CHIYODA CORPORATION
Consolidated Financial Results

for the Six-Month Period Ended September 30, 2005

This document has been prepared as a guide to non-Japanese investors and contains forward-looking
statements that are based on managements’ estimates, assumptions and projections at the time of
publication. A number of factors could cause actual results to differ materially from expectations. This
document is a translation of excerpts taken from the Japanese language original. All numbers are rounded
down to the nearest unit in accordance with standard Japanese practice. Please be advised that the Company
cannot accept responsibility for investment decisions made based on the information contained in this report.

1Summary of Financial Statements (Consolidated)
for the Six-Month Period Ended September 30, 2005

Listed Exchanges
Head Office
Stock CodePresident & CEO
Inquiries
Telephone
U.S. GAAP Accounting Principles

Tokyo
Kanagawa, Japan
6366
Nobuo Seki
Shinji Kusunoki, General Manager, Accounting Department+81-45-506-9410
Not adopted

Consolidated Business Results
for the Six-Month Period Ended September 30, 2005

1) Consolidated Business Results

Net Sales.........................................
Operating Profit ..............................
Ordinary Profit ...............................
Net Profit ........................................
Net Profit per Share (¥) ..................
Fully Diluted Net Profit per Share (¥)

Apr. 1, 2005–
Sep. 30, 2005
Change(%)
165,515
42.2
8,218
72.9
9,029
75.2
10,622
108.5
55.55
55.20

Millions of Yen
Apr. 1, 2004–
Sep. 30, 2004
Change(%)
116,371
31.2
4,752
90.4
5,153
71.1
5,095
135.6
27.44
26.74

Apr. 1, 2004–
Mar. 31, 2005
Change(%)
267,655—
11,077—
11,587—
12,863
—
68.62
67.30

(Notes) (1) Gain from investments in subsidiaries and affiliates accounted for by the equity method:
Six-month period ended September 30, 2005:
Six-month period ended September 30, 2004:
Year ended March 31, 2005:
0,

51 million yen
98 million yen
152 million yen(2) Average number of outstanding shares (consolidated) during the period:
Six-month period ended September 30, 2005:
191,218,401 shares
Six-month period ended September 30, 2004:
185,701,353 sharesYear ended March 31, 2005:
187,450,203 shares(3) Changes to accounting principles:No(4) Percentages for net sales, operating profit, ordinary profit and net profit represent year-on-year changes.

2) Changes in Consolidated Financial Position
Apr. 1, 2005–
Sep. 30, 2005

Millions of Yen
Apr. 1, 2004–
Sep. 30, 2004

Apr. 1, 2004–
Mar. 31, 2005

Total Assets........................................ ..
Shareholders’ Equity .......................... ..
Equity Ratio........................................ ..

214,462
46,57921.7%

160,454
28,48817.8%

182,893
36,873
20.2%

Shareholders’ Equity per Share (¥) .... ..

243.10151.79193.22(Notes)Six-month period ended September 30, 2005:
Six-month period ended September 30, 2004:
Year ended March 31, 2005:

Outstanding shares (consolidated) at the end of the period:
191,602,061 shares
187,684,027 shares
190,837,167 shares23) Consolidated Cash Flows
Apr. 1, 2005–
Sep. 30, 2005

Millions of Yen
Apr. 1, 2004–
Sep. 30, 2004

Apr. 1, 2004–
Mar. 31, 2005

(2,814)(2,683)

484

1,757

(1,541)(1,006)(1,160)

552

1,169

39,511

37,20041,594

Net cash provided by (used in) operating
activities ............................................. ..................
Net cash provided by (used in) investing
activities ............................................. ..................
Net cash provided by (used in) financing
activities .............................................
Cash and cash equivalents at end of period ...........

4) Consolidated Subsidiaries and Affiliates Accounted forby the Equity Method
Number of consolidated subsidiaries:
Number of non-consolidated subsidiaries accounted forby the equity method:
Number of affiliates accounted for by the equity method:

18055) Changes in the Scope of Consolidation and Affiliates Accounted forby the Equity Method
Consolidated subsidiaries:
Newly included
ExcludedAffiliates accounted for by the equity method:
Newly included
Excluded

00
00

Consolidated Operations Forecast
for the Year Ending March 31, 2006
Millions of Yen
Apr. 1, 2005 – Mar. 31, 2006
Net Sales ............................................ ................... ......................

360,000

Ordinary Profit ................................... ................... ......................

20,000Net Profit............................................ ................... ......................

17,500(Note) Projected net profit per share for the year ending March 31, 2006:

91.34 yen3

(1) State of the GroupThe Chiyoda Group of Companies consists of the parent company, 18 subsidiaries, and 5 equity method affiliates.
As a comprehensive engineering services organization, the Group’s central business is its expertise in providing themost efficient solutions based on an accurate understanding of customer needs. By using highly advanced
technologies and achieving the optimal combination of the project execution skills of group companies, all groupmembers work in unison to conduct business operations. Through this approach, the Group responds flexibly to theneeds of today’s markets, society and regions. The Group’s business is divided into Engineering Businesses andOther Businesses, and the Group’s structure is outlined below.

Business Flowchart
Clients

Chiyoda Corporation
Comprehensive engineering business,
including consulting, planning,
designing, procurement, construction,
trial operation, maintenance and otherservices, for plants of all types

Engineering, Construction & Maintenance*1 Chiyoda Kosho Co., Ltd.
Plant engineering, construction, and maintenanceof energy and chemical plants*1 Chiyoda Techno Ace Co., Ltd.
Engineering and construction of pharmaceuticalfactories, laboratories, and research centers*1 Chiyoda Keiso Co., Ltd.
Construction related to facilities for industries of all
types
Consulting*1 U-Tech Consulting Co., Ltd.
Consulting for industrial and social, regional
development

Advanced Engineering*1 Chiyoda Advanced Solutions Corporation
Computer aided engineering analysis, plant life
cycle engineering and risk management, utilizationof space environment, etc.

Global Engineering Satellites (GESs)*1 C&E Corporation (Philippines)*2 L&T Chiyoda Ltd. (India)
Overseas construction bases*1 Chiyoda Singapore (Pte) Limited*1 PT. Chiyoda International Indonesia*1 Chiyoda (Thailand) Limited*1 Chiyoda Malaysia Sdn. Bhd.
*1 Chiyoda & Public Works Co., Ltd. (Myanmar)*2 Chiyoda Petrostar Ltd. (Saudi Arabia)
Overseas design bases

Other businesses

Finance, Accounting, Tax*1 Arrow Business Consulting Corporation
Consulting services for finance and accounting

Airfreight and Spare Parts Supply*1 Arrowhead International Corporation
Travel and air cargo agent, spare parts supply

Information System Development*2 IT Engineering Limited
IT solutions and software development

Human Resources Staffing and Training*2 Arrow Mates Co., Ltd.
Staffing of human resources

Overseas Accounting and Finance*1 Chiyoda Asia Pacific (Pte) Limited (Singapore)Consulting on accounting and finance*1： Consolidated subsidiary*2： Affiliated company accounted for by
the equity method
Direct Client Orders
Contracted Business, Entrusted
Businesses

Overseas sales bases*1 Chiyoda International Corporation (USA)*1 Chiyoda Nigeria Limited4

(2) Management Policies
1. Basic Management Policies
The Chiyoda Group has formulated, and on February 17, 2005 announced, a medium-term management plan called“Double Step-Up Plan 2008” (DSP2008). The goal of the plan, which starts in fiscal 2005 (ends in March 2006) andends in fiscal 2008 (ends in March 2009) is to enable the Group to consistently increase earnings.
The fundamental management policy is to achieve the targets of DSP2008 in order to achieve further gains incorporate value.
Management philosophy
The Chiyoda Group aims to conduct group management so as to earn the trust and understanding of shareholders,customers, suppliers, employees, communities and all other stakeholders.

Corporate Philosophy
As a comprehensive engineering services organization, the Group’s most important
objectives are to promote its business and to contribute to the sustainable development of asociety by sound application of its know-how and state-of-the-art technology.

Management Policies
Steadfast implementation of
Double Step-Up Plan (DSP) 2008

Quality management policy

Occupational health andsafety policy

Environmental policy

Information security policy

Code of business conduct

Privacy policy

2. Management Vision and Medium-Term Management Strategies

M e d iu m - T e rm M a n a g e m e n t P la n
D o u b le S te p - U p P la n (D S P ) 2 0 0 8
M a n a g e m e n t V is io n
M a n a g e m e n t V is io n
• S te p u p to b e c o m e t h e R e lia b ilit y N o .1 P r o je c t
Com pany .
• S t e p u p t o b e c o m e a n E x c e lle n t C o m p a n y a b le tos u s t a ine a r n in g s g r o w th .
M e d iu m - T e r m M a n a g e m e n t
M e d iu m - T e r m SMt raante
a ggeie
mse n tS ttr
r a t e g ie s
S1

S2
S3

S4

C o n d u c t b u s in e s s o p e r a tio n s b a s e d o n s u p e r io r
te c h n o lo g ie s , e s ta b lis h in g r e la tio n s h ip s a s ah ig h ly tr u s te d p a r tn e r fo r o u r c lie n ts .
F u r th e r u p g r a d e p r o je c t e x e c u tio n s k ills th r o u g h S m a r t
E P C th a t u tiliz e s th e G r o u p ’s c o lle c tiv e s tr e n g th s .
E s ta b lis h a c o n s is te n tly s o u n d fin a n c ia l p o s itio n a b le tos u p p o r t th e c r e a tio n o f n e x t- g e n e r a tio n b u s in e s s e s th a t
c a n s u s ta in e a r n in g s g r o w th .
C r e a te a n e n e r g e tic o r g a n iz a tio n a n d r e fin e e m p lo y e es k ills to p r o v id e a p le a s a n t a n d r e w a r d in g w o r k p la c e .

P la c e p r io r ity o n C o r p o r a te S o c ia l R e s p o n s ib ility ( C S R ) p r o g r a m s

5There are two fundamental elements of DSP 2008. The first is to resolutely retain the innovative thinking needed to“capitalize on change, and take on challenges posed by change” with the aim of becoming “the Reliability No.1
Project Company.” The second is to aim to become “an Excellent Company that can increase earnings” throughconstant internal efforts.
In accordance with the above fundamental approaches, the Group has established medium- and long-term
strategies. All Group employees from senior management on down are working as one to achieve management
goals. To reach these goals, balance scorecards are used to facilitate comprehensive management of key targets foreach strategy, action plans and the status of progress toward goals.
3. Targeted Performance Indicators
The management goal of DSP 2008 is to raise the return on equity to at least 30% by fiscal 2008 (ends in March2009). The Group aims to further strengthen profitability through its own efforts and establish a permanently soundfinancial structure that can support the creation of next-generation businesses.
4. Fundamental Policy for Earnings Distributions
The Group has finally established a base capable of returning earnings to shareholders by eliminating its
accumulated loss in fiscal 2005. A dividend of 6 yen per share was paid in June 2005. The Group plans to pay a
consistent and stable dividend while increasing retained earnings to support the Group’s continuous growth andimproving employee remuneration based on operating results. The goal is to pay a dividend of at least 10 yen per
share by fiscal 2008, the final year of DSP 2008.
5. Policy and Thinking Regarding Reduction in Investment Unit
The Group regards a change in the stock investment unit as an effective means of adding vitality to capital markets,and thus as an important management issue. Such actions will be taken based on a comprehensive evaluation ofstock market trends, changes in Chiyoda’s investment unit and other items.
6. Important Management Issues
Execution on schedule of the DPS 2008 medium-term management planDue to growth in the market for natural gas development, including LNG, activity is strong in the industrial plant
market. Customers are demanding plants that are larger, able to perform more complex operations and have better
reliability. The Chiyoda Group is now executing DSP 2008 as planned for the purpose of responding accurately tothe demands of customers.
Measures to deal with business risk and other risks are explained later. The Group is taking actions to minimize theimpact of risks by thoroughly analyzing all risks, including the sharp increase in the price of basic materials and otheritems, and exhaustively managing procurement methods, contract terms and other items.
7. Fundamental stance concerning Corporate Governance1) Fundamental thinking concerning Corporate Governance
The Group places priority on fulfilling its obligations as a corporate citizen, viewing Corporate Social Responsibility(CSR) management that can earn the trust and understanding of shareholders, customers and all otherstakeholders as the basis for all corporate activities. The Group manages operations in a transparent and soundmanner, maintains a system of fair internal checks that is appropriately operated, discloses suitable information at
the proper time, and takes other steps to enhance Corporate Governance. In this manner, the Group strives to
conduct CSR-oriented management.

62) Status of initiatives concerning Corporate Governancei) Corporate Governance framework
The Group has newly established CSR Division and Operational Auditing Office in April 2005 for the purposes ofenhancing the quality and transparency of management, better responding to the needs of stakeholders,complying with all laws and regulations, and strengthening risk management functions. In July 2005, theCompany strengthened its CSR and internal control frameworks by establishing the CSR Division and appointing avice president who is solely in charge of overseeing internal control systems. The Group will work with the SQEDivision (which is responsible for workplace safety and hygiene and product quality management) to placeemphasis on CSR management by building effective internal controls that are linked directly to management.

Corporate Governance Structure
Stockholders Meeting

Corporate Auditors

Board of Directors

Corporate Auditors Committee

Executive Committee
Internal
control thru
PDCA cycle

Crisis Managers
SQE Division
Occupational safety andhealth, quality, environment
Operational Auditing Office

CSR Division
Compliance, social andenvironmental activities,
information security management

P(lan)D(o)C(heck)A(ct)Operations audit, internal control,enhancement of systems, export
control
Corporate Administration
Executive Officers
Risk Managers

Internal Checks and Balances

Project Operations
Executive Officers
Risk Managers

Self Auditingii) Status of measures to improve Corporate Governance (first half of FY05)(1) Execution of duties by directors, Executive Committee and executive officers
The Company has adopted the corporate auditor system and the executive officer system, under which the Boardof Directors supervises the execution of business activities by the executive officers. By separating the functionsof business execution and supervision, this framework strengthens management functions.
Regarding the execution of business activities, the Company has an Executive Committee made up ofrepresentative directors, and that serves as a preliminary deliberative body for the Board of Directors. Thisfacilitates reaching accurate decisions with in response to rapid changes in the social and economic environment.
Decisions involving the execution of business activities require unanimous approval of the committee. The
corporate auditors attend important meetings, including Board of Directors and Executive Committee, stating
their opinions as necessary. This system provides for a quick, transparent decision-making process.
The daily execution of business activities in accordance with decisions made by the Board of Directors andExecutive Committee is entrusted by the board to the executive officers. These officers perform their duties while
communicating as required with consulting attorneys and other external parties. The executive officers submit
reports on their activities as required at meetings of the Board of Executive Officers, which are attended bydirectors and corporate auditors, and the Executive Committee.

7During the first half of the fiscal year under review, the Board of Directors met 7 times (deliberating on 25
subjects) and the Executive Committee met 25 times (deliberating on 65 subjects, and examining 32 proposals).
These two bodies debated and reached decisions regarding fundamental management policies, legally prescribed
items and other important management issues. The two bodies also supervised the execution of businessactivities, confirmed progress made with regard to management plans, and performed other duties.
(2) Audits by the corporate auditors (Board)
The Board of Auditors comprises two statutory auditors and two outside auditors. These include three auditors asprovided for in Paragraph 1, Article 18 of the Law Concerning Special Measures Under Commercial Code with
Respect to Audit, etc., of Corporations (Kabushiki Kaisha).
The audit policy places emphasis on creating a corporate governance system worthy of the confidence thatsociety has placed in the Company by achieving sound and sustainable growth through audits of the performanceof duties by directors. The two core policy objectives are as follows:(1) Assure strict adherence to due professional care practice in corporate decision making by the directors(2) Constantly supervise the operation of the internal control system and provide counsel and advice for the
improvement of its functions
During the first half of the fiscal year under review, the Board of Auditors met 6 times (5 regular meetings andone extraordinary meeting). The corporate auditors (Board) and financial auditor maintain close coordination. The
financial auditors submitted an annual audit plan, interim financial statements to the corporate auditors.
(3) Status of risk management system
The Group has established risk management and crisis management systems to deal with risks and crises, and arisk managers and crisis managers have been appointed. This provides an effective system for the constantoversight of preventive measures and, in the event of an incident, a proper response along with measures tominimize losses.
(4) Promotion of CSR management
For the purpose of conducting CSR management that is integrated with corporate-level management, the Chiyoda
Group aggressively conducts CSR management through the CSR Division (established in April 2005), which
oversees the Compliance Management Office, Social Environment Office (established in April 2005) andInformation Security Management Office.
ComplianceWith regard to compliance, the Group ensures strict adherence to laws and regulations in Japan and overseas,international rules and internal rules, and the corporate code of conduct to ensure that business activities areconform to social standards. Furthermore, handbooks providing behavior guidelines and other information
concerning compliance and information security are made available to Group executives and employees on a realtime basis by using internal groupware.
In April 2004, a group dedicated exclusively to export management was established in the Operational Auditing
Office in order to conduct the strict management needed to ensure compliance with all laws and regulations
associated with exports.
Environment management
Regarding environmental management, the Company in March 2001 became the first Japanese company
specializing in engineering services to earn ISO14001 and JIS Q 14001 certification. The Group remains firmly
committed to environmental management.
In August 2005, the Group released its 2005 environmental report, which includes environmental activities
conducted by the entire Group, and placed the report on the Chiyoda web site. In addition, the Group is an active
participant in Team Minus 6%, a citizens project in Japan aimed at preventing global warming.
Information security management
Regarding information security management, the Chiyoda Information Security Management System, which
conforms to BS7799-Part II (2002) (an international standard prescribed by the UKAS for information security
management systems), provides a clearly defined and organizational system for protecting and handling thevarious information resources that represent the nucleus of the Group’s operations. In April 2005, the Group
formulated a “Personal Information Protection Policy” and “Personal Information Protection Regulations” inresponse to the full-scale enactment of Japan’s Personal Information Protection Law, thereby establishing apersonal information protection framework at the group level.
(5) A rigorous SQE program
Preserving the enhancing the safety and health of everyone who works at the Group is the basis for future growth
and a major premise for the construction of plants that can achieve a high degree of customer satisfaction. The
Group takes suitable actions to train all employees in order to prevent accidents and fires. In this manner, theGroup is constantly conducting programs aimed at preserving and improving workplace safety and hygiene.

8

With regard to occupational safety and hygiene, the Group has management systems that conform to OHSAS
18001 (standards for workplace safety and hygiene management systems established by an international
consortium including the British Standards Institute, Japan Industrial Standards and similar organizations of othercountries), the de facto world standard, and the standards announced by the Japanese Ministry of Health, Labourand Welfare. In fiscal 2004, the Group had an excellent safety record.
Regarding the quality management system, the Company has retained ISO9001 and JIS Q 9001 certification
since 1994.
(6) Strengthening systems for internal checks and internal audits
In addition to conducting self-assessments of the status of existing internal checks, the Group in April 2005
established the Business Auditing Office to evaluate daily business activities from a neutral perspective in order tostrengthen the system of internal checks. The Operational Auditing Office is a new unit established for the
purpose of planning and executing audits that verify the proper structure and operation of the various elements
required for an effective system of internal checks. Measures will be taken to further strengthen the Group’s
internal control framework to prepare for the planned release of a report on internal checks.
During the first half of the fiscal year under review, the Group disclosed information concerning operations toshareholders in a speedy and accurate manner through earnings announcement meetings, supplying more
information through the investor relations section of its web site, and by other means. In addition, in accordancewith disclosure regulations of the Tokyo Stock Exchange, a Group representative in February 2005 submitted an“Oath Concerning Timely Disclosure” in writing. Regarding the “Confirmation of Suitability of MOF Securities
Report and other documents,” the Group has a system under which, when this confirmation of suitability is
submitted, business division confirmation documents are submitted by the directors responsible for each divisionand the CEOs of all group companies to the Company’s president and representative director. By verifying that
there are no fraudulent entries in reports and that no information is missing, the Company ensures that theconfirmation of suitability has been properly prepared.
(7) Audits of individual projects
Operating divisions perform self-assessments of the risks and profitability of individual projects. In addition, adouble-check is performed by a corporate administration division to provide an internal checking function,
thereby enhancing the transparency of management.
This system is part of the process to ensure the rigorous application of the proper business cycle (plan,
implement, confirm by management, execute countermeasures). Managers can confirm that divisions areproperly monitoring activities and that the system of internal checks is functioning properly.
Beginning in the fiscal year that ended in March 2004, professional auditors from corporate administration havebeen conducting “project audits,” which entail examining the suitability of project execution plans formulated byoperating divisions. This is aimed at further enhancing the transparency of management transparency andstrengthening internal checks.
iii) Personal, financial, business and other relationships with outside corporate auditors
The Company has three outside auditors: a former managing director of The Bank of Tokyo-Mitsubishi, Ltd., aformer associate director of Mitsubishi UFJ Trust and Banking Corporation and an attorney. Regarding significant
relationships, the Bank of Tokyo-Mitsubishi and Mitsubishi UFJ Trust and Banking Corporation are both major
shareholders of the Company and providers of financial services. Mitsubishi Corporation is a major shareholder
and business partner.
iv) Financial auditing
Names of engagement partners and the auditing firm who performed the audit:
Engagement partner

Auditing firm

Yoshio Aoki

Deloitte Touche Tohmatsu

Hiroki Kitakata
Deloitte Touche Tohmatsu
Note: Certified public accountant Yoshio Aoki was assigned to audit the Company for the first time in the current
fiscal year.
For the fiscal year-end financial audit, the engagement partners will be assisted by five certified public accountants,
four assistant accountants and one other individual.
8. Items concerning parent company
Chiyoda has no parent company.

9(3) Results of Operations and Financial Condition
1. Consolidated Operating Results for the Six Months Ended September 30, 2005
During the first half of the fiscal year, Japan’s economy staged a gradual recovery despite the higher cost of basic
materials due to the sharp increase in the price of crude oil. Fueling the recovery is growth in capital expenditures
backed by a substantial improvement in corporate earnings. Outside Japan, the U.S. economy remains healthy
despite the effects of hurricanes and the higher cost of crude oil.
In the Japanese industrial plant market, there is a very large volume of capital spending by Japanese oil companies
for facilities that manufacture feedstock for petrochemicals. As a result, Chiyoda received orders during the first half
for new petrochemical facilities and the expansion of existing ones. Chiyoda also received orders for studies
concerning the future expansion of these facilities. In the petrochemical industry, Japanese chemical companies areseeing earnings improve as they gain confidence in their ability to raise prices to reflect the higher cost of crude oil.
The result is a growing desire among these companies to increase capital expenditures. Japanese chemicalcompanies are making substantial investments in China and elsewhere in Asia for facilities to produce value-added
derivatives and competitive exclusive products.
In the overseas industrial plant market, the shift to natural gas among energy-consuming nations is gaining
momentum as crude oil prices remain high. India started importing LNG in 2004 and China began purchasing LNG.
Rising demand is creating an increasingly larger volume of gas development projects in the Middle East, Asia andAfrica.
In the first half of the fiscal year, consolidated new contracts were 442,110 million yen, 264.1% higher than one
year earlier. New contracts included an order received in September to build two enormous LNG trains in Qatar,each with an output of 7.8 million tons per annum. Chiyoda has thus surpassed in the first half its full-year
consolidated new contract forecast of ¥350,000 million. New contracts in Japan totaled 65,813 million yen, up
39.3%, and overseas new contracts were 376,297 million yen, up 407.3%.

New Contracts and Backlog of Contracts
Billions of Yen
900

812.3

800
700
600

522.4

500
400
300
200

411.2

375.8
246.1

128.0

217.9

321.7

316.1

180.4

442.1
376.2

218.6
209.6

249.0

100
89.9

68.6

71.9

89.4

65.8

March, 2002

March, 2003

March, 2004

March, 2005

September,
2005

0

Domestic Contracts

Overseas Contracts

Backlog of Contracts

Consolidated net sales from construction contracts increased 42.2% to 165,515 million yen, exceeding the 150,000
million yen forecast for the first half by 10.3% as construction work advanced as planned. Net sales totaled 42,416
million yen in Japan, up 23.4%, and 123,098 million yen overseas, up 50.1%.
Regarding earnings, gross profit on completed construction contracts rose 43.0% to 12,660 million yen due togrowth in the volume of completed contracts and an improvement in gross margin on these contracts. In addition,
selling, general and administrative expenses continued to decline relative to sales. The result was a 72.9% increasein operating profit to 8,218 million yen. Ordinary profit increased 75.2% to 9,029 million yen due to the growth inoperating profit, higher interest income as joint venture assets increased, and other items. Net profit rose 108.5%
10

to 10,622 million yen. This includes a gain on the reversal of the allowance for doubtful accounts due to therecovery of long-term receivables.

11

Consolidated Results of Operations – Four-year Summary
Six months ended
September 30
2002
2003
2004

New
contracts

Construction
contracts

101.2
241.5
124.1

69.3
88.6
116.3

Gross profit
on projects
completed
5.4
6.5
8.8

Operatingprofit1.0
2.4
4.7

Ordinary
profitBillions of Yen
Net profit

1.6
3.0
5.1

2.4
2.1
5.0

2005

442.1

165.5

12.6

8.2

9.0

10.6

Pct. YoY change(reference)Year ended March
31, 2005

264.1%
411.2

42.2%
267.6

43.0%
19.7

72.9%
11.0

75.2%
11.5

108.5%
12.8

On a non-consolidated basis, first half new contracts increased 301.2% to 415,053 million yen, well above thefiscal-year new contract forecast of ¥310,000 million announced at the start of the fiscal year. Domestic newcontracts increased 44.2% to 44,531 million yen and overseas new contracts were up 410.6% to ¥370,521 million.
Net sales from construction contracts increased 45.5% to 141,187 million yen, exceeding by 8.6% the 130,000
million yen forecast for the first half. Net sales from domestic construction contracts were up 24.0% to 25,669
million yen and net sales from overseas construction contracts increased 51.3% to ¥115,517 million.
Regarding earnings, operating profit increased 124.0% to 7,626 million yen, ordinary profit increased 135.8% to
8,910 million yen, and net profit increased 106.1% to 9,655 million yen.
Major new contracts overseasz LNG plant Trains 6 & 7 of Ras Laffan Liquefied Natural Gas III in Qatarz Expansion of LNG plant Train 4 & 5 of Qatar Liquefied Gas Company Limited (II) in Qatar
Major completions overseas (*) completed portionz Sakhalin II LNG project in Russia (*)
z LNG plant Train 4 & 5 for Ras Laffan Liquefied Natural Gas in Qatar (*)
z LNG plant in Oman (*)
Major new contracts in Japanz No. 8 cooling tower and related facilities for Fuji Oil Co., Ltd.
z BTX (benzene, toluene and xylene) plant expansion for Taiyo Oil Co., Ltd.
Major completions in Japan (*) completed portionz LPG storage terminals in Fukushima (*)
z Waste heat recovery power generation system for Fuji Oil Co., Ltdz Mixed xylene plant for Seibu Oil (*)
z Lube oil/grease mixing and filling plant for Nippon Petroleum Refining

122. Financial Condition
1) Assets, Liabilities and Shareholders’ Equity
AssetsAssets increased 31,569 million yen compared with the end of the previous fiscal year. Fixed assets were down 1,954
million yen, mainly the net result of capital expenditures in IT and other fields and the recovery of long-term
receivables and long-term accounts receivable. Current assets increased 33,523 million yen. Although there was a
1,011 million yen decrease in cost of construction contracts in progress, there was a 13,874 million yen increase intrade notes and accounts receivable and a ¥19,787 million increase in joint venture assets due to an increase in largescale projects conducted as joint ventures.
Liabilities
Liabilities were 21,906 million yen more than at the end of the previous fiscal year. This was mainly attributable toa 14,550 million yen increase in advance receipts on construction contracts and a 8,541 million yen increase innotes and accounts payable.
Shareholders’ equity
Shareholders’ equity increased 9,706 million yen compared to the end of the previous fiscal year due to first half net
profit. The equity ratio rose by 1.5 point to 21.7%.

Billions of Yen
FY ended
March 31
Current Assets
Cash and time
deposits
Trade receivables
and costs ofconstruction
contracts inprogress
Jointly controlled
assets of joint
ventureOther current
assetsFixed Assets

Sep. 30,
2005

Mar. 31,2005

Change

39.6

42.3

(2.7)

75.4

62.6

12.8

69.7

49.9

19.8

10.6

7.0

3.6

Property, plantand equipment
Intangible fixed
assetsInvestments andother assets
Total Assets

6.9

6.7

0.2

2.9

2.8

0.1

9.1

11.2

(2.1)

214.4

182.8

31.6

Sep. 30,
2005

Mar. 31,2005

Change

10.0

10.1

(0.1)

141.8

118.7

23.1

Other current
liabilities
Non-current
Liabilities
Long-term debt

9.3

10.8

(1.5)

0.2

0.2

0.0

Other long-term
liabilities (*)
Shareholders’EquityLiabilities andShareholders’Equity

6.4

6.0

0.4

46.5

36.8

9.7

214.4

182.8

31.6

Current liabilities
Short-term loans

Trade payable andadvance receipts
on construction
contracts* Includes minority interests

2) Cash Flows
Operating activities
Net cash used in operating activities was 2,814 million yen. Profit before income taxes and minority interests was
10,197 million yen and depreciation and amortization was 686 million yen. Net changes in current assets andliabilities (total of changes in trade receivables, cost of construction contracts in process, trade payables, andadvance receipts on construction contracts) provided net cash of 10,229 million yen. However, there was anincrease of 19,787 million yen in jointly controlled assets of joint ventures due to an increase in large-scale projects
conducted as joint ventures.

Joint venture assets represent the share of the Company’s interest in balance sheet items as shown in joint venturecontracts associated with construction contracts. In effect, these assets thus represents the Company’s share of cash
and cash equivalents held in the name of the joint venture. Taking this into consideration, effective net cash provided
by operating activities was 16,972 million yen.
Investing activities
Net cash provided by investing activities was 1,757 million yen. Purchases of property, plant and equipment, including
the investments in IT-related software, totaled 808 million yen. However, there were proceeds of 1,902 million yen

13from collections of long-term loans and proceeds of 654 million yen from maturities of time deposits of more than
three months.
Financing activities
Net cash used in financing activities was 1,160 million yen. There were proceeds of 202 million yen from theexercise of stock options but cash was used for dividend payments and other items.

The result of the above items was a net decrease of 2,083 million yen in cash and cash equivalents compared with theend of the previous fiscal year to 39,511 million yen as of September 30, 2005.

Change in Financial (Consolidated)
Billions of Yen
Fiscal year ended March 31

2002

2003

2004

2005

Six-month ended
Sep. 30, 2005

Total Assets

129.3

120.2

142.8

182.8

214.4

Total Liabilities (*)

114.2

103.6

120.0

146.0

167.8

Shareholders’ Equity

15.1

16.6

22.7

36.8

46.5

Net CashOperating

6.9

15.5

0.4

15.5

(2.8)

provided by

Activities(used in):Investing

(0.8)

(1.2)

(1.0)

(1.2)

1.7

(9.5)

(8.2)

1.1

(8.2)

(1.1)

38.6

34.9

40.9

41.5

39.5

Activities
Financing
Activities
Balance of Cash and Cash
Equivalents* Includes minority interests.

Cash Flow IndicesFiscal year ended March 31

2002

2003

2004

2005

Six-month ended
Sep. 30, 2005

Shareholders’ Equity ratio

21.7%

11.7%

13.9%

15.9%

20.2%

Years for Debt Redemption

2.7 year

2.7 year

0.7 year

21.3 year—(interest-bearing debt divided(1.8 year)(2.5 year)(0.3 year)(0.5 year)(0.6 year)

Interest Coverage Ratio

17.5 times

11.7 times(142.4 times(9(operating cash flow divided(26.7 times)

2.4 times)

6.1 times)(shareholders’ equity divided
by total assets)

by operating cash flow)
1.6 times(72.3 times)—(113.0 times)

by interest expense)
Note: Figures in parentheses show years of debt redemption by real cash flow (adjusted for jointly controlled assets of joint
ventures) provided by operating activities and interest coverage ratio.

3. Outlook for the Year Ending March 31, 2006 and Risk Factors
The economic recovery in Japan is expected to continue despite concerns associated with the direction of theChinese economy and the much higher cost crude oil.

Overseas, the United States, the world’s largest consumer of energy, is expected to become increasingly dependenton LNG imports. As a result, there are a large number of LNG plants in the planning stages in the Middle East,
particularly Qatar, Nigeria and other west African countries, and Russia. In the crude oil field, refineries in the
United States and Europe are operating at more than 90% of capacity. This is creating a situation in which any
tightening in the supply-demand balance can produce sudden price increases and even product shortages. The
Chiyoda Group will target new contracts mainly in market sectors where the Group can fully utilize its superior
technologies. Targeted sectors include LNG, a market where growth is expected to continue.
In Japan, oil companies are expected to make substantial investments. These investments will target not only
petrochemical projects, but also projects to prepare for future shifts in demand as well as to respond to thewidening gap between the prices of heavy and light oil products. The Group thus expects a continuation in thecurrent favorable environment for capturing new orders.
The market for environmental facilities is expected to grow in the U.S., where restrictions targeting air pollution andother problems are being tightened, and in Europe as eastern European countries join the EU. One result is rising14

demand for flue gas desulfurization facilities at coal-fired power plants and other plants. Chiyoda offers partners
licenses to utilize its CT-121 desulfurization technology. Chiyoda is now conducting full-scale sales activities for thistechnology, which represents a business model that, unlike conventional EPC (engineering, procurement andconstruction) projects, incorporates earnings from intellectual property using an internally developed technology.
The Group received orders for 12 of these desulfurization facilities during the previous fiscal year and the first halfof the current fiscal year, and continues to conduct sales activities to capture more contracts.
Forecasts for the fiscal year ending in March 2006 are based on the exchange rate of 110 yen to the U.S. dollar
compared with the 100 yen rate used at the beginning of the fiscal year. For the fiscal year, Chiyoda has increased its
forecast for consolidated new contracts from 350.0 billion yen to 600.0 billion yen. The ordinary profit forecast has
been raised from 14.0 billion yen to 20.0 billion yen and the net profit forecast from 14.5 billion yen to 17.5 billion yen.
On a non-consolidated basis, the forecasts are new contracts of 550.0 billion yen, up from 310.0 billion yen, net sales
from completed contracts of 310.0 billion yen, up from 270.0 billion yen, ordinary profit of 19.0 billion yen, up from
12.5 billion yen, and net profit of 16.5 billion yen, up from 13.5 billion yen. The projected year-end dividend per sharehas been raised from 8 yen to 10 yen.

Outlook for FY2005 Business Results
Billions of yen
Consolidated
FY to March 31
New contracts
Completed projects
Ordinary profit
Net profit

2006
600.0
360.0
20.0
17.5

2005
411.2
267.6
11.5
12.8

Non-consolidated
Change
(%)
45.9
34.5
73.9
36.7

2006
550.0
310.0
19.0
16.5

2005
368.2
223.8
9.1
11.8

Change
(%)
49.4
38.5
108.8
39.8

4. Risk factors
Presented below is a list of major items, including significant items concerning the Group’s operating results andfinancial condition that may have a material effect on investment decisions. The Group is aware of these risks and istaking the greatest possible precautions to prevent their occurrence. The Group is also working on quickly
responding in the event that a problem occurs to minimize its impact.

Risk factors listed below that involve future events represent items that the Company currently regards asimportant with regard to risk management.
1) Foreign exchange rate volatility
At overseas construction projects, foreign currencies are used for most payments received and purchases ofequipment and materials. Consequently, operating results are vulnerable to the effects of unexpected exchange
rate movements. The Company uses foreign exchange forward agreements and other means to minimize theimpact of foreign exchange rate movements on earnings from ongoing construction projects.
2) Higher cost of basic materials and other items
At plant construction projects, there is a gap between the time estimates are prepared and the time materials andequipment are ordered and purchased. As a result, increases in the cost of labor, equipment, materials and otheritems following the receipt of an order can have an impact on earnings. Moreover, there may be an impact onearnings from higher prices of equipment and materials or in the event that completion of a project is delayed by
the inability to procure equipment and materials on time due to insufficient supplies.

Presently, prices of basic materials are much higher and there are shortages of certain raw materials. Chiyoda isdoing everything possible to avoid and minimize exposure to these risks. The Company is studying thediversification of suppliers, such as by making purchases in all areas of the world, and the placement of large orders,
including provisions covering unusually large increases in prices when negotiating contracts with customers, andtaking other actions.
3) Terrorism, hostilities in neighboring countries, strikes and anarchism
There could be an impact on earnings in the event that global terrorism or similar events directly affect the head
office, construction sites and employees or cause the suspension of business operations, or that instability in client
countries in the Middle East or elsewhere causes the medium- to long-term cancellation or postponement of capital
expenditures. If any of these events occurs, there could be an impact on earnings if the Group is unable to pass on
the resulting expenses to customers. The Group has a crisis management system that permits a quick initial
response if an event of this nature occurs.
4) Accidents during transport, etc.
There is a risk of loss or damage of equipment and materials during transport due to inclement weather and othernatural disasters. Although marine transport insurance and other precautions are taken, insurance does notnormally cover losses caused by wars and hostilities that erupt without warning. Consequently, Chiyoda is15

temporarily exposed to the resulting risks. In the event that this type of problem occurs, the Company will quickly
hold discussions with customers and other related parties to determine the best response.
5) Accidents at plants
There is a possibility of a variety of problems occurring due to some cause at plants under construction by theGroup or at plants have been constructed by the Group. Such problems range from minor malfunctions ofconstituent components of a plant to a major accident like an explosion or fire that affects the entire plant. In theevent that the Group is responsible for the cause of the accident, there could be an impact on earnings.

To prevent the occurrence of these accidents, the Group has established quality management, safety management andother risk management systems in order to maximize the safety of the plants it constructs. The Group will continue totake actions to strengthen these risk management systems.
Precautions regarding forward-looking statements
Forecasts for operating results contained in these materials are based on various assumptions concerning future
events. Actual results may differ significantly from these forecasts due to a wide range of factors. Investors are
therefore urged to refrain from reaching decisions based solely on these forecasts.

16

Financial Statements
1. Consolidated Balance Sheets
Apr. 1, 2005–
Sep. 30, 2005%

Millions of Yen
Apr. 1, 2004–
Sep. 30, 2004%

Apr. 1, 2004–
Mar. 31, 2005%

AssetsCurrent Assets
Cash and time deposits....................................
Notes and accounts receivable-trade .................
Costs of construction contracts in progress.........
Deferred tax assets .........................................
Jointly controlled asset of joint venture..............
Other ............................................................
Allowance for doubtful accounts ........................
Total Current Assets ....................................
Fixed Assets
Property, plant and equipment
Buildings and structures ..........................
Accumulated depreciation ........................
Book value of buildings andstructures
Machinery and equipment ........................
Accumulated depreciation ........................
Book value of machinery andequipment
Tools, furniture and fixtures .....................
Accumulated depreciation ........................
Book value of tools, furniture andfixtures
Land .....................................................
Construction in progress ..........................
Total property, plant and equipment ..........
Intangible fixed assets ..............................

Investments and other assets
Investment securities ..............................
Long-term loans .....................................
Long-term accounts receivable .................
Long-term receivables .............................
Deferred tax assets.................................
Other investments ..................................
Allowance for doubtful accounts................
Allowance for capital loss on investments
Total investments and other assets ...........

39,65638,931

42,384

51,52323,96628,031
28,206

37,64924,977

4,080
69,741

2,792
37,196

3,803
49,953

6,917
(350)

3,366
(326)

3,749
(506)

195,535

91.2

138,198

86.1

162,011

6,410

6,205

6,302

3,338

3,166

3,247

3,072

3,038

3,054

813
315

726
311

685
313

498

415

371

5,482
4,039

5,231
3,904

5,352
3,954

1,442

1,327

1,398

1,904
1

1,962
0

1,955
3

6,919

6,744

6,783

2,901

2,620

2,844

4,392
597
1,911
—
756

4,332
665
5,105
4,166
126

4,322
643
3,711
3,003
112

3,200
(1,490)
(263)

2,179
(3,421)
(263)

2,208
(2,485)
(263)

9,105

12,891

11,254

88.6

Total Fixed Assets ......................................

18,926

8.8

22,25613.9

20,881

11.4

Total Assets ...............................................

214,462100.0

160,454100.0

182,893100.0

17Apr. 1, 2005–
Sep. 30, 2005%
Liabilities and Shareholders’ Equity
Current Liabilities
Notes and accounts payable-trade ...................
Short-term loans ..........................................
Income taxes payable ....................................
Advance receipts on construction contracts .......
Indemnity allowance for completed
construction ...............................................
Accrued bonuses ...........................................
Allowance for contingency loss ........................
Other ..........................................................
Total Current Liabilities ..............................

Millions of Yen
Apr. 1, 2004–
Sep. 30, 2004%

Apr. 1, 2004–
Mar. 31, 2005%

82,955
10,061

55,820115

74,414
10,101

388
58,934264
47,717664
44,384

934

1,148

759

2,480

1,551

2,814

—

200

—

5,524

9,463

6,642

161,27975.2

116,28172.5

139,78176.4

Non-Current Liabilities
Long-term debt .............................................
Deferred tax liabilities ....................................
Liability for retirement benefits........................
Liability for retirement benefit to directors ........
Other liabilities ..............................................
Total Non-Current Liabilities .......................

6,303

2.9

15,322

9.5

5,894

3.2

Total Liabilities ...........................................

167,58278.1

131,604

82.0

145,675

79.6

Minority Interests .......................................

301

0.2

362

0.2

345

0.2

12,823
6,607
28,100

6.0
3.1
13.1

12,342
6,131
10,854

7.7
3.8
6.8

12,721
6,506
18,622

6.9
3.6
10.2

203

10,265

214

0
5,598

0
4,595

1
5,167

363
136

374
86

425
85

Shareholders’ Equity
Common stock ..............................................
Additional paid-in capital ................................
Retained earnings..........................................
Net unrealized loss on available-for-salesecurities......................................................
Foreign currency translation adjustments .........
Treasury stock ..............................................
Total Shareholders’ Equity ..........................

39
(587)
(405)

0.0
(0.3)
(0.2)

27
(689)
(178)

0.0
(0.4)
(0.1)

31
(759)
(250)

0.0
(0.4)
(0.1)

46,57921.7

28,48817.8

36,873

20.2

Liabilities, Minority Interests andShareholders’ Equity...................................

214,462100.0

160,454100.0

182,893100.0

18

2. Consolidated Statements of Income
Apr. 1, 2005–
Sep. 30, 2005(%)
Construction Contracts .................................
Cost of Construction Contracts......................
Gross profit .....................................................
Selling, General and
Administrative Expenses ...............................
Operating profit ...............................................
Other Income
Interest ....................................................
Dividend income........................................
Equity in earnings of associated companies...
Rent income ........................................... ..
Foreign exchange gain ...............................
Other ......................................................
Total Other Income .......................................

Millions of Yen
Apr. 1, 2004–
Sep. 30, 2004(%)

Apr. 1, 2004–
Mar. 31, 2005(%)

165,515100.0

116,371100.0

267,655

100.0

152,854
12,660

92.4
7.6

107,518
8,852

92.4
7.6

247,905
19,749

92.6
7.4

4,441

2.6

4,099

3.5

8,671

3.3

8,218

5.0

4,752

4.1

11,077

4.1

863

274

723

17
51
138
3
46

7
98
121
63
124

152
247
—
141

1,120

0.7

690

19

0.6

1,284

0.5

Other Expenses
Interest expense ........................................
Cost of rent income ....................................
Foreign exchange loss .................................
Other ........................................................
Total Other Expenses ....................................

310

0.2

289

0.3

775

0.3

Ordinary profit.................................................

9,029

5.5

5,153

4.4

11,587

4.3

Extraordinary Gain
Reversal of allowance for doubtful accounts ...
Reversal of allowance for contingency loss ....
Other .......................................................
Total Extraordinary Gain ...............................

1,167
—
3

Extraordinary Loss
Loss on sale of fixed assets ..........................
Impairment loss ..........................................
Loss on removal of fixed assets ....................
Other ........................................................
Total Extraordinary Loss ................................

Profit before income
taxes and minority interests ...............................
Income taxes current .......................................
Income taxes deferred ......................................
Total Tax
Minority interests in net profit ............................
Net profit .......................................................

150
89
—
70

1,170

153
84
—
51

304
149
102
218

282
—
10
0.7

292

1,073
200
34
0.3

388
233
99

—
—
—
2

1,308

0.5

390
233
98

70

124

2

0.0

791

0.7

846

0.3

10,197

6.2

4,654

4.0

12,049

4.5

478
(925)

291
(754)

931
(1,754)

(446)

(0.2)

(462)

(0.4)

(823)

(0.3)

21

(0.0)

22

(0.0)

9

(0.0)

10,622

6.4

5,095

4.4

12,8634.8

19

3. Consolidated Statements of Retained Earnings
Apr. 1, 2005–
Sep. 30, 2005
Additional Paid-in Capital
Additional Paid-in Capital at Beginning of Period

New stock issue associated with exercise of stock
options
Additional Paid-in Capital at End of Period
Retained Earnings
Retained Earnings at Beginning of Period
Increase in Retained Earnings
From net profit
Total Increase in Retained Earnings
Decrease in Retained Earnings
From cash dividends paid
From decrease in consolidated subsidiaries
Total Decrease in Retained Earnings
Retained Earnings at End of Period

6,506

Millions of Yen
Apr. 1, 2004–
Sep. 30, 2004

5,818

Apr. 1, 2004–
Mar. 31, 2005

5,818

100

312

688

6,607

6,131

6,506

18,622

5,800

5,800

10,622

5,095

12,863

10,622

5,095

12,863

1,145
—

—
41

—
41

1,145

41

41

28,10010,854

18,62220

4. Consolidated Statements of Cash FlowMillions of Yen

Cash Flow from Operating Activities
Profit before income
taxes and minority interests.............................................
Depreciation and amortization ..........................................
Impairment loss
Decrease in allowance for doubtful accounts ......................
Interest and dividend income ..........................................
Interest expense ............................................................
Foreign exchange losses (gains) .......................................
Equity in earnings of associated companies ........................
Loss on sales and disposal of property,
plant and equipment .......................................................
Decrease (increase) in trade notes and accounts
receivable ......................................................................
Decrease (increase) in costs of construction contracts inprogress ........................................................................
Increase (decrease) in trade notes and accounts payable ....
Increase in advance receipts on construction contracts.......
Increase (decrease) in accrued bonuses ............................
Increase in retirement benefits.........................................
Indemnity allowance for completed contracts .....................
Decrease in allowance for investment loss ........................
Increase in jonitly controlled assets of joint ventures ..........
Increase (decrease) in consumption taxes payable .............
Other ............................................................................
Subtotal................................................
Interest and dividend income ...........................................
Interest paid ..................................................................
Income taxes paid ..........................................................
Net Cash Provided byOperating Activities ...........................................................

Apr. 1, 2005–
Sep. 30, 2005

Apr. 1, 2004–
Sep. 30, 2004

Apr. 1, 2004–
Mar. 31, 2005

10,197

4,654

12,049

686
—

624
233

1,284
233

(1,152)
(880)

(238)
(281)

(993)
(742)

150

153

304

(89)
(51)

(225)
(98)

(66)
(152)

—

487

488

(13,874)(3,446)(13,064)

1,011
8,541
14,550(9,288)2,973
10,655(6,059)21,568
7,322

(334)

3

1,265

431
174
—
(19,787)
(755)
(878)

467
69
—
(8,782)
304
(903)

1,038
(319)
(200)
(21,540)183(2,157)(2,060)
299
(150)
(903)

(2,636)
322
(153)
(216)

442
754
(304)
(408)

(2,814)(2,683)484

21

4. Consolidated Statements of Cash Flow (Continued)
Millions of Yen

Cash Flow from Investing Activities
Payment for time deposits................................................
Proceeds from refundsof time deposits with maturities ........................................
Purchase of property, plant and equipment ........................
Proceeds from sale of property, plant and equipment ..........
Purchase of intangible fixed assets ....................................
Payments for purchase of investment securities ..................
Proceeds from sales of investment securities ......................
Net decrease in short-term loans ......................................
Long-term loans .............................................................
Proceeds from collections of long-term loans ......................
Other ............................................................................
Net Cash Used in Investing Activities .

Apr. 1, 2005–
Sep. 30, 2005

Apr. 1, 2004–
Sep. 30, 2004

Apr. 1, 2004–
Mar. 31, 2005—

(1,016)

(622)

654
(239)

—
(375)

542
(854)

49
(568)

23
(452)

65
(1,037)

(24)

(0)

(33)

—
1

155
1

222
39

(19)
1,902

(6)
129

(20)
689

0

—

1

1,757

(1,541)(1,006)—(50)
202(1,138)

14
(50)
627

—
(101)
1,382
—
—

Cash Flow from Financing Activities
Net increase in short-term bank loans ...............................
Repayments of long-term debt ........................................
Proceeds from new stock issue .........................................
Cash dividends paid ........................................................
Cash dividends paid to minority shareholders .....................
Other ...........................................................................
Net Cash Used in Financing Activities .

(19)
(154)

—
—
(38)

(110)

(1,160)

552

1,169

Foreign Currency Translation Adjustments on Cashand Cash Equivalents ......................................................

135

25

100

(2,083)
41,594(3,646)40,902

747
40,902Net Increase (Decrease) in Cash and Cash Equivalents ...
Cash and Cash Equivalents at Beginning of Period ..........
Decrease in Cash and Cash Equivalents Elimination From
Consolidation .................................................................
Cash and Cash Equivalents at End of Period ....................

—

(56)

(56)

39,511

37,20041,59422

<Appendix to Consolidated Financial Statements>

Changes in Accounting Principles
Latest Consolidated Six-Month Period(Apr. 1, 2005–Sep. 30, 2005)
Allowances for retirement benefits
Same as on the left

Previous Consolidated Six-Month
Period(Apr. 1, 2004–Sep. 30, 2004)
Allowances for retirement benefits
To provide for employee retirement
benefits, an allowance for retirement
benefits is provided in the amountdeemed to have accrued at the end of
the interim period, based on theestimated retirement benefit
obligations and pension assets at theend of the current fiscal year.
The transitional obligation of 12,123
million yen is being amortized by thestraight-line method and charged toincome over 15 years. An amountequivalent to 50% of the annual
obligation is charged to income at theend of the current interim period.
The Company amortizes and charges
to income accrual gain or loss fromthe year following the year in which
the gain or loss is recognizedprimarily by the straight-line method
over a period of 10 years, which falls
within the average remaining years ofservice of the employees.

Latest Consolidated Six-Month Period(Apr. 1, 2005–Sep. 30, 2005)

Previous Fiscal Year
(Apr. 1, 2004–Mar. 31, 2005)
Allowances for retirement benefits
To provide for employee retirement
benefits, an allowance for retirement
benefits is provided in the amountbased on the estimated retirement
benefit obligations and pension assets
at the end of the fiscal year.
The transitional obligation of 12,123
million yen is being amortized using
the straight-line method and charged
to income over 15 years.
The Company amortizes and charges
to income accrual gain or loss fromthe year following the year in which
the gain or loss is recognizedprimarily by the straight-line method
over a period of 10 years, which falls
within the average remaining years ofservice of the employees.

Previous Fiscal Year
(Apr. 1, 2004–Mar. 31, 2005)

Recognition of revenues on
construction contracts in process
In principle, revenues are recognized
upon completion of construction
contracts, except for the following
contracts. The Company and its four
significant domestic consolidated
subsidiaries recognize revenues on
construction contracts greater than
0.1 billion yen and having
construction duration of more than
12 months by the percentage-ofcompletion method.

Previous Consolidated Six-Month
Period(Apr. 1, 2004–Sep. 30, 2004)
Recognition of revenues on
construction contracts in process
In principle, revenues are recognized
upon completion of construction
contracts, except for the following
contracts. The Company and its four
significant domestic consolidated
subsidiaries recognize revenues on
construction contracts greater than
0.1 billion yen and having
construction duration of more than
12 months by the percentage-ofcompletion method.

Chiyoda Singapore (Pte) Ltd.
(Singapore-based subsidiary), PT.
Chiyoda International Indonesia(Indonesia-based subsidiary) andseven other subsidiaries recognize
revenues by the percentage-ofcompletion method.

Chiyoda Singapore (Pte) Ltd.
(Singapore-based subsidiary), PT.
Chiyoda International Indonesia(Indonesia-based subsidiary) and six
other subsidiaries recognize
revenues by the percentage-ofcompletion method.

Chiyoda Singapore (Pte) Ltd.
(Singapore-based subsidiary), PT.
Chiyoda International Indonesia(Indonesia-based subsidiary) andseven other subsidiaries recognize
revenues by the percentage-ofcompletion method.

Revenues on construction contracts
recognized by the percentage-ofcompletion method totaled 132,432
million yen

Revenues on construction contracts
recognized by the percentage-ofcompletion method totaled 87,205
million yen

Revenues on construction contracts
recognized by the percentage-ofcompletion method totaled 186,399
million yen

Changes in Accounting Policies

Changes in Accounting Policies

In prior periods, the percentage-ofcompletion method had been applied

In prior periods, the percentage-ofcompletion method had been applied

Recognition of revenues on
construction contracts in process
In principle, revenues are recognized
upon completion of construction
contracts, except for the following
contracts. The Company and its four
significant domestic consolidated
subsidiaries recognize revenues on
construction contracts greater than
0.1 billion yen and having
construction duration of more than
12 months by the percentage-ofcompletion method.

23

Latest Consolidated Six-Month Period(Apr. 1, 2005–Sep. 30, 2005)—

to contract amounts greater than 5billion yen and having construction
duration of more than 18 months.
However, the criteria for theapplication of this method have beenrevised. Effective from new contracts
signed in the current six-month
period revenues on construction
contracts greater than 0.1 billion yen
and having construction duration of
more than 12 months are recognizedby the percentage-of-completion
method.

to contract amounts greater than 5billion yen and having construction
duration of more than 18 months.
However, the criteria for theapplication of this method have beenrevised. Effective from new contracts
signed in the current fiscal year,
revenues on construction contracts
greater than 0.1 billion yen andhaving construction duration of morethan 12 months are recognized by
the percentage-of-completion
method.

Effective from new contracts signedin the current six-month period, thethree significant domestic
consolidated subsidiaries have alsochanged criteria for the applicationof the percentage-of-completion
method to maintain conformity withthe criteria for the application of thepercentage-of-completion method of
the Company.

Effective from new contracts signedin the current fiscal year, the threesignificant domestic consolidated
subsidiaries have also changed
criteria for the application of thepercentage-of-completion method tomaintain conformity with the criteria
for the application of the percentageof-completion method of theCompany.

The change in the accounting policy
was made in consideration of theincreasing number of small- to
medium-size projects, more precise
management of such projects madepossible by enhanced corporate
organization and to better reflect
construction revenue in the period
profit/loss in view of the recent
trends in international accounting
standards.

The change in the accounting policy
was made in consideration of theincreasing number of small- to
medium-size projects, more precise
management of such projects madepossible by enhanced corporate
organization and to better reflect
construction revenue in the period
profit/loss in view of the recent
trends in international accounting
standards.

As a result, gross profit on projects
completed was 633 million yen
higher, and gross profit, operating
profit, ordinary profit and net profit
were each 63 million yen eachhigher, compared to amounts thatwould have been reported if theprevious method had been usedconsistently.

As a result, gross profit on projects
completed was 4,318 million yen
higher, and gross profit, operating
profit, ordinary profit and net profit
were each 300 million yen eachhigher, compared to amounts thatwould have been reported if theprevious method had been usedconsistently.

The effect of this change on
Segment Information is presented in
Segment Information.

The effect of this change on
Segment Information is presented in
Segment Information.

Previous Consolidated Six-Month
Period(Apr. 1, 2004–Sep. 30, 2004)
Accounting for impairment ofproperty, plant and equipment
Effective the current six-month
period the Company adopted the
new standards for accounting for
impairment of property, plant andequipment (Opinion on “AccountingStandards for Impairment of Fixed
Assets,” (ASBJ, August 9, 2002))
and Accounting Standard
Implementation Guidance No. 6(“Implementation Guidance on
Accounting Standard for Impairmentof Fixed Assets,” (ASBJ, October 31,2002)), effective the fiscal year
ending on March 31, 2004.

Previous Fiscal Year
(Apr. 1, 2004–Mar. 31, 2005)
Accounting for impairment ofproperty, plant and equipment
Effective the current consolidated
fiscal year, the Company adopted
the new standards for accounting for
impairment of property, plant andequipment (Opinion on “AccountingStandards for Impairment of Fixed
Assets,” (ASBJ, August 9, 2002))
and Accounting Standard
Implementation Guidance No. 6(“Implementation Guidance on
Accounting Standard for Impairmentof Fixed Assets,” (ASBJ, October 31,2002)), effective the fiscal year
ending on March 31, 2004.
24

The effect of the adoption of the new
accounting standard and theaccounting standard implementation
guidance was to decrease profit
before income taxes by 233 million
yen, compared to the amount thatwould have been reported if theprevious standard had been appliedconsistently.

The effect of the adoption of the new
accounting standard and theaccounting standard implementation
guidance was to decrease profit
before income taxes by 233 million
yen, compared to the amount thatwould have been reported if theprevious standard had been appliedconsistently.

In accordance with the revisedStandards for the Preparation ofInterim Consolidated Financial
Statements, accumulated impairment
losses are deducted directly from thecarrying amounts of the respective
fixed assets.

In accordance with the revisedStandards for the Preparation ofInterim Consolidated Financial
Statements, accumulated impairment
losses are deducted directly from thecarrying amounts of the respective
fixed assets.

Changes in accounting practiceLatest Consolidated Six-Month Period(Apr. 1, 2005–Sep. 30, 2005)(Consolidated interim statements of income)
Effective from the current interim period, “Long-term
Receivables” presented as a separate line item in priorperiods, is reclassified and included in “Other
Investments” under “Investments and Other Assets” since
the item has reduced impact on total assets as of the endof the current interim period following the collection of all
outstanding receivables from National Nigerian Petroleum
Corporation (Notes to Consolidated Interim Balance
Sheets, #4).

Previous Consolidated Six-Month Period(Apr. 1, 2004–Sep. 30, 2004)(Consolidated interim statements of income)
Effective from the current interim period, “Real Estate
Revenue,” included in “Other-Net” under “Other Income(Expenses)-Net” in prior periods, is reclassified andpresented as a separate line item since the amount of“Real Estate Revenue” exceeded 10/100 of the total“”Other Income (Expenses)-Net.”“Real Estate Revenue” in the previous interim period was
86 million yen.

Long-term receivables as of the end of the current interim
period were 991 million yen.

Notes for consolidated balance sheets
Latest Consolidated Six-Month Period(Apr. 1, 2005–Sep. 30, 2005)#4 The Company as of the end of thecurrent interim period collected thebalance of outstanding receivablesfrom Nigerian National Petroleum
Corporation.

#5 The Company also has thefollowing receivables and other assets
from KAFCO, a Bangladesh company,
and KAFCO Japan Investment Co.,
Ltd., its related investment firm inJapan (an investment firm in Japan),as follows:

Previous Consolidated Six-Month
Period(Apr. 1, 2004–Sep. 30, 2004)#4 Long-term receivables include
receivables of 3,114 million yen from
Nigerian National Petroleum
Corporation (NNPC).

Previous Fiscal Year
(Apr. 1, 2004–Mar. 31, 2005)

Regarding the above long-term
receivables, due to economic andpolitical circumstances in Nigeria,
payments, in accordance with thenegotiated repayment schedule, werein arrears for an extended period. In
February 2000, NNPC reconfirmed theamount of the claim and 848 million
yen was collected in the previous
fiscal year.

Regarding the above long-term
receivables, due to economic andpolitical circumstances in Nigeria,
payments, in accordance with thenegotiated repayment schedule, werein arrears for an extended period. In
February 2000, NNPC reconfirmed theclaim and 1,125 million yen was alsocollected in the current fiscal year.

Of the above long-term receivables,
269 million yen was collected on
October 26, 2004 but the repayment
schedule for the remaining balance
has yet to be determined.
#5 The Company also has thefollowing receivables and other assets
from KAFCO, a Bangladesh company,
KAFCO International Co., Ltd. and
KAFCO Japan Investment Co., Ltd.,
its related investment firm in Japan(an investment firm in Japan), as
follows:#4 Long-term receivables include
receivables of 1,976 million yen from
Nigerian National Petroleum
Corporation (NNPC).

The repayment schedule for theremaining balance has yet to be
determined.

#5 The Company also has thefollowing receivables and other assets
from KAFCO, a Bangladesh company,
KAFCO International Co., Ltd. and
KAFCO Japan Investment Co., Ltd.,
its related investment firm in Japan(an investment firm in Japan), as
follows:
25

In March 2001, KAFCO, its
shareholders and banks reached anagreement about financial
restructuring under the supervision of
the Bangladesh government and
KAFCO has started making payments
based on the schedule defined in thefinancial restructuring plan agreed toin July 2001. Collection was onschedule as of the end of the current
interim period.
Investment securities
Long-term receivables
Total

Millions of yen
1,346
1,874
3,221

In March 2001, KAFCO, its
shareholders and banks reached anagreement about financial
restructuring under the supervision of
the Bangladesh government and
KAFCO has started making payments
based on the schedule defined in thefinancial restructuring plan agreed toin July 2001. Collection was onschedule as of the end of the current
interim period.
Accounts receivable other(Current assets)
Investment securities
Long-term receivables
Total

Millions of yen
45

1,346
5,040
6,432

In March 2001, KAFCO, its
shareholders and banks reached abasic agreement about financial
restructuring under the supervision of
the Bangladesh government and
KAFCO has started making payments
based on the schedule defined in thefinancial restructuring plan agreed toin July 2001. Collection was onschedule as of the end of the current
fiscal period.
Accounts receivable other(Current assets)
Investment securities
Long-term receivables
Total

Millions of yen
45

1,346
3,661
5,054

26

SECURITIESPrevious six-month period (As of September 30, 2004)
1. Information regarding marketable securities classified as “Other Securities”
Millions of yen

Acquisition cost
Equity securities

57

Carrying value

Unrealized
gain/loss

102

45

2. “Other Securities” without market value mainly consisted of the following.
Millions of yen

Item

Aggregate gain

Other securities
1) Equity securities – unlisted2) Subscription certificates

1,574
15

Previous six-month period (As of September 30, 2005)
1. Information regarding marketable securities classified as “Other Securities”
Millions of yen

Acquisition cost
Equity securities

58

Carrying value

Unrealized
gain/loss

124

66

2. “Other Securities” without market value mainly consisted of the following.
Millions of yen

Item

Aggregate gain

Other securities
1) Equity securities – unlisted2) Subscription certificates

1,500
15

Previous fiscal year (As of March 31, 2005)
1. Information regarding marketable securities classified as “Other Securities”
Millions of yen

Acquisition cost
Equity securities

57

Carrying value

Unrealized
gain/loss

111

53

2. “Other Securities” without market value mainly consisted of the following.
Millions of yen

Item
Other securities
1) Equity securities – unlisted2) Subscription certificates

Aggregate gain
1,481
15

27

Segment Information
1. Industry Segments
The Company’s latest six-month period was from April 1, 2005 to September 30, 2005. The previous six-month period
was from April 1, 2004 to September 30, 2004. The previous fiscal year was from April 1, 2004 to March 31, 2005.
The main business of the Chiyoda Group is engineering that focuses on the planning, design, construction, andoperations assistance of public- and private-sector facilities, as well as facilities for pollution prevention andenvironmental preservation and enhancement. In non-engineering businesses, there are no segments that account for
10% or more in terms of sales, operating profits or assets, and as such these segments have been omitted.

2. Geographic Segments
Latest Six-Month Period (From April 1, 2005 to September 30, 2005)
Millions of Yen

Japan
Net sales
Outside customers .........
Inter-segment ...............
Total ...........................
Operating expenses........
Operating Profit (Loss) ..

Asia

North
America

Other

—
16

—
—

Eliminati
ons(Corporate)Consolid
ated

165,515
1,151—(1,151)

165,515—

Total

158,107
766

7,408
368

158,873
149,535

7,776

16

—

166,666

8,892

16

6

158,451(1,151)(1,155)

165,515
157,296

9,338(1,116)

(0)

(6)

8,214

4

8,218

(Notes)(1)
Geographic segmentation is according to geographic proximity(2)
Countries included in regions other than Japan:
Asia: Indonesia, Singapore, Philippines, Myanmar, Malaysia and Thailand.
North America: America.
Other: Nigeria.

3. Overseas Sales
Latest Six-Month Period (From April 1, 2005 to September 30, 2005)
Asia
Overseas sales .............................................
Consolidated sales ........................................
Ratio of overseas to consolidated sales (%) ......

Millions of Yen
Russia/MiddleCentral
Other
East
Asia

21,22373,08728,306

480

12.8

44.2

17.1

0.3

Total
123,098
165,51574.4(Notes)(1)
Geographic segmentation is according to geographic proximity(2)
Countries and areas included in each region:
Asia: China, Indonesia and Singapore
Middle East: Qatar, Oman , Iran and Saudi Arabia
Russia/Central Asia: Russia
Other: America(3)Overseas sales are those sales of the Company and its consolidated subsidiaries that take place in countries orregions other than Japan28

Segment Information
1. Industry Segments
The Company’s latest six-month period was from April 1, 2005 to September 30, 2005. The previous six-month period
was from April 1, 2004 to September 30, 2004. The previous fiscal year was from April 1, 2004 to March 31, 2005.
The main business of the Chiyoda Group is engineering that focuses on the planning, design, construction, andoperations assistance of public- and private-sector facilities, as well as facilities for pollution prevention andenvironmental preservation and enhancement. In non-engineering businesses, there are no segments that account for
10% or more in terms of sales, operating profits or assets, and as such these segments have been omitted.

2. Geographic Segments
Latest Six-Month Period (From April 1, 2005 to September 30, 2005)
Millions of Yen

Japan
Net sales
Outside customers .........
Inter-segment ...............
Total ...........................
Operating expenses........
Operating Profit (Loss) ..

Asia

North
America

Other

—
16

—
—

Eliminati
ons(Corporate)Consolid
ated

165,515
1,151—(1,151)

165,515—

Total

158,107
766

7,408
368

158,873
149,535

7,776

16

—

166,666

8,892

16

6

158,451(1,151)(1,155)

165,515
157,296

9,338(1,116)

(0)

(6)

8,214

4

8,218

(Notes)(1)
Geographic segmentation is according to geographic proximity(2)
Countries included in regions other than Japan:
Asia: Indonesia, Singapore, Philippines, Myanmar, Malaysia and Thailand.
North America: America.
Other: Nigeria.

3. Overseas Sales
Latest Six-Month Period (From April 1, 2005 to September 30, 2005)
Asia
Overseas sales .............................................
Consolidated sales ........................................
Ratio of overseas to consolidated sales (%) ......

Millions of Yen
Russia/MiddleCentral
Other
East
Asia

21,22373,08728,306

480

12.8

44.2

17.1

0.3

Total
123,098
165,51574.4(Notes)(1)
Geographic segmentation is according to geographic proximity(2)
Countries and areas included in each region:
Asia: China, Indonesia and Singapore
Middle East: Qatar, Oman , Iran and Saudi Arabia
Russia/Central Asia: Russia
Other: America(3)Overseas sales are those sales of the Company and its consolidated subsidiaries that take place in countries orregions other than Japan

29

Production, Orders and Sales Situation
1. Orders
Apr. 1, 2005–
Sep. 30, 2005
New
Backlog
contracts
Amt
%
Amt
%

Millions of Yen
Apr. 1, 2004–
Sep. 30, 2004
New
Backlog
contracts
Amt
%
Amt
%

Apr. 1, 2004 –Mar. 31, 2005
New
Backlog
contracts
Amt
%
Amt
%

Business Segment
Engineering

439,743+268.0%99.5

812,354][13,314]100.
0119,480

98.4

392,871][11,959]

100.0

407,173

99.0

522,444[2,953]100.0

366.595+542.8%82.9

671,634[13,311]

82.7

57,02847.0

220,057[9,908]56.0

285,055

69.3

378,270[3,455]

72.4

7,906
+53.5%

1.8

52,788
[664]

6.5

5,151

4.2

82,020[1,860]20.9

20,5395.0

68,433
[413]

13.1

257
-98.0%

0.1

4,853
[40]

0.6

13,207

10.9

16,687[-243]

4.2

13,884

3.4

9,961
[166]

1.9

53,194+101.6%12.0

60,691[330]

7.5

26,386

21.7

40,537[227]

10.3

52,22712.7

35,090[-762]

6.7

General chemicals .....

4,915
-9.2%

1.1

14,537[-508]

1.8

5,414

4.5

19,088[89]

4.9

17,756

4.3

24,295[-258]

4.7

Industrial machinery ..

3,005-70.2%

0.7

3,614
[—]

0.4

10,0908.3

10,034[-6]

2.6

11,270

2.7

2,858
[-9]

0.5

3,869
+75.8%

0.9

4,234[-523]

0.5

2,200

1.8

4,445
[123]

1.1

6,439

1.6

3,534
[-51]

0.7

Other ......................

2,367+21.5%

0.5

—]
[—]

—

1,948

1.6

—]
[—]

—

4,119

1.0

—]
[—]

—

Total .......................

442,110+264.1%

100.0

812,354] 100.0[13,314]

121,429100.0

392,871][11,959]100.0

411,292

100.0

522,444[2,953]100.0

LNG plant .................
Gas and power
utilities.....................
Gas chemicals ...........
Petroleum andpetrochemicals..........

Environment andother .......................

(Note) Classification of business segment has been changed in accordance with Gas Value Chain business.

30

Breakdown of Domestic and Overseas Orders
Apr. 1, 2005–
Sep. 30, 2005
New contracts

Amt
Domestic.....

65,813+39.3%
Overseas..... 376,297+407.3%
Total .......... 442,110+264.1%

%
14.9
85.1
100.0

BacklogAmt%

113,505
14.0[-983]
698,84986.0[14,297]
812,354 100.0[13,314]

Millions of Yen
Apr. 1, 2004–
Sep. 30, 2004
New
Backlog
contracts
Amt
%
Amt
%
47,25838.9

74,17061.1

121,429100.0

104,187][-104]
288,684][12,064]
392,871][11,959]

Apr. 1, 2004 –Mar. 31, 2005
New contracts

Amt

%

26.5

89,496

21.8

73.5

321,796

78.2

100.0

411,292

100.0

BacklogAmt%

91,09217.4[-204]
431,352
82.6[3,157]522,444 100.0[2,953](Note)
Numbers in brackets [ ] under “Backlog of orders” indicate the total of increases or decreases accompanying foreign
currency translation adjustments related to foreign currency business, increases resulting from adjustments for new
contracts, and decreases resulting from contractual changes in orders received before the previous fiscal year.

2. SalesBusiness Segment
Engineering

LNG plant .................................
Gas and power utilities ...............
Gas chemicals ...........................
Petroleum and petrochemicals.....
General chemicals .....................
Industrial machinery ..................
Environment and other...............
Other ......................................
Total .......................................

Millions of Yen
Apr. 1, 2004 –Sep. 30, 2004
Amt%

Apr. 1, 2005 –Sep. 30, 2005
Amt%
163,148+42.6%
86,541+82.3%
24,216+0.3%
5,406-21.3%
27,924+4.5%
14,164+274.5%2,249-21.6%
2,646
+3.2%
2,367
+21.5%
165,515+42.2%

98.6

114,422

Apr. 1, 2004 –Mar. 31, 2005
Amt
%

98.3

263,536

98.5

52.3

47,48440.8

110,844

41.4

14.6

24,135

20.7

51,662

19.3

3.3

6,865

5.9

14,6785.5

16.9

26,72023.0

57,018

21.3

8.5

3,782

3.2

10,570

4.0

1.4

2,869

2.5

11,221

4.2

1.6

2,564

2.2

7,540

2.8

1.4

1,948

1.7

4,119

1.5

100.0

116,371100.0

267,655100.0(Note) Classification of business segment has been changed in accordance with Gas Value Chain business.

31

Breakdown of Domestic and Overseas Sales
Millions of Yen
Apr. 1, 2004–
Sep. 30, 2004
Amt%

Apr. 1, 2005 –Sep. 30, 2005
Amt%
Domestic .........

42,416+23.4%
123,098+50.1%

Overseas .........

34,37825.6

29.5

89,61233.5

70.5

178,043

66.5

100.0

267,655

100.0

81,992

74.4

165,515+42.2%

Total ..............

Apr. 1, 2004 –Mar. 31, 2005
Amt
%

100.0

116,371(Notes)(1)“Status of production” is not listed, because it is difficult to define production results for the Chiyoda Group.
(2)
Sales results and percentages of total sales for main customers are shown below.

Millions of Yen

Apr. 1, 2004 –Sep. 30, 2004

Apr. 1, 2005 –Sep. 30, 2005
Customer
Sakhalin Energy
Investment Co., Ltd.
Qatar Liquefied Gas
Co., Ltd. Ⅱ
Ras Laffan LNG Co.,
Ltd.
(3)

Amt

%

28,30617.1 Qalhat LNG SA OC

Customer

Apr. 1, 2004 –Mar. 31, 2005

Amt

%

Amt

%

18,61016.0 Sakhalin Energy

Customer

49,777

18.6

28,092

10.5

25,82915.6 Sakhalin Energy

15,79324,921

Investment Co., Ltd.
15.1 Ras Laffan LNG Co.,
Ltd.

Investment Co., Ltd.
13.6 Ras Laffan LNG Co.,Ltd.

11,616

10.0

Amounts contained in these tables do not include consumption tax.

32