap transactions
Interest expenses for long-term loans3) 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, we do not hold derivatives for speculation purpose.
4) Evaluation method of hedging availability
Since the preferential treatment for interest swap transactions is adopted, the reference
relating to the evaluation of hedging availability is omitted.
(6) Other important items for the mid-term period consolidated financial statements
1) Completed works amount recording basis
Work completion basis is adopted. To some of works, however, we apply 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
13 million yen
Unearned profit deducted amount−million yen
Total
13 million yen
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 that mature within three months after theacquisition date, and short-term investments that have no fixed maturity or redemption date,facilitate cash-out, and take a slight risk of price fluctuations.
(Changes of basic important items for producing mid-term period consolidated financial statements)
Accounting standards relating to the shrinkage loss of fixed assets
Since the current mid-term consolidated accounting period, we have applied the “Accounting standards
relating to loss due to the shrinkage loss of fixed assets” (“Statement position regarding the establishment
accounting standards relating to loss due to the shrinkage loss of fixed assets” (published on August 9,
2002 by the Business Accounting Council)) and the “Application Guideline for accounting standards
relating to loss due to the shrinkage loss of fixed assets” (Business Accounting Standards Application
Guideline No. 6 published on October 31, 2003 by the Business Accounting Standards Committee).
These changes resulted in an increase of 135 million yen in the mid-term net loss before tax
adjustments, etc.
Furthermore, the accumulated shrinkage loss was directly deducted from the amount of each asset
under the regulations concerning mid-term consolidated financial statements.

14

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 year

4,205

4,983

4,813

30

17

18

Time deposit

27

27

27

Investment securities

1,096

1,551

1,007

－

－

245

329

443

361

322

226

379

9,732

－

676

(442)

(－)

(135)

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(2) Liabilities for the above
Work payable
Long-term loans expecting toreturn within 1 year.
Long-term loans
Liabilities of investing
companies(Amount equivalent toinvestment ratio of ourcompany)[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 year

1,639

1,863

3,464

Reserves for retirement benefits

223

298

434

Amounts transferred from reserves for
directors’ retirement benefits

39

39

79

Amount of computers

607

626

1,206

443

475

916

Amounts transferred from allowancefor bad debts

16

175

35

Depreciation expenses

185

198

377

－

－

67

Communication
expensesandtransportation

2. Amounts transferred from allowancefor bad debts, included in evaluation
loss on golf club membership rights,
etc.

15

3. Seasonal variations of the amount of completed works
As for amount of completed works with our corporate group, since works to be completed during thesecond half of the accounting year absorb a larger percentage compared to those to be completed during
the first half as normal business pattern of the company, there is a substantial difference in the amount ofcompleted works between the first and second halves of the consolidated accounting year, thus resulting
in seasonal variations of the performance between the first and second halves of the accounting year.
The following section shows the amount of completed works for one year through the end of the current
mid-term consolidated accounting period.
Second half of the previous consolidated accounting year
101,502 million yen
Current mid-term consolidated accounting period
59,864 million yen
Total
161,366 million yen
4. Paid amount of taxes and adjusted amount of corporate taxes, etc. 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 accounting year.
5. Shrinkage loss
For the current mid-term consolidated accounting period, our corporate group recorded shrinkage loss forthe asset group listed in the table below.
Application
Idle assets

Category

Location

Shrinkage loss

Land and building

Tokorozawa City, Saitama Pref.

48 million yen

Land and building

Ichikawa City, Chiba Pref.

21

Land and building

Kashiwa City, Chiba Pref.

14

Land and building, etc.

Others50

Total

135 million yen

Our corporate group conducts asset grouping based on whether or not it generates approximately
independent revenues. Business assets are grouped in units of business establishment by region in termsof management accounting being used to keep track of the balance of these assets. Leased assets and idle
assets are grouped by individual object.
Due to falling land prices or else, we reduced the book values to the recoverable values and recorded thedecrease concerned as shrinkage loss (of 135 million yen) in the special losses.
Furthermore, we measured the recoverable values of the asset groups using the net amount of assets soldand evaluated them according to the amount evaluated by real-estate appraisal.
[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 of more than
three months
Securities 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

22,79823,58022,739

100

100

100

22,89923,68022,840

-27

-37

-27

-100

-100

-100

22,771

23,54322,712[Relating to leases]
Since we have been proceeding with online disclosure procedure in accordance with the provisions
under Article 27-30-6 of the Securities and Exchange Law, the reference relating to leases is omitted.
16

5. Relating to Securities
The following section describes securities at the end of the mid-term consolidated accounting period (as of
September 30, 2005).
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

j 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

j Stocks

4,781

10,314

5,532

2

3

1

4,784

10,3185,534

k Bonds

Corporate bonds
Total(Note) The values listed in the “Acquisition cost” column all represent book values after shrinkage loss istreated.
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
j Discount bank debentures
k Unlisted foreign bonds
Total(2) Other securities
j Unlisted stocks
Total

99
0
100
3,028
3,028

(Note) For the other securities with no valuation at the market price, 18 million yen was treated as
shrinkage loss.

17

The following section describes securities at the end of the previous 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 bonds

j Corporate bonds

Total
Category

200

201

1

200

201

1

Acquisition cost

Recording amount in
the mid-term
consolidated balance
sheet

Balance(2) Other securities

j Stocks

4,956

8,177

3,220

2

3

0

102

93

-8

5,061

8,273

3,212

k Bonds

Corporate bondsl Others

Total(Note)The values listed in the “Acquisition cost” column all represent book values after shrinkage loss istreated.

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
j Discount bank debentures
k Unlisted foreign bonds
Total(2)Other securities
j Unlisted stocks (excluding over-the-counter
stocks)
Total

18

99
0
100

2,686
2,686

The following section describes securities at the end of the previous fully-year consolidated accounting
period (as of March 31, 2005).
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

j Corporate bonds

Total
Category

200

201

1

200

201

1

Acquisition cost

Recording amount in
the mid-term
consolidated balance
sheet

Balance(2) Other securities

j Stocks

4,698

8,534

3,836

2

3

1

4,701

8,538

3,837

k Bonds

Corporate bonds
Total(Note) The values listed in the “Acquisition cost” column all represent book values after shrinkage loss istreated.
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
j Discount bank debentures
k Unlisted foreign bonds
Total(2) Other securities
j Unlisted stocks
Total

99
0
100
2,668
2,668

(Note) For the other securities with no valuation at the market price, 8 million yen was treated as
shrinkage loss.

19

6. Relating to Derivatives
Since we have been proceeding with online disclosure procedure in accordance with the provisions
under Article 27-30-6 of the Securities and Exchange Law, the reference relating to derivatives isomitted.

7. Segment Information
1. Business segments information
For the current mid-term consolidated accounting period (April 1, 2005 to September 30, 2005), theprevious mid-term consolidated accounting period (April 1, 2004 to September 30, 2004) and theprevious full-year consolidated accounting period (April 1, 2004 to March 31, 2005),
Since our corporate group is engaged in facility construction works, there are no business types otherthan those. Consequently, the reference to business segments information is omitted.
2. Geographic segments information
For the current mid-term consolidated accounting period (April 1, 2005 to September 30, 2005), theprevious mid-term consolidated accounting period (April 1, 2004 to September 30, 2004), and theprevious full-year consolidated accounting period (April 1, 2004 to March 31, 2005),
Since the total sales amount of all segments of "Japan" exceeds 90%, the reference to geographic
segments information is omitted.
3. Overseas sales
For the current mid-term consolidated accounting period (April 1, 2005 to September 30, 2005), theprevious mid-term consolidated accounting period (April 1, 2004 to September 30, 2004), and theprevious full-year consolidated accounting period (April 1, 2004 to March 31, 2005),
Since overseas sales amount is less than 10% of the total consolidated sales, the reference to overseas
sales is omitted.

20