June 14, 2004

Additional disclosure items are as follows:

I. Notes to consolidated financial statements

1. Tax-effect accounting

Previous term (as of March 31, 2003)
1. Breakdown of deferred income taxes and liabilities
(Millions of yen)
Deferred tax assets:
Provisions for severance and retirement benefits 1,485
Allowance for doubtful accounts 17,726
Amount in arrears 661
Revaluation of inventories 2,732
Revaluation of investment securities 929
Revaluation of golf-club memberships 665
Tax loss carryforwards 15,752
Unrealized gains 216
Revaluation of investments in subsidiaries 5,428
Unrealized losses on available-for-sale securities 3,702
Other 2,991
Subtotal 52,292
Less: Valuation reserves -23,246
Total deferred tax assets 29,045
Deferred tax liabilities:
Depreciation expense -1,007
Retained earnings belonging to subsidiaries -599
Unrealized gains on available-for sale securities -76
Other -387
Total deferred tax liabilities -2,071
Net deferred tax assets 26,974
Note: The amounts for net deferred tax assets coincide with the total sum of amounts included under the following items of the balance sheet.
(Millions of yen)
Current assets: deferred tax assets 6,255
Noncurrent assets: deferred tax assets 21,229
Current liabilities: deferred tax liabilities -1
Long-term liabilities: deferred tax liabilities -509
2. Reconciliation between statutory tax rate and effective tax rate for the year ended March 31, 2003 was as follows:
Statutory income tax rate 43.9%
Expense not deductible for tax purposes 2.8
Nontaxable revenue -4.8
Per capita tax 10.1
Equity in earnings of unconsolidated subsidiaries and affiliates 22.9
Valuation reserves -26.1
Deduction of net operating loss carryforwards -31.8
Effect from changes in statutory tax rate -27.6
Effect from adoption of consolidated corporate-tax system 50.3
Other 15.1
Effective income tax rate 54.8%
Previous term (as of March 31, 2004)
1. Breakdown of deferred income taxes and liabilities
(Millions of yen)
Deferred tax assets:
Provisions for severance and retirement benefits 1,912
Allowance for doubtful accounts 14,166
Amount in arrears 283
Revaluation of inventories 2,556
Revaluation of investment securities 1,056
Revaluation of golf-club memberships 554
Tax loss carryforwards 8,286
Unrealized gains 207
Revaluation of investments in subsidiaries 7,321
Unrealized losses on available-for-sale securities 592
Other 2,375
Subtotal 39,315
Less: Valuation reserves -10,564
Total deferred tax assets 28,750
Deferred tax liabilities:
Depreciation expense -970
Retained earnings belonging to subsidiaries -522
Unrealized gains on available-for sale securities -216
Other -309
Total deferred tax liabilities -2,071
Net deferred tax assets 26,731
Note: The amounts for net deferred tax assets coincide with the total sum of amounts included under the following items of the balance sheet.
(Millions of yen)
Current assets: deferred tax assets 6,773
Noncurrent assets: deferred tax assets 20,565
Current liabilities: deferred tax liabilities -12
Long-term liabilities: deferred tax liabilities -595
2. Reconciliation between statutory tax rate and effective tax rate for the year ended March 31, 2003 was as follows:
Statutory income tax rate 43.9%
Expense not deductible for tax purposes 2.6
Nontaxable revenue -12.1
Per capita tax 4.9
Equity in earnings of unconsolidated subsidiaries and affiliates -3.3
Valuation reserves 7.5
Deduction of net operating loss carryforwards -11.7
Other 0.3
Effective income tax rate 32.1%



2. Related-party transactions

For the reporting term (April 1, 2003 to March 31, 2004)

Classification Subsidiary
Company name Tojo Concrete Co., Ltd.
Head office location Kato-gun, Hyogo Prefecture
Paid-in capital (\ million) 50
Business lines Manufacturing of concrete materials and products
Kanematsu's voting rights in the company 35.00% (directly held)
Nature of transactions
Directors
Effects on Kanematsu's performance
--
--
Transaction
Debt forgiveness
Loss resulting from debt forgiveness		 Transaction amount (\ million)
140
11
Title --
Term-end balance --

Notes:
1. Amounts equivalent to consumption tax is not included in transaction amounts but included in term-end balances.
2. Additional information
Debt forgiveness was implemented to allow the liquidation of the company.



For the previous term (April 1, 2002 to March 31, 2003)

Classification Subsidiary
Company name Malaysian Topmaking Mills Sdn. Bhd.
Head office location Kuala Lumpur, Malaysia
Paid-in capital M$5,250 thousand
Business lines Processing and sale of wool top, washed wool and washed coal
Kanematsu's voting rights in the company Nil
Nature of transactions
Directors
Effects on Kanematsu's performance
--
--
Transaction
Debt forgiveness
Loss resulting from debt forgiveness		 Transaction amount (\ million)
1,549
155
Title --
Term-end balance --

Notes:
1. Amounts equivalent to consumption tax are not included in transaction amounts, but included in term-end balances.
2. Additional information
a. During the reporting term, Malaysian Topmaking Mills Sdn. Bhd. was removed from the scope of consolidation due to sell-offs of the equity stakes held by the Company. Amounts for transactions represent related-party transactions when the said company was a consolidated subsidiary. Debt forgiveness was implemented in line with Kanematsu’s decision to withdraw from the business operated by the said company.
b. The ratio of voting rights was shown as of the balance sheet date.