Attached Sheets to Brief Report on Closing of Accounts Financial Contents

・Relating to closing of accounts

Attached materials

1. Situation of the Corporate Group

Our corporate group consists of our company, 10 subsidiary companies and 10 affiliated companies, mainly engaged in the business of designing, supervising, and job execution of electrical, air conditioning, tap water hygienic facilities. The position of our group relating to business and the systematic chart of our business are as follows:

(1) Position of our group relating to business

Facility job work

Electrical, air conditioning, and plumbing & sanitary engineering

Part of the work of orders received by us is relegated to DAIDAN Service Kanto Co., Ltd., DAIDEN Koji Co, Ltd., DAIDEN Setsubi  Koji Co., Ltd., Okayama DAIDEN Setsubi Co., Ltd., Kyushu DAIDEN Setsubi Koji Co., Ltd., Kumamoto DAIDEN Setsubi Koji Co., Ltd., DAIDEN KOJI Corp., and CNA Engineers PTE LTD. To the MERINO O.D.D. SDN BHD., we sell facilities and equipment and to THAI O.D.D. Co., Ltd., we offer technical assistance.

Gas piping work

Kyo Gas Co., Ltd. executes gas piping work for orders placed by the Osaka Gas Co., and orders placed by our company are minimal.

(2) Systematic chart of business

2. Management Policies

(1) Basic policy on management Policies

Our company, as a general facility job execution company, pursues a basic management policy of contributing to society by offering a safe and easy to use, high quality environment by 　technology which contributes to environmental preservation. Under such a management policy, to emerge as winners in the great industrial structural reformation to an information oriented society, the company aims to display creativity, to 　reinforce its technical and sales strengths and become a vigorous company.

(2) Basic policy on distribution of profits

Our basic policy will be to secure profits and to return profits stability and continuously to our shareholders. As a management index, we aim for a capital stock profit rate of 5% (current profit per share of 60yen).

(3) Measures relating to fulfilling of corporate governance

To cope with severe changes in the management environment and to conduct more mobile management, the Managing Director's meeting was abolished and a new management eliberation meeting was established.  This management deliberation meeting comprised of several Directors, quickly studies adequate measures relating to important management issues, and decides management policies as required.  At the same time, the meeting submits proposals to the Directors meeting for activation of the Director's meeting.

(4) Management strategy for the mid term

Targeting March, 2003 when the company will celebrate its 100th anniversary of founding, the company has prepared a mid term management plan called "Challenge NEW DAIDAN 100" and full scale tackling of various concrete measures was started in April 2000.

Main measures are as follows:

・ Make positive use of the fast advancing information technology in order acceptance activities, in designing and job execution, and aim to make in-house work more effective and expand revenue.

・ In continuation of acquiring certification on quality assurance system ISO9000 series at all business establishments, the company will aim to acquire certification on environment management system ISO14001, not by units of each business establishment but in one stroke by the entire company.

・ Under a high transparency personnel evaluation system from April 2000, a merit graded wage system will be introduced and efforts will be made to reform employee's consciousness and to effectively utilize human resources.

・ International accounting principles will be adopted and while aiming for an open corporate management, we will pursue management which places importance on cash flow and aim to become a company highly evaluated by the market for its strong financial constitution.

・ With such various measures, in approaching the year 2003 in which the company will celebrate its 100th anniversary of founding, the company will do its utmost, en bloc, to improve company performance.

3. Management record

(1) Outline of the current period

With the support of governmental policies in public and private financing, the economy of the nation in the current period showed signs of recovery in certain industries. Especially, the information related industries are showing bullish trends.  However, most companies were busy engaging in restructuring themselves and did not show outward signs of pursuing new investments. Also in regard to personal consumption, the trend was a repetition of one step forward and then one step backward, reflecting the serious employment situation.  A full scale recovery of the private sector was not seen. In the construction industry, some increase was seen in the private sector.  The situation on new order placements continued to be severe with investments in public works showing a downturn.  Under such circumstances, our company implemented the following measures. In the aspect of sales, centering around medical relations which are our forte, we strongly promoted proposals of new technology.   In regard to refurbishing work, detailed sales activities were pursued, such as implementing of a company-wide order increasing measure called "R operation" in close collaboration with affiliated companies.

In the aspect of technical matters, we are aggressively pushing measures to make the automatic control system open.  In concrete terms, a network integrator contract was concluded with Echeron Company in December 1999 and capital participation in the CNA Company of Singapore was made.  Also, work was conducted on our Osaka Head office building to make it adaptable to the open system and worked to upgrade the level of our technical employees. In regard to quality aspects, certification of the quality assurance system "ISO9000 series" was acquired at all business establishments of the company.  Following this, we have started work to acquire certification for the environmental management system "ISO14001." In regard to job execution aspects. together with concentration on reduction of costs while upholding quality levels, we have been implementing VE proposals which positively adopts development technology.

As the result of the above, consolidated order backlog totals 174 billion 471 million yen.   Completed jobs total 168 billion, 563 million yen. In regard to profits, operating profits totaled 4 billion, 18 million yen while ordinary profits were 4 billion, 247 million yen and net profits for the period were 1 billion 200 million yen.

In regard to consolidated cash flow for the current period, cash flow on sales activities was -2 million yen, cash flow on investment activities was 547 million yen, cash flow on financial activities was -2 billion 160 million yen with a difference of 1 billion 615 million yen less. Cash and cash equivalent balance at the end of the period was 31 billion, 271 million yen. In regard to stock dividends of our company, we plan to pay a ordinary dividend of  5yen and a special dividend of  6yen per share for a total of 11yen per share for this current period, same as that for the previous period.  Since an ordinary dividend of \5 was paid for the interim period, dividend for the entire period will become 16yen per share.  As the result, ratio of earnings to dividends will become 54.5%.

(2) Forecast for the next period

Although the forecast for the information technology related fields may be bright, it is predicted that there are still many companies which will continue with restructuring for their survival and a little more time may be required for the entire economy to recover.

In the construction and facilities industry, much cannot be expected of the extended effects of the "new economic measures" taken by the government and it is thought that corporate facility investments will continue on a low level.

To cope with such a situation, our company will concentrate our efforts en bloc to garner orders and increase efficiency of job execution.

Firstly, in technical aspects, for the further promotion of opening up of the automatic control system by Lon Works, we have established a Open Network Office within the Technical Development Division.  With this technology, we will work to increase obtaining of orders.

Also, by making the most of our job execution track record accumulated over 97 years in business, we will be working to substantiate our refurbishing division for positive coping with maintenance work.

In regard to the shortage of reserves for retirement allowance accounts, disposition will be made by lump-sum subscribing of held securities to retirement allowance trust for our non-consolidated portion in the September 1999 interim period.  For the consolidated subsidiary company portion, the total amount will be charged off in lump sum.

(Unit: million yen )

Pre-condition for trial calculation   Discount rate 3.0% /Expected working revenue rate 3.0%

By the above, a order backlog of 174 billion yen,  completed work amount of 174 billion yen, an operating profit of 3 billion 50 million yen, and a current net profit of -3 billion, 100 million yen are predicted for the next period.

[Situation on coping with the Y2K problem]

Our company had set the Y2K problem as an important management issue and coped with the problem by establishing a "Company-wide Y2K Countermeasure Organization." As the result, no Y2K problems were encountered.  The company will continue surveillance and coping with any possible occurrence of the Y2K problem.

4. Consolidated Financial Statements, etc.

(1) Consolidated Balance Sheet

(Unit: million yen)

(2) Consolidated Profit and Loss Statement

(Unit: million yen)

(3) Statement of Consolidated Earned Surplus

(Unit: million yen)

(4) Statement of consolidated cash flow

(Unit: million yen)

(5) Basic items for preparing consolidated financial statements

1. Items relating to scope of consolidation

All subsidiary companies (10) are consolidated. The names of the concerned consolidated subsidiary companies are as follows:

 DAIDAN Service Kanto Co., Ltd.         Okayama Daiden Setsubi Co., Ltd.

 Daiden Koji Co., Ltd.                                Kyushu Daiden Setsubi Co., Ltd.

 Daiden Koji Corp.                                      Kumamoto Daiden Setsubi Co., Ltd.

 Kyo Gas Co., Ltd.                                      Merino O.D.D. SDN. BHD

 Daiden Setsubi Koji Co., Ltd.                    Thai O.D.D. Co., Ltd.

2. Items relating to application of the equity method

The equity method is applied to investments related to all affiliated companies (1).  The name of the concerned company is as follows: CNA Engineers Pte., Ltd.

3. Items relating to business year, etc. of consolidated subsidiary companies

Out of the consolidated subsidiary companies, the accounts closing date of Merino O.D.D. SDN. BHD and Thai O.D.D. Co., Ltd. is December 31 and since the difference to the consolidated accounts closing day is within 3 months, the various financial statements relating to the business year of the concerned consolidated subsidiary companies are taken for consolidated accounting.  For any important transaction arising in the period between the dates of closing of accounts, adjustments necessary for consolidation are taken.

4. Items relating to accounting procedure standards

(1) Evaluation standard and evaluation method of securities

Securities with market values on the exchange market

Lower of cost or market in accordance with the moving average cost method

Other securities

Cost method (Moving average cost method)

(2) Evaluation method and evaluation standard of inventory assets

Incomplete work expenditures  Cost method based on actual cost method

Materials and stored goods     Lower of cost or market method

(3) Depreciation method of tangible fixed assets

Straight line method in regard to buildings and fixed percentage method in regard to others are adopted.  However the straight line method is adopted for overseas subsidiary companies.

(4) Accounting standard for reserves

�@     Reserves for bad debts

To cope with recovery failures of completed work accounts receivables and loans receivables, the reserves are set basing on the total of transfer limit amount by actual transfer rate based on corporate tax law and reserve amount coping with actual cost of liabilities.

�A       Reserves for completed work compensation

This is set with the object of warranting defects of completed work, accounted with consideration given for future compensation predictions, basing on past records for the object work subject to compensation.

�B     Retirement allowance reserves

To provide for retirement allowance of employees, the company has set an amount with pension asset balance deducted from the amount calculated by the present value method with required payment amount at the end of the period as the standard with consideration for mandatory retirement.

�C         Reserves for Directors' retirement allowance

To provide for retirement allowance of Directors', the company has accounted reserves for amounts required to be paid at the end of the period, based on in-house regulations.

�D        Reserves for liability warrantee loss

To provide for losses relating to warranting of liabilities, an estimated loss amount has been accounted with consideration given to the financial condition of the warranted party.

(5) Accounting standard for completed work amounts

Accounting standard for completed work amounts are in accordance with work completion standards.  Accounting standards for completed work amounts of overseas subsidiary companies are by work progress standards.

(6) Treatment of important lease transactions

Finance lease transactions other than those for which transfer of ownership rights of the leased object to the lessee is recognized, are accounted, basing on method relating to normal lease transactions.

(7) Accounting of consumption tax is in accordance with after tax method.

5. Items relating to evaluation of assets and liabilities of consolidated subsidiarie

Evaluation method of assets and liabilities of consolidated subsidiaries is in accordance with total market price evaluation method.

6. Items relating to depreciation of consolidated adjustment account

Consolidated adjustment account is depreciated by straight line method over 5 years.

7. Items relating to treatment of surplus appropriation accounts

Consolidated surplus calculation is made basing on surplus appropriation decided during the consolidated accounting year.

8. Scope of funds in the consolidated cash flow statement

Funds (cash and equivalent) in the consolidated cash flow statement consist of cash on hand, deposits payable upon demand, time deposits for which maturity is within 3 months after acquiring or readily convertible into cash without maturity date or redemption date.

[Additional information]

1. Tax effect accounting

In accordance with the amendment of consolidated financial statement regulations, tax effect accounting is being applied from this current period.

Incident to this change, compared with the case where tax effect accounting is not applied, deferred tax assets of 1,776 million yen (current assets of 519 million yen, investments, etc. of 1,256 million yen) were accounted with 295 million yen less net profits and 1,774 million yen more consolidated surplus accounted for the current period.

2. Deposits in the name of a joint enterprise entity

Because deposits in the name of a joint enterprise entity for which our company acts as the representative are becoming more important, deposits in the name of a joint enterprise entity are being accounted as assets from the current period.  By this, "cash flow on sales activities," "increase-decrease amount of cash and cash equivalent objects," and "period end balance of cash and cash equivalent objects" have increased 2,529 million yen respectively.

Remarks:

Those relating to consolidated balance sheet

[Current period]

1. Accumulated amount of depreciation of tangible fixed assets                              4,980 million yen

2. Transferred amount by endorsed notes receivable                                                   73 million yen

3. Number of treasury stock and consolidated balance sheet amount                     1,916 shares

                    0

4. Number of shares of parent company held by subsidiary                                    36,400 shares

company and consolidated balance sheet amount                                                  15 million yen

[Those relating to consolidated cash flow statement]

Period end balance of cash and cash equivalent objects and relation to the amount and account stated in the consolidated balance sheet

[Current period]

[Those relating to lease transactions]

Finance lease transactions other than those for which ownership rights of the leased object transfers to the lessee

1. Amount equivalent to acquired amount of the leased object, amount equivalent to accumulated depreciation amount, and amount equivalent to balance at end of period

[Current period]

Note: Amount equivalent to acquired amount was calculated by the interest payable inclusive method because the ratio of unexpired lease charge balance at end of the year in the year end balance of tangible fixed assets was low.

2. Amount equivalent to unexpired lease charge at end of year

[Current period]

Note: Amount equivalent to unexpired lease charges at the end of the year was calculated by the interest payable inclusive method because the ratio of unexpired lease charge balance at end of the year in the year end balance of tangible fixed assets was low.

3. Payable lease charges and amount equivalent to depreciation expenses

[Current period]

4. Calculation method of amount equivalent to depreciation expenses

   Calculation was made by the straight line method with lease period set as the service life and residual value set at zero.

[Those relating to tax effect accounting]

1. Details of main reasons for occurrence of deferred tax assets and deferred tax liabilities

[Current period]

2. Contents by major items which were reasons for a serious difference seen between the legal effective tax rate and the burden amount of corporate tax after adjustment for tax effect

[Current period]

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｜Brief Report on Closing of Accounts for the period ending March 2000｜