Chiyoda Global Headquarters

CHIYODA CORPORATION   Consolidated Financial Statements FY2023

Minatomirai Grand Central Tower, 4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
https://www.chiyodacorp.com/en/

Consolidated
Financial Statements

FY2022For the year ended March 31, 2023

Printed in Japan

CORPORATE PHILOSOPHY

CONTENTS

Enhance our business in aiming for harmony between energy and theenvironment and contribute to the sustainable development of a society as anintegrated engineering company through the use of our collective wisdom andpainstakingly developed technology.

02   Consolidated Balance Sheet
04   Consolidated Statement of Income
06   Consolidated Statement of Comprehensive Income
08   Consolidated Statement of Changes in Equity

Every Chiyoda Group employee engages in our corporate activities with this philosophy in mind as we strive for10   Consolidated Statement of Cash Flows

corporate group management that earns the trust and empathy of all of our stakeholders, including shareholders,12   Notes to Consolidated Financial Statements

customers, business partners, employees, and local communities.

49   Independent Auditor’s Report01Consolidated Balance Sheet
March 31, 2023

02

Chiyoda Corporation

Consolidated Financial Statements FY2022

03

Consolidated
Statement of Income
Chiyoda Corporation and Consolidated Subsidiaries

Chiyoda Corporation and Consolidated Subsidiaries

Year Ended March 31, 2023

Consolidated Statement of Income
Year Ended March 31, 2023

Consolidated Statement of Income
Year Ended March 31, 2023

Millions of Yen
2023
2022
REVENUE¥ 430,163¥ 311,115$ 3,210,176

397,454288,3212,966,078

32,70922,794

244,098

SELLING, GENERAL, AND ADMINISTRATIVE
EXPENSES (Note 18)

14,592

12,249108,898

Operating income

18,116

10,545

135,199

4,174
30

687

31,153
224

360
95

588
160

2,687
709

COST OF REVENUE
Gross profit

OTHER INCOME (EXPENSES):Interest and dividend income
Equity in earnings of associated companies
Gain on liquidation of subsidiaries and associatedcompanies
Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associatedcompanies (Note 19)
Interest expense
Equity in losses of associated companies
Settlement payments
Project related loss due to settlements with customers(Note 20)
Foreign exchange (loss) gain
Impairment loss (Note 9)
Loss on retirement of fixed assets
Loss on liquidation of subsidiaries and associatedcompanies
Expenses on office consolidation related to the domestic
business integration (Note 8)
Loss on valuation of shares of subsidiaries and associates
Loss on valuation of investment securities (Note 7)
Loss on sales of Investment securities
Other—net

231
(897)
(443)

(593)

(879)
(321)
(201)
(20,374)
1,406
(426)
(306)

1,725
(6,699)(3,308)

(242)

(1)

(89)
194

(704)
(455)
(136)
(38)
(481)

Other income (expenses)—net

2,712(19,803)

20,242

INCOME (LOSS) BEFORE INCOME TAXES

20,829(9,258)155,442

INCOME TAXES (Note 16):
Current
Deferred

5,511
117

3,509
59

41,131
876

5,629

3,569

42,008¥ 15,200¥ (12,828)$ 113,433

NET INCOME (LOSS)—(Forward)-7-

Chiyoda Corporation

Consolidated Financial Statements FY2022

Millions of Yen
2023
2022
NET INCOME (LOSS)—(Forward)
NET INCOME (LOSS) ATTRIBUTABLE TONONCONTROLLING INTERESTSNET INCOME (LOSS) ATTRIBUTABLE TO OWNERS
OF THE PARENT¥ 15,200¥ (12,828)$ 113,433

12

(198)

94

¥ 15,187¥ (12,629)$ 113,339

Yen
PER SHARE OF COMMON STOCK (Notes 2.ab and 25):
Basic net income (loss)
Diluted net income
Cash dividends applicable to the year

Thousands of
U.S. Dollars(Note 1)2023

¥ 50.54
15.49

U.S. Dollars¥ (56.88)$ 0.380.12

See notes to consolidated financial statements.

(4,430)

(94)
(61)
(18)
(5)
(64)

Total income taxes

04

Thousands of
U.S. Dollars(Note 1)
2023

(Continued)-8-(Concluded)05

ConsolidatedofSubsidiaries
Comprehensive Income
Chiyoda CorporationStatement
and Consolidated
Year Ended March 31, 2023

Consolidated Statement of Comprehensive Income
Year Ended March 31, 2023

Millions of Yen
2023
2022

Thousands of
U.S. Dollars(Note 1)2023

¥ 15,200¥ (12,828)$ 113,433

OTHER COMPREHENSIVE INCOME (LOSS) (Note 24):
Unrealized loss on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Foreign currency translation adjustments
Defined retirement benefit plans
Share of other comprehensive income of associates(14)
50(7,914)
(871)
343

(119)
1,625
(5,350)
(678)
79

(107)
380
(59,064)(6,500)2,560

Total other comprehensive loss

(8,406)(4,444)(62,731)COMPREHENSIVE INCOME (LOSS)¥ 6,794¥ (17,272)$ 50,702

TOTAL COMPREHENSIVE INCOME (LOSS)ATTRIBUTABLE TO:
Owners of the parent
Noncontrolling interests¥ 6,77122¥ (17,109)(163)$ 50,534
167

NET INCOME (LOSS)

See notes to consolidated financial statements.

-9-

06

Chiyoda Corporation

Consolidated Financial Statements FY202207

Consolidated Statement of Changes in Equity

ChiyodaChiyodaCorporation
Corporation
and Consolidated
and
ChiyodaConsolidated
Corporation
Subsidiaries
Subsidiaries
and Consolidated Subsidiaries
Year Ended March 31, 2023

Consolidated
Consolidated
Statement
Statementof Changesof Changes
Consolidated
in Equityin Equity
Statement of Changes in Equity
Year EndedYear March
Ended 31,March
202331, 2023 Year Ended March 31, 2023
Thousands
Thousands

Millions Millions
of Yen of Yen
Millions of Yen
Accumulated
Accumulated
Other Comprehensive
Other Comprehensive
IncomeAccumulated
Income(Loss) Other(Loss)Comprehensive Income (Loss)
Outstanding
Outstanding
Outstanding
Outstanding
CommonOutstanding
CommonOutstanding
CommonUnrealized
Unrealized
Unrealized
NumberNumberof
Numberof
Number
ofofStock
Number
Stockof
Numberof Retained
Stock
Gain (Loss)
Gain(Loss)
DeferredDeferred
Gain GainForeign
Gain (Loss)
DeferredGain
Retained
Retained
Foreign Defined
Defined
ForeignDefinedShares SharesofofShares Sharesofof andShares
andof
Shares
Earnings
of Earnings
andon Availableon
Earnings
Availableon Derivatives
on Derivatives
Currency
on AvailableCurrency
Retirement
on Derivatives
Retirement
Currency
Retirement
CommonCommonPreferredPreferredPreferred
CommonPreferred
Capital CapitalPreferred(Accumulated(Accumulated
Preferred
Treasury
Treasury
Capital for-Sale(Accumulated
for-Saleunder Hedge
Treasuryunder Hedge
Translation
for-SaleTranslationBenefit
under Hedge
BenefitTranslation
Noncontrolling
Noncontrolling
Benefit Total Total
Stock Stock Stock Stock Stock Stock
Stock
Surplus Surplus
Stock
Deficit) Deficit)
StockStock Surplus
StockSecurities
Securities
Deficit) Accounting
Stock
Accounting
Adjustments
Securities
AdjustmentsPlans
Accounting
Plans Total
Adjustments
Total InterestsInterests
Plans Equity Total
EquityBALANCE,BALANCE,APRIL 1,APRIL
2021 1, 2021

Thousands

258,967¥ 15,014¥ 15,014¥ 142
BALANCE,APRIL258,967
1, 2021175,000175,000
258,967

Cumulative
effectsof changes
Cumulativeineffects of changes inCumulative
effects ofchangesinaccounting
accounting policies
accounting
policies policies
Net
Net lossNet
attributable
loss attributableto owners
to ownersofof loss attributable to owners of
the parent
the parent
the parent
Cash dividends,
Cash dividends,¥20.78 per¥20.78share
per share
Cash dividends, ¥20.78 per share
Purchase
Purchaseof treasuryof treasury
stock stock Purchase of treasury stock
DisposalDisposalof treasuryof treasury
stock stock
Disposal of treasury stock
TransferTransfer
of loss onof loss
disposalon disposalofofTransfer of loss on disposal oftreasury stock
treasurytreasury
stock stock
Net change in the year
Net change
Net change
in the year
in the year

¥175,000142 ¥ 15,708¥ 15,708¥ 15,014
142 ¥ 203¥ 15,708¥ (1,435)¥¥(1,435)
¥ 203
1

(585)

(585)

585

585

BALANCE,MARCHMARCH
31, 202231, 2022 BALANCE,
258,967
MARCH
258,967
31, 2022
175,000175,000 15,014
258,967
15,014142
BALANCE,
Cumulative
effectsof changes
Cumulativeineffects of changes inCumulative
effects ofchangesinaccounting
accounting
policies policies(Note 4)(Note 4) accounting policies (Note 4)
Net income
Net income
attributable
attributableto owners
to ownersof Net incomeofattributable to owners of
the parent
the parent
the parent
Disposal of treasury
4stock
DisposalDisposalof treasuryof treasury
stock stock4
Net change in the year
Net change
Net change
in the year
in the year11

(12,629)(12,629)(3,636) (3,636)(12,629)(3,636)(585)

BALANCE,MARCHMARCH
31, 202331, 2023 BALANCE,
258,971
MARCH
258,971
31, 2023
175,000175,000¥ 15,014
258,971¥ 15,014¥ 142
BALANCE,

(585)

585

¥30
(1,435)¥30

83 (1,142)
83

1,656 (849)
1,656(5,306)(119)(5,306)
(6)
83

(6)

(247)

15,187 15,187

2

2

(14)

(14)

¥175,000142 ¥ 13,797¥ 13,797¥ 15,014¥ (847)¥¥ 142(847)¥ 69¥ 13,797
¥ 69

50

2

50

¥ 1,707¥ (847)¥ 1,7071$ 112,050$ 112,050$ 1,064 $ 1,064$ (8,527)$ $ (8,527)
112,050$ (6,339)$ 1,064(6,339)$ 623$ $(8,527)
623 $ 12,360$ (6,339)$ 12,360 $Cumulative
effectsof changes
Cumulativeineffects of changes inCumulative
effects ofchangesinaccounting
accounting
policies policies(Note 4)(Note 4) accounting policies (Note 4)
Net income
Net income
attributable
attributableto owners
to ownersof Net incomeofattributable to owners of
the parent
the parent
the parent
Disposal of treasury stock
DisposalDisposalof treasuryof treasury
stock stock
Net change in the year
Net change
Net change
in the year
in the year
BALANCE,MARCHMARCH
31, 202331, 2023 BALANCE, MARCH 31, 2023
BALANCE,(1,847) (1,847)¥ 36,747
1(12,629)(12,629)(12,629)(3,636)(3,636)(3,636)(375) (375)(375)
375 375375(12,629)(3,636)
(375)
375

(241)
(678) (4,720)(4,479)(4,720)(241)(4,720)755
1,656755 15,654 15,654(6) 106106
755 15,76115,654
15,761

106

15,761(247)(247) (247)
(247)

(247)

15,187 15,187
22(871) 50(871)(8,415) (7,581)(8,415)

15,18715,187
15,187222(871)
22 (8,393)(8,415)(8,393)22

15,1872(8,393)¥ (7,587)¥ 69¥ (7,587)¥ (115)¥ 1,707¥ (115)¥ 22,180¥ 22,180(7,587) ¥ 129 ¥¥ 129(115)¥ 22,310¥¥22,180
22,310¥ 129¥ 22,310

Noncontrolling
Interests

Total
Equity$ 797$ 117,624(7,581)(14)(7,581)

22

$ 623
(47)
$

(47)$ 5,641$ 12,360$ 5,641$ 116,826$$ 116,826(47) $ 797 $ 5,641$ 797 $ 117,624$ 116,826$ 117,624(1,847)(1,847)(1,847)(1,847)

113,339113,339
113,339
113,339
113,33915
15
15 15 15
(56,576)(107)(56,576)(6,500) 380(6,500)(62,804)(56,576)(62,804) 167 (6,500)
167 (62,637)(62,804)(62,637)

167

113,33915(62,637)$ 112,050$ 112,050$ 1,064 $ 1,064$ 102,964$ 102,964$ 112,050$ (6,324)$ 1,064(6,324)$ 516$ 102,964$ 516 $ 12,740$ (6,324)$ 12,740 $ (56,623)$ 516$ (56,623)$ (859)$ 12,740$ (859)$ 165,528$$(56,623)
165,528 $ 964 $ $(859)964 $ 166,492$ 165,528$ 166,492$ 964$ 166,492

113,339113,339(1,847)¥ 348

11Thousandsof U.S. Dollars
Thousandsof U.S. Dollars (Note 1)
Thousandsof U.S. (Note
Dollars1)(Note1)
Accumulated
Other Comprehensive
IncomeAccumulated(Loss) Other
Accumulated
Other Comprehensive
Income(Loss)Comprehensive Income (Loss)
CommonCommonCommonUnrealized
Unrealized
Unrealized
Stock Stock
Stock
Gain (Loss)
Gain(Loss)
Gain (Loss)
Retained
Retained
RetainedDeferredDeferred
Gain GainForeign
Foreign DefinedDeferredDefinedGain
ForeignDefinedandandEarnings
Earnings
andon Availableon
Earnings
Availableon Derivatives
on Derivatives
Currency
on AvailableCurrency
Retirement
on Derivatives
Retirement
Currency
Retirement
Treasury
Treasury
Treasury
Total Total
PreferredPreferred
Capital Capital(Accumulated(Accumulated
Preferred
Capital for-Sale(Accumulated
for-Saleunder Hedge
under Hedge
Translation
for-SaleTranslationBenefit
under Hedge
BenefitTranslation
Noncontrolling
Noncontrolling
Benefit
Stock Stock
Surplus SurplusDeficit) Deficit)
Stock Stock Surplus
StockSecurities
Securities
Deficit) Accounting
Stock
Accounting
Adjustments
Securities
AdjustmentsPlans
Accounting
Plans Total
Adjustments
Total InterestsInterests
Plans
EquityTotal
EquityBALANCE,MARCHMARCH
31, 202231, 2022 BALANCE, MARCH 31, 2022
BALANCE,

Total
Equity(678)
1,625(678)(4,479) (5,306)(4,479) (241)(247)

15,187

1(12,629)(12,629)(3,636) (3,636)(375) (375)
375
375

(375)
961
1,625 1,625(247)¥ 5,300¥ 203¥ 5,300 ¥ 1,434
¥ ¥30
1,434
¥ 36,399¥ 36,399
5,300 ¥ 348 ¥¥1,434
348 ¥ 36,747¥¥36,399
36,747
1

(585)
(119)

(119)

175,000
142 (1,142) (1,142)
15,014 (849) 142
(849)
(247)

4

(375) (375)961 (585)
961¥

Noncontrolling
Interests

15

15

113,339
(107)

(107)

(1,847) (1,847)
15
380
380

Seetonotes
to consolidated
statements.
See notes
consolidated
financialfinancial
statements.
See notes
to consolidated financial statements.

- 10 -

08

Chiyoda Corporation

Consolidated Financial Statements FY2022- 10 -- 10 -

09

ConsolidatedofSubsidiaries
Cash Flows
Chiyoda Corporation Statement
and Consolidated

Chiyoda Corporation and Consolidated Subsidiaries

Year Ended March 31, 2023

Consolidated Statement of Cash Flows
Year Ended March 31, 2023

Consolidated Statement of Cash Flows
Year Ended March 31, 2023

Millions of Yen
2023
as Restated(Note 1)2022
OPERATING ACTIVITIES:
Income (loss) before income taxes
Adjustments for:
Income taxes paid
Depreciation
Impairment loss
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts(Decrease) increase in allowance for warranty costs forcompleted works
Decrease in allowance for losses on construction
contracts
Decrease in liability for retirement benefits
Foreign exchange gain—net
Decrease in provision for business structure
improvement
Equity in losses of associated companies
Loss on valuation of investment securities
Gain on sales of investment securities
Loss on valuation of shares of subsidiaries andassociated companies
Gain on sales of shares of subsidiaries and associatedcompanies
Gain on liquidation of subsidiaries and associatedcompanies
Loss on sales and disposals of fixed assets
Expenses on office consolidation related to the domestic
business integration
Changes in operating assets and liabilities:
Decrease in trade notes and accounts receivable,
and costs and estimated earnings on long-term
construction contracts
Increase in costs of construction contracts in process
Increase (decrease) in trade notes and accounts
payableIncrease in contract liabilities
Decrease (increase) in accounts receivable—other(Decrease) increase in accounts payable—other
Increase in jointly controlled assets of joint venture(Increase) decrease in interest and dividends
receivable
Other—net
Total adjustments
Net cash provided by (used in) operating
activities—(Forward)- 11 -

10

Chiyoda Corporation

Consolidated Financial Statements FY2022

Thousands of
U.S. Dollars(Note 1)
2023
as Restated(Note 1)

¥ 20,829¥ (9,258)$ 155,442(5,644)
3,195(42,121)23,84333
105(1,168)
3,060
426
33
(86)

(2,075)

2,475(15,488)(11,713)
(848)
(929)

(2,806)(362)(1,072)(87,417)(6,333)(6,940)

413
18
(89)

(17)
321
89
(160)

3,084
136
(670)

252
785

61

455

(231)

(1,725)

(359)

(326)
319

94

(2,686)704

5,914(4,259)8,380(9,744)

44,135(31,785)

25,934
14,536
47,837(26,582)(16,639)(25,028)
65,506(111)
39,750(82,678)

193,539
108,481356,996(198,373)(124,174)(2,655)(2,786)23,327

15(13,148)(16,333)(19,813)(20,798)
174,087¥ 44,157¥ (25,591)$ 329,530(Continued)

Millions of Yen
2023
as Restated(Note 1)
2022
Net cash provided by (used in) operating activities—(Forward)
INVESTING ACTIVITIES:Net decrease (increase) in time deposits
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of intangible assets
Payments for purchases of investment securities
Proceeds from sales of investment securities
Proceeds from liquidation of subsidiaries and associatedcompanies
Payments of loans receivable
Proceeds from collections of loans
Net cash provided by (used in) investing
activities
FINANCING ACTIVITIES:
Proceeds from long-term debt
Repayments of long-term debt
Payments of cash dividends
Other—net

Thousands of
U.S. Dollars(Note 1)
2023
as Restated(Note 1)

¥ 44,157¥ (25,591)$ 329,530

10,107(948)
4(1,836)(2,001)
1,312

(576)
(515)
1
(1,624)(720)
230

75,429(7,082)
37(13,703)(14,940)
9,797

21
(194)
1,424

79
(987)
326

164
(1,454)
10,631

7,889(3,787)58,8793,600(20,130)

26,865(150,230)

(526)

(126)
(3,636)(433)(17,057)(4,197)(127,294)

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
ON CASH AND CASH EQUIVALENTS

2,593

3,938

19,353NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS

37,582(29,638)

280,468

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

69,09998,738515,669¥106,682¥ 69,099$ 796,137

Net cash used in financing activities

CASH AND CASH EQUIVALENTS, END OF YEAR

(3,929)See notes to consolidated financial statements.

- 12 -(Concluded)11

Chiyoda Corporation and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

Notes
to Consolidated
Year Ended
March 31, 2023 Financial Statements
Year Ended March 31, 2023
1.

BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

L&T Chiyoda (India) Limited was excluded from the scope of associated companies due to thesales of its shares.

The accompanying consolidated financial statements have been prepared in accordance with theprovisions set forth in the Japanese Financial Instruments and Exchange Act and its related
accounting regulations and in accordance with accounting principles generally accepted in Japan("Japanese GAAP"), which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards ("IFRS").

Both investments in the remaining unconsolidated subsidiaries and associated companies arestated at cost. If the equity method of accounting had been applied to the investments in thesecompanies, the effect on the accompanying consolidated financial statements would not bematerial.

In preparing these consolidated financial statements, certain reclassifications and rearrangements
have been made to the consolidated financial statements issued domestically in order to present
them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications
have been made in the 2022 consolidated financial statements to conform to the classifications usedin 2023.
The consolidated financial statements are stated in Japanese yen, the currency of the country inwhich Chiyoda Corporation (the "Company" or "Chiyoda") is incorporated and principally operates.
The translations of Japanese yen amounts into U.S. dollar amounts are included solely for theconvenience of readers outside Japan and have been made at the rate of ¥134 to $1, theapproximate rate of exchange at March 31, 2023. Such translations should not be construed as
representations that the Japanese yen amounts could be converted into U.S. dollars at that or any
other rate.

Most of the consolidated foreign subsidiaries have a December 31 year-end, which is different
from that of the Company. As a result, adjustments have been made for any significant
transactions which took place during the period between the year-end of these subsidiaries andthe year-end of the Company.
The excess of the cost of acquisition over the fair value of the net assets of an acquired
subsidiary at the date of acquisition is amortized over a period of 20 years.
All significant intercompany balances and transactions have been eliminated in consolidation. All
material unrealized profit included in assets resulting from transactions within the Group is also
eliminated.
b.

Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated
Financial Statements—Under Accounting Standards Board of Japan ("ASBJ") Practical Issues
Task Force ("PITF") No. 18, "Practical Solution on Unification of Accounting Policies Applied toForeign Subsidiaries for the Consolidated Financial Statements," the accounting policies andprocedures applied to a parent company and its subsidiaries for similar transactions and events
under similar circumstances should in principle be unified for the preparation of the consolidated
financial statements. However, financial statements prepared by foreign subsidiaries inaccordance with either IFRS or generally accepted accounting principles in the United States ofAmerica (Financial Accounting Standards Board Accounting Standards Codification) tentatively
may be used for the consolidation process, except for the following items that should be adjusted
in the consolidation process so that net income is accounted for in accordance with Japanese
GAAP, unless they are not material: (a) amortization of goodwill; (b) scheduled amortization of
actuarial gain or loss of pensions that has been recorded in equity through other comprehensive
income; (c) expensing capitalized development costs of R&D; (d) cancellation of the fair value
model of accounting for property, plant and equipment and investment properties andincorporation of the cost model of accounting; and (e) recording a gain or loss through profit orloss on the sale of an investment in an equity instrument for the difference between theacquisition cost and selling price, and recording impairment loss through profit or loss forother-than-temporary declines in the fair value of an investment in an equity instrument, where aforeign subsidiary elects to present in other comprehensive income subsequent changes in thefair value of an investment in an equity instrument.

c.

Unification of Accounting Policies Applied to Foreign Associated Companies for the
Equity Method—ASBJ Statement No. 16, "Accounting Standard for Equity Method of
Accounting for Investments," requires adjustments to be made to conform the associate's
accounting policies for similar transactions and events under similar circumstances to those of
the parent company when the associate's financial statements are used in applying the equity
method unless it is impracticable to determine such adjustments. In addition, financial statements
prepared by foreign associated companies in accordance with either IFRS or generally accepted
accounting principles in the United States of America tentatively may be used in applying theequity method if the following items are adjusted so that net income is accounted for inaccordance with Japanese GAAP, unless they are not material: (a) amortization of goodwill;(b) scheduled amortization of actuarial gain or loss of pensions that has been recorded in equity
through other comprehensive income; (c) expensing capitalized development costs of R&D;(d) cancellation of the fair value model of accounting for property, plant and equipment andinvestment properties and incorporation of the cost model of accounting; and (e) recording a gainor loss through profit or loss on the sale of an investment in an equity instrument for thedifference between the acquisition cost and selling price, and recording impairment loss throughprofit or loss for other-than-temporary declines in the fair value of an investment in an equity
instrument, where a foreign associate elects to present in other comprehensive income
subsequent changes in the fair value of an investment in an equity instrument.

Japanese yen figures less than a million yen are rounded down to the nearest million, except for per
share data.
U.S. dollar figures less than a thousand U.S. dollars are rounded down to the nearest thousand,except for per share data.
In the consolidated balance sheet as of March 31, 2023, there were errors in the amounts indicatedas "Cash and cash equivalents" and "Short-term investments," and therefore the amounts in thecurrent consolidated fiscal year have been restated to ¥59,682 million ($445,391 thousand) and¥1,558 million ($11,633 thousand).
In the consolidated statement of cash flows for the year ended March 31, 2023, there were errors in
the amounts indicated as "Cash and cash equivalents, beginning of year" and "Cash and cash
equivalents, end of year," and therefore the amounts in the current consolidated fiscal year have been
restated to ¥69,099 million ($515,669 thousand) and ¥106,682 million ($796,137 thousand).
In the Note 22, "Financial Instruments and Related Disclosures, (5) Maturity Analysis for Financial
Assets and Securities with Contractual Maturities" as of March 31, 2022, there was an error in theamount indicated as "Total" amount of "Due in 1 Year or Less," and therefore the amount in the priorconsolidated fiscal year has been restated to ¥333,318 million.
2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.

Consolidation—The consolidated financial statements as of March 31, 2023, include theaccounts of the Company and its 15 (16 in 2022) significant subsidiaries (together, the "Group").
Under the control and influence concepts, those companies in which the Company, directly or
indirectly, is able to exercise control over operations are fully consolidated, and those companies
over which the Group has the ability to exercise significant influence are accounted for by theequity method.
Investments in four (five in 2022) associated companies are accounted for by the equity method.

- 13 -

12

Chiyoda Corporation

Consolidated Financial Statements FY2022- 14 -

13

Notes to Consolidated Financial Statementsd.

Revenue Recognition—The Group provides the services of planning, engineering,procurement, construction, commissioning and maintenance of various plants, and also provides
consulting for industrial facilities in the engineering business. Mainly long-term construction
contracts are concluded. The guarantee that the plants satisfy the required specification definedin the construction contracts is not recognized as an independent performance obligation as it
does not separately provide an independent service. The construction of plants follows the
specification required by customers and the Group has a piece-work claim on the portion of theobligation that has been fulfilled. Therefore, the Group determines that the performanceobligation is satisfied over time and recognizes revenue based on the progress in satisfying theperformance obligation.
The percentage of completion is measured by the ratio of costs accrued on and before the end ofreporting period in the estimated total construction cost, which is called the input method. If theperiod of construction from the beginning date defined in the contract to the estimated date ofperformance obligation completion is extremely short, the Group recognizes revenue at the timeof performance obligation completion, adapting alternative treatment, instead of recognizing
based on percentage of completion.

e.

Long-Lived Assets—The Group reviews its long-lived assets for impairment whenever eventsor changes in circumstance indicate the carrying amount of an asset or asset group may not berecoverable. An impairment loss is recognized if the carrying amount of an asset or asset groupexceeds the sum of the undiscounted future cash flows expected to result from the continued use
and eventual disposition of the asset or asset group. The impairment loss would be measured as
the amount by which the carrying amount of the asset exceeds its recoverable amount, which is
the higher of the discounted cash flows from the continued use and eventual disposition of theasset or the net selling price at disposition.

m. Software—Software for internal use is amortized on a straight-line basis over its estimateduseful life (five years at the maximum).
n.

Other Assets—Intangible assets and goodwill are carried at cost less accumulated amortization,
which is calculated by the straight-line method over their estimated useful lives.

o.

Allowance for Warranty Costs for Completed Work—The allowance for warranty costs forcompleted work is provided based on past rate experience.

In addition, if liquidated damage defined in contracts for construction delays is expected, theestimated variable consideration is deducted from contract prices agreed in contracts withcustomers.

p.

Allowance for Losses on Construction Contracts—The allowance for losses on construction
contracts is provided for an estimated amount of probable losses to be incurred in future years in
respect of construction projects in progress.

Cash Equivalents—Cash equivalents are short-term investments that are readily convertible
into cash and exposed to insignificant risk of changes in value. Cash equivalents include time
deposits, certificates of deposit and short-term loans receivable based on uncommitted line ofcredit loan agreement with an affiliated company of Mitsubishi Corporation, all of which mature or
become due within three months of the date of acquisition.

q.

Provision for Treatment of PCB Waste—Provision for treatment of PCB (Poly ChlorinatedBiphenyl) waste is provided based on estimated costs of the treatment for PCB products andequipment as well as their collection and transportation fees.

r.

Retirement and Pension Plans—The Company and consolidated subsidiaries have funded or
unfunded defined benefit pension plans and defined contribution pension plans for employees.
Certain consolidated subsidiaries have defined benefit corporate pension plans or severance
lump-sum payment plans, and calculate retirement benefit assets, retirement benefit liabilities,
and retirement benefit expenses by using the simplified method.

f.

Short-Term Investments—Short-term investments are time deposits which will mature within
three months after the date of acquisition. Short-term investments are exposed to insignificant
risk of changes in value.

g.

Inventories—Costs on construction contracts in progress are stated at cost based on thespecific identification method.

h.

Investment Securities—All equity securities other than nonmarketable available-for-sale equity
securities are classified as available-for-sale equity securities and are reported at fair value, withunrealized gains and losses, net of applicable taxes, reported in a separate component of equity.
The cost of equity securities sold is determined based on the moving-average method.
Nonmarketable available-for-sale equity securities are stated at cost determined by themoving-average method or at amortized cost. For other-than-temporary declines in fair value,
investment securities are reduced to net realizable value by a charge to income.

14

l.

i.

Jointly Controlled Assets of Joint Venture—The jointly controlled assets of the joint venture
consist of jointly controlled cash pertaining to the contract work recognized based on the
Company's share of the venture.

j.

Allowance for Doubtful Accounts—The allowance for doubtful accounts is stated in amounts
considered to be appropriate based on the Group's past credit loss experience and an evaluationof potential losses in the receivables outstanding.

k.

Property, Plant and Equipment—Property, plant and equipment are stated at cost.
Depreciation is computed by the declining-balance method, except for buildings owned by theCompany and structures acquired on or after April 1, 2016, that are depreciated using thestraight-line method, at rates based on the estimated useful lives of the assets. The range ofuseful lives is from 8 to 57 years for buildings and structures, from 4 to 17 years for machineryand equipment, and from 4 to 15 years for tools, furniture, and fixtures.

Chiyoda Corporation

Consolidated Financial Statements FY2022- 15 -In order to provide employee retirement benefits, the Company recorded retirement benefit
liabilities by excluding the projected amount of pension assets from that of liability for retirement
benefits at the end of the current fiscal year.
The Company and its consolidated domestic subsidiaries account for the liability for retirement
benefits based on the projected benefit obligations and plan assets at the balance sheet date.
The projected benefit obligations are attributed to periods on a benefit formula basis. Actuarial
gains and losses are amortized on a straight-line basis over 10 years within the averageremaining service period.
Actuarial gains and losses that are yet to be recognized in profit or loss are recognized withinequity (accumulated other comprehensive income), after adjusting for tax effects, are recognizedin profit or loss over a certain period no longer than the expected average remaining service
period of the employees.
The Company provides the exceeded amount as asset for retirement benefits of investment andother assets in case the amount of plan asset recognized at the end of this accounting period
exceeds the difference between the benefit obligations and unrecognized actuarial gain andlosses.

- 16 -

15

Notes to Consolidated Financial Statementss.

t.

Asset Retirement Obligations—Under Japanese GAAP, an asset retirement obligation isdefined as a legal obligation imposed either by law or contract that results from the acquisition,
construction, development and normal operation of a tangible fixed asset and is associated withthe retirement of such tangible fixed asset. The asset retirement obligation is recognized as thesum of the discounted cash flows required for the future asset retirement and is recorded in the
period in which the obligation is incurred if a reasonable estimate can be made. If a reasonableestimate of the asset retirement obligation cannot be made in the period the asset retirement
obligation is incurred, the liability should be recognized when a reasonable estimate of the asset
retirement obligation can be made. Upon initial recognition of a liability for an asset retirement
obligation, an asset retirement cost is capitalized by increasing the carrying amount of the related
fixed asset by the amount of the liability. The asset retirement cost is subsequently allocated to
expense through depreciation over the remaining useful life of the asset. Over time, the liability is
accreted to its present value each period. Any subsequent revisions to the timing or the amountof the original estimate of undiscounted cash flows are reflected as an adjustment to the carrying
amount of the liability and the capitalized amount of the related asset retirement cost.
Board Incentive Plan Trust for Director's Compensation—The Company introduced a"Performance-Based Stock Compensation Plan" (the "Plan") to improve medium-to-long termbusiness performance and to heighten the mindset of contributing to the enhancement ofcorporate value of our directors and executive officers (excluding non-executive directors andnon-residents of Japan) (the "Directors & Officers") based on the ordinary general meeting ofshareholders of the Company on June 23, 2021, from the prior consolidated fiscal year.
Accounting policies regarding the Plan follow "Practical Solution on Transactions of Delivering
the Company's Own Stock to Employees etc. through Trusts" (PITF No. 30 of March 26, 2015).
(1) Outline of the Plan
The Company introduce a system called BIP (Board Incentive Plan) trust for Director'scompensation ("BIP trust") and will provide the Company's stock and cash equivalent torealized amount of the Company's stock obtained from BIP trust depending on theirpositions and goal achievement after the Directors & Officers' retirement.
(2) Company stock remaining in BIP trust
Company stock remaining in BIP trust was recorded as treasury stock in equity referring
book value of BIP trust excluding accompanying costs. Book value and the number of stocksof the treasury stock at March 31, 2023 and 2022, were ¥373 million ($2,788 thousand) and
904,689 stocks, and ¥375 million and 909,600 stocks, respectively.

u.

Research and Development Costs—Research and development costs are charged to income
as incurred.

v.

Leases—Japanese GAAP require that all finance lease transactions be capitalized byrecognizing lease assets and lease obligations in the balance sheet.
All other leases are accounted for as operating leases.

w. Income Taxes—The provision for income taxes is computed based on the pretax income
included in the consolidated statement of income. The asset and liability approach is used torecognize deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of assets and liabilities.
Deferred taxes are measured by applying currently enacted income tax rates to the temporary
differences.

x.

Foreign Currency Transactions—All short-term and long-term monetary receivables andpayables denominated in foreign currencies are translated into Japanese yen at the exchange
rates at the balance sheet date. Foreign exchange gains and losses from translation arerecognized in the consolidated statement of income to the extent that they are not hedged byforeign currency forward contracts.

y.

Foreign Currency Financial Statements—Balance sheet accounts of consolidated foreignsubsidiaries are translated into Japanese yen at the current exchange rate as of the balance
sheet date except for equity, which is translated at the historical rate. Differences arising fromsuch translation are shown as "Foreign currency translation adjustments" under accumulated
other comprehensive income in a separate component of equity. Revenue and expense
accounts of consolidated foreign subsidiaries are translated into Japanese yen at the current
exchange rate as of the balance sheet date.

z.

Derivatives and Hedging Activities—The Group uses derivative financial instruments,
including foreign currency forward contracts, as a means of hedging exposure to foreign currency
risks. The Group does not enter into derivatives for trading or speculative purposes.
Derivative financial instruments are classified and accounted for as follows:(1) All derivatives are recognized as either assets or liabilities and measured at fair value, withgains or losses recognized in the consolidated statement of income.
(2) For derivatives used for hedging purposes, if such derivatives qualify for hedge accounting
because of high correlation and effectiveness between the hedging instruments and thehedged items, gains or losses on derivatives are deferred until maturity of the hedgedtransactions.
Foreign currency forward contracts are utilized to hedge foreign exchange risks. Certain assets
and liabilities on construction contracts denominated in foreign currencies are translated at thecontracted rates if the forward contracts qualify for hedge accounting.
Foreign currency deposits are held to hedge foreign exchange risks derived from forecasted
purchases of fixed assets denominated in foreign currency.

aa. Accounting Principles and Procedures Adopted When Related Accounting Regulations
Were Unclear (Consolidation Measures for Jointly Controlled Entities)—For jointly
controlled entities that are not legal entities, the assets, liabilities, revenues and expenses areconsolidated according to the amount of interest in the entity. This is conditional upon the factthat the contract specifies all assets and liabilities belong to the co-owners of the entity.
For incorporated jointly controlled entities, the assets, liabilities, revenues and expenses areconsolidated according to the amount of interest in the entity. This is conditional upon the factthat in reality, the entity could be judged as an unincorporated entity. For example, if the contract
specifies that all assets and liabilities belong to the co-owners, investment amounts are minimal,
and liquidation is certain upon the completion of the project, the entity could be deemed assimilar to unincorporated ones.
ab. Per Share Information—Basic net income per share is computed by dividing net income
available to common shareholders by the weighted-average number of common shares
outstanding for the period, retroactively adjusted for stock splits.
Diluted net income per share reflects the potential dilution that could occur if preferred stocks
were exercised. Diluted net income per share of common stock assumes full exercise ofpreferred stocks.
Cash dividends per share presented in the accompanying consolidated statement of income are
dividends applicable to the respective fiscal years, including dividends to be paid after the end of
the year.

16

Chiyoda Corporation

Consolidated Financial Statements FY2022- 17 -- 18 -

17

Notes to Consolidated Financial Statements

3.

5.

SIGNIFICANT ACCOUNTING ESTIMATES
Revenue Recognition(Consolidated Balance Sheet)(1) The amount recorded in the fiscal years ended March 31, 2023 and 2022

Although "Short-term loans receivable" was included to "Prepaid expenses and other" under "Current
assets" in the prior consolidated fiscal year, it was separately stated from the current consolidated
fiscal year as the amounts have exceeded 5% of the total assets. In order to reflect this change inpresentation, the Company reclassified figures for the prior year's consolidated balance sheet.

Millions of Yen
2023
2022
Revenue recognized in proportion to satisfying
a performance obligation over time
Allowance for losses on construction contracts¥ 405,220
27,894¥ 274,126
34,815

Thousands of
U.S. Dollars
2023

As a result, "Prepaid expenses and other" of ¥21,731 million under "Current assets" in the prior year's
consolidated balance sheet has been reclassified to "Short-term loans receivable" of ¥11,402 million
and "Prepaid expenses and other" of ¥10,328 million.

$ 3,024,031
208,167

Also "Deposits received" stated separately under "Current liabilities" in the prior consolidated fiscal
year, it was included to "Accrued expenses and other" under "Current liabilities" from the current
consolidated fiscal year as the amounts were not significant. In order to reflect this change inpresentation, the Company reclassified figures for the prior year's consolidated balance sheet.

(2) Information on significant accounting estimates
Revenue recognized in proportion to satisfying a performance obligation over time is based on
the percentage of completion measured by the ratio of costs in total construction cost, which iscalled input method as stated in Note 2, "Summary of Significant Accounting Policies,
d. Revenue recognition."
When it is probable that the total construction costs will exceed total construction revenue and its
amount is reasonably estimated, allowance for losses on construction contracts is recognized bydeducting profit or loss that has been already posted from total estimated excess amount.

As a result, "Deposits received" of ¥783 million under "Current liabilities" and "Accrued expenses andother" of ¥5,940 million under "Current liabilities" in the prior year's consolidated balance sheet havebeen reclassified to "Accrued expenses and other" of ¥6,724 million.
6.

In addition, the total construction cost includes significant estimation factors such as individual
risks with construction conduct, and the estimated risks, including the effects of the situation in
Ukraine. If unpredictable changes in assumptions occur the total construction cost may change.
In such cases, the degree of progress for contracts may change, which could have a significant
impact on the figures of revenue recognized in proportion to satisfying a performance obligation
over time and allowance for losses on construction contracts in the following consolidated fiscal
year.

RECEIVABLES FROM CONTRACT WITH CUSTOMERS AND CONTRACT ASSETS
Notes receivable, receivables from contract with customers and contract assets at March 31, 2023
and 2022, were as follows:

A part of the estimation of the total construction revenue based on the contracts with customers
contains the elements of variable consideration, which come from future events that not occurredyet, such as incentive or bonuses from achieving significant milestones and liquidated damages
for construction delays. Such estimation is based on the single amount that is most likely to arise
when chosen from every possible amount of consideration.

4.

CHANGES IN PRESENTATION

Millions of Yen
2023
2022
Notes receivable—trade
Accounts receivable—trade
Contract assets
7.

¥ 1,337
21,403
12,292The impact on profit/loss and information per share is not significant.

18

Chiyoda Corporation

Consolidated Financial Statements FY2022- 19 -

9,980
159,730
91,737

Investment securities at March 31, 2023 and 2022, consisted of the following:
Millions of Yen
2023
2022

Applying of Accounting Standards Codification Topic 842 "Leases"

As a result, "Current portion of long-term debt" of ¥291 million ($2,178 thousand) under "Current
liabilities" and "Long-term debt" of ¥622 million ($4,643 thousand) under "Long-term liabilities" wereincreased, then "Retained earnings" of ¥247 million ($1,847 thousand) at the beginning was
decreased in consolidated balance sheet of the current fiscal year.

$

INVESTMENT SECURITIESACCOUNTING CHANGE

The consolidated foreign subsidiary that applies accounting principles generally accepted in the
United States of America ("U.S. GAAP") started to apply "Leases" (Financial Accounting Standards
Board Accounting Standards Codification, "FASB ASC" Topic 842) from the beginning of the current
fiscal year. FASB ASC Topic 842, in principle, requires the subsidiary to record all leases of lessee asassets and liabilities in consolidated balance sheet. As a result of applying this standard, thecumulative impact of adopting the standard was recognized at the start date of application, which isapproved as transitional measures.

¥ 1,577
28,395
10,465

Thousands of
U.S. Dollars
2023

Non-current—Equity securities¥ 2,985¥ 1,479

Thousands of
U.S. Dollars
2023$ 22,281

The costs and aggregate fair values of investment securities at March 31, 2023 and 2022, were as
follows:
March 31, 2023

Cost
Securities classified as—
Available-for-sale—equity securities¥ 179- 20 -

Millions of Yen
Unrealized
Unrealized
Gains
Losses
¥ 67

Fair
Value
¥ 246

19

Notes to Consolidated Financial Statements

8.

March 31, 2022

Cost
Securities classified as—
Available-for-sale—equity securities

Millions of Yen
Unrealized
Unrealized
Gains
Losses

¥ 237

¥ 101

Regarding business assets, grouping of assets is taken place based on the business segments in theGroup.

Fair
Value

For the purpose of seeking efficient group management by the domestic business integration, theGroup determined to carry out office consolidation in the current fiscal year. According to this, theassets were no longer expected to be used due to the relocation of offices. Therefore, the assets
related to relocation of offices were reduced to recoverable value and its reduction was recorded as
extraordinary losses.

¥ 338

March 31, 2023

Cost
Securities classified as—
Available-for-sale—equity securities

Thousands of U.S. Dollars
Unrealized Unrealized
Gains
Losses$ 1,337$ 501$1

Recoverable value is determined as zero.

Fair
Value

Details of impairment loss as follows:$ 1,837

Information on the available-for-sale securities sold during the years ended March 31, 2023 and2022, was as follows:
March 31, 2023

Proceeds

Millions of Yen
Realized
Gains

9.

¥ 133

Kanagawa,
Japan

Business assets

Buildings andstructures

¥ 94

$ 704

IMPAIRMENT LOSS OF LONG-LIVED ASSETS

¥ 95

¥5

None
March 31, 2022

Securities classified as—
Available-for-sale—equity securities

Proceeds

Millions of Yen
Realized
Gains

¥ 230

¥ 160

Realized
LossesLocation

Used Status

Category of Assets

Impairment Loss
Millions of Yen

MyanmarBusiness assets

Buildings, structures andinvestment properties¥ 426

The Group grouped the business assets based on business segments.

March 31, 2023

The impairment loss of ¥426 million, including loss for buildings of ¥266 million and investment
properties of ¥159 million, was reported on other expenses by identifying the indication of impairment
considering the economic situation of Myanmar and the prospect of it and reducing book value to therecoverable value in the prior consolidated fiscal year. The recoverable value was measured byestimating the value in use. The recoverable value was estimated to be zero as the value of thebuildings, structures, and investment properties based on future cash flows was negative.

Thousands of U.S. Dollars
Realized
Realized
Proceeds
Gains
LossesSecurities classified as—
Available-for-sale—equity securities

$ 997

$ 709

$ 38

The impairment loss on available-for-sale securities for the years ended March 31, 2023 and 2022,
was ¥79 million ($592 thousand) and ¥89 million, respectively.
When assessing impairment, if the available fair value at the end of the period of the securities
declines by 50% or more, compared with acquisition cost, all the corresponding securities are
impaired. In addition, in the case whereby the available fair value of the securities declined by morethan 30% but by less than 50%, the Group examines the recoverability of the fair value of the
securities and reduce the value if those securities are considered to be unrecoverable.

Consolidated Financial Statements FY2022

Used Status

Impairment Loss
Millions of Thousands of
Yen
U.S. Dollars

Impairment loss on long-lived assets for the fiscal years ended March 31, 2023 and 2022, was asfollows:

Realized
LossesMarch 31, 2022

Chiyoda Corporation

Location

Category ofAssetsMarch 31, 2023

Securities classified as—
Available-for-sale—equity securities

20

EXPENSES ON OFFICE CONSOLIDATION RELATED TO THE DOMESTIC BUSINESSINTEGRATION- 21 -

10.

INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATEDCOMPANIES
Investments in and advances to unconsolidated subsidiaries and associated companies at March 31,
2023 and 2022, were as follows:
Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Investments¥ 3,456¥ 4,032$ 25,793

Total¥ 3,456¥ 4,032$ 25,793- 22 -

21

Notes to Consolidated Financial Statements

11.

ASSETS AND LIABILITIES ACCOUNTED FOR AS FINANCIAL TRANSACTIONSThe Company has concluded agreements with banks on accounts with overdrafts for efficient fundingof working capital.

Assets and liabilities accounted for as financial transactions at March 31, 2023 and 2022, were as
follows:
Millions of Yen
2023
2022
Land
Buildings and structures
Tools, furniture and fixtures
Current portion of long-term debt
12.

The overdraft balance on the current overdraft agreement at March 31, 2023 and 2022, were as
follows:

Thousands of
U.S. Dollars
2023

¥ 381
252

¥ 381
281

$ 2,844
1,881

490

621

3,659

Millions of Yen
2023
2022

LONG-TERM DEBT
13.

Long-term debt at March 31, 2023 and 2022, consisted of the following:
Millions of Yen
2023
2022
Long-term loans from banks, with interest rates at
2.5% (2023) and 2.5% (2022)—Unsecured
Long-term loans from banks, with interest rates at
1.9% (2022) and 1.9% (2021)—Unsecured
Long-term loans from banks, with interest rates at
0.8% (2023) and 0.8% (2022)—Unsecured
Long-term loans from banks, with interest rates at
0.6% (2023) and 0.6% (2022)—Unsecured
Long-term loans from banks, with interest rates at
0.7% (2023) and 0.7% (2022)—Unsecured
Long-term loans from banks, with interest rates at
0.6% (2023) and 0.6% (2022)— Unsecured
Long-term loans accounted as financial transactions,with interest rates at 3.4% (2023) and 3.4% (2022)—
CollateralizedLong-term loans accounted as financial transactions,with interest rates at 1.1% (2022) and 1.1% (2021)—
Collateralized
Obligations under finance leases
Total
Less current portionLong-term debt, less current portion¥ 20,000¥ 20,000

4,000

2,600
1,000

1,000

$ 149,253

29,850$ 74,626

PLEDGED ASSETS AND SECURED LIABILITIES

621

2,169
31,259(6,390)10,0001,279
46,900(21,269)

16,190233,282(47,690)¥ 24,869¥ 25,631$ 185,592

2023
2024
2025
2026
2027

¥ 5,490
20,000
1,202
1,202
1,195

$ 40,972
149,253
8,973
8,973
8,919

Total

¥ 29,090$ 217,092

Thousands of
U.S. Dollars
2023

Buildings and fixtures
Land
Investment securities¥ 1,880
4,013
37¥ 1,849
4,013
37$ 14,033
29,950277

Total¥ 5,931¥ 5,900$ 44,261

Millions of Yen
2023
2022

3,659

490

Thousands of
U.S. Dollars- 23 -¥ 10,000

7,462

Millions of Yen

Consolidated Financial Statements FY2022

Unexecuted balance

7,462Year Ending
March 31

Chiyoda Corporation$ 74,626

Secured liabilities at March 31, 2023 and 2022, were as follows:

Current portion of long-term loans¥ 10,000

Total¥ 10,000Thousands of
U.S. Dollars
2023

Other than the assets mentioned above, an investment in a Special Purpose Company ("SPC") isalso pledged as collateral. The investment amount is eliminated against the SPC's equity account.
The investment amounts were ¥42,231 million ($315,158 thousand) and ¥58,564 million for the years
ended March 31, 2023 and 2022, respectively.
Assets used as collaterals are provision of collaterals for borrowings, and there are no corresponding
liabilities at the end of the current fiscal year.

Annual maturities of long-term debt, excluding finance leases, at March 31, 2023, were as follows:22¥ 10,000Millions of Yen
2023
2022

19,402

1,000

Total maximum limit amount of the agreement
Borrowing balance

Assets that are pledged as collateral at March 31, 2023 and 2022, were as follows:

Thousands of
U.S. Dollars
2023

10,0004,000

Thousands of
U.S. Dollars
2023

14.

RETIREMENT AND PENSION PLANS
The Company and consolidated subsidiaries have funded or unfunded defined benefit pension plansand defined contribution pension plans for employees.
Under defined benefit corporate pension plans, all of which are funded, employees are entitled tocertain lump-sum payments or pension payments based on cumulated points which are granted inaccordance with years of continuous employment, occupational classification and performance
evaluation. Under severance lump-sum payment plans, employees are entitled to certain lump-sum
payments based on salary and service period.

- 24 -

23

Notes to Consolidated Financial Statements

Certain consolidated subsidiaries have defined benefit corporate pension plans or severance
lump-sum payment plans and calculate retirement benefit expenses by using the simplified method.

(4) Reconciliation between the liability recorded in the consolidated balance sheet and the balancesof defined benefit obligations and plan assets:(1) The changes in defined benefit obligation for the years ended March 31, 2023 and 2022, wereas follows:
Millions of Yen
2023
2022
Balance at beginning of year
Current service cost
Interest cost
Actuarial losses (gains)
Benefits paid
Transfer of debt with business divestitures*
Others¥ 17,738
840
150
249
(1,520)

Balance at end of year

Thousands of
U.S. Dollars
2023$ 132,378
6,275
1,120
1,860
(11,349)35¥ 18,847
856
142
(44)
(1,272)(822)
30¥ 17,493¥ 17,738$ 130,549(2) The changes in plan assets for the years ended March 31, 2023 and 2022, were as follows:

Balance at beginning of year
Expected return on plan assets
Actuarial gains
Contributions from the employer
Benefits paid
Transfer of asset with business divestitures*
Others¥ 17,840
332
(598)
1,072
(1,515)

Balance at end of year

Funded defined benefit obligations
Plan assets
Total
Unfunded defined benefit obligations¥ 18,657(18,431)225
412

Net liability arising from defined
benefit obligations¥

264* This was due to the transfer of defined benefit obligation in the prior consolidated fiscal
year, by a factor of business divestiture of IT business from Chiyoda System Technologies
in consolidated fiscal year of 2021.

Millions of Yen
2023
2022

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023$ 133,136
2,479(4,464)
8,002(11,313)30¥ 18,893
331
(385)
1,073
(1,272)(822)
22¥ 17,160¥ 17,840$ 128,065

225* This was due to the transfer of plan assets in the prior consolidated fiscal year, by a factorof business divestiture of IT business from Chiyoda System Technologies in consolidated
fiscal year of 2021.

24

Chiyoda Corporation

Thousands of
U.S. Dollars
2023

Balance at beginning of year
Benefit costs
Benefits paid
Contribution to the plans
Others

¥ 242
168
(28)
(84)
6

¥ 239
111
(31)
(85)
7

$ 1,807
1,258
(213)
(630)
49

Balance at end of year

¥ 304

¥ 242

$ 2,271

Consolidated Financial Statements FY2022- 25 -¥ 18,913(19,153)(239)
380$ 139,232(137,552)
1,680
3,074

¥

$

140

Millions of Yen
2023
2022

4,755

Thousands of
U.S. Dollars
2023

Liability for retirement benefits
Asset for retirement benefits

¥ 804
(167)

¥ 773
(633)

$ 6,006(1,251)

Net liability arising from defined
benefit obligations

¥ 637

¥ 140

$ 4,755(5) The components of net periodic benefit costs for the years ended March 31, 2023 and 2022,
were as follows:
Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial gains
Benefit costs in simplified method
Others

¥ 840
150
(332)
(290)
168
(1)

¥ 856
142
(331)
(317)
111

$ 6,275
1,120(2,479)(2,168)1,258(14)Net periodic benefit costs

¥ 534

¥ 461

$ 3,991(6) Amounts recognized in other comprehensive income (before income tax effect) in respect ofdefined retirement benefit plans for the years ended March 31, 2023 and 2022, were as follows:(3) The changes in the liability recorded in the consolidated balance sheet by using the simplified
method for the years ended March 31, 2023 and 2022, were as follows:
Millions of Yen
2023
2022

637

Thousands of
U.S. Dollars
2023

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Actuarial losses¥ 1,137¥ 662$ 8,488

Total¥ 1,137¥ 662$ 8,488- 26 -

25

Notes to Consolidated Financial Statements(7) Amounts recognized in accumulated other comprehensive income (before income tax effect) in
respect of defined retirement benefit plans as of March 31, 2023 and 2022, were as follows:
Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Unrecognized actuarial losses (gains)¥ 220¥ (917)$ 1,644

Total

¥ 220

¥ (917)$ 1,64415.

EQUITYJapanese companies are subject to the Companies Act of Japan (the "Companies Act"). The
significant provisions in the Companies Act that affect financial and accounting matters are
summarized below:a.

Under the Companies Act, companies can pay dividends at any time during the fiscal year in
addition to the year-end dividend upon resolution at the shareholders' meeting. Additionally, forcompanies that meet certain criteria, an Audit & Supervisory Board may declare dividends(except for dividends-in-kind) at any time during the fiscal year if the company has prescribed soin its articles of incorporation. The Board of Directors of a company with an audit and supervisorycommittee (as implemented under the Companies Act effective May 1, 2015) may also declare
dividends at any time because such company, by its nature, meets the criteria under theCompanies Act. The Company became organized as a company with an audit and supervisorycommittee effective June 23, 2016. However, the Company does not meet all the above criteria.

(8) Plan assetsa.

Components of plan assets
Plan assets as of March 31, 2023 and 2022, consisted of the following:
2023

2022

Debt investments
Equity investments
General accounts
Alternative investments*
Others

30 %
22
18
18
12

30%
24
18
21
7

Total

100 %

100 %

The Companies Act permits companies to distribute dividends in kind (noncash assets) toshareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of
Directors if the articles of incorporation of the company so stipulate. The Companies Act provides
certain limitations on the amounts available for dividends or the purchase of treasury stock. The
limitation is defined as the amount available for distribution to the shareholders, but the amountof net assets after dividends must be maintained at no less than ¥3 million.
The preferred dividend annual rate for the Class A Preferred Shares is set at 3%. If there is a
shortfall in dividend on the shareholders of Class A Preferred Shares during a fiscal year, such
shortfall will be carried over into the following fiscal year or into subsequent fiscal years. The
shareholders of Class A Preferred Shares may not receive dividends from surplus in excess of
the amount of such preferred dividends. The order of preference on payment of dividends fromsurplus between the Class A Preferred Shares and common shares is as follows: the amountequal to the unpaid dividends carried over on the Class A Preferred Shares is paid first; preferred
dividends on the Class A Preferred Shares are paid next; and dividends on common shares arepaid last.

* This was stated separately in the current consolidated fiscal year to enhance the clarityof the disclosure, though stated as debt investments, equity investments, and others in
the prior consolidated fiscal year. As a result, 5% of debt investments, 3% of equity
investments, and 13% of others in the prior consolidated fiscal year reclassified to 21%
of alternatives. Main component of alternatives is investments to hedge funds.
b.

Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term rates ofreturn which are expected currently and in the future from the various components of theplan assets.

b.

(9) Assumptions used for the years ended March 31, 2023 and 2022, were set forth as follows:

Discount rate
Expected rate of return on plan assets

2023

2022

Mainly 0.7%
Mainly 1.8%

Mainly 0.7%
Mainly 1.8%

Dividends

Increases/Decreases and Transfer of Common Stock, Reserve, and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated asa legal reserve (a component of retained earnings) or as additional paid-in capital (a componentof capital surplus), depending on the equity account charged upon the payment of such
dividends, until the aggregate amount of legal reserve and additional paid-in capital equals 25%of the common stock. Under the Companies Act, the total amount of additional paid-in capitaland legal reserve may be reversed without limitation. The Companies Act also provides that
common stock, legal reserve, additional paid-in capital, other capital surplus, and retained
earnings can be transferred among the accounts within equity under certain conditions upon
resolution of the shareholders.

(10) Payables to defined contribution plans of the Company and consolidated subsidiaries for theyears ended March 31, 2023 and 2022, were ¥343 million ($2,564 thousand) and ¥341 million,
respectively.

c.

Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of suchtreasury stock by resolution of the Board of Directors. The amount of treasury stock purchased
cannot exceed the amount available for distribution to the shareholders, which is determined by aspecific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component ofequity.

26

Chiyoda Corporation

Consolidated Financial Statements FY2022- 27 -

27

Notes to Consolidated Financial Statements

The Companies Act also provides that companies can purchase both treasury stock acquisitionrights and treasury stock. Such treasury stock acquisition rights are presented as a separate
component of equity or deducted directly from stock acquisition rights.
d.

Investments and other assets—Deferred tax assets
Long-term liabilities—Deferred tax liabilities

INCOME TAXESThe tax effects of significant temporary differences and tax loss carryforwards which resulted indeferred tax assets and liabilities at March 31, 2023 and 2022, were as follows:
Millions of Yen
2023
2022
Deferred tax assets:
Tax loss carryforwards*2
Adjustment of percentage of completion for foreign
construction
Cost of revenue
Profit/loss in joint venture
Allowance for losses on construction contracts
Accounts receivable from completed construction
contracts and contract assets
Long-term accounts receivable
Carryforward foreign tax credit
Long-term loans receivable
Allowance for employees' bonus
Costs of construction contracts in process
Asset retirement obligations
Other
Subtotal of deferred tax assets
Valuation allowance for tax loss carryforwards*2
Valuation allowance for temporary differences
Subtotal valuation allowance¥ 56,055¥ 56,415$ 418,324

7,205
6,769
3,760
3,060

4,514
10,63553,77150,51928,06522,837

2,123
1,824
1,745
1,643
1,544
738
536
1,867
88,875(56,001)(31,919)(87,920)

1,366
1,824
1,643
960
442
530
2,495
85,103(56,380)(28,002)(84,382)

15,84913,61313,02812,262
11,525
5,514
4,002
13,935663,249(417,921)(238,204)(656,125)

954

720

7,123

(752)
(212)
(162)
(11)

(749)
(265)
(35)
(74)

(5,612)(1,582)(1,211)(84)(1,137)(1,124)(8,491)(403)$ (1,368)

Deferred tax liabilities:
Deferred gains on hedges
Fixed assets as asset retirement obligations
Prepaid pension costs
Other
Total

Chiyoda Corporation

Consolidated Financial Statements FY2022

Tax loss carryforwards*
Valuation allowance for tax loss carryforwards
Deferred tax assets

March 31, 2022
Tax loss carryforwards*
Valuation allowance for tax loss carryforwards
Deferred tax assets

March 31, 2023

Total

Net deferred tax liabilities*1

Thousands of
U.S. Dollars
2023

¥

(183)

4,275

¥

¥ 139
(323)

¥ 129
(533)

Thousands of
U.S. Dollars
2023$ 1,044(2,412)*2 Amounts of tax loss carryforwards and related deferred tax assets by tax loss carryforwards for the years ended March 31, 2023 and 2022, were as follows:

March 31, 2023

The Company and its domestic subsidiaries are subject to Japanese national and local income taxes
which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 31% for theyears ended March 31, 2023 and 2022.

28

Millions of Yen
2023
2022

Foreign Currency Translation Adjustments
The fluctuation of foreign currency translation adjustments was mainly caused by substantialchanges of foreign exchange rate in the yen-translation of financial statement items for theoverseas consolidated subsidiaries.

16.

*1 Net deferred tax assets and deferred tax liabilities as of March 31, 2023 and 2022, were recorded in the accompanying consolidated balance sheet as follows:

Tax loss carryforwards*
Valuation allowance for tax loss carryforwards
Deferred tax assets

After
1 Yearthrough
2 Years

1 Year
or
Less
¥ 24
(24)

1 Year
or
Less
¥ 147
(147)

1 Year
or
Less

After
2 Years
through
3 Years

Millions of Yen
After
3 Years
through
4 Years

After
4 Years
through
5 Years¥ 1,551(1,551)¥ 8,137(8,137)

¥1
(1)

After
1 Yearthrough
2 YearsAfter
2 Years
through
3 Years¥ 3,635(3,600)
34

¥ 64
(64)

After
1 Yearthrough
2 Years

$ 181
(181)

After
5 Years

Total¥ 46,340(46,286)53¥ 56,055(56,001)
53

Millions of Yen
After
After
3 Years
4 Years
throughthrough
4 Years
5 Years

After
5 Years

Total¥ 8,979(8,979)¥ 41,169(41,169)¥ 2,418(2,418)

Thousands of U.S. Dollars
After
After
After
2 Years
3 Years
4 Years
throughthroughthrough
3 Years
4 Years
5 Years$ 11,574(11,574)$ 60,728(60,728)

$ 11
(11)

¥ 56,415(56,380)
34

After
5 Years

Total$ 345,827(345,425)
402$ 418,324(417,921)
402* Figures for tax loss carryforwards were the amounts multiplied by the effective statutory tax rate.
A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statement of income isomitted since the differences between those rates are below 5% of the normal effective statutory tax rate for the current consolidated fiscal year and the loss before
income tax reported in the prior consolidated fiscal year.
Additionally, the Company and its domestic subsidiaries started to apply the Group Tax Sharing System from the current consolidated fiscal year.
In accordance with the provisions of Paragraph 42 of "The Practical Solution on the Accounting and Disclosure under the Group Tax Sharing System" (ASBJ Guidance
No. 42 of August 12, 2021), we assessed the accounting treatments on Japanese national and local income taxes or relating tax effects and disclosed the relevant
information.

- 30 -

29

Notes to Consolidated Financial Statements

17.

REVENUEYear Ended March 31, 2022

(1) Disaggregation of Revenue
Revenues from contracts with customers on a disaggregated basis for the years ended March
31, 2023 and 2022, were as follows:Year Ended March 31, 2023
Reportable
Segment
Engineering
Geographical areas:
America
Asia and Oceania
Middle and near East and Africa
Other oversea
Japan
Revenues from contracts with customers
Other revenue¥ 55,858
129,137
151,967
10
92,561
429,535

Total¥ 429,535

Products and services:
LNG plant
Other gas products
Oil and petrochemical
Medicine, biochemistry and generalchemistry
Environment, new energy and infrastructure
Other
Revenues from contracts with customers
Other revenue
Total

Millions of Yen
Other*1

Total

¥ 627
627

¥ 55,858
129,137
151,967
10
93,189430,163¥ 627¥ 430,163¥ 239,315
3,068
29,551¥ 239,315
3,068
29,551

34,096
119,227
4,275
429,535¥ 627
627

34,096
119,227
4,903
430,163¥ 429,535¥ 627¥ 430,163

Reportable
Segment
Engineering

Consolidated Financial Statements FY2022

Total¥ 54,105
57,161
82,321(150)
116,956
310,394¥ 721
721¥ 54,105
57,161
82,321(150)
117,677
311,115Total¥ 310,394¥ 721¥ 311,115

Products and services:
LNG plant
Other gas products
Oil and petrochemical
Medicine, biochemistry and generalchemistry
Environment, new energy and infrastructure
Other
Revenues from contracts with customers
Other revenue
Total
Year Ended March 31, 2023

¥ 155,454
4,063
56,670¥ 155,454
4,063
56,67032,68159,0692,455
310,394¥ 721
721

32,68159,0693,176
311,115¥ 310,394¥ 721¥ 311,115

Thousands of U.S. Dollars
Reportable
Segment
Engineering
Other*1
Total

Geographical areas:
America
Asia and Oceania
Middle and near East and Africa
Other oversea
Japan
Revenues from contracts with customers
Other revenue$ 416,851
963,715
1,134,087
80
690,755
3,205,491$ 4,685
4,685$ 416,851
963,715
1,134,087
80
695,440
3,210,176

Total$ 3,205,491$ 4,685$ 3,210,176

Total

Chiyoda Corporation

Other*1

Geographical areas:
America
Asia and Oceania
Middle and near East and Africa
Other oversea
Japan
Revenues from contracts with customers
Other revenue

Products and services:
LNG plant
Other gas products
Oil and petrochemical
Medicine, biochemistry and generalchemistry
Environment, new energy and infrastructure
Other
Revenues from contracts with customers
Other revenue

30

Millions of Yen- 32 -$ 1,785,937
22,896
220,536$ 1,785,937
22,896
220,536

254,454889,757
31,9083,205,491$ 4,685
4,685

254,454889,757
36,593
3,210,176$ 3,205,491$ 4,685$ 3,210,17631Notes to Consolidated Financial Statements(4) Transaction Prices Allocated to Remaining Performance Obligations*1 Division of "Other" is other business segment, which is not included in reportable segment,
and contains worker dispatch business.

The following table shows the summary of the transaction prices allocated to remaining
performance obligations that are unsatisfied at March 31, 2023 and 2022, were as follows:(2) Basic Information to Understand Revenues from Contracts with Customers
Basic information to understand revenue from contracts with customers is included in Note 2,"Summary of Significant Accounting Policies, d. Revenue Recognition."(3) Contract Balances
Receivables from contract with customers, contract assets and contract liabilities at the
beginning and the end of the years ended March 31, 2023 and 2022, were as follows:
Millions of Yen
2023
2022
Receivables from contracts with customers:
Balance at beginning of year
Balance at end of year
Contract assets:
Balance at beginning of year
Balance at end of year
Contract liabilities:
Balance at beginning of year
Balance at end of year

Thousands of
U.S. Dollars
2023¥ 29,973
22,741¥ 40,957
29,973$ 223,680
169,711

10,465
12,292

7,570
10,465

78,10191,737

143,431
163,347

74,833
143,4311,070,386
1,219,014

Contract assets are the right of the Group for consideration recorded by recognizing revenue
based on the progress. At the point that the right of the Group for consideration become
unconditional, contract assets will be transferred to accounts receivable—trade.
Contract liabilities are advance receipt from customers before fulfillment of contract regarding
contract which recognize revenue based on progress. Contract liabilities will be reversed after
revenue recognition.

18.

Within one year
After one to five years
After five years¥ 437,287
707,391
4,212¥ 459,913
854,866
16,233$ 3,263,338
5,279,039
31,434

Total¥ 1,148,890¥ 1,331,014$ 8,573,812

RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥2,052 million ($15,316 thousand) and¥1,343 million for the years ended March 31, 2023 and 2022, respectively.

19.

GAIN ON SALES OF SHARES OF SUBSIDIARY AND ASSOCIATED COMPANY
Since the Company determined transfer of all shares of L&T Chiyoda (India) Ltd., an associatedcompany of the Company, a gain of ¥231 million ($1,725 thousand) on sales of shares of subsidiary
and associated company was recorded.

20.

PROJECT RELATED LOSS DUE TO SETTLEMENTS WITH CUSTOMERSAs a result of the litigation settlement of the pended lawsuit with the customer of the Ichthys LNG
projects, a reasonably estimated loss of ¥20,374 million was recorded as "Project related loss due tosettlements with customers" and debt corresponding to the loss was recorded as account payable—
other in current liabilities, in the prior fiscal year.

21.

The Group roughly receive consideration in proportion to the satisfying a performanceobligation as conditions are defined in contracts such as milestones. No consideration contains
significant financial elements.

LEASESThe Group leases certain machinery, computer equipment, and other assets.
Future minimum payments under non-cancelable operating leases were as follows:

The amount of revenue recognized for the year ended March 31, 2023, that were included incontract liabilities balance at the beginning of the year is ¥123,008 million($917,977 thousand).

Millions of Yen
2023
2022

The amount of revenue for the year ended March 31, 2023, recognized (or partiallyrecognized) from performance obligations satisfied in the prior consolidated fiscal year is¥(3,195) million ($(23,843) thousand).
The amount of revenue recognized for the year ended March 31, 2022, that were included incontract liabilities balance at the beginning of the year is ¥60,707 million.
The amount of revenue for the year ended March 31, 2022, recognized (or partiallyrecognized) from performance obligations satisfied in the prior consolidated fiscal year is¥6,650 million.

Thousands of
U.S. Dollars
2023

Millions of Yen
2023
2022

Thousands of
U.S. Dollars
2023

Due within one year
Due after one year

¥

(4)
(270)

$4

Total

¥ (274)$4The consolidated foreign subsidiary which applies U.S. GAAP started to apply "Leases" (ASC
Topic 842) from the beginning of the current fiscal year. Operating leases related to the subsidiary is
contained only in the amount of the prior consolidated fiscal year.
22.

FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments for cash surpluses, if any, invested in low-risk financial
assets, such as deposits at notice. For operating capital, the Group uses bank loans. Derivatives
are used, not for speculative purposes, but to manage exposure to the market risk of fluctuation
in foreign currency exchange rates and interest rates.

32

Chiyoda Corporation

Consolidated Financial Statements FY2022- 33 -- 34 -

33

Notes to Consolidated Financial Statements(2) Nature and Extent of Risks Arising from Financial Instruments
Receivables, such as trade notes and trade accounts, are exposed to customer credit risk.
Although receivables in foreign currencies are exposed to the market risk of fluctuation in foreign
currency exchange rates, the position, net of payables in foreign currencies, is hedged by using
foreign currency forward contracts.
Investment securities are equity securities related to the business in which the Group operates.
Marketable securities are exposed to the risk of fluctuations in stock prices.
Payment terms of payables, such as trade notes and trade accounts, are generally less than one
year. Although payables in foreign currencies are exposed to the market risk of fluctuation inforeign currency exchange rates, the position, net of receivables in foreign currencies, is hedgedby using foreign currency forward contracts.
Derivatives are foreign currency forward contracts, which are used to manage exposure tomarket risks from changes in foreign currency exchange rates of receivables and payables.
Please see Notes 2.z and 23 for more details about derivatives.
(3) Risk Management for Financial Instruments(a) Fair values of financial instruments
March 31, 2023
Carrying
AmountWith respect to foreign currency forward contracts, the Group limits the counterparties to thosederivatives to major financial institutions that can bear losses arising from credit risk.
Market risk management (risk of foreign exchange and interest rates)
Foreign currency trade receivables and payables are exposed to market risk resulting fromfluctuations in foreign currency exchange rates. Such foreign exchange risk grasped by currency
and month is hedged principally with foreign currency forward contracts.
Foreign currency forward contracts are controlled under the internal guidelines. The position
related to particular construction contracts is identified and is reviewed. For setting andcancelling foreign currency contracts, reconciliation of the transaction and balances withcustomers' confirmation replies is made, and the transactions related to foreign currency forward
contracts are executed and accounted for under internal guidelines.
Marketable and investment securities are managed by monitoring the market values andfinancial position of issuers on a regular basis. The Group assesses the stock price risk
quantitatively so as to account for significant declines in market value as impairment losses.
Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on
their maturity dates. The Group manages its liquidity risk by holding an adequate volume of liquid
assets along with timely, adequate financial planning.
(4) Fair Values of Financial Instruments
Fair values of financial instruments may differ as such assessment is based on certain
assumptions including fluctuating factors, under different assumptions. Please see Note 23 forfair values for derivatives.

34

Chiyoda Corporation

Consolidated Financial Statements FY2022

Fair Value

Unrealized
Gain (Loss)

Investment securities

¥

246

¥

246

Total

¥

246

¥

246

Notes and accounts payable—trade
Current portion of long-term debt
Long-term debt

¥ 129,370
5,490
23,600¥ 129,370
5,490
23,487¥ (112)

Total¥ 158,461¥ 158,348¥ (112)

March 31, 2022

Credit risk management
The Group manages its credit risk from receivables based on internal guidelines, which include
monitoring of payment terms and balances of major customers to identify the default risk ofcustomers at an early stage.

Millions of Yen

Carrying
AmountMillions of Yen
Fair Value

Unrealized
Gain (Loss)

Investment securities

¥

338

¥

338

Total

¥

338

¥

338

Notes and accounts payable—trade
Current portion of long-term debt
Long-term debt

¥ 96,084
20,621
25,000¥ 96,084
20,60524,907¥ (15)(92)

Total¥ 141,705¥ 141,597¥ (108)March 31, 2023
Thousands of U.S. Dollars
Carrying
Unrealized
AmountFair Value
Gain (Loss)
Investment securities

$

1,837

$

1,837

Total

$

1,837

$

1,837

Notes and accounts payable—trade
Current portion of long-term debt
Long-term debt

$ 965,455
40,972
176,119$ 965,455
40,972
175,277$ (841)

Total$ 1,182,547$ 1,181,705$ (841)

Description is omitted as the carrying value of cash and cash equivalents, short-term
investments, notes and accounts receivable—trade, accounts receivable—other, jointly
controlled assets of joint venture, short-term loans, accounts payable—other, and income
taxes payable approximates fair value because of their short maturities.

35

Notes to Consolidated Financial Statements(b) Carrying amount of financial instruments with fair values that cannot be reliably determined
Millions of Yen
2023
2022
Investment securities that do not have a quoted
market price in an active market
Investments in equity instruments that do nothave a quoted market price in an active market
Investments in unconsolidated subsidiaries andassociated companies that do not have a quoted
market price in an active market¥ 2,738¥ 1,139$ 20,433

1

1

9

3,456

4,032

25,793(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities$ 445,250
11,633
157,979
297,573
1,206,293
355,064$ 2,198

Total$ 2,473,795$ 2,198

Please see Note 12 for annual maturities of long-term debt.
Millions of Yen
Due after Due after
1 Year
5 Years
throughthrough
5 Years
10 Years

Due in1 YearorLess¥ 59,663
1,558
21,16939,874
161,643
47,578

¥ 294

Total

¥ 331,488¥ 294

The fair value of financial instruments is categorized into the following three levels, depending on
the observability and significance of the inputs used in making fair value measurements:

Level 2: Fair values measured by using inputs other than quoted prices included within Level 1
that are observable for the assets or liabilities, either directly or indirectly.
Level 3: Fair values measured by using unobservable inputs for the assets or liabilities.
If multiple inputs are used that have a significant impact on the measurement of fair value, fairvalue is categorized at the lowest level in the fair value measurement among the levels to which
each of these inputs belongs.

March 31, 2022

(a) The financial assets and liabilities measured at the fair values in the consolidated balance
sheetMillions of Yen

Due in1 YearorLess
as Restated(Note 1)

Due after
1 Yearthrough
5 Years

Cash and cash equivalents
Short-term investments
Notes and accounts receivable, and costs and estimatedearnings on long-term construction contracts*
Accounts receivable—other*
Jointly controlled assets of joint venture
Short-term loans receivable¥ 59,073
9,696
28,484
83,223
141,438
11,402

¥ 216

Total

¥ 333,318¥ 216- 37 -(6) Financial Instruments Categorized by Fair Value Hierarchy

Level 1: Fair values measured by using quoted prices (unadjusted) in active markets for
identical assets or liabilities.

Cash and cash equivalents
Short-term investments
Notes and accounts receivable, and costs and estimatedearnings on long-term construction contracts*
Accounts receivable—other*
Jointly controlled assets of joint venture
Short-term loans receivable

Consolidated Financial Statements FY2022

Cash and cash equivalents
Short-term investments
Notes and accounts receivable, and costs and estimatedearnings on long-term construction contracts*
Accounts receivable—other*
Jointly controlled assets of joint venture
Short-term loans receivable* Allowance for doubtful accounts is deducted.

March 31, 2023

Chiyoda Corporation

Thousands of U.S. Dollars
Due inDue after Due after
1 Year
1 Year
5 Yearsor
throughthroughLess
5 Years
10 YearsThousands of
U.S. Dollars
2023

Financial instruments above are not included in "Investment securities" in "(a) Fair values offinancial instruments" as they have no market prices and also it is extremely difficult todetermine fair value.

36

March 31, 2023

Due after
5 Years
through
10 Years

March 31, 2023
Level 1Millions of Yen
Level 2
Level 3

Total

Investment securities—
Available-for-sale securities—
equity securities

¥ 246

¥ 246

Total assets

¥ 246

¥ 246

Derivative transactions—
Foreign currency forward contracts

¥ 107

¥ 107

Total

¥ 107

¥ 107

37

Notes to Consolidated Financial Statements

March 31, 2023

March 31, 2022
Level 1
Investment securities—
Available-for-sale securities—
equity securities¥ 338

Total assets¥ 338

Millions of Yen
Level 2
Level 3

Level 1

Total

¥ 338

$ 965,455
40,972
175,277$ 965,455
40,972
175,277¥ 338

Total liabilities$ 1,181,705$ 1,181,705

¥ 22

¥ 22

Total

¥ 22

¥ 22

The following is a description of valuation methodologies and inputs used for measurementof the fair value of assets and liabilities:
Investment Securities
The fair values of listed equity securities are measured at the quoted market prices. Since
listed equity securities are traded in active markets, the fair value of listed equity securities
are categorized as Level 1.

March 31, 2023
Thousands of U.S. Dollars
Level 2
Level 3

Derivatives

Total

Investment securities—
Available-for-sale securities—
equity securities$ 1,837$ 1,837

Total assets$ 1,837$ 1,837

Derivative transactions—
Foreign currency forward contracts

$ 804

$ 804

Total

$ 804

$ 804

The fair values of foreign currency forward contracts are measured at quoted market prices
obtained from relevant financial institution, and are categorized as Level 2.
Notes and Accounts Payable—Trade
The fair value of each group of payables and short-term bank loans with similar maturities
are measured by using discounted present value techniques considering assumptions
including expected future cash flows and discount rates taking into account maturity andcredit risk, and are categorized as Level 2.
Current Portion of Long-Term Debt and Long-Term Debt(b) The financial assets and liabilities not measured at the fair values in the consolidatedbalance sheet

The fair values of long-term debt are measured by using discounted present value
techniques considering assumptions including the total amount of principal and discountrates taking into account maturity and credit risk, and are categorized as Level 2.

March 31, 2023
Level 1Millions of Yen
Level 2
Level 323.
Total

Notes and accounts payable—trade
Current portion of long-term debt
Long-term debt

¥ 129,370
5,490
23,487¥ 129,370
5,490
23,487

Total liabilities¥ 158,348¥ 158,348

DERIVATIVES
Derivative Transactions to Which Hedge Accounting Is Not Applied
March 31, 2023

March 31, 2022

38

Chiyoda Corporation

Millions of Yen
Level 2
Level 3

Notes and accounts payable—trade
Current portion of long-term debt
Long-term debt

¥ 96,084
20,60524,907¥ 96,084
20,60524,907

Foreign currency forward contracts:
Selling USD/buying JPY
Selling EUR/buying JPY
Selling AUD/buying JPY
Buying USD/selling JPY

Total liabilities¥ 141,597¥ 141,597

Total

Level 1

Consolidated Financial Statements FY2022- 39 -

Total

Notes and accounts payable—trade
Current portion of long-term debt
Long-term debt

Derivative transactions—
Foreign currency forward contracts

Level 1Thousands of U.S. Dollars
Level 2
Level 3

Total

Contract
AmountMillions of Yen
Contract
AmountFair
Due after
One YearValue¥ 9,517
11,582
11,304
492

¥ 7
20
9
(3)

¥ 7
20
9
(3)

¥ 32,896

¥ 34

¥ 34

Unrealized
Gain (Loss)

39

Notes to Consolidated Financial Statements

March 31, 2022

March 31, 2022

Contract
AmountMillions of Yen
Contract
AmountFair
Due after
One Year
Value

Foreign currency forward contracts:
Selling USD/buying JPY
Selling EUR/buying JPY
Selling AUD/buying JPY
Buying USD/selling JPY¥ 9,376
16,98532,922
112

¥

Total

¥ 59,396¥ 123

Unrealized
Gain (Loss)

7
19
93
3

¥

Foreign currency forward
contracts—Accounted forunder deferred hedge
accounting method:
Selling USD/buying JPY
Buying USD/selling JPY
Buying EUR/selling JPY

7
19
93
3

¥ 123

March 31, 2023
Thousands of U.S. Dollars
Contract
AmountFair
Due after
Unrealized
One Year
Value
Gain (Loss)$ 71,025
86,43384,362
3,677

$ 54
153
73
(24)

$ 54
153
73
(24)

Total

$ 245,498

$ 256

$ 256

March 31, 2023

Hedged Item

Total

Millions of Yen
Contract
AmountContract
Due after
AmountOne Year

Fair
Value
(Loss)

Foreign currency forward
contracts—Accounted forunder deferred hedge
accounting method:
Selling USD/buying JPY
Buying USD/selling JPY
Buying EUR/selling JPY¥ 3,009326
1,193¥ (222)
19
56¥ 4,530¥ (145)

¥ 432
¥ 432

Foreign currency
forecasted transaction

PayablesTotal¥ 1,18443659¥ (201)¥ 1,887¥ (142)59

Foreign currency
forecasted transaction

Total
Other*1:
Buying USD/selling JPY
Buying EUR/selling JPY

Total

Chiyoda Corporation

PayablesHedged Item

Derivative Transactions to Which Hedge Accounting Is Applied

40

Other*1—
Buying USD/selling JPY

Fair
Value
(Loss)March 31, 2023

Foreign currency forward contracts:
Selling USD/buying JPY
Selling EUR/buying JPY
Selling AUD/buying JPY
Buying USD/selling JPY

Other*1:
Buying USD/selling JPY
Buying EUR/selling JPY

Foreign currency
forecasted transaction

Total

Contract
AmountForeign currency forward
contracts—Accounted forunder deferred hedge
accounting method:
Selling USD/buying JPY
Buying USD/selling JPY
Buying EUR/selling JPY

Hedged Item

Millions of Yen
Contract
AmountContract
Due after
AmountOne Year

Total

PayablesThousands of U.S. Dollars
Contract
AmountFairContract
Due after
Value
AmountOne Year(Loss)$ 8,840324
4,924$ (1,502)(1)
443$ 14,089$ (1,060)$ 1,725269$ 1,994*1 Fair value of the foreign currency forward contract assigned for payables is included in the fairvalue of payables disclosed in Note 22.

¥ 231
36
¥ 267

Consolidated Financial Statements FY2022

41

Notes to Consolidated Financial Statements

24.

OTHER COMPREHENSIVE LOSS25.

The components of other comprehensive loss for the years ended March 31, 2023 and 2022, were as
follows:
Millions of Yen
2023
2022
Unrealized loss on available-for-sale securities:
Gains (losses) arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total

¥

¥

Deferred gain on derivatives under hedge accounting:
Gains arising during the year
Reclassification adjustments to profit or loss
Adjustment to acquisition cost of assets
Amount before income tax effect
Income tax effectTotal
Foreign currency translation adjustments:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Total
Defined retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Share of other comprehensive income of associates:
Income arising during the year
Reclassification adjustments to profit or loss
Total
Total other comprehensive loss

19
(53)
(33)
19

¥

(14)

¥

Thousands of
U.S. Dollars
2023

(62)
(96)
(159)
39

$

(119)

$

146
(399)
(253)
145
(107)

¥ 4,330(174)(4,146)941¥ 2,899
(17)
(475)
2,405
(780)

$ 32,317(1,301)(30,947)
68
311

¥

50

¥ 1,625$¥ (7,556)(358)¥ (4,800)(550)$ (56,391)(2,672)¥ (7,914)¥ (5,350)$ (59,064)

¥

(846)
(290)
(1,137)
266

¥

¥

(871)

¥
¥

$ (6,319)(2,168)(8,488)
1,987

¥

(678)

$ (6,500)

13
329

¥

79

$

100
2,460

343

¥

79

$

2,560

¥ (4,444)

A reconciliation of the differences between basic and diluted net income (loss) per share ("EPS") for
the years ended March 31, 2023 and 2022, was as follows:Year Ended March 31, 2023

Basic EPS—Net income available
to common shareholders
Effect of dilutive securities—
Preferred stock
Diluted EPS—Net income forcomputation$ (62,731)

Millionsof YenNet Income
Attributableto Owners of
the Parent

Thousandsof Shares¥ 13,087

258,9692,100

721,385¥ 15,187

Yen

WeightedAverage
SharesU.S. Dollars

EPS¥ 50.54$ 0.38980,354¥ 15.49$ 0.12Millionsof Yen
Net Loss
Attributableto Owners of
the Parent

Thousandsof Shares

Yen

WeightedAverage
SharesEPS¥ (14,729)

258,966¥ (56.88)

2,100

736,750¥ (12,629)

995,716

Year Ended March 31, 2022

380

(334)
(317)
(662)
(16)

¥ (8,406)

NET INCOME (LOSS) PER SHARE

Basic EPS—Net loss available
to common shareholders
Effect of dilutive securities—
Preferred stock
Diluted EPS—Net loss forcomputation

Please note that diluted EPS for the prior consolidated fiscal year is not indicated because basic
earnings per share were negative, although there are potential common shares with dilutive effects.
There was no dilutive effect for the year ended March 31, 2022.
From the prior consolidated fiscal year, the Company had adopted BIP trust and the number ofCompany stocks remaining in BIP trust included as treasury stock which was excluded from thetotal outstanding stocks in the calculation of EPS.
The number of Company stocks remaining in BIP trust at March 31, 2023 and 2022, were 904,689
stocks and 909,600 stocks, respectively.
In the calculation of weighted-average shares of basic and diluted net income per share (EPS), thenumber of company shares held by the trust bank is included in treasury stock that is excluded
from the total number of outstanding shares at the end of the current consolidated fiscal year
(906 thousand shares and 303 thousand shares in 2023 and 2022).

42

Chiyoda Corporation

Consolidated Financial Statements FY2022

43

Notes to Consolidated Financial Statements

26.

SUBSEQUENT EVENTS
Merger of Consolidated Subsidiaries
The Company concluded the absorption-type merger, with Chiyoda Kosho Co. Ltd. as the surviving
company, regarding three consolidated domestic subsidiaries, Chiyoda Kosho Co. Ltd., Chiyoda
System Technologies Corporation and Chiyoda TechnoAce Co. Ltd., and they merged on April 1,
2023.
(a) Outline of absorption-type merger(1) Name and business contents of merger companies
Surviving company name: Chiyoda Kosho Co. Ltd.
Energy, environment and maintenance businessBusiness contents:
Absorbed company name: Chiyoda System Technologies Corporation
Instrumentation and electrical solution businessBusiness contents:
Absorbed company name: Chiyoda TechnoAce Co. Ltd.
Life science businessBusiness contents:(2) Date of the merger
April 1, 2023
(3) Legal formality of the merger
The absorption-type merger, with Chiyoda Kosho Co. Ltd. as the surviving company,
Chiyoda System Technologies Corporation and Chiyoda TechnoAce Co. Ltd. as absorbed
company(4) The name after the merger
Chiyoda X-ONE Engineering Corporation (previously Chiyoda Kosho Co. Ltd.)(5) Contents of outline regarding other transactions
The merger was executed to improve efficiency of business management by integration ofabove three companies' resources and to optimize the technological capabilities, experienceand track record accumulated by the three organizations to progress as a sustainableleading integrated engineering contractor, possessing the comprehensive technologies
required for the engineering, procurement and construction (EPC) of industrial plants andfactories and develop its maintenance engineering business.
(b) Outline of accounting policy

27.

SEGMENT INFORMATION
Under Japanese accounting standards, an entity is required to report financial and descriptive
information about its reportable segments. Reportable segments are operating segments oraggregations of operating segments that meet specified criteria. Operating segments are components
of an entity about which separate financial information is available and for which such information isevaluated regularly by the chief operating decision-maker in deciding how to allocate resources andin assessing performance. Generally, segment information is required to be reported on the same
basis as is used internally for evaluating operating segment performance and deciding how toallocate resources to operating segments.
(1) Description of Reportable Segments
The Group's reportable segments are those for which separate financial information is available
and regular evaluation by the Company's management is performed in order to decide how
resources are allocated within the Group. The Group provides "Engineering" services globally,
including planning, engineering, construction, procurement, commissioning, and maintenance,
adapting the most appropriate functions of each related company.
(2) Methods of Measurement for the Amounts of Sales, Profit (Loss), Assets, Liabilities, andOther Items for Each Reportable Segment
The accounting policies of each reportable segment are consistent with those disclosed in
Note 2, "Summary of Significant Accounting Policies."
The profit in reporting segments is based on the operating income. Intersegment income andtransfers are measured at the quoted market price.
(3) Information about Sales, Profit, Assets, Liabilities, and Other Items
Year Ended March 31, 2023
Since the reportable segment of the Group consists of only the "Engineering" segment, and othersegments have become immaterial, the Group has omitted reporting of segment information.
Year Ended March 31, 2022
Since the reportable segment of the Group consists of only the "Engineering" segment, and othersegments have become immaterial, the Group has omitted reporting of segment information.
Related Information(1) Information about Products and Services
The engineering business represents more than 90% of the total sales of the Group. Accordingly,
the presentation of the information about each service is not required under Japanese GAAP.

The merger was executed as a deal under common control based on ASBJ Statement No. 21 of"Accounting Standard of Business Combinations" (ASBJ Statement No. 21 of January 1, 2019)and "Implementation Guidance on Accounting Standard for Business Combinations andAccounting Standard for Business Divestitures" (ASBJ Guidance No. 10 of January 1, 2019).
Please refer to the consolidated financial statements for the year ended March 31, 2024, issued on
the same date for further information.

44

Chiyoda Corporation

Consolidated Financial Statements FY2022

45

Notes to Consolidated Financial Statements(3) Information about Major Customers(2) Information about Geographical Areas

Year Ended March 31, 2023

(a) Revenue

Related Segment

Millions of Yen
Revenue

Thousands of
U.S. Dollars
Revenue

Engineering
Engineering¥ 146,126
91,256$ 1,090,492
681,014

Related Segment

Millions of Yen
Revenue

Engineering
Engineering¥ 75,437
31,521

Year Ended March 31, 2023
Millions of Yen

Thousands of
U.S. Dollars

Qatar
Indonesia
Japan
U.S.A.
Others¥ 149,896
125,579
93,18955,8585,640$ 1,118,629
937,161
695,440
416,851
42,093Total¥ 430,163$ 3,210,176

Name
Qatar Energy
PT Freeport Indonesia
Year Ended March 31, 2022
Name
Qatar Energy
BP Berau Ltd.

Year Ended March 31, 2022

(4) Information about Goodwill by Reportable Segment

Millions of Yen
Japan
Qatar
U.S.A.
Indonesia
Others¥ 117,677
81,266
54,10552,870
5,195

Total

¥ 311,115

The reportable segment of the Group consists of only the engineering segment, and the othersegment is immaterial. Accordingly, the Group has omitted reporting of segment information.
Regarding the goodwill, which is not included in the reportable segment, its amortization in theyear was ¥29 million ($223 thousand) and its unamortized balance was ¥194 million($1,455 thousand).
28.

Note: Revenue is classified by country or region based on the location of construction sites.

RELATED PARTY DISCLOSURES
The material transactions of the Group with the parent company and major shareholders for the years
ended March 31, 2023 and 2022, were as follows:Year Ended March 31, 2023

(b) Property, plant and equipment
Year Ended March 31, 2023
Millions of Yen

Thousands of
U.S. Dollars

Japan
Asia
Others¥ 9,393
1,269
80$ 70,101
9,471
604

Total

¥ 10,743$ 80,177

Year Ended March 31, 2022
Millions of Yen
Japan
Asia
Others¥ 9,632
1,279
125

Total

¥ 11,038

Guaranteed liabilities*1
Loan of funds*2

Millions of Yen

Thousands of
U.S. Dollars¥ 47,000$ 350,746

Year Ended March 31, 2022
Millions of Yen¥ 10,000
10,00010,000

Guaranteed liabilities*1
Loan of funds*2
Borrowings*3*1 The guaranteed liabilities are related to the borrowings from Mitsubishi Corporation Financial &Management Services (Japan) Ltd. Regarding these guaranteed liabilities, guarantee fees havebeen paid and buildings, structures, land, investment securities and other assets have beencollateralized. The transaction amount represents the balance of liabilities corresponding to thecollateral assets as of the end of the fiscal year.
At the end of the current fiscal year, there are no corresponding liabilities.
*2 This was due to the transaction with Mitsubishi Corporation Financial & Management Services(Japan) Ltd. Regarding the loan of funds, applicable interest rates are rationally determined
upon taking into account the market rate of interest.

46

Chiyoda Corporation

Consolidated Financial Statements FY2022- 48 -

47

Notes to Consolidated Financial Statements*3

Independent Auditor’s Report
Deloitte Touche Tohmatsu LLC
Marunouchi Nijubashi Building
3-2-3 Marunouchi
Chiyoda-ku,
Tokyo
100-8360
Deloitte Touche
Tohmatsu
LLC
Japan
Marunouchi Nijubashi Building
3-2-3 Marunouchi
Tel: +81 (3) 6213 1000
Chiyoda-ku,
Tokyo
100-8360
Fax:+81 (3) 6213
1005
Japan
www.deloitte.com/jp/en

This was due to the transaction with Mitsubishi Corporation Financial & Management Services(Japan) Ltd. Regarding the borrowings, applicable interest rates are rationally determined upontaking into account the market rate of interest.

There are no material balances with unconsolidated subsidiaries and associated companies as ofMarch 31, 2023.

Tel: +81 (3) 6213 1000
Fax: +81 (3) 6213 1005
www.deloitte.com/jp/en

There are no material transactions of the Group with unconsolidated subsidiaries and associatedcompanies for the year ended March 31, 2023.

INDEPENDENT AUDITOR'S REPORT******INDEPENDENT AUDITOR'S REPORTTo the Board of Directors of Chiyoda Corporation:
OpinionTo the Board of Directors of Chiyoda Corporation:We
have audited the consolidated financial statements of Chiyoda Corporation and its consolidated
Opinionsubsidiaries (the "Group"), which comprise the consolidated balance sheet as of March 31, 2023, and theconsolidated
statementof income, financial
consolidated
statementof comprehensive
income,We have audited
the consolidated
statementsof Chiyoda
Corporationand itsconsolidated
consolidated
statementofchangesinequityandconsolidated
statement
of
cash
flows
for
the
then
and thesubsidiaries (the "Group"), which comprise the consolidated balance sheet as of year
March
31,ended,2023, and
notes
to
the
consolidated
financialstatements,
includingasummaryofsignificant
accounting
policies,
allconsolidated statement of income, consolidated statement of comprehensive income, consolidated
expressedinJapaneseyen.
statement of changes in equity and consolidated statement of cash flows for the year then ended, andnotes to the consolidated financial statements, including a summary of significant accounting policies, allInour opinion,
the accompanying
consolidated financial statements present fairly, in all material
expressed
in Japaneseyen.
respects, the consolidated financial position of the Group as of March 31, 2023, and its consolidated
financialperformanceand its consolidated
cashfinancial
flows forstatements
the year thenended
in accordancewith
In our opinion,
the accompanying
consolidated
present
fairly,in all material
accounting
principles
generally
acceptedinJapan.
respects, the consolidated financial position of the Group as of March 31, 2023, and its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance with
Convenience
Translationaccounting principles
generally accepted in Japan.

Our
audit also comprehended
the translation of Japanese yen amounts into U.S. dollar amounts and, inConvenience
Translation
our opinion, such translation has been made in accordance with the basis stated in Note 1 to theconsolidated
statements.
Such U.S. of
dollaramountspresented
for theamounts
convenienceof
Our audit alsofinancial
comprehended
the translation
Japanese
yenareamounts
intosolely
U.S. dollar
and, inreaders
outsideJapan.
our opinion, such translation has been made in accordance with the basis stated in Note 1 to theconsolidated financial statements. Such U.S. dollar amounts are presented solely for the convenience of
Basis
Opinionreadersfor
outsideJapan.
We
conducted
our audit in accordance with auditing standards generally accepted in Japan. Our
Basisfor Opinion
responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit
of
Consolidated
Financial
Statements
sectionof ourreport. generally
We are independent
the Group
Wethe
conducted
our auditin accordancewithauditing
standards
accepted inof
Japan.
Our inaccordancewiththeprovisions
of
the
Code
of
Professional
EthicsinJapan,
andwe
have
fulfilledourresponsibilities under those standards are further described in the Auditor's Responsibilities for the
Audit
other
ethicalresponsibilities
asauditors.
We
believe
that
the
audit
evidence
wehave
obtainedisof the Consolidated Financial Statements section of our report. We are independent of the Group in
sufficientandwithappropriate
to provide
basis offorProfessional
our opinion.Ethics in Japan, and we have fulfilled ouraccordance
the provisionsof theaCodeother ethical responsibilities as auditors. We believe that the audit evidence we have obtained isEmphasisof appropriate
Mattersufficient andto provide a basis for our opinion.

As
discussed
Note 1 of the consolidated financial statements, the accompanying consolidated financial
Emphasisof inMatterstatements have been restated. Our opinion is not modified in respect of this matter.
As discussed in Note 1 of the consolidated financial statements, the accompanying consolidated financial
Key
Audit Matterstatements
have been restated. Our opinion is not modified in respect of this matter.
A
keyAudit
auditMattermatter is a matter that, in our professional judgment, was of most significance in our audit ofKey
the consolidated financial statements of the current period. The matter was addressed in the context of
our
audit
of matterthe consolidated
statements
as a judgment,
whole, andwas
in forming
opinion thereon,and of
we
A key
audit
is a matterfinancial
that, in our
professionalof mostour
significancein our audit
donotprovideaseparate
opiniononthematter.
the consolidated financial statements of the current period. The matter was addressed in the context of
our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we
Estimateof total
construction
revenueandmatter.
total construction cost in revenue recognition
do not provide
a separate
opinionon theSee
Noteof
3.total construction revenue and total construction cost in revenue recognition
Estimate

48

Chiyoda Corporation

Consolidated Financial Statements FY2022

See Note 3.

Member of
Deloitte Touche Tohmatsu Limited

49

Independent Auditor’s Report

Key Audit Matter Description
The Group has mainly entered into long-term construction contracts in the engineering business. For
these contracts, the Group determined that it satisfies the performance obligation over time andrecognizes revenue by measuring the progress towards the complete satisfaction of such performanceobligation. The progress is measured based on the percentage of construction costs incurred by the endof each reporting period to total construction costs. For the year ended March 31, 2023, ¥405,220 million($3,024,031 thousand) of the total revenue of ¥430,163 million ($3,210,176 thousand) was recognizedusing this method.
This method is based on the estimated total construction revenue and total construction costs, which
involve significant judgments and forecasts made by management depending on the businessenvironment and include the following factors of uncertainty of accounting estimates:(1) Estimation of total construction revenue includes significant forecasts and judgments related tofuture uncertain events, such as potential liquidated damages for delays in construction completion.
Although an agreement is reached on the change in the method of construction or the scope ofwork, the agreement on the variable consideration may not necessarily be confirmed in a timely
manner by the contract, and there is a significant uncertainty in the estimation of total construction
revenue depending on the size and nature of the construction project.
(2) Estimation of total construction costs is based on various significant assumptions related to thefluctuation of the market prices for outsourcing costs, such as labor costs, equipment and materials
costs and transportation costs, the construction schedule established based mainly on themobilization plan of construction workers and the procurement plan of equipment and materials. For
the year ended March 31, 2023, total construction costs increased due to higher prices of labor,
equipment and materials than originally estimated which resulted partly from the Russia-Ukraine
crisis, or due to delays in the mobilization of construction workers, securing infrastructure, or
procurement of equipment and materials that do not proceed as planned. The estimation of total
construction costs for such an unexpected event involves high uncertainties and may take time toreview depending on the size and nature of the project.
In particular, accounting estimates related large-scale and long-term plant construction projects inforeign countries involve uncertainties and have significant impact on the consolidated financial
statements as a whole.
Given the above understanding, we have determined the estimation of total construction revenue
and total construction costs used in revenue recognition for large-scale and long-term plant
construction projects in foreign countries to be a key audit matter.
How the Key Audit Matter Was Addressed in the Audit
Our audit procedures to determine the appropriateness of the estimation of total construction revenue
and total construction costs for large-scale and long-term plant construction projects in foreign countries
are as follows, among others:(1) Internal control testing
We obtained an understanding of the business environment surrounding the Group and the industry.
We then tested the design and operating effectiveness of the internal controls over the estimation of
total construction revenue and total construction costs used in revenue recognition, including thefollowing controls among others.

(2) Assessment of appropriateness of the estimation of total construction revenue and total construction
costs(a) We investigated whether each project's construction budget, which is based on the estimation of
total construction costs was quantitatively and comprehensively analyzed and evaluatedthrough Strategy & Risk Integration Division's Cost review.
(b) We inspected the documentation of the Project Profitability Review Meetings prepared byproject managers to evaluate whether the project's construction budget was adjusted in a timely
and appropriate manner and comprehensively in accordance with the progress of theconstruction reflecting the result of discussion at the meetings.
(c) We inquired of project managers and inspected supporting evidence to obtain an understandingof the status of negotiations with customers or subcontractors and the progress of theconstructions and identified key uncertain factors, such as the risk of incurring liquidated
damages due to delays in the construction project and the risk of incurring additional
construction costs to be paid to subcontractors, including the impact of the Russia-Ukraine
crisis, and evaluated the reasonableness and feasibility of the assumptions of the estimates.
(d) We compared the initial estimated total construction costs with actual or revised total
construction costs to evaluate the appropriateness of the estimation of total construction
revenue or total construction costs.
(e) We compared the estimated amount of total construction revenue or total construction costswith supporting evidence, such as contracts and relating memorandum agreed on withcustomers, and quotes and invoices from subcontractors or equipment vendors.
Other Information
Other information comprises the information included in the Group's disclosure documents
accompanying the audited consolidated financial statements, but does not include the consolidated
financial statements and our auditor's report thereon.
We determined that no such information existed and therefore, we did not perform any work thereon.
Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with accounting principles generally accepted in Japan, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with accounting principles generally accepted in Japan and using the going concern basis ofaccounting unless management either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
The Audit and Supervisory Committee is responsible for overseeing the Directors' execution of duties
relating to the design and operating effectiveness of the controls over the Group's financial reporting
process.

Strategy & Risk Integration Division's Cost review: the profit-and-losses and progress ofconstruction projects are monitored, analyzed and evaluated.
Project Profitability Review Meetings: the progress and profitability of current construction projects
are reported and discussed.

50

Chiyoda Corporation

Consolidated Financial Statements FY2022

51

Independent Auditor’s Report

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor'sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards generally accepted in Japan
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks. The
procedures selected depend on the auditor's judgment. In addition, we obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

From the matters communicated with the Audit and Supervisory Committee, we determine those mattersthat were of most significance in the audit of the consolidated financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required
to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

Deloitte Touche Tohmatsu LLC
August 30, 2024

• Obtain, when performing risk assessment procedures, an understanding of internal control relevant tothe audit in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and,based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Group's ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor's report to
the related disclosures in the consolidated financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However, future events or conditions may cause the Group to cease to continue as agoing concern.
• Evaluate whether the overall presentation and disclosures of the consolidated financial statements arein accordance with accounting principles generally accepted in Japan, as well as the overall
presentation, structure and content of the consolidated financial statements, including the disclosures,and whether the consolidated financial statements represent the underlying transactions and events ina manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.
We communicate with the Audit and Supervisory Committee regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide the Audit and Supervisory Committee with a statement that we have complied with
relevant ethical requirements regarding independence, and communicate with it all relationships andother matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.

52

Chiyoda Corporation

Consolidated Financial Statements FY2022

53

Chiyoda Global Headquarters

CHIYODA CORPORATION   Consolidated Financial Statements FY2023

Minatomirai Grand Central Tower, 4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
https://www.chiyodacorp.com/en/

Consolidated
Financial Statements

FY2022For the year ended March 31, 2023

Printed in Japan