The Board of Directors and This document has been translated from the original Japanese as a guide for non-Japanese readers. It may contain forward-looking statements based on a number of assumptions and beliefs made by management in light of information currently available. Actual financial results may differ materially depending on a number of factors, including changing economic conditions, legislative and regulatory developments, delay in new product and service launches, and pricing and product initiatives of competitors

Yen amounts in these financial statements have been rounded to the nearest one million yen. U.S. dollar amounts are provided solely for the convenience of readers and are translated from yen at the rate of \107 = US$1, the approximate exchange rate on June 25, 2004, and have been rounded to the nearest one thousand dollars

Consolidated Statements of Operations April 10, 2003 - March 31, 2004

Consolidated Statement of Shareholders Equity April 10, 2003 - March 31, 2004

Consolidated Statement of Cash Flows Years April 10, 2003 - March 31, 2004

(1)Summary of Significant Accounting Policies

Incorporation On April 10, 2003, the Company was established and incorporated as TC Holdings Co., Ltd. in order to absorb the construction business operations of the (Former) Tokyu Construction Co., Ltd. (now called TC Properties Co., Ltd., and hereinafter called‘former Tokyu Construction’). On July 25, 2003, the Board of Directors of the Company approved a private placement of 739,860,000 shares of common stock at \50 per share, which was carried out on August 28, 2003. Also, on July 25, 2003, the Board of Directors of the Company approved a private placement of 27,000,000 shares of Preferred Stock A at \500 per share and 12,500,000 shares of Preferred Stock B at \500 per share for placement on August 29, 2003. On October 1, 2003, the Company absorbed the construction business operations of the former Tokyu Construction Co., Ltd. in accordance with a Corporate Separation Agreement and changed its corporate name to Tokyu Construction Co., Ltd. Since the Company started business operations effective from October 1, 2003, the operating results presented herein are substantially only for the 6 months period from October 1, 2003 until March 31, 2004. The details of the Corporate Separation Agreement are presented in Note 2. ‘Important Agreement’. Solely for the convenience of readers, the consolidated balance sheets and statements of operations of the former Tokyu Construction for the year ended March 31, 2003, and for the 6 months ended September 30, 2003 and of the Company for the period ended March 31, 2004 (substantially the 6 months period ended March 31, 2004) are attached at the end of this report as appendixes.

(a)

Basis of Presenting Consolidated Financial Statements The accompanying consolidated financial statements have been prepared from the accounts maintained by the Company and consolidated subsidiaries in accordance with the provisions set forth in the Securities and Exchange Laws of Japan and the Japanese Commercial Code and in conformity with accounting principles and practices generally accepted in Japan, which may differ in some material respects from accounting principles and practices generally accepted and applied in countries and jurisdictions other than Japan. Certain items presented in the Japanese consolidated financial statements have been reclassified for presentation solely for the convenience of readers outside Japan. In addition, the notes to the consolidated financial statements include information which is not required under accounting principles generally accepted in Japan but is presented herein as additional information.

(b)

Cash and Cash Equivalents For purposes of the consolidated statements of cash flows, the Company and consolidated subsidiaries consider low-risk and all highly liquid securities with maturities of three months or less when purchased to be cash equivalents.

(c)

Consolidation Policies The accompanying consolidated financial statements include the accounts of the Company and its all subsidiaries. All significant intercompany accounts, intercompany transactions and unrealized profits have been eliminated in consolidation. Investments in all affiliates are accounted for by the equity method.

(d)

Method of Accounting for Construction Contracts The Company and consolidated subsidiaries applied the percentage-of-completion method for most contracts. Certain short-term contracts whose contract period is within 1 year are accounted for by the completed-contract method, which recognizes income only when a contract is completed. In accordance with accounting principles generally accepted in Japan, the anticipated losses on contracts in process are recognized by the percentage-of-completion method or by the completed-contract method, whichever applicable depend on the construction term.

(e)

Inventories Inventories are stated at cost, determined by the identified cost method for land and housing and adjusted for any substantial permanent decline in value, and by the average method for materials and supplies.

(f)

Short-term Investments and Investments Bonds held to maturity are valued by the amortized cost method (straight line method). ‘Other securities’ (securities which are neither trading nor held-to-maturity securities nor holdings in subsidiaries and affiliates) with market value are carried at the market value on the balance sheet date. The difference between the acquisition cost and the market value of‘Other securities’ is recognized in‘Unrealized gain (loss) on securities’in the balance sheet. The cost of‘Other securities’sold is computed based on the moving average method. Bonds with maturities of less than 1 year included in bonds held to maturity are recognized in the securities account as a current asset. Other securities are presented as investment securities.

(g)

Property and Equipment Property and equipment are stated at cost. The Company and most of its subsidiaries compute depreciation of items other than buildings by the declining-balance method and of buildings by the straight-line method. Rates for depreciation are based on the estimated useful lives of the assets according to their general class, type of construction, and use. The estimated useful lives are principally as follows: Buildings and structures……………55 years

(h)

Goodwill Goodwill is amortized fully at the time it is recognized.

(i)

Deferred Assets Company formation expenses, expenses incurred for the opening of business and new stock issuance expenses are expensed fully when paid

(j)

Income Taxes The Company and consolidated subsidiaries record income taxes currently payable based upon their determination of taxable income. Deferred tax assets have been recognized in the consolidated financial statements for the period ended March 31, 2004 with respect to the differences between the financial reporting and tax bases of assets and liabilities, measured using the enacted tax rates and laws which will be in effect when the differences are expected to be reversed. The effect on deferred tax assets of a change in tax rates is recognized in income in the period that includes the enactment date.

(k)

Accrued Retirement Benefits In accordance with the Accounting Standard for Retirement Benefits issued by the Business Accounting Deliberation Council of Japan, the allowance for retirement benefits for employees is provided based on the estimated retirement benefit obligation and the pension plan assets. Actuarial gains or losses are amortized by the straight-line method, principally over 5 years, which is within the estimated average remaining years of service of the eligible employees.

(l)

Foreign Currency Translation All foreign monetary assets and liabilities are translated into yen amounts at the exchange rate in effect at the balance sheet date. Assets, liabilities, revenues and expenses of overseas affiliate are translated into yen amounts at the exchange rate in effect at the balance sheet date and shareholdersﾕ equity accounts are translated into yen amounts at historical rates. Translation adjustments arising from the translation of amounts in the financial statements are included in foreign currency translation adjustments in shareholdersﾕ equity.

(m)

Method of Corporate Separation On April 10, 2003, the Company was incorporated as TC Holdings Co., Ltd. and on October 1, 2003, the Company absorbed the construction business operations of TC Properties Co., Ltd. (the former Tokyu Construction) and changed its name to Tokyu Construction Co., Ltd. Further, the Purchase method was applied in the Corporate Separation, based on the‘Accounting Method in connection with Corporate Separation’(Research Report, No.7, March 30, 2001) issued by The Japanese Institute of Certified Public Accountants. As a result, assets, liabilities and capital increased by \246,198 million ($2,300,917 thousand), \239,198 million ($2,235,497 thousand) and \7,000 million ($65,420 thousand), respectively. Goodwill of \68,000 million ($635,514 thousand) on the construction business which was evaluated by two independent specialists was recognized by both the Company and the former Tokyu Construction, and was amortized fully in current period by the Company.

(n)

Impairment of Long-lived Assets The Company has adopted the Accounting Standard for Impairment of Long-lived Assets issued by the Business Accounting Deliberation Council of Japan. This standard shall be effective for fiscal years beginning on or after April 1, 2005, although earlier application is encouraged. Under this standard, tangible and intangible assets are defined as the long-lived assets. The impairment test has two steps. The first, identities potential impairments by comparing the book value of the grouping unit with its market value or the sum of its estimated future cash flows. If the market value and/or the sum of its estimated future cash flows exceed the book value of the grouping unit, the second step is not necessary. The second step calculates the impairment loss by comparing the book value of the grouping unit with its fair value. If the book value of the grouping unit exceeds its fair value, the book value is written down to fair value in the period identified. Fair value is calculated as the present value of estimated future cash flows using a risk-adjusted discount rate. Because of all assets were succeeded by Corporate Separation made on October 1, 2003, using the Purchase Method, any impairment loss was not recognized after the impairment review.

(2)Important Agreement

On October 1, 2003, the Company absorbed the construction business operations of TC Properties Co., Ltd. (the former Tokyu Construction) and cahnged its corporate name in accordance with the Corporate Separation Agreement that was decided by board of directors' meeting held on May 27, 2003 and approved by an extraordinary stockholders' meeting on June 24, 2003. An outline of this Corporate Separation Agreement is as follows,

(a)

Purpose Absorption of the construction business operations of the former Tokyu Construction Co., Ltd.

(b)

Method of Corporate Separation The former Tokyu Construction shall be the separated company and the Company shall be the successor company. The construction business operations shall be succeeded by the Company, and its shares shall be allocated to shareholders of the former Tokyu Construction by the assimilation and shareholder allotment method.

(c)

Date of Separation October 1, 2003

(d)

Issuance and Allocation of New Stock upon Corporate Separation Upon separation, the Company shall issue 196,250,000 shares of new common stock and allocate them to shareholders of the former Tokyu Construction who are listed in its final shareholdersﾕ list dated September 30, 2003, in the ratio of 0.25 shares for one common share of the former Tokyu Construction. This clause is not applicable to shareholders of the deferred or preferred stock of the former Tokyu Construction.

(e)

Capital Increase The Company and the former Tokyu Construction increased their Capital as follows:

(f)

Amount of Shareholders' Equity On October 1, 2003, Shareholders' Equity of the Company was as follows:

(g)

Assigned Rights and Liabilities The Company has succeeded to all rights and liabilities arising from and belonging to the construction business operations of the former Tokyu Construction excluding the items that are specifically described in the Corporate Separation Agreement. Also, the Company succeeded assets and liabilities of the construction business operations of the former Tokyu Construction, the value of which was determined based on the balance sheet of the former Tokyu Construction as at March 31, 2003 with further necessary adjustments and changes up until the date of separation. As a result, the amount of succeeded assets, liabilities and others were as follows:

(3)U.S. Dollar Amounts

The consolidated financial statements presented herein are expressed in yen and, solely for the convenience of the readers, have been translated into U.S. dollars at \107 = U.S. $1, the approximate rate of exchange in effect on June 25, 2004. This translation should not be construed as a representation that all the amounts shown could be converted into U.S. dollars at that or any other rate.

(4)Short-term Investments and Investment Securities

(a)

Marketable securities classified as ‘Other securities’ at March 31, 2004 are summarized as follows:

(b)

Non-marketable securities at March 31, 2004 are summarized as follows:

(5)Property and Equipment

Property and equipment at March 31, 2004 is as follows:

(6)Short-term and Long-term Borrowings

The Company has entered into a syndicated long-term borrowing agreement with 13 financial institutions and this borrowing agreement is recorded as a single outstanding borrowing at March 31, 2004. Short-term borrowings comprise the current portion of long-term borrowings. The current interest rate applicable to the syndicated long-term borrowings outstanding at March 31, 2004 is 2.190% per annum.

The aggregate annual maturities of long-term borrowings maturing after March 31, 2004 are as follows:

The following assets are provided as security for the borrowings at March 31, 2004:

(7)Retirement Benefit Plans

The Company and consolidated subsidiaries have pension plans covering substantially all of employees. Benefits under the plans are primarily based on the combination of the years of services and compensation. The funding policy is to make periodic contributions as required by applicable regulations. The plan's funded status and amount recognized in the accompanying consolidated balance sheet at March 31, 2004 are as follows: The Company succeeded the former Tokyu Constructionﾕs retirement benefit plan as of October 1, 2003, the date of corporate separation, and therefore, the Company recognizes retirement benefit expenses only after that date.

The components of retirement benefit expenses for the period ended March 31, 2004 are as follows:

Actuarial assumptions used in accounting for the above plans are as follows:

(8)Guarantee Deposits

Guarantee deposits at March 31, 2004 are summarized as follows:

(9)Shareholders' Equity

(a)

On April 10, 2003, upon incorporation, the Company issued 1,200 shares of common stock at \50,000 per share.

(b)

On May 21, 2003, upon stock split 1,000 shares for one, issued shares of common stock of the Company increased to 1,200,000 shares.

(c)

On August 28, 2003, the Company issued 739,860,000 shares of common stock at \50 per share by private placement.

(d)

On August 29, 2003, the Company issued 27,000,000 shares of Preferred Stock A and 12,500,000 shares of Preferred Stock B each at \500 per share by private placements. All preferred stocks are convertible into common stocks at the option of the holder. Additional information on conversion is as follows:

Remaining each preferred stock by the end of the relevant conversion period will be converted into common stock on the day following the end of the conversion period on the prescribed terms for each preferred stock.

(e)

On October 1, 2003, the Company issued 196,250,000 shares of new common stock and allocated these to shareholders of the former Tokyu Construction who were listed in its final shareholdersﾕ list dated September 30, 2003, in the ratio of 0.25 shares per one issued share of the Company. Furthermore, additional paid-in capital was increased by \7,000million.

(10)Land and Housing

Land and housing at March 31, 2004 are summarized as follows:

(11)Other Income

The composition of Other income-Other for the period ended March 31, 2004 is as follows:

(12)Other Expenses

The composition of Other expenses-Other for the period ended March 31, 2004 is as follows:

(13)Income Taxes

The Company and consolidated subsidiaries are subject to a number of taxes based on income which, in the aggregate, resulted in a statutory tax rate of approximately 40.7% for the period ended March 31, 2004. The tax effects of temporary differences which gave rise to significant portions of deferred tax assets and deferred tax liabilities as at March 31, 2004 are summarized as follows:

For the period ended March 31, 2004, a reconciliation of the difference between the statutory income tax rate and the effective income tax rate was omitted because a net loss before income taxes was recorded.

(14)Rental Expenses

Rental expenses, principally for office buildings for the period ended March 31, 2004, totaled approximately \1,335 million (U.S. $12,476 thousand).

(15)Contingent Liabilities

As at March 31, 2004 contingent liabilities for loans guaranteed by the Company amounted to \414 million (U.S. $3,878 thousand).

(16)Segment Information

The Company and consolidated subsidiaries operate in two business segments as indicated below. Certain corporate administrative expenses have been allocated to the segments based on the nature of each expense.

*Elimination of intercompany sales **Includes unallocated administrative expenses of \1,843 million (U.S. $17,220 thousand) in 2004.

Independent Auditors' Report

The Board of Directors and Shareholders Tokyu Construction Co., Ltd.

We have audited the accompanying consolidated balance sheet of Tokyu Construction Co., Ltd. and consolidated subsidiaries as of March 31,2004 and the related consolidated statements of operations, shareholders' equity, and cash flows for the period from April 10,2003 to March 31,2004,all expressed in yen. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by managements, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Tokyu Construction Co., Ltd. and consolidated subsidiaries at March 31,2004, and the period from April 10,2003 to March 31,2004 in conformity with accounting principles generally accepted in Japan. The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the period ended March 31,,2004 are presented solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 3. Shin Nihon & Co. June 24,2004