CHIYODA CORPORATION
Consolidated Financial Results
for the Year Ended March 31, 2004

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

1Summary of Financial Statements (Consolidated)
for the Year Ended March 31, 2004

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

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

Consolidated Business Results
for the Year Ended March 31, 2004

1) Consolidated Business Results
Millions of Yen
Apr. 1, 2003–
Mar. 31, 2004
Change (%)

Net Sales..........................................................
Operating Profit.............................................
Ordinary Profit ..............................................
Net Profit.........................................................
Net Profit per Share (¥).................................
Fully Diluted Net Profit per Share (¥)
Return on Equity (ROE)
Ratio of Ordinary Profit to Total Assets
Ratio of Ordinary Profit to Net Sales

206,816
5,881
6,348
6,646
35.91
34.99
33.7%
4.8%
3.1%

24.3
279.8
165.2
232.5

Apr. 1, 2002 –Mar. 31, 2003
Change (%)

166,367
1,548
2,393
1,999
10.79
10.77
12.6%
1.9%
1.4%

17.6
—
—
—

(Notes) (1) Gain from investments in subsidiaries and affiliates accounted for by the equity method:Year ended March 31, 2004:
0,155 million yen
Year ended March 31, 2003:
1,000 million yen(2) Average number of outstanding shares (consolidated) during the period:
Year ended March 31, 2004:
185,100,716 sharesYear ended March 31, 2003:
185,293,208 shares(3) Changes to accounting principles:
None(4) Percentages for net sales, operating profit, ordinary profit and net profit represent year-on-year changes.

2) Changes in Consolidated Financial Position
Millions of Yen
Apr. 1, 2003–
Mar. 31, 2004

Total Assets ..................................................... .......................
Shareholders’ Equity ..................................... .......................
Equity Ratio .................................................... .......................
Shareholders’ Equity per Share (¥) ............. .......................
(Notes) Outstanding shares (consolidated) at the end of the period:
Year ended March 31, 2004:
Year ended March 31, 2003:

142,859
22,76615.9%
123.04

Apr. 1, 2002 –Mar. 31, 2003

120,297
16,66913.9%
90.01

185,040,675 shares
185,199,189 shares23) Consolidated Cash Flows
Millions of Yen
Apr. 1, 2003–
Mar. 31, 2004

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

Apr. 1, 2002 –Mar. 31, 2003

15,580(1,277)(8,254)40,902

6,939(873)(9,544)34,9404) Consolidated Subsidiaries and Affiliates Accounted forby the Equity Method
Number of consolidated subsidiaries:
Number of non-consolidated subsidiaries accounted forby the equity method:
Number of affiliates accounted for by the equity method:

20
055) Changes in the Scope of Consolidation and Affiliates Accounted
for by the Equity Method
Consolidated subsidiaries:
Newly included
ExcludedAffiliates accounted for by the equity method:
Newly included
Excluded

04
03

Consolidated Operations Forecast
for the Year Ending March 31, 2005
Millions of Yen
Apr. 1, 2004 – Mar. 31, 2005
Interim period
Full term

Net Sales .......................................................... ........................ ............................

100,000

220,000

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

3,300

7,100

Net Profit ......................................................... ........................ ............................

3,400

7,300

(Note) Projected net income per share for the year ending March 31, 2005:

39. 45 yen

3(1) State of the GroupThe Chiyoda Group of Companies consists of the parent company, 20 subsidiaries, and 5 equity method
affiliates. As a group of engineering companies, the Group provides customers with the most effective solutions
for their needs, and bases its business upon its function as solutions provider. By combining and deploying theresources and expertise of each era, group company, and conducting operations as a single unit, the Group isable to flexibly meet the needs of each region and its customers. The Group’s business is divided intoEngineering Businesses and Other Businesses, and the Group’s structure is outlined below.

Clients

Chiyoda Corporation
Engineering, procurement
construction, andcommissioning
Engineering, Construction & Maintenance*1 Chiyoda Kosho Co., Ltd.
Plant engineering, construction, and maintenanceof energy and chemical plants*1 Chiyoda Techno Ace Co., Ltd.
Engineering and construction of pharmaceuticalfactories, laboratories, and research centers*1 Chiyoda Keiso Co., Ltd.
Electrical and instrumentation engineering,equipment supply, installation and maintenanceConsulting*1 U-Tech Consulting Co., Ltd.
Consulting for industrial and social, regional
development

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

Regional Businesses*1 Chiyoda Singapore (Pte) Limited*1 Chiyoda International Corporation (USA)*1 PT. Chiyoda International Indonesia*1 Chiyoda (Thailand) Limited*1 Chiyoda Malaysia Sdn. Bhd.
*1 Chiyoda Nigeria Limited*1 Chiyoda & Public Works Co., Ltd. (Myanmar)*1 C&E Corporation (Philippines)*1 Chiyoda International Limited (UK)
*2 Chiyoda Petrostar Ltd. (Saudi Arabia)*2 L&T Chiyoda Ltd. (India)

Other businesses

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

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

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

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

Overseas Accounting and Finance*1 Chiyoda Asia Pacific (Pte) Limited (Singapore)Consulting on accounting and finance*1： Consolidated subsidiary*2： Affiliated company accounted for by
the equity method
Direct Client Orders
Contracted Business, Entrusted
Businesses4(2) Management Policies
1. Basic Management Policies
The Group bases its corporate activities on earning the trust and empathy of its customers together with theirsatisfaction.

Corporate Philosophy
As an integrated engineering entity, Chiyoda is to contribute to theprogress of society and to the growth of its business through the soundand unbiased application of state-of-the-art technologies

Management Policies
Commitment to building a firm foundation of trust with customers
Provide high quality services
Expand Group operations through use of a cross-function of eachcompany capabilities

Quality management policy

Occupational health andsafety policy

Environmental policy

Information security policy

Code of business conduct

Medium- and Long-Term Business Strategy”Project Super X” Program
Complete the New Restructuring Plan as early as possible
Build a foundation for a business that can ensure ample returns to shareholders,
contributions to society, and enhancement of employee benefits

Objectives

Mid/long-term strategies
1)
2)
3)
4)
5)

Build long-term relationship withcustomers
Promote Plant Lifecycle Engineering
Client Satisfaction
Stabilize profitability
Strengthen competitiveness
Human asset development and proper
deployment

1)
2)
3)
4)
5)
6)

Increase customer satisfaction level
Continual improvement in quality
management system
Technology strengthening andbroadening i-PLANT21®
Enhance corporate management
systemExpand use of overseas low costengineering center
Career development program andsuccess support

Priorities
1)
2)
3)

Secure sufficient earnings
Implement selective and focused businessprograms and deploy personnel appropriately
Eliminate deficit projects

5

The Group’s New Restructuring Plan, which runs though the fiscal year ending March 31, 2006, was approvedin fiscal 2001 and is currently in progress. Of the objectives laid out in the New Restructuring Plan, thosedealing with financial restructuring, reduction of personnel and fixed costs, review of business sectors, and reexamination of Group companies were accomplished by the end of March, 2002, and objectives dealing
achieving positive profitability in terms of operating, ordinary, and net profit on schedule with the fiscal closeon March 31, 2003.
In order to achieve the objectives of the New Restructuring Plan as early as possible, the Group launched the“Project Super X” program, beginning in April 2001. Project Super X dealt not only with early achievement of
New Restructuring Plan objectives, but also with strengthening all aspects of Group operations, including sales,
project execution, management, finance, and human resources, and cultivating a new business model. These
efforts will create the foundation upon which the Group will be able to meet the expectations of stockholders,
contribute to the community, and provide fulfilling benefits for its employees, and the Group places utmost
importance upon this priority.
Within the specific priority, the mid-to-long-term management strategy is set as seen below, and executives
and employees have united in their efforts to achieve the Group objectives. In executing the plan, besides
setting priority goals for each strategic theme, developing action plans and managing its progress, we
introduced the balanced scorecard method, which is used to integrate each strategic theme. The balance
scorecard enables management to maintain overall control by keeping them aware of progress among thevarious strategic themes, which results in higher management quality.
1) Build long-term relationships with customers [Customer Viewpoint]
To companies and customers that aim at sustainable development, our Group will make a concentrated
investment of management resources and advanced technologies that bring high added value. The Groupaims to be much more than a plant supplier; instead we plan to build and maintain selected lifetime
partnerships with our customers.
2) Promote Plant Lifecycle Engineering (PLE) [Customer Viewpoint]
In addition to strengthening our conventional business model (EPC: Engineering, Procurement, Construction),
the Group promotes a new business model called PLE, meaning Plant Lifecycle Engineering, which should
contribute toward making our customer’s assets more competitive.
PLE: Plant Lifecycle Engineering is a service provided by our Group, which optimizes all aspects of acustomer’s capital plant investment, beginning with the investment plan, and moving through EPC,
maintenance, operation, revamping and remodeling, and decommissioning, and on to proposals on
the next investment plan. PLE assumes mutual access to a common database with the customer,
and includes analysis of trade-offs concerning cost, quality, stable production, occupational healthand safety, ecological burden, and so on.
3) Stabilize profitability [Financial Viewpoint]
One of the Group’s strengths is project execution capability. To that strength, we are adding a greater
element of risk management, which will help make sure we take on projects with high probability and low
risk. In addition, Group companies are paying strict attention to achieving a positive cash flow provided byoperational activities.

64) Strengthen competitiveness [Business Process Viewpoint]
As the Group further improves operational efficiency with the use of IT, operations should move more
quickly as well. In addition, we will continue to broaden and strengthen the functions of our low costengineering centers, promote their strategic alliances with other companies, and strengthen our overall
competitiveness.
5) Human asset development and proper deployment [Personnel and Reform Viewpoint]
The Group considers it vital to develop and nurture our human assets and to maintain flexibility in deploying
those assets, thereby consolidating our position as a front runner among world engineering corporations.
3.Managerial index objectives
Under the Group’s New Restructuring Plan, eliminating the accumulated loss is the first priority and goal.
However, that goal should be achieved by the fiscal year ending March 2005, one year earlier than originallyplanned. The Group is now executing Project Super X, which ensures that the goal will be achieved.
4.Basic policy concerning profit allocation
The Group is aware that early elimination of accumulated loss is the greatest return we can offer ourshareholders. At the same time, we realize that eliminating loss will lead to sustainable growth for our businessand improvement of benefits for our employees. The Group is putting every effort into execution of ProjectSuper X, in order to return to our intrinsic corporate values and achieve the profitability required to offer
dividends every year.
5.Thinking and policies concerning the reduction of the minimum investment unit
The Group is aware that the number of shareholders has increased and that our shares the liquidity of ourshares is of great importance. Because of that awareness, the Group reformed the method with which we holdour annual general shareholders’ meetings, (we no longer merely read the report to the shareholders, butinstead, prepare audiovisual aids for the presentation.), prepared a new Website (we present information
aimed at giving investors a better view of the Group), and are working on preparing more detailed annual andinterim reports.
As a result of these efforts, we believe that our shares have achieved a high degree of liquidity, and we willcontinue in our efforts to provide more and better investor-oriented information and thereby achieve further
liquidity for our shares.
Concerning the reduction of the minimum investment unit, whenever necessary because of market trends, andwhen it is required to the benefit of our shareholders, then we will consider taking the actions necessary.
6. Issues that must be dealt withThe Group is concentrating on the following issues with the aim of achieving a broad-based recovery inoperating results and sustainable growth over the medium and long terms.
1) Actions in individual business sectors to improve earnings
In the overseas plant market, rapid growth is foreseen in demand for gas value chain services in the UnitedStates, Europe, China, India and elsewhere. Furthermore, the construction of even larger plants is being
planned in countries that produce natural gas. Accordingly, the Group is leveraging its solid reputation amongcustomers for reliability to sustain stable growth in the Middle East while targeting opportunities in Russia andother regions of the world. One reason for this reputation is the Group’s skills in gas value chain services. The
Group is capable of supplying comprehensive engineering services for projects of all types, extending fromupstream facilities to end users, to generate value from natural gas reserves anywhere in the world. Alsobacking up the Group’s reputation is its outstanding track record. Every LNG plant constructed by the Grouphas been completed on time and operated with no accidents. In the petrochemicals sector, orders will bereceived and operations conducted by drawing on technologies of alliance partners in ethylene and other fields.
In the Japanese plant market, the energy and environmental sector is strong as oil, electric and gas companies
make substantial investments in facilities that generate clean energy. Here, the Group is deepening
relationships with customers and taking steps to become even more competitive with regard to capturing
orders for large projects. In the fine industries sector, the goal is to boost profitability by capturing orders forplants for electronic materials, pharmaceuticals, specialty chemicals and other products that require many
value-added processes. In the clean energy sector, the Group is targeting fields with growth potential, such as
development of domestic gas-to-liquid (GTL) and approach to hydrogen energy, as well as the use of pinch
technology to conserve energy throughout a petrochemical complex.

72) Develop the PLE (plant lifecycle engineering) business
The Group plans to establish a new PLE business model rooted in its technological superiority in the businesssectors listed above. By developing and supplying plants and comprehensive services that are competitive andgenerate value for customers, the Group can maintain long-term relationships with customers and receive
more orders.
3) Become more competitive through unified group management
Use the integrated group IT system completed in the prior fiscal year to conduct even more efficient Groupwide management and step up cost containment programs. Relationships among Japanese group members will
be strengthened while making increasing use of design bases in the Philippines and India for procurement,
construction and project support activities. Going farther, the competitive edge of the entire Group will be
reinforced by establishing a global network of procurement bases.
4) Rigorously execute risk management to conduct projects as planned
The Group conducts the Cold Eye Review System in which sales activities concerning a project are evaluatedprior to submission of an estimate, an official bid and signing of a contract in order to quickly identify potential
risks. Along with this exhaustive system for project monitoring by management, the Group is also upgrading
construction plans and construction process management to be certain that projects received are executed asplanned. Furthermore, professional auditors from the corporate administration side follow up by performing
project audits to verify the suitability of project execution plans formulated by operating divisions. Throughthese activities, the Group aims to further strengthen internal controls and make its management moretransparent.
5) Strengthen human resources development to support medium- and long-term growth
Developing the human resources that represent the nucleus of project-related operations, the primary sourceof the Group’s earnings, is one of the most important goals of management. In accordance with this stance,
the entire Group is enhancing career development systems, training systems and other personnel development
systems to further improve the ability to execute projects.
6) Refine and expand engineering technology and IT expertise
The Group will continue to enlarge the scope for applying its proprietary i-PLANT21® integrated projectengineering system, which uses a database to seamlessly link E (engineering), P (procurement) and C(construction). In addition, the Group formed a strategic alliance in the field of engineering software. This
makes it possible to combine the Group’s various databases and EPC experience, expertise, and know-how (iPLANT21®) with SmartPlant® Foundation, the alliance partner’s engineering data management software
covering the entire life cycle of plants. This combination will speed up the development of the secondgeneration i-PLANT21®, which will make the Group even more competitive.
7) Corporate citizenshipAs companies place greater emphasis on fulfilling their social obligations, the Group is strengthening corporate
governance and compliance programs by further upgrading its legal auditing system continuing to conduct
programs to ensure strict compliance with laws, regulations and rules. Regarding risk management and crisis
management, the Group has established a clearly defined operating framework, providing for an effective
system for dealing with the impact of terrorism and other potential risks. In the construction of plants,
preliminary studies are conducted to determine the impact on biosystems and other steps taken to conduct
projects in an environmentally responsible manner. Through these and other activities, the Group continues toaddress environmental issues, taking every action possible to contribute to the sustainable development ofcustomers’ business operations and society. Moreover, the Group had no accidents during the past fiscal year
at any of its projects in Japan. The Group is aware that preserving and enhancing the safety and health of
everyone with whom comes in contact is the basis for its ability to grow. Consequently, the Group will continue
to conduct workplace safety and hygiene management programs, taking the actions required to train managers
and employees and prevent accidents. Priority will continue to be placed on activities that preserve andimprove workplace safety and hygiene.
7.Actions taken to develop our operations management organization(reinforcement of Corporate Governance )1) Basic thinking on corporate governance
The Group believes that earning the trust of shareholders as well as customers and the general public is thebasis for all corporate activities. Accordingly, in the interest of ensuring the transparency and soundness ofmanagement, initiatives will be taken to construct a fair system of internal checks and a suitable means ofexecuting that system along with the timely and appropriate disclosure of related information.

82) The situation concerning execution of corporate governancei) The corporate governance program, including decision-making, and the organizations concerned withmanagement and execution.

Corporate Governance Structure
Stockholders’ Meeting

Corporate Auditors

Board of Directors
Internal
control thru
PDCA cycle

Executive Committee(composed of representative
directors)

P(lan)D(o)C(heck)A(ct)Crisis Manager
SQE Division
Occupational safety andhealth, quality, environment,
information security

Compliance Management
OfficeCorporate administration
Executive Officer
Risk Manager

Internal Checks and Balances

Compliance

Project Operations
Executive Officer
Risk Manager

Self Auditing

Chiyoda Corporation adopts a corporate auditor system, in accordance with the Commercial Code, Law No.188,
Article 2, Item 7-2, has one outside director, and in accordance with Commercial Code, Law No. 18, Article 1,
has three outside auditors.
In the fiscal year starting in April 2001, Chiyoda instituted an executive officer system, which strengthens
operations management functions by separating execution from decision-making.
Concerning decision making, the company has set up an executive committee to cope with the economic
situation and with rapid changes in society at large. The executive committee consists of representative
directors, and unanimous votes are necessary for decisions concerning important business executions.
Corporate auditors attend executive committee meetings, and express their opinions when asked to do so. The
executive committee contributes to quick, transparent decision-making process.
Day-to-day operations move ahead based on the decisions made by the Board of Directors and the executive
committee. The executive officers, in executing the policies of the Board of Directors, consult with such outside
sources as legal advisors and lawyers as they carry out their responsibilities. The executive officers reportaccordingly on the progress of the business executions at executive officers committee or executive committee
meetings at which directors and/or auditors are in attendance. Directors oversee executive officers, andauditors ascertain that directors’ actions are within legal boundaries.
Organizations attached to the executive officers committee audits business operations for compliance,
occupational health and safety, quality, environmental issues, and information security management. If there9

is doubt about any facet of the operations being audited, the executive officers committee is informed
immediately. The organizations do not conduct one-way audits as it were, but maintain constantcommunications with the various sectors, which enables them to emphasize knowing in advance of probableproblems, so they can be discussed and solutions found before the fact.
On the other hand, individual projects get double checked, once by the project team, which audits its own
project and controls profitability, and a second time by the audit department. This kind of double check helps
assure transparent business operations.
These interlinking systems assume the operations cycle (plan do confirm by management
countermeasure) is strictly adhered to, and confirm that the management layer is monitoring project
execution and understands the internal check functions and make the most of those functions.
During the past fiscal year, project audits were conducted for the purpose of further strengthening internal
checks and enhancing the transparency of management. In these audits, professional auditors from corporate
administration verify the suitability of project execution plans formulated by operating divisions.
The Group has risk management and crisis management systems to deal with the various risks andcontingencies that can occur with respect to business activities. A risk manager is appointed to constantly workon preventing such events from occurring and minimizing damages that could result in the event that aproblem does occur. A crisis manager is appointed to ensure that there is a rapid response and suitable controlof events if a crisis occurs. Furthermore, there is a unified system for handling information and the chain ofcommand during an emergency. In this manner, the Group has established an effective framework for risk
management and crisis management.
ii) Basic policies concerning related parties
Chiyoda’s external board member is the Chairman of Kellogg Brown and Root (KBR) of the United States. KBR
competes with Chiyoda in certain areas and we have technology alliances with the company in the field of
petroleum and petrochemicals. Further, through a special purpose company, KBR is a Chiyoda shareholder.
Chiyoda has one outside auditor, a former managing director of the Bank of Tokyo-Mitsubishi and a former
Associate Director of Mitsubishi Trust and Banking. These two banks are major shareholders of Chiyoda as wellas important financial service providers to the company.
iii) Status of enhancements to corporate governance over the past year
The Group believes that corporate governance should be based on a clearly defined management philosophy
and that earning the trust of the general public and customers is the basis for all corporate activities. To ensurethat businesses are conducted in a socially acceptable manner, the Group rigorously complies with laws andregulations in Japan and overseas as well as with international guidelines and the Group’s internal rules. The
Group has also formulated a code of behavior and, using the internal Web groupware, makes available tomanagers and employees on a real-time basis a behavior handbook and information on compliance, workplacesafety and hygiene, quality, environmental, information security and other subjects.
During the past fiscal year, the Board of Directors met 12 times (deliberating on 53 subjects), the Executive
Committee met 74 times (deliberating on 234 subjects and examining 56 proposals). These two bodies
debated and reached decisions regarding fundamental management policies, legal matters and other importantmanagement issues. They also supervised the execution of business operations and confirmed progress madewith regard to management plans. The Board of Auditors met 12 times during the past fiscal year.
Regarding public announcements and the disclosure of information, the Group has taken actions to ensure therapid and accurate provision of information regarding operations through earnings announcement meetings,
supplying more information through the investor relations section of its web site and by other means.
Furthermore, the Company was the first Japanese company specializing in engineering services to issue anenvironmental report, which is also available through the Company’s web site.
Regarding environmental management, the Company in March 2001 became the first Japanese company
specializing in engineering services to earn ISO14001 and JIS Q 14001 certification, UKAS (United Kingdom
Accreditation Services) and JAB (Japan Accreditation Board for Conformity Assessment) certification. At
certification renewal examinations conducted in February 2004, all certifications were extended. Moreover, theChiyoda Information Security Management System was reviewed in conjunction with revisions to BS7799-Part
II (2002) (an international standard prescribed by the UKAS for information security management systems).
This provides a clearly defined and organizational system for protecting and handling the various information
resources that represent the nucleus of the Group’s operations.

10(3) Results of Operations and Financial Condition
1. Consolidated Operating Results for the Year Ended March 31, 2004
During the past fiscal year, Japan’s economy staged a gradual recovery backed by growth in capital investment
and exports and a rebound in consumer spending. Overseas, the global economy continued to recover despite
further turmoil in the Middle East as the situation in Iraq and other factors raised concerns about terrorism.
In the Japanese plant market, there were substantial investments for projects by oil companies to lower sulfur
in fuel oil and by Japanese chemical companies to build resin manufacturing facilities in China. Another sourceof orders was projects to convert thermal power stations to LNG to reduce CO2 emissions. There was also
progress regarding plans in Japan to build LNG receiving terminals due to expected growth in the use of naturalgas, which is a comparatively clean source of energy.
In the overseas plant market, rapid economic growth in China is generating a high level of capital investment
along with steady growth in demand for energy. Furthermore, the energy major companies are aggressively
executing strategies to shift to gas, creating considerable activity in the plant markets of oil and gas producing
regions, particularly the Middle East.
In this environment, consolidated domestic new orders increased 4.9% to ¥71,979 million and overseas neworders were up 21.2% to ¥218,678 million. The result was an increase of 16.7% in total new orders to¥290,658 million, which was above the target of ¥280.0 billion for the fiscal year.
Billions of Yen

Net sales from domestic construction contracts were down 23.7% to ¥63,353 million but overseas construction
contracts increased 72.2% to ¥143,462 million. Total net sales from construction contracts climbed 24.3% to¥206,816 million, clearing the target for the fiscal year.
Regarding earnings, gross profit on completed construction contracts increased 35.1% to ¥14,106 million as
the volume of completed contracts increased and risk management methodology was applied to ensure theprofitability of new orders. In addition, measures to further reduce selling, general and administrative expenses
resulted in a 279.8% increase in operating profit to ¥5,881 million. Ordinary profit was up 165.2% to ¥6,348
million, mainly a reflection of lower interest expenses as interest-bearing debt was reduced. Net profit rose
232.5% to ¥6,646 million, a figure that includes the effect of recoveries of delinquent long-term receivables.
Both ordinary profit and net profit met targets for the fiscal year.

Consolidated Results of Operations – Four-year Summary
Billions of Yen

Fiscal year
ended March
31
2001
2002
2003
2004

New orders

Construction
contracts

139.4
217.9
249.0
290.6

128.6
141.5
166.3
206.8

Gross profit on
projects
completed
(2.5)
4.6)
10.4)
14.1)

OperatingprofitOrdinary
profitNet profit(13.8)
(5.1)
1.5)
5.8)

(13.3)
(3.3)
2.3)
6.3)

(4.6)
0.1)
1.9)
6.6)

11

Revisions of Consolidated Business Results Forecasts for Fiscal Year Ending
March 31, 2004 (April 1, 2003 – March 31, 2004)

Forecasts announced on Nov. 13 2003 (A)Business results (B)Increase/decrease (B-A)
Increase ratio
Previous fiscal year (FY ended March 2003)

Construction
contracts
200,000
206,816
6,816
3.4
166,367

Millions of Yen, %Ordinary profit
5,000
6,348
1,348
27.0
2,393

Net profit
4,100
6,646
2,546
62.1
1,999

On a non-consolidated basis, the Company recorded ¥44,293 million in new domestic orders, an increase of
3.5%, and ¥200,595 million in overseas new orders, an increase of 18.4%. Total new orders thus increased
15.4% to ¥244,888 million, exceeding the target of ¥230.0 billion. Revenues from domestic construction
contracts decreased 29.8% to ¥38,330 million and overseas construction contracts increased 73.3% to¥131,457 million. Total revenues from construction contracts were up 30.1% to ¥169,787 million, meeting thetarget for the fiscal year.
Operating profit surged 496.8% to ¥3,689 million, ordinary profit rose 74.3% to ¥4,010 million and net profit
increased 58.5% to ¥4,255 million. Ordinary profit and net profit cleared targets for the fiscal year.

Revisions of Non-Consolidated Business Results Forecasts for Fiscal YearEnding March 31, 2004 (April 1, 2003 – March 31, 2004)

Forecasts announced on Nov. 13 2003 (A)Business results (B)Increase/decrease (B-A)
Increase ratio
Previous fiscal year (FY ended March 2003)

Projects
completed
160,000
169,787
9,787
6.1
130,470

Millions of Yen, %Ordinary profit
3,500
4,010
510
14.6
2,301

Net profit
3,300
4,255
955
28.9
2,684

Results by Business Segment
The following is a summary of operating results by business segments.
Petroleum
In Japan, results reflected several positive trends: the benefits of the reorganization of the Japanese oil
industry and consolidations of refineries; higher sales of fuel oil and other oil products due to the suspension ofoperations at nuclear power plants; and substantial investments in facilities to remove sulfur from gasoline andkerosene due to environmental issues. The result was a 299.6% increase in new orders to ¥38,890 million.
However, revenues from construction contracts decreased 25.4% to ¥25,727 million because of the decline inoverseas orders in the prior fiscal year.
Major new orders
No. 10 hydrodesulferization plant for Mizushima Refinery of
Nippon Petroleum Refining Co., Ltd.
Ultra low sulfur gasoline project for Seibu Oil Co., Ltd. and Showa
Yokkaichi Sekiyu Co., Ltd.
Major completions
Expansion of atmospheric distillation facility for Taiyo Oil Co., Ltd.
Crude distillation unit for Taiyo Oil Co., Ltd.

Chemicals
In general chemical products, there has been a new development in which moves by chemical companies tostrengthen their operating bases by shifting to polypropylene production in response to the natural gas-based
production of ethylene are similar to moves among oil refining companies seeking to add value to products otherthan gasoline. However, this trend has now yet led to orders for new facilities. In pharmaceuticals, the operating
12

environment is changing due to amendments to Japan’s Pharmaceuticals Affairs Law, mergers, acquisitions ofJapanese companies by foreign pharmaceutical firms, and other events. As a result, Japanese pharmaceuticalcompanies continued to outsource their engineering activities. Outside Japan, an enormous volume ofinvestments are planned in the Middle East. Furthermore, more foreign companies are establishing operations in
China in automobiles, home appliances, food, construction and other market sectors. As a result, Japanesechemical companies are stepping up investments in China to supply these manufacturers with materials and parts.
As a result, new orders fell 55.1% to ¥21,855 million but, due to the large volume of orders received earlier,revenues from construction contracts completed rose 51.4% to ¥54,229 million.
Major orders
Pharmaceutical laboratory for Mitsubishi Pharma
Corporation
PVDC (polyvinylidene chloride) plant for Nantong SKT
New Material Co., Ltd.
PMMA (polymethyl methacrylate) sheets plant for
Mitsubishi Rayon Polymer Nantong Co., Ltd.
Major completions
The completed portion of construction of
ethylene/methanol plant in Saudi Arabia
Pharmaceutical plant for Chugai Pharmaceutical Co., Ltd.

Power & Gas
In Japan, gas utilities are selling increasing volumes of city gas because of rising residential demand for hot waterand the shift to natural gas among industrial users. As a result, strong growth is continuing in the use of natural
gas in residential and industrial applications.
Overseas, the United States has adopted a policy of increasing imports of LNG and energy sources in response to
declining natural gas output in the United States and Canada. In Europe as well, LNG import volumes continue torise as deregulation causes a growing number of companies to begin supplying gas. At the same time, theemergence of new LNG importing nations is raising the number of market participants. Also, India signed acontract with Qatar for the supply of 7.5 million tons of LNG annually, and China has signed contracts to purchase
LNG from Indonesia and Australia. In response, there is considerable activity in the Middle East for gas processing
facilities and the expansion of LNG and LPG facilities.
As a result, new orders increased 36.7% to ¥201,040 million and, due to new orders for large-scale projects,
revenues from construction contracts rose 94.8% to ¥93,434 million.
Major new orders
Sakhalin II Project in Russia (LNG liquefaction plant/crude oil
export facilities) for Sakhalin Energy Investment Company
Ltd.
LNG liquefaction plant (additional work) in Qatar for Ras
Laffan Liquefied Natural Gas Co., Ltd.
Gas processing plant phase 1 (additional work) in Qatar for
ExxonMobil Middle East Gas Marketing Ltd.
Kamisu LNG storage terminal for Japan Storage Co., Ltd.
Major completions
The completed portion of construction of train 3 at LNG
liquefaction plant in Qatar
The completed portion of construction of LNG liquefaction
plant in Oman
The completed portion of construction of Sakhalin II Projectin Russia
Utility facilities for Japan Nuclear Fuel Limited

OthersIn electronic materials and advanced films, most orders received involved engineering projects. New orders
totaled ¥28,872 million, an decrease of 33.9%. Construction contracts completed decreased 30.5% to ¥33,424
million, a figure that includes the completion of environment-related projects received in the prior fiscal year. One

13major completion during the fiscal year was No. 2 flue gas desulfurization equipment at the Kobe Power Station of
Kobe Steel, Ltd.

Breakdown by Business Segment

Breakdown by Area

14

2. Financial Condition
1) Assets, Liabilities and Shareholders’ Equity
AssetsAssets increased ¥22,562 million compared with the end of the prior fiscal year. Fixed assets decreased ¥1,063
million because of the collection of long-term delinquent receivables and a decline in foreign currencydenominated long-term receivables because of the yen’s appreciation. However, current assets rose ¥23,626
million, largely the result of an increase in joint venture assets due to an increase in large-scale projects
conducted as joint ventures.
Liabilities
Liabilities were ¥16,619 million higher than one year earlier. Repayments of short- and long-term loans totaled¥8,206 million, but there were increases of ¥11,889 million in advance receipts on construction contracts and¥6,376 million in accounts payable for construction costs.
Shareholders’ equity
Shareholders’ equity increased ¥6,097 million compared to the end of the previous fiscal year, mainly the result ofhigher net profit. The equity ratio was 15.9%, an improvement of 2.0 points.
Billions of Yen

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

Total Assets

2004

2003

Change

41.6

36.1

5.5)

43.5

46.4

(2.9)

28.4

8.6

19.7)

6.9

5.6

1.3)

22.3

23.3

(1.0)

142.8

120.2

22.5)

2004
Current liabilities
Short-term loans

2003

Change

0.1

8.2

(8.1)

Trade payable
and advancereceipts on
construction
contracts

89.9

71.6

18.2)

Other current
liabilities
Non-current
Liabilities
Long-term debt
Other long-term
liabilities (*)
Shareholders’EquityLiabilities andShareholders’Equity

14.7

9.5

5.3)

10.3
4.9

10.4
3.8

(0.1)
1.1)

22.7

16.6

6.0)

142.8

120.2

22.5)

* Includes minority interests
2) Cash Flows
Operating activities
Net cash provided by operating activities was ¥15,580 million. In addition to profit before income taxes of ¥5,370
million and depreciation and amortization of ¥1,205 million, net changes in operating assets and liabilities (total ofchanges in trade receivables, cost of construction contracts in progress, trade payables, and advance receipts on
construction contracts) provided net cash of ¥21,215 million.
Jointly controlled assets of joint venture represent the share of the Company’s interest in balance sheet items as shownin joint venture contracts associated with construction projects. In effect, this figure thus represents theCompany’s share of cash and cash equivalents held in the name of the joint venture. Taking this into
consideration, effective net cash provided by operating activities was ¥35,322 million.
Investing activities
Net cash used in investing activities was ¥1,277 million, the result of purchases of property, plant and equipmentof ¥1,744 million, including investments in IT-related software
Financing activities
Net cash used in financing activities was ¥8,254 million due to the repayment of loans.

15

As a result of the above factors, cash and cash equivalents as of March 31, 2004 was ¥40,902 million, a netincrease of ¥5,962 million.

Change in Financial (Consolidated)
Billions of Yen
Fiscal year ended March 31
Total Assets
Total Liabilities (*)
Shareholders’ Equity
Net CashOperatingprovided by
Activities(used in):Investing
Activities
Financing
Activities
Balance of Cash and Cash
Equivalents

2001
137.0)
121.9)
15.0)(15.3)

2002
129.3)
114.2)
15.1)
10.4)

2003
120.2)
103.6)
16.6)
6.9)

2004
142.8)
120.0)
22.7)
15.5)

31.4)

(0.2)

(0.8)

(1.2)

(16.0)

(5.8)

(9.5)

(8.2)

33.9)

38.6)

34.9)

40.9)

11.7%

2003
13.9%

2004
15.9%

-

2.7 year

2.7 year

0.7 year-17.5 times

11.7 times

42.4 times* Includes minority interests.
Cash Flow IndicesFiscal year ended March 31
Shareholders’ Equity ratio(shareholders’ equity divided bytotal assets)
Years for Debt Redemption(interest-bearing debt divided byoperating cash flow)
Interest Coverage Ratio(operating cash flow divided byinterest expense)

2001
11.0%

2002

Ref.: Years of debt redemption by cash flow provided by operating activities is essentially 0.3 years andinterest coverage ratio is essentially 96.1.

3. Outlook for the Year Ending March 31, 2005
Although there are concerns due to rapid increases in the cost of crude oil and other basic materials as well as the
yen’s strength, the global economy is expected to continue recovering amid a gradual upturn in corporate
earnings.
In Japan, petrochemical companies are seeking to become more competitive by forming more cohesive units built
around industrial complexes in individual regions. This trend leads to forecasts for continued strength ininvestments for comprehensive energy-saving and environmental facilities for these regions by petrochemical, oiland other companies. In addition, the Group is promoting Plant Lifecycle Engineering (PLE) to meet the demandfor optimizing all aspects of a plant, including the need to deal with older equipment and use equipment for longer
periods of time. The Group will draw on its technological resources to formulate PLE proposals.
Outside Japan, the outlook remains clouded by events such as global terrorism and the reconstruction of Iraq.
Against this backdrop, energy major companies are shifting their emphasis from oil to gas. This leads to forecasts
for continued growth on a global scale in gas-related investments, including upstream projects.
Based on this outlook, and assuming an exchange rate of ¥105.0 to the U.S. dollar, the Company is forecasting
consolidated orders of ¥230.0 billion, revenues from construction contracts of ¥220.0 billion, ordinary profit of¥7.1 billion and net profit of ¥7.3 billion in the fiscal year ending March 31, 2005.
On a non-consolidated basis, the Company anticipates new orders of ¥200.0 billion, revenues from construction
contracts of ¥185.0 billion, ordinary profit of ¥5.8 billion and net profit of ¥6.5 billion.
The Company plans to pay a dividend of between ¥3 and ¥5 per share applicable to the fiscal year ending March
31, 2005.

16

Outlook for FY2005 Business Results
Billions of yen

FY to March 31
New orders
Completed projects
Ordinary profit
Net profit

2005
230.0
220.0
7.1
7.3

Consolidated
2004
Change (%)
290.6(20.9)
206.8
6.4)
6.3
11.8)
6.6
9.8)

Non-consolidated
2005
2004
Change (%)
200.0
244.8
(18.3)
185.0
169.7
9.0)
5.8
4.0
44.6)
6.5
4.2
52.8)

Precautions regarding forward-looking statements
Forecasts for operating results contained in these materials are based on various assumptions. Actual results may
differ significantly from these forecasts due to a wide range of factors. Investors are therefore urged to refrainfrom decisions based solely on these forecasts.

17

Financial Statements
1. Consolidated Balance Sheets
As of Mar. 31, 2004%

AssetsCurrent Assets
Cash and time deposits..................................
Notes and accounts receivable-trade ...........
Costs of construction contracts in progress
Deferred tax assets .........................................
Jointly controlled asset of joint venture.......
Other ................................................................
Allowance for doubtful accounts .................
Total Current Assets .....................................

41,613
24,612
18,9182,086
28,413
5,343(431)
120,556

Millions of Yen
As of Mar. 31, 2003%

Difference

84.4

36,11225,374
21,105
194
8,672
6,098
(628)
96,929

5.9

189
—
1
(144)

1.9

290

80.6

5,500
(762)
(2,187)
1,891
19,741(755)
197
23,626

Fixed Assets
Property, plant and equipment
Buildings and structures........................
Accumulated depreciation ....................
Book value of buildings and structures
Machinery and equipment ....................
Accumulated depreciation ....................
Book value of machinery and equipment
Tools, furniture and fixtures .................
Accumulated depreciation ....................
Book value of tools, furniture and fixtures
Land .........................................................
Construction in progress .......................
Total property, plant and equipment ........

6,352
3,335
3,017
870
612
258
5,269
4,151
1,118
2,526
1
6,922

4.9

6,675
3,199
3,476
959
825
134
5,177
4,249
928
2,526
—
7,067

Intangible fixed assets..................................

2,607

1.8

2,317

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

4,325
701
5,127
4,133
82
2,220
(3,554)(263)
12,773

8.9

4,206
631
5,793
5,650
82
2,367
(4,485)(263)
13,983

11.6

118
69
(665)
(1,516)
(0)
(147)
931
0
(1,210)Total Fixed Assets .........................................

22,303

15.6

23,36719.4(1,063)

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

142,859

100.0

120,297100.0

22,562

(459)

123

18

Millions of Yen
As of Mar. 31, 2003%

Difference

73.4

46,5118,202
294
25,172
694
1,375
800
6,354
89,40474.3

6,376)(8,100)(100)
11,889)
385)
172)
(600)
5,408)
15,432)

11.4

(105)
(7)
1,217)
107)(24)
1,187)

As of Mar. 31, 2004%

Liabilities and Shareholders’ Equity
Current Liabilities
Notes and accounts payable-trade............................
Short-term loans .........................................................
Income taxes payable .................................................
Advance receipts on construction contracts............
Indemnity allowance for completed construction..
Accrued bonuses.........................................................
Allowance for contingency loss ................................
Other ............................................................................
Total Current Liabilities ...........................................

52,888101
194
37,061
1,079
1,548
200
11,762
104,836

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

10,316
1
4,128
378
86
14,912

10.5

10,422
9
2,910
270
111
13,724

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

119,748

83.9

103,12985.7

16,619)Minority Interests ......................................................

344

0.2

499

0.4

(154)

12,027
5,818
5,800

8.4
4.1
4.0

12,027
5,818
(496)

10.0
4.8
(0.4)

—)
—)
6,297)

26
(766)
(140)
22,766

0.0
(0.5)
(0.1)
15.9

10
(642)
(48)
16,669

0.0
(0.5)
(0.0)
13.9

15)
(124)
(92)
6,097)

142,859

100.0

120,297100.0

22,562)

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

19

2. Consolidated Statements of Income
Apr. 1, 2003 –Mar. 31, 2004

Construction Contracts .............................................
Cost of Construction Contracts................................
Gross profit ..................................................................
Selling, General and
Administrative Expenses..........................................
Operating profit ..........................................................

Millions of Yen
Apr. 1, 2001 –Mar. 31, 2002(%)(%)

Difference

206,816
192,709
14,106

100.0
93.2
6.8

166,367
155,924
10,443

100.0
93.7
6.3

40,449)36,785)
3,663)

8,225
5,881

4.0
2.8

8,894
1,548

5.4
0.9

(669)
4,332)

0.6

331
28
—
1,000
205
186
1,751

1.0

(575)

0.5

(196)

Other Income
Interest..................................................................
Dividend income.................................................
Foreign exchange gain........................................
Equity in earnings of associated companies....
Rent income ........................................................ .
Other ....................................................................
Total Other Income....................................................

360
50
294
155
146
170
1,176

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

374
84
—
250
710

0.3

528
93
178
106
906

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

6,348

3.1

2,393

1.4

3,954)

Extraordinary Gain
Reversal of allowance for contingency loss .....
Reversal of allowance for doubtful accounts ..
Gain on sales of investments in subsidiaries...
Adjustments to previous period earnings .......
Other.....................................................................
Total Extraordinary Gain..........................................

600
485
—
—
112
1,198

0.6

—
1,167
314
184
42
1,708

1.0

(509)

20

2. Consolidated Statements of Income (Continued)
Millions of Yen
Apr. 1, 2002 –March 31, 2003

Apr. 1, 2003 –Mar. 31, 2004(%)

Construction Contracts .................................

206,816Extraordinary Loss
Loss on guarantee of construction
performance in affiliated companies..
Allowance for contingency loss ............
Loss on devaluation of golf membership
Allowance for investment loss ..............
Loss on sale of fixed assets.....................
Other.........................................................
Total Extraordinary Loss...............................

Difference

(%)

100.0

166,367

100.0

1,679
—
—
—
—
497
2,176

1.1

—
800
294
263
79
155
1,593

0.9

583)

Profit before income
taxes and minority interests ..........................

5,370

2.6

2,508

1.5

2,861)

Income taxes current .....................................
Foreign tax refunded ......................................
Income taxes deferred ....................................
Total Tax
Minority interests in net profit ......................
Minority interests in net loss .........................
Net profit .........................................................

667—(1,905)(1,237)
—
38
6,646

(0.6)
—
0.0
3.2

951
(317)
(146)
487
22
—
1,999

0.3
(0.0)
—
1.2

(1,725)(22)
38)
4,647)

21

3. Consolidated Statements of Retained Earnings

Additional Paid-in Capital
Additional Paid-in Capital at Beginning of Period
Additional Paid-in Capital at End of Period

Apr. 1, 2003 –Mar. 31, 2004

Millions of Yen
Apr. 1, 2002 –Mar. 31, 2003

5,818
5,818

5,818
5,818

—
—

Difference

Retained Earnings
Retained Earnings at Beginning of Period
Increase in Retained Earnings
From net profit
From decrease in consolidated subsidiaries
From increase in consolidated subsidiaries
Total Increase in Retained Earnings(496)(2,516)

2,019

6,646
12
—
6,659

1,999
—
20
2,019

4,639

Decrease in Retained Earnings
From consolidated subsidiaries
Total Decrease in Retained Earnings
Retained Earnings at End of Period

361
361
5,800

—
—
(496)

361
361
6,297

22

4. Consolidated Statements of Cash Flow

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

Apr. 1, 2003 –Mar. 31, 2004

Millions of Yen
Apr. 1, 2002 –Mar. 31, 2003

5,370)
1,205)(1,128)
(410)
374)
650)
(155)
—)

2,508)
1,225)
(967)
(359)
528)
915)
(1,000)(314)

2,861)
(20)
(160)
(50)
(154)
(264)
844)
314)

—)
—)
762)
2,187)
6,376)

90)
294)
1,144)
2,804)
6,167)

(90)
(294)
(382)
(616)
208)

11,889)172)
1,217)
385)
(0)
(600)
(19,741)645)
6,787)
15,988)
665)
(367)
(705)

(8,540)158)
1,081)
(140)
263)
800)
—)
(1,845)
1,932)
6,747)
1,576)(594)(790)

20,429)
14)
136)
525)
(264)
(1,400)(19,741)
2,490)
4,855)
9,240)
(911)
227)
85)

15,580)6,939)

8,641)

Difference23

4. Consolidated Statements of Cash Flow (Continued)
Apr. 1, 2003 –Mar. 31, 2004

Cash Flow from Investing Activities
Payment for time deposits............................................................
Proceeds from refundsof time deposits with maturities..................................................
Payments for purchase of investment securities .......................
Proceeds from sales of investment securities.............................
Purchase of investment in consolidated subsidiaries ...............
Proceeds from sales of investment in subsidiaries
within the scope of consolidation................................................
Purchase of property, plant and equipment ..............................
Proceeds from sale of property, plant and equipment .............
Purchase of intangible fixed assets..............................................
Proceeds from sale of intangible fixed assets.............................
Net decrease in short-term loans.................................................
Long-term loans.............................................................................
Proceeds from collections of long-term loans ............................
Other ...............................................................................................
Net Cash Used in Investing Activities.......
Cash Flow from Financing Activities
Net decrease in short-term bank loans .......................................
Proceeds from long-term debt .....................................................
Repayments of long-term debt ...................................................
Other ..............................................................................................
Net Cash Used in Financing Activities......
Foreign Currency Translation Adjustments on Cashand Cash Equivalents .......................................................................
Net Increase (Decrease) in Cash and Cash Equivalents .............
Cash and Cash Equivalents at Beginning of Period....................
Increase in Cash and Cash Equivalents From New
Consolidation.....................................................................................
Decrease in Cash and Cash Equivalents Elimination From
Consolidation ....................................................................................
Cash and Cash Equivalents at End of Period ...............................

Millions of Yen
Apr. 1, 2002 –Mar. 31, 2003

Difference

(1)

(48)

47)

353)
(20)
11)
—)

588)
(118)
7)
(30)

(234)
98)
3)
30)

—)
(751)
8)
(992)
—)
10)
(144)
249)
0)
(1,277)

115)
(296)
141)
(852)
1)
51)
(637)
193)
11)
(873)

(115)
(455)
(133)
(140)
(1)
(41)
493)
56)
(11)
(404)

(7,904)
—)
(257)
(92)
(8,254)(8,717)
8)
(792)
(42)
(9,544)

813)
(8)
534)
(50)
1,289)

(78)

(459)

381)

5,970)
34,940)(3,937)
38,677)

9,907)(3,737)

—)

200)

(200)

(7)
40,902)—)
34,940)(7)
5,962)

24

<Appendix to Consolidated Financial Statements>

Basis of presenting the consolidated financial statements
Details of the changes in the Article 4. Accounting Principles, C. Important Accounting Standards
for Allowances, (6) Allowances for Retirement Benefits are as follows.
Current Fiscal Year (From April 1, 2003 to
March 31, 2004)

Previous Fiscal Year (From April 1, 2002 to
March 31, 2003)(6) Allowances for retirement benefits(6) Allowances for retirement benefits

To prepare for employees’ retirement
benefits, the Company posts an amountcalculated based on the projected amount of
obligations for retirement benefits andpension assets at the end of the current
interim fiscal year.

To prepare for employees’ retirement
benefits, the Company posts an amountcalculated based on the projected amount of
obligations for retirement benefits andpension assets at the end of the current
interim fiscal year.

Regarding the difference at the time ofchange in accounting standards (12,123
million yen), an average over 15 years is
processed as operating expenses.

Regarding the difference at the time ofchange in accounting standards (12,123
million yen), an average over 15 years is
processed as operating expenses.

Actuarial differences at Chiyoda areprocessed as operating expenses from thesubsequent consolidated fiscal year, basedon the “fixed amount method” and using a
set number of years (10 years) equal to orless than the average remaining period of
employment for employees working at thetime that the difference occurred.

Actuarial differences at Chiyoda areprocessed as operating expenses from thesubsequent consolidated fiscal year, basedon the “fixed amount method” and using a
set number of years (12 years) equal to orless than the average remaining period of
employment for employees working at thetime that the difference occurred.

(additional information)(additional information)

For actuarial difference, since the averageremaining period of employment for
employees has dropped below 12 years, thefixed number of years for processing ofoperating expenses based on the “fixedamount method” was changed to 10 years asof the end of the consolidated interim fiscal
term from 12 years used at the end of thelast fiscal year.

For actuarial difference, since the averageremaining period of employment for
employees has dropped below 13 years, thefixed number of years for processing ofoperating expenses based on the “fixedamount method” was changed to 12 years asof the end of the consolidated interim fiscal
term from 13 years used at the end of thelast fiscal year.

This change will have only a slight effect on
operating profit, ordinary profit, profit before
income taxes and minority interests. In
addition, information concerning the effectupon segment information is contained in
the Segment Information section.

This change will have only a slight effect on
operating profit, ordinary profit, profit before
income taxes and minority interests. In
addition, information concerning the effectupon segment information is contained in
the Segment Information section.

25

Notes to consolidated financial statements
SECURITIESPrevious fiscal year
1. Information regarding marketable securities classified as “Other Securities” (As of
March 31, 2003)
Millions of yen

Security
Securities whose carrying value
exceeds their acquisition cost
Securities whose acquisition costexceeds their carrying value
Total

Acquisition
cost

Equitysecurities
Equitysecurities

Carrying value
633

Unrealized
gain/loss
26

48

38

(10)

54

71

16

2. Sales of securities classified as “Other Securities (April 1, 2002 – March 31, 2003)
Millions of yen

Sales amount

Aggregate gain

Aggregate loss

5

1

3

3. “Other Securities” without market value mainly consisted of the following. Their
carrying values are summarized below. (As of March 31, 2003)
Other Securities
Millions of yen

Equity securities – unlisted (excluding OTC stock)
Subscription certificates

1,746
17

Current fiscal year
1. Information regarding marketable securities classified as “Other Securities” (As of
March 31, 2004)
Millions of yen

Security
Securities whose carrying value
exceeds their acquisition cost
Securities whose acquisition costexceeds their carrying value
Total

Equitysecurities
Equitysecurities

Acquisition
cost
48

Carrying value
93

Unrealized
gain/loss
44

8

8

(0)

57

101

44

2. Sales of securities classified as “Other Securities (April 1, 2003 – March 31, 2004)
Millions of yen

Sales amount

Aggregate gain
3

Aggregate loss-

5

3. “Other Securities” without market value mainly consisted of the following. Their
carrying values are summarized below. (As of March 31, 2004)
Other Securities
Millions of yen

Equity securities – unlisted (excluding OTC stock)
Subscription certificates

1,608
15

26

Allowance for Retirement Benefits
1. Accounting for retirement benefits
Previous fiscal year (April 1, 2002 – March 31, 2003) and Current
fiscal year (April 1, 2003 – March 31, 2004)
The Company and its consolidated domestic subsidiaries provide qualified pension plans and lump sum severance
payment plans for their defined benefit pension plans. In addition, the Company sometimes provides extra
severance pay. Part of overseas subsidiaries also provides defined benefit plans. The company has been
providing lump sum severance payment plans and qualified pension plans from 1980.

2. Retirement benefit obligations
Millions of Yen
As of Mar. 31, 2004

Projected benefit obligations
Fair value of plan assets
Obligation for unreserved retirement
benefitUnrecognized transitional obligation
Unrecognized actuarial loss
Net benefit obligation recognized in the
consolidated balance sheet
Reserve for retirement benefits (*1)

As of Mar. 31, 2003

(34,025)
15,594(34,212)
14,195(18,431)(20,016)

8,890
5,412

9,699
7,406

(4,128)(2,910)(4,128)(2,910)Note 1) The reserve for retirement benefits does not include extra severance payments that are set to be paid in
the following period (accounting for 27 million yen in the current and 131 million yen in the previous
fiscal year). These payments are included in the other current liabilities.
2) The group uses heuristic method for consolidating retirement obligations of its subsidiaries.

27

3. Retirement benefit costs
Millions of Yen
As of Mar.31, 2004

Service cost
Interest cost
Expected return on plan assets
Amortization of transitional obligation
Recognized actuarial loss
Net periodic benefit cost

As of Mar. 31, 2003

921
477
(195)
808
782
2,795

1,079
738
(364)
808
307
2,569

Note: According to heuristic method of consolidation of subsidiaries, subsidiary retirement benefit costs arerecorded under the Service cost.

4. Actuarial assumptions used to determine costs and benefit
obligations for principal pension plans
As of Mar. 31, 2004

Equal amountperiodDiscount rate
Expected rate of return on plan assets
Recognition period of actuarial gain/loss

1.5%
1.5%
10 years (depreciated with thestraight line method over a
fixed number of years withinaverage employee working
period in the fiscal year inwhich the loss occurred, andrecognized in the following
fiscal year)

1.5%
2.5%
12 years (depreciated with thestraight line method over a
fixed number of years withinaverage employee working
period in the fiscal year inwhich the loss occurred, andrecognized in the following
fiscal year)

15 years

15 years

Amortization period of transitional
obligation

over

As of Mar. 31, 2003

Allocation of projected benefit obligation

each

Equal amountperiod

over

each

28

Tax Effect Accounting
1. Principle cause of deferred tax assets and liabilities
Millions of Yen
As of Mar. 31, 2004
As of Mar. 31, 2003

Deferred tax assets
Tax loss carry forward ...................................................... ..
Cost of construction contracts ............................................
Retirement benefits ..............................................................
Allowance for doubtful accounts .......................................
Loss on construction contracts due to application ofprogress percentage method...............................................
Loss on valuation of costs of construction contracts inprogress .................................................................................
Loss on valuation of fixed assets ........................................
Other ......................................................................................
Sub-total deferred tax assets................................................... ..
Valuation allowance ...................................................................
Total deferred tax assets.............................................................

6,679
3,632
1,506
1,269

23,230
4,216
895
1,929

562

180

122
737
2,872
17,381(15,196)
2,184

181
733
3,142
34,509(34,223)
285

Deferred tax liabilities
Unrealized gains on other securities..................................
Other ......................................................................................
Total deferred tax liabilities.......................................................

(17)
(0)
(18)

(8)
(9)
(18)

Net deferred tax assets ...............................................................

2,166

267

Note: Net deferred tax assets for the current and the previous fiscal year are included in the consolidated balance
sheets as follows:
Millions of Yen
As of Mar. 31, 2004
As of Mar. 31, 2003

Current assets – Deferred tax assets .........................................
Fixed assets –Deferred tax assets ..............................................
Non-current liabilities – Deferred tax liabilities......................

2,086
82
(1)

194
82
(9)

2. Principle items which caused differences between statutory effective
tax rate and income tax rate charged after adoption of deferred tax
accounting
Percent %As of Mar. 31, 2004
As of Mar. 31, 2003%%

Normal effective statutory tax rate...........................................
Adjustments
Non-deductible entertainment and other expenses.........
Non-taxable dividend and other income ..........................
Parity adjustment for inhabitance taxes ............................
Foreign taxes ........................................................................
Valuation allowance ............................................................
Equity in earnings of affiliated companies .......................
Net loss of consolidated subsidiaries.................................
Reduction in deferred tax asset balance due to change
in tax rates .............................................................................
Unrealized income ...............................................................
Other ......................................................................................
Income tax rate charged after adoption of deferred tax
accounting ..........................................................................

42.0

42.0

13.5
(0.0)
1.2
2.9
(74.8)
(1.2)
(0.8)

6.0
(0.2)
3.0
3.8
(19.0)(16.8)
(1.3)

-

0.4

(5.4)
(0.4)

1.5

(23.0)

19.4

29

3. Others
Previous fiscal year (April 1, 2002 – March 31, 2003)
Due to partial change in local tax law (Law No. 9 of 2003) promulgated as of March 31, 2003 thestatutory effective corporate tax rate applied for calculation of deferred tax assets and liabilities
has been changed from 42.00% to 40.44% (however, the new rate was applicable only for thelosses which would be posted after April 1, 2004.)
Consequently net deferred tax assets (after deducting deferred tax liabilities) were lower by 9
million yen and the total tax was adjusted higher by 9 million yen.

30

Segment Information
1. Industry Segments
The Company’s current fiscal year was from April 1, 2003 to March 31, 2004. The previous fiscal year was from
April 1, 2002 to March 31, 2003. The main business of the Chiyoda Group is engineering that focuses on theplanning, design, construction, and operations assistance of public- and private-sector facilities, as well as
facilities for pollution prevention and environmental preservation and enhancement. In non-engineeringbusinesses, there are no segments that account for 10% or more in terms of sales, operating profits or assets,
and as such these segments have been omitted.

2. Geographic Segments
Current fiscal year (From April 1, 2003 to March 31, 2004)
Millions of Yen

Revenues
Outside customers........
Inter-segment ................
Total ...............................
Operating expenses ......
Operating Profit (Loss)....
Assets

Japan

Asia

EuropeNorth
America

196,5233
196,526
190,560
5,965
139,232

10,239807
11,047
11,162
(114)
6,487

53
338
391
383
7
244

−
33
33
33
0
577

Others

Total

−
−
−
11
(11)
124

206,816
1,182
207,999
202,151
5,847
146,666

Eliminations(Corporate)

Consolidated−(1,182)(1,182)(1,216)33(3,806)

206,816−
206,816
200,935
5,881
142,859(Notes)(1)
Geographic segmentation is according to geographic proximity(2)
Countries included in regions other than Japan:
Asia: Indonesia, Singapore, Philippines, Myanmar, Malaysia and Thailand.
Europe: England and Germany.
North America: America.
Other regions: Nigeria.
(3)Within asset Elimination (Corporate) account, corporate assets accounted for 3,015 million yen, consisting mainly of longterm investments (investment securities).s(4)
Changes in Accounting Principles:
Starting from the current fiscal year, the Company has changed the fixed number of years for the processing ofoperating expenses for actuarial loss to 10 years, from the previous 12 years. This change will have only a slight effecton each segment.

Previous fiscal year (From April 1, 2002 to March 31, 2003)
Millions of Yen
Japan

Asia

EuropeNorth
America

OthersTotal

Eliminations(Corporate)

Consolidated

Revenues
Outside customers............. 160,526
Inter-segment ..................... 25,163
Total .................................... 185,689
Operating expenses ........... 183,425
Operating Profit (Loss) ....
2,263
Assets126,246

5,659
624
6,283
6,473
(189)
7,445

48
199
247
249
(2)
216

133
42
175
199
(23)
636

0
0
0
14
(14)
159

166,367
26,028
192,395
190,362
2,033
134,704−(26,028)(26,028)(25,543)(484)(14,406)

166,367−
166,367
164,818
1,548
120,297(Notes)(1)
Geographic segmentation is according to geographic proximity(2)
Countries included in regions other than Japan:
Asia: Indonesia, Singapore, Philippines, Myanmar, Malaysia and Thailand.
Europe: England, Germany and Poland.
North America: America.
Other regions: Nigeria.
(3)Within asset Elimination (Corporate) account, corporate assets accounted for 3,184 million yen, consisting mainly of longterm investments (investment securities).
(4)
Changes in Accounting Principles:1) Starting from this fiscal year, the Company has implemented a change to a new accounting method by which income
and expenses related to leases for the purpose of real estate business are included in non-operating profit and loss. As a31

result of the above factors, operating income of Japan was ¥53 million less than it would have been under previous
accounting principles. This change had no effect on segments outside of Japan.
2) Starting from the current fiscal year, the Company has changed the fixed number of years for the processing ofoperating expenses for actuarial loss to 12 years, from the previous 13 years. This change will have only a slight effecton each segment.

3. Overseas Sales
Current fiscal year (April 1, 2003 to March 31, 2004)
Millions of Yen
Middle East

Russia/Central Asia

26,33890,78622,343

3,994

12.74

43.90

10.80

1.93

Asia

Overseas sales ..........................................................
Consolidated sales...................................................
Ratio of overseas to consolidated sales (%).

Other
Regions

Total

143,462
206,816
69.37(Notes)(1)
Geographic segmentation is according to geographic proximity(2)
Countries and areas included in each region:
Asia: China, Thailand and Indonesia.
Middle East: Qatar, Saudi Arabia, Oman and Iran
Russia/Central Asia: Russia
Other regions: Venezuela(3)Overseas sales are those sales of the Company and its consolidated subsidiaries that take place in countries or regions
other than Japan(4) Reclassification of Geographical Segments
Effective the current fiscal year, the “Russia and Central Asia” region, included as a component of “Other Regions” inprior years, is reclassified and presented as a separate line item (“Russia and Central Asia”) since total sales in thisregion exceeded 10% of consolidated net sales.
Sales in the “Russia and Central Asia” region included in “Other Regions” totaled ¥685 million, which accounted for
0.4% of the overseas sales, in the previous consolidated fiscal year.

Previous fiscal year (April 1, 2002 to March 31, 2003)
Millions of Yen
Asia

Overseas sales ..........................................................
Consolidated sales...................................................
Ratio of overseas to consolidated sales (%).

Middle East

Other Regions

25,36846,66011,284

15.25

28.04

6.78

Total

83,313
166,367
50.07(Notes)(1)
Geographic segmentation is according to geographic proximity(2)
Countries and areas included in each region:
Asia: Singapore, China and Indonesia.
Middle East: Qatar and Saudi Arabia.
Other regions: Venezuela and Russia(3)
Overseas sales are those sales of the Company and its consolidated subsidiaries that take place in countries or regions
other than Japan32

Production, Orders and Sales Situation
1. OrdersMillions of Yen
Apr. 1, 2003 –Apr. 1, 2002 –Mar. 31, 2004
Mar. 31, 2003
New Orders
Backlog
New Orders
Backlog
Amt
%
Amt
%
Amt
%
Amt
%

Business Segment
Engineering
Petroleum-related......................
Petrochemical-related ...............
Chemical-related........................
Gas and Power Utilitiesrelated .........................................
Social developments-related ....
Industrial machinery-related
Other ...........................................
Total Engineering
Other ...........................................
Total ............................................

38,890+299.6%
6,056-66.8%
15,799-48.1%
201,040+36.7%
1,736+50.2%
2,503-9.0%
21,068-39.6%
287,094+17.5%

13.4

3.564-26.6%
290,658+16.7%

1.2

2.1
5.4
69.2
0.6
0.9
7.2
98.8

100.0

28.639[1,160]16,126[-2,007]21,306[1,366]
290,595[-16,559]
1,256
[6]
2,819
[1,025]
15,110[-9,147]
375,854[-24,155]−[−]
375,854[-24,155]

7.6

9,732

4.0

4.3

18,2367.3

5.7

30,42612.2

77.3

147,049

59.0

0.3

1,155

0.5

0.8

2,750

1.1

4.0

34,885

14.0

100.0

244,238

98.1

−

4,855

1.9

100.0

249,093100.0

14,3154.5[-3,360]
43,945 13.9[-2,236]
26,5038.4[-204]
199,549 63.1[-6,118]
2,521
0.8
[-40]
5,073
1.6
[-8]
24,2597.7[-727]
316,167 100.0[-12,696]−−[−]
316,167 100.0[-12,696](Note)
Numbers in [ ] brackets under “Backlog of orders” indicate the total of increases or decreases accompanying foreign
currency translation adjustments related to foreign currency business, increases resulting from adjustments for neworders, and decreases resulting from contractual changes in orders received before the previous fiscal year.
Percentages under “New orders” indicate year on year % change.

33

Breakdown of Domestic and Overseas Orders
Millions of Yen
Apr. 1, 2003 –Apr. 1, 2002 –Mar. 31, 2004
Mar. 31, 2003
New Orders
Backlog
New Orders
Backlog
Amt
%
Amt
%
Amt
%
Amt
%

Domestic .....................................
Overseas......................................
Total ............................................

71,979+4.9%
218,678+21.2%
290,658+16.7%

24.8
75.2
100.0

91,412[-817]
284,441[-23,337]
375,854[-24,155]

24.3

68,605

27.6

75.7

180,488

72.4

100.0

249,093

100.0

83,604 26.4[-585]
232,562 73.6[-12,111]
316,167 100.0[-12,696](Note)
Numbers in brackets [ ] under “Backlog of orders” indicate the total of increases or decreases accompanying foreign
currency translation adjustments related to foreign currency business, increases resulting from adjustments for neworders, and decreases resulting from contractual changes in orders received before the previous fiscal year.

2. SalesBusiness Segment

Engineering
Petroleum-related.........................................................
Petrochemical-related ..................................................
Chemical-related...........................................................
Gas and Power Utilities-related..................................
Social developments-related .......................................
Industrial machinery-related ......................................
Other ..............................................................................
Total Engineering
Other ..............................................................................
Total ...............................................................................

Millions of Yen
Apr. 1, 2003 –Apr. 1, 2002–
Mar. 31, 2004
Mar. 31, 2003
%
Amt
%
Amt

25,727-25.4%
31,866+96.3%
22,362+14.2%
93,434+94.8%
3,008+49.6%
5,782+236.3%21,069-46.6%
203,252+25.8%
3,564-26.6%
206,816+24.3%

12.4

34,496

20.7

15.4

16,236

9.9

10.8

19,58911.8

45.2

47,972

28.8

1.5

2,011

1.2

2.8

1,719

1.0

10.2

39,486

23.7

98.3

161,511

97.1

1.7

4,855

2.9

100.0

166,367

100.0

34

Breakdown of Domestic and Overseas Sales
Millions of Yen
Apr. 1, 2003 –Mar. 31, 2004
Amt

Domestic ...................................................................

63,353-23.7%
143,462+72.2%
206,816+24.3%

Overseas ....................................................................
Total...........................................................................

Apr. 1, 2002 –Mar. 31, 2003
%

Amt

%

30.6

83,053

49.9

69.4

83,313

50.1

100.0

166,367

100.0(Notes)(1)“Status of production” is not listed, because it is difficult to define production results for the Chiyoda Group.
(2)
Sales results and percentages of total sales for main customers are shown below.
Millions of Yen
Apr. 1, 2003–
Mar. 31, 2004
CustomerRas Laffan LNG Co., Ltd.
Sakhalin Energy Investment Co., Ltd.
Qalhat LNG SA OC(3)

Apr. 1, 2002 –Mar. 31, 2003
Customer

Amt%

28,11022,34322,025

13.6 Ras Laffan LNG Co., Ltd.
10.8
10.7

Amt

%

23,811

14.3

Amounts contained in these tables do not include consumption tax.

35