CHIYODA CORPORATION
Consolidated Financial Results

for the Six-Month Period Ended September 30, 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 Six-Month Period Ended September 30, 2004

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

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

Consolidated Business Results
for the Six-Month Period Ended September 30, 2004

1) Consolidated Business Results
Apr. 1, 2004–
Sep. 30, 2004
Change(%)

Net Sales ....................................................... 116,371
Operating Profit ..........................................
4,752
Ordinary Profit ...........................................
5,153
Net Profit ......................................................
5,095
Net Profit per Share (¥) ..............................
27.44
Fully Diluted Net Profit per Share (¥)
26.74

31.2
90.4
71.1
135.6

Millions of Yen
Apr. 1, 2003–
Sep. 30, 2003
Change(%)

88,679
2,495
3,011
2,162
11.68
11.40

27.9
142.3
84.6
(12.8)(Notes) (1) Gain from investments in subsidiaries and affiliates accounted for by the equity method:
Six-month period ended September 30, 2004:
Six-month period ended September 30, 2003:
Year ended March 31, 2004:
0,

Apr. 1, 2003–
Mar. 31, 2004
Change(%)
206,816
—
5,881
—
6,348
—
6,646
—
35.91
34.99

98 million yen
171 million yen
155 million yen(2) Average number of outstanding shares (consolidated) during the period:
Six-month period ended September 30, 2004:
185,701, 353 shares
Six-month period ended September 30, 2003:
185,140,984 sharesYear ended March 31, 2004:
185,100, 716 shares(3) Changes to accounting principles:
Yes(4) Percentages for net sales, operating profit, ordinary profit and net profit represent year-on-year changes.

2) Changes in Consolidated Financial Position
Apr. 1, 2004–
Sep. 30, 2004

Total Assets ..................................................... ..
Shareholders’ Equity ..................................... ..
Equity Ratio .................................................... ..
Shareholders’ Equity per Share (¥) ............. ..
(Notes) Outstanding shares (consolidated) at the end of the period:
Six-month period ended September 30, 2004:
Six-month period ended September 30, 2003:
Year ended March 31, 2004:

160,454
28,48817.8%
151.79Millions of Yen
Apr. 1, 2003–
Sep. 30, 2003

138,063
18,715
13.6%
101.11

Apr. 1, 2003–
Mar. 31, 2004

142,859
22,76615.9%
123.04

187,684,027 shares
185,098,165 shares
185,040,675 shares23) Consolidated Cash Flows
Apr. 1, 2004–
Sep. 30, 2004

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

Millions of Yen
Apr. 1, 2003–
Sep. 30, 2003

(2,683)(1,541)
552
37,200

Apr. 1, 2003–
Mar. 31, 2004

(3,378)(673)(241)
31,145

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

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

18055) Changes in the Scope of Consolidation and Affiliates Accounted
for by the Equity Method
Consolidated subsidiaries:
Newly included
ExcludedAffiliates accounted for by the equity method:
Newly included
Excluded02
00

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

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

250,000

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

8,700

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

8,300(Note) Projected net income per share for the year ending March 31, 2005:

44. 22 yen

3(1) State of the GroupThe Chiyoda Group of Companies consists of the parent company, 18 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 TechnoAce 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)*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 forby 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 PolicieszzzCommitment 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

2.Medium- and Long-Term Business Strategy”Project Super X” Program
Achieve growth over the medium and long terms
Build a foundation for a business that can ensure ample returns to shareholders,
contributions to society, and enhancement of employee benefits

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

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

Objectives
Client Satisfaction

1)
2)
3)
4)
5)

Increase customer satisfaction level
Strengthen unified PLE/Group operations
Thoroughly execute LL program andpromote KM
Execute Smart EPC
Reinforce personnel development andtraining

Priorities
1)
2)

3)

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

Notes:
LL—Lessons & Learnt (KM program for accumulating as an organization the experience, knowledge and know-how
gained through business activities)
KM—Knowledge Management
Smart EPC—Business process improvement initiatives targeting engineering, procurement and construction thatuse IT to perform tasks with high efficiency and accuracy.

5

The Group’s New Restructuring Plan, which runs though the fiscal year ending March 31, 2006, was approved infiscal 2001 and is currently in progress. Of the objectives laid out in the New Restructuring Plan, those dealing withfinancial restructuring, reduction of personnel and fixed costs, review of business sectors, and re-examination ofGroup 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 close on March 31, 2003.
The Group continues to prioritize the remaining issues of “Project Super X,’” a Company-wide campaign started
in the March 2002 fiscal year in order to achieve the objectives of the New Restructuring Plan as quickly as
possible and build the base for becoming an outstanding organization. The objectives are to forcefully execute
projects and risk management while building a new business model. This will enable the Group to build a baseof operations capable of further stabilizing profitability, returning earnings to shareholders, contributing to thecommunity and improving benefits for employees.
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. Since
this goal was achieved in the fiscal period that ended in September 2004, 18 months ahead of schedule, theGroup has transformed itself into an organization with stable earnings power and the ability to generateearnings growth. The next managerial index objectives will be determined as part of the next medium-term
management plan.
4.Basic Policy Concerning Profit Allocation
Since the accumulated loss has been eliminated 18 months ahead of schedule, the Group has finally achieved aframework capable of returning earnings to shareholders. The policy will be to pay a dividend in line with actual
profits while further increasing retained earnings, supporting sustained growth of the Group’s businesses andimproving benefits for employees.
5. Issues That Must Be Dealt With
To achieve growth over the medium and long terms, the Group is formulating the next medium-term
management plan continuing to concentrate on the following issues with the aim of stabilizing profitability andgenerating earnings growth.
1) Actions in individual business sectors to improve earnings(Overseas Gas Value Chain)
Anticipating further expansion in markets for gas, the Group will continue to develop this business in a stablemanner by utilizing its expertise in Gas Value Chain services (the ability to supply comprehensive engineering
services extending from upstream facilities to end-users) and customer relationships deeply rooted in trust.
(Overseas oil and chemicals)
Utilize technological alliances and internal technologies in ethylene and other fields to capture orders andexecute projects.
(Domestic energy and environment)
There is enormous interest among customers in making investments in clean energy. The Group will further
deepen ties with customers and take steps to compete more effectively for large projects.
(Domestic fine industries)
The goal is to boost profitability by capturing and executing orders for plants for electronic materials,
pharmaceuticals, specialty chemicals and other products that require many value-added processes.
(Energy conservation and clean energy)
Aggressively target fields with growth potential, such as development of the Japanese gas-to-liquid (GTL)
business and hydrogen energy, and the use of pinch technology to conserve energy throughout a petroleum
complex.
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 as
7

planned. 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 corporate social responsibility (CSR), the Group isreexamining its current activities with regard to all stakeholders from the perspectives of management, global
and environmental issues, corporate ethics, human rights and the workplace environment, and society. In
addition, the Group is preparing a corporate citizenship roadmap that covers current actions for all
stakeholders as well as issues that need to be addressed in the future. The Group is constantly conducting
various initiatives and activities based on each issue.
6. Corporate Governance Initiatives
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
Stockholders Meeting

Corporate Auditors

Board of Directors
Internal
controlthrough
PDCA cycle

Executive Committee(composed ofrepresentative directors)
Crisis Manager
SQE Division
Occupational safety andhealth, quality, environment,
information security

Compliance Management
OfficeCorporate administration
Executive Officer
Risk Manager

Internal Checks and BalancesP(lan)D(o)C(heck)A(ct)Compliance

Project Operations
Executive Officer
Risk Manager

Self Auditing

Chiyoda Corporation adopts a corporate auditor system, in accordance with Commercial Code, Law No. 18,
Article 1, has four 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.
For the management of the execution and profitability of individual projects, Chiyoda has a self-auditing
system for operating divisions along with project audits performed by professional auditors from corporate

9administration. These auditors verify the suitability of project execution plans formulated by operating divisions
for the purpose of further strengthening internal checks and enhancing the transparency of management.
To respond to a risk crisis, the Group has established risk management and crisis management systems andappointed risk managers and crisis managers. In this manner, the Group has established an effective
framework to constantly work on preventing problems from occurring and, in the event that a problem does
occur, to take the necessary actions and minimize damages.
ii) Basic policies concerning related parties
Chiyoda has four outside auditors: a former managing director of the Bank of Tokyo-Mitsubishi, a former
associate director of Mitsubishi Trust and Banking, a former executive officer of Mitsubishi Corporation, and an
attorney. Regarding significant relationships, the Bank of Tokyo-Mitsubishi and Mitsubishi Trust and Banking
are both major shareholders of the Company and provide financial services. Mitsubishi Corporation is a major
shareholder of the Company and a business partner.
iii) Status of enhancements to corporate governance over the past half 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 groupware, makes available to managers
and employees on a real-time basis a behavior handbook and information on compliance, workplace safety andhygiene, quality, environmental, information security and other subjects.
During the past half fiscal year, the Board of Directors met 5 times (deliberating on 18 subjects), the Executive
Committee met 24 times (deliberating on 54 subjects and examining 34 proposals). These two bodies debatedand 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 6 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. The Group
continuously takes actions to improve environmental management.
Moreover, the Chiyoda Information Security Management System, which conforms to BS7799-Part II (2002) (aninternational standard prescribed by the UKAS for information security management systems), 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 Six Months Ended September 30, 2004
During the first half of the fiscal year, Japan’s economy staged a solid recovery backed by a big upturn incorporate earnings, continued growth in capital investment, and gradual improvements in employment levels
and consumer spending. Overseas, crude oil prices reached an all-time high due to terrorism in Saudi Arabia
and Russia and political unrest in oil-producing nations such as Nigeria, as well as concerns about tight supplies
in the United States. Nevertheless, the global economy continued to recover as economies in China and otherparts of Asia continued to expand.
In the Japanese plant market, as the Japanese government took steps to prevent global warming, there was
rapid growth in the use of natural gas and actions among electric and gas utilities to procure LNG supplies. As
prices of oil and petrochemical products climbed, all oil companies began to see benefits of integrations andclosings of refineries to streamline operations. In the chemical industry, there was demand for additional
ethylene crackers as companies switch feedstock for general chemical products that are highly dependent on
naphtha. There was also growth in business from pharmaceutical manufacturers for production facilities as
they reviewed their facilities.
In the overseas plant market, the sudden rise in crude oil prices accelerated the global shift in energy use tonatural gas. In the United States, the world’s largest energy consumer, domestic gas production and imported
gas from Canada were unable to meet demand, pointing to increasing reliance on LNG imports. As a result,
there is considerable activity in LNG plant construction. China, which became a net importer of crude oil, hasbeen developing energy resources using its own funds for national security considerations but is now becoming
increasingly dependent on imported oil from the Middle East, central Asia and elsewhere. In the Middle East,
many investment plans involving petrochemical projects are under way by domestic chemical companies andthe energy major companies due to expectations for surging demand from China.
In this environment, consolidated new orders were ¥121,429 million, 49.7% less than one year earlier when theGroup received a large order for the Sakhalin II project in Russia. However, this figure represented over half ofthe ¥230.0 billion target for new orders for the fiscal year at the beginning of the year, and 47% of the revised
fiscal year new order target of ¥260.0 billion. Of the total, domestic orders represented ¥47,258 million, up
15.4% from the first half of the previous fiscal year, and overseas orders accounted for ¥74,170 million, a yearon-year decline of 63.0%.

Billions of Yen

Net sales from construction contracts were ¥116,371 million, 16% more than the target of ¥100 billion at the
beginning of the fiscal year and 31.2% higher than net sales in the first half of the prior fiscal year. This
performance mainly reflected steady progress in construction and a weaker yen at the end of the period than had
been expected at the beginning of the fiscal year. Of the total, domestic orders represented ¥34,378 million,
down 23.4% from the first half of the previous fiscal year, and overseas orders accounted for ¥81,992 million, a
year-on-year increase of 34.8%.
Regarding earnings, gross profit on completed construction contracts rose 34.5% to ¥8,852 million due to growthin the volume of completed contracts and an improvement in gross margin on these contracts. In addition, acontinuing decline in selling, general and administrative expenses relative to sales resulted in a 90.4% increase inoperating profit to ¥4,752 million. Ordinary profit increased 71.1% to ¥5,153 million due to higher interest and11dividend income and other items, and net profit was up 135.6% to ¥5,095 million. Both ordinary profit and net
profit met the targets for the first half.

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

Six months
ended
September
30
2001
2002
2003
2004
Pct. YoYchange(reference)Year ended
March 31,2004

New orders

Construction
contracts

Gross profit on
projects
completed

OperatingprofitOrdinary
profitNet profit

99.1
101.2
241.5
124.1
(49.7%)

71.6
69.3
88.6
116.3
31.2%

2.9
5.4
6.5
8.8
34.5%

(1.9)
1.0
2.4
4.7
90.4%

(1.7)
1.6
3.0
5.1
71.1%

2
2.4
2.1
5.0
135.6%

290.6

206.8

14.1

5.8

6.3

6.6

On a non-consolidated basis, new orders were down 51.5% to ¥103,446 million, which was half of the ¥200
billion target set at the beginning of the fiscal year. Domestic new orders increased 9.9% to ¥30,885 million andoverseas new orders fell 60.8% to ¥72,561 million.
Net sales from construction contracts increased 37.2% to ¥97,036 million, 14% higher than the first half target of¥85 billion as net sales from domestic construction contracts rose 45.6% to ¥20,708 million and net sales fromoverseas construction contracts climbed 35.1% to ¥76,327 million.
Operating profit was up 174.9% to ¥3,403 million, ordinary profit increased 136.7% to ¥3,778 million and net
profit rose 537.4% to ¥4,684 million. Ordinary profit and net profit were both far above the targets set at the
beginning of the fiscal year, enabling the Company to eliminate the accumulated loss.

12

Major New Orders for Apr. 1, 2004–Sep. 30, 2004
Overseas
Over 10 billion yenz
LNG plant train 5 (Qatar/Ras Laffan Liquefied
Natural Gas)
Under 10 billion yenz
Fertilizer plant (Iran)z
Ethylene plant additional work (Saudi Arabia)

Domestic
Under 10 billion yenzEthylene cracker (Mitsubishi Chemical
Engineering and Mitsubishi Chemical)zMixed xylene plant (Seibu Oil)z
Synthesizing plant for clinical trial (Eisai)z
E-6 (Circuit Board Materials) Plant (Nippon Steel
Chemical)

Major Completed Construction Contracts for Apr. 1, 2004–Sep. 30, 2004(*) completed portion
Overseas
Domestic
Under 10 billion yen
Over 10 billion yenz
LNG plant (Oman) (*)
z
Desulfurization equipment for Maizuru ThermalzSakhalin II LNG project (Russia) (*)
Power Station 1 (Kansai Electric Power)z
LNG plant train 4 (Qatar/Ras Laffan Liquefiedz
LNG receiving terminal (Mizushima LNG) (*)
Natural Gas) (*)
z
LPG storage terminals in Kamisu, Fukushima andUnder 10 billion yen
Namikata (Japan LPG Storage) (*)
Capacity increase of fluid catalytic cracking (FCC)z
Gas development project phase I additional work z
plant at Keihin refinery (TOA Oil)
(Qatar/ ExxonMobil) (*)
z
Ultra low sulfur gasoline project (Fuji Oil)z
Natural gas development (Indonesia) (*)
z
Ultra low sulfur gasoline project (NipponzMethanol plant (Saudi Arabia) (*)
Petroleum Refining)

Major Contracts Carried Over for Apr. 1, 2004–Sep. 30, 2004
Overseas
Domestic
Over 10 billion yen
Over 10 billion yenz
Sakhalin II LNG project (Russia)zMizushima LNG terminal (Mizushima LNG)z
LNG plant train 4 & 5 (Qatar/Ras Laffan Liquefied z
LPG storage terminals in Kamisu, Fukushima andNatural Gas)
Namikata (Japan LPG Storage)z
Gas development project phase I additional work Under 10 billion yen(Qatar/ ExxonMobil)z
Pharmaceutical laboratory (Mitsubishi Pharma)z
LNG plant (Oman)z
Ethylene cracker (Mitsubishi Chemical
Under 10 billion yen
Engineering and Mitsubishi Chemical)zUltra low sulfur gasoline project (Showaz
Fertilizer plant (Iran)
Yokkaichi Sekiyu)z
Ethylene plant additional work (Saudi Arabia)z
Mixed xylene plant (Seibu Oil)z
Ultra low sulfur gasoline project (Seibu Oil)13

2. Financial Condition
1) Assets, Liabilities and Shareholders’ Equity
AssetsAssets increased ¥17,594 million compared with the end of the prior fiscal year. Fixed assets decreased ¥47
million as the early application of asset impairment accounting offset the effect of capital investment in plant andequipment, including IT-related software. Current assets increased ¥17,642 million, mainly the result of growth inaccounts receivable-trade and costs of construction contracts in progress and growth in joint venture assets due
to an increase in large-scale projects conducted as joint ventures.
Liabilities
Liabilities increased ¥11,855 million, mainly the result of increases of ¥10,655 million in advance receipts on
construction contracts and ¥2,931 million in accounts payable for construction costs.
Shareholders’ equity
Shareholders’ equity increased ¥5,721 million due to first-half net profit and increases of ¥627 million in paid-in
common stock and the capital surplus because of the exercise of stock options. The equity ratio rose 1.8
percentage point during the first half to 17.8%.
Billions of Yen

Mar. 31,2004

Sep. 30,
2004

ChangeCurrent Assets
Cash and time
deposits
Tradereceivables andcosts ofconstruction
contracts inprogress
Jointly
controlled
assets of joint
ventureOther current
assetsFixed Assets

41.6

38.9

(2.6)

43.5

56.2

12.7

28.4

37.1

8.7

6.9

5.8

(1.1)

Property, plantand equipment
Intangible fixed
assetsInvestments
and otherassetsTotal Assets

6.9

6.7

(0.1)

2.6

2.6

0.0

12.7

12.8

0.1

142.8

160.4

17.5

Current
Liabilities
Short-termloans
Trade payable
and advancereceipts on
construction
contracts

Other current
liabilities
Non-current
Liabilities
Long-term debt
Other long-term
liabilities (*)
Shareholders’EquityLiabilities andShareholders’EquityMar. 31,2004

Sep. 30,
2004

Change

0.1

0.1

0.0

89.9

103.5

13.5

14.7

12.6

((2.1)

10.3

10.2

(0.0)

4.9

5.4

0.4

22.7

28.4

V5.7

142.8

160.4

1717.5* Includes minority interests
2) Cash Flows
Operating activities
Net cash used in operating activities was ¥2,683 million. Cash was provided by income before income tax andminority interests of ¥4,654 million, depreciation and amortization of ¥624 million and ¥880 million in net changes
in operating assets and liabilities (total of changes in trade receivables, cost of construction contracts in progress,
trade payables, and advance receipts on construction contracts). However, there was a ¥8,782 million increase in
the Group’s share of jointly controlled assets due to growth in large-scale joint-venture projects.
Jointly controlled assets of joint venture represent the share of the Company’s interest in balance sheet items asshown in 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 ¥6,099 million.

14

Investing activities
Net cash used in investing activities was ¥1,541 million. Although there were proceeds from the sale ofinvestment securities and recovery of long-term loans receivable, there were payments of ¥1,016 million forinvestments in time deposits of more than three months and ¥827 million in payments for plant and equipment,
including investments in IT-related software.
Financing activities
Net cash provided by financing activities was ¥552 million, the result of shares issued due to the exercise of stock
options.
As a result of the above factors, cash and cash equivalents as of September 30, 2004 were ¥37,200 million,¥3,702 million less than at the end of the prior fiscal year.

Change in Financial (Consolidated)
Billions of Yen
2003

130.9
115.8
15.1
4.2

134.5
117.3
17.1
5.1

138.0
119.3
18.7
(3.3)

160.4
131.9
28.4
(2.6)

(reference)Year ended
March 31,
2004
142.8
120.0
22.7
15.5

0.3

(0.2)

(0.6)

(1.5)

(1.2)

(6.1)

(4.5)

(0.2)

0.5

(8.2)

32.5

38.8

31.1

37.2

40.9

2001

2002

2004

Six months ended September 30

Total Assets
Total Liabilities (*)
Shareholders’ Equity
Net CashOperatingprovided by
Activities(used in):Investing
Activities
Financing
Activities
Balance of Cash and Cash
Equivalents* Includes minority interests.

Cash Flow IndicesFiscal year ended March 31

2002

2003

2004

Apr. 1, 2004–
Sep. 30, 2004
17.8%

11.7%
13.9%
15.9%
Shareholders’ Equity ratio(shareholders’ equity divided bytotal assets)
2.7 year
2.7 year
0.7 yearYears for Debt Redemption(interest-bearing debt divided byoperating cash flow)
17.5 times
11.7 times
42.4 times
Interest Coverage Ratio(operating cash flow divided byinterest expense)
Ref.: Years of debt redemption by cash flow provided by operating activities is essentially 1.7 years and interest coverage
ratio is essentially 39.8.
3. Outlook for the Year Ending March 31, 2005
Although there are concerns about the impact on the global economy of the rapid increases in the cost of crude oiland basic materials, the economy is expected to continue to stage a gradual recovery.
The Group is promoting Plant Lifecycle Engineering (PLE) for optimizing all aspects of a plant, including the needto deal with older equipment and use equipment for periods of time, a field where solid demand is foreseen in
Japan and overseas. The Group will draw on its technological resources to formulate PLE proposals.
Outside Japan, the outlook remains clouded by terrorism in all areas of the world, prolonged turmoil in Iraq andother events. However, there is growing demand for gas in energy-consuming nations. LNG imports are growing
in the United States, the United Kingdom has become a net importer of gas, India has started importing LNG and
15

China will undoubtedly become an importer of LNG within a few years. Investments by the energy major
companies to develop oil and gas in Asia, Australia, the Middle East, Africa and elsewhere are expected tocontinue in projects including gas fields, wells and other upstream activities. Targeting these growing investments,
the Group will utilize its extensive track record and experience to develop businesses in a stable manner byleveraging skills in Gas Value Chain services.
In Japan, solid growth in the volume of gas sales indicates that there will continue to be substantial gas-related
capital investment in both the consumer and industrial market segments. In addition, oil and petrochemicalcompanies are increasingly sharing energy among their production facilities to become more competitive and oilcompanies using desulfurization residues and other materials to generate electricity (IGCC: Integrated
Gasification Combined Cycle) are selling excess power to electric utilities and other users. As a result, thesecompanies are studying investment plans for conserving energy at all industrial complexes in a particular region
as well as for environmental systems. The Group will capitalize on this trend to increase new orders by promoting
PLE, a field where the Group has superior technology.
As in the first half of the fiscal year, the Group expects steady progress at ongoing construction projects. However,completions may be pushed back in some instances because of delays in procuring equipment and materials thatare in short supply. Sudden increases in prices of equipment and materials along with foreign exchange
movements may have an impact on the Group’s outlook for sales and earnings from future orders, too.
Based on this outlook, and assuming an exchange rate of ¥105 to the U.S. dollar, the Company is forecasting
consolidated new orders of ¥260.0 billion (compared with a forecast of ¥230.0 billion at the beginning of the fiscal
year), net sales from construction contracts of ¥250.0 billion (up from ¥220.0 billion), ordinary profit of ¥8.7
billion (up from ¥7.1 billion) and net profit of ¥8.3 billion (up from ¥7.3 billion).
On a non-consolidated basis, the Company anticipates new orders of ¥220.0 billion (up from ¥200.0 billion), net
sales from construction contracts of ¥210.0 billion (up from ¥185.0 billion), ordinary profit of ¥6.8 billion (up from
¥5.8 billion) and net profit of ¥7.5 billion (up from ¥6.5 billion). The Company plans to pay a year-end dividend of¥5 per share, compared with the previous plan of paying a year-end dividend of between ¥3 and ¥5.

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.

16

Financial Statements
1. Consolidated Balance Sheets
Apr. 1, 2004–
Sep. 30, 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 ......................................

38,931
28,031
28,206
2,792
37,1963,366(326)
138,198

86.1

Millions of Yen
Apr. 1, 2003–
Sep. 30, 2003%

32,272
29,41727,273854
20,257
5,533(536)
115,071

83.3

Apr. 1, 2003–
Mar. 31, 2004%

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

84.4

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 .........

6,205
3,166
3,038
726
311
415
5,231
3,904
1,327
1,962
0
6,744

6,663
3,311
3,351
817
616
200
5,196
4,278
918
2,526
—
6,998

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

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

2,620

2,416

2,607

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 .............

4,332
665
5,105
4,166
126
2,179
(3,421)(263)
12,891

4,341
671
5,405
5,526
79
2,224
(4,409)(263)
13,577

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

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

22,25613.9

22,991

16.7

22,303

15.6

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

160,454100.0

138,063100.0

142,859

100.0

17

Apr. 1, 2004–
Sep. 30, 2004%

Liabilities and Shareholders’ Equity
Current Liabilities
Notes and accounts payable-trade............................. 55,820
Short-term loans ..........................................................
115
Income taxes payable ..................................................
264
Advance receipts on construction contracts............. 47,717
Indemnity allowance for completed construction...
1,148
Accrued bonuses..........................................................
1,551
Allowance for contingency loss .................................
200
Other .............................................................................
9,463
Total Current Liabilities ............................................ 116,281

Millions of Yen
Apr. 1, 2003–
Sep. 30, 2003%

Apr. 1, 2003–
Mar. 31, 2004%

72.5

42,1978,066
132
41,389
945
1,276
2,146
8,415
104,571

10,265
0
4,595
374
86
15,322

9.5

10,367
10
3,489
309
93
14,271

10.3

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

Total Liabilities ........................................................... 131,604

82.0

118,84286.0

119,748

83.9

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

362

0.2

504

0.4

344

0.2

12,342
6,131
10,854

7.7
3.8
6.8

12,027
5,818
1,312

8.7
4.2
1.0

12,027
5,818
5,800

8.4
4.1
4.0

27
(689)
(178)
28,488

0.0
(0.4)
(0.1)
17.8

18
(360)
(101)
18,715

0.0
(0.2)
(0.1)
13.6

26
(766)
(140)
22,766

0.0
(0.5)
(0.1)
15.9

Liabilities, Minority Interests andShareholders’ Equity.................................................. 160,454

100.0

138,063100.0

142,859

100.0

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...................................

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........................................

75.7

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

73.4

10.5

18

2. Consolidated Statements of Income

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

Apr. 1, 2004–
Sep. 30, 2004(%)

Millions of Yen
Apr. 1, 2003–
Sep. 30, 2003(%)

116,371
107,518
8,852

100.0
92.4
7.6

88,67982,098
6,580

100.0
92.6
7.4

206,816
192,709
14,106

(%)
100.0
93.2
6.8

4,099
4,752

3.5
4.1

4,085
2,495

4.6
2.8

8,225
5,881

4.0
2.8

0.6

176
46
303
171
—
186
884

1.0

360
50
294
155
146
170
1,176

0.6

0.4

374
84
250
710

0.3

3.4

6,348

3.1

0.2

485
600
112
1,198

0.6

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

274
7
63
98
121
124
690

Other Expenses
Interest expense ...................................................
Cost of rent income..............................................
Other......................................................................
Total Other Expenses .................................................

153
84
51
289

0.3

202
49
115
367

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

5,153

4.4

3,011

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

282
—
10
292

0.3

199
—
0
200

Extraordinary Loss
Loss on sale of fixed assets .................................
Impairment loss ...................................................
Loss on removal of fixed assets..........................
Loss on guarantee of construction
performance in affiliated companies ..............
Allowance for contingency loss .........................
Other......................................................................
Total Extraordinary Loss ...........................................
Profit before income
taxes and minority interests .......................................
Income taxes current ..................................................
Income taxes deferred .................................................
Total Tax
Minority interests in net profit...................................
Minority interests in net loss......................................
Net profit......................................................................

Apr. 1, 2003–
Mar. 31, 2004

388
233
99

—
—
—

—
—
—

—
—
70
791

—
1,346
78
1,425

1,679
—
497
2,176

4,654
291
(754)
(462)
22
—
5,095

0.7

4.0

(0.4)
(0.0)
—
4.4

1,787
267
(659)
(392)
17
—
2,162

1.6

2.0

(0.4)
(0.0)
—
2.4

5,370
667
(1,905)(1,237)
—
38
6,646

1.1

2.6

(0.6)
—
0.0
3.2

19

3. Consolidated Statements of Retained Earnings
Apr. 1, 2004–
Sep. 30, 2004

Millions of Yen
Apr. 1, 2003–
Sep. 30, 2003

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

5,818

5,818

5,818

New stock issue associated with exercise of stock
options
Additional Paid-in Capital at End of Period

312
6,131

—
5,818

—
5,818

5,800

(496)

(496)

5,095
—
5,095

2,162
—
2,162

6,646
12
6,659

41
—
41
10,854

—
352
352
1,312

—
361
361
5,800

Retained Earnings
Retained Earnings at Beginning of Period
Increase in Retained Earnings
From net profit
From decrease in consolidated subsidiaries
Total Increase in Retained Earnings
Decrease in Retained Earnings
From decrease in consolidated subsidiaries
From consolidated subsidiaries
Total Decrease in Retained Earnings
Retained Earnings at End of Period

Apr. 1, 2003–
Mar. 31, 2004

20

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

Apr. 1, 2004–
Sep. 30, 2004

Millions of Yen
Apr. 1, 2003–
Sep. 30, 2003

4,654
624
(238)
(281)
153
(225)
(98)

1,787
595
(167)
(222)
202
380
(171)

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

487
233
(3,446)——(4,042)——762(9,288)2,973
10,6553467
69——(8,782)304(903)(2,636)
322
(153)
(216)

(6,167)(4,313)
16,217
(99)
578
251
(0)
1,346
(11,585)
668
1,349(3,392)
462
(205)
(243)

2,187
6,376
11,889
172
1,217
385
(0)
(600)
(19,741)645
6,787
15,988
665
(367)
(705)

(2,683)(3,378)15,580

Apr. 1, 2003–
Mar. 31, 2004

21

4. Consolidated Statements of Cash Flow (Continued)
Apr. 1, 2004–
Sep. 30, 2004

Millions of Yen
Apr. 1, 2003–
Sep. 30, 2003

(1,016)

(1)

(1)

—
(0)
155
(375)
23
(452)
1
(6)
129
—
(1,541)

30
(18)
—
(266)
4
(466)
1
(73)
115
0
(673)

353
(20)
11
(751)
8
(992)
10
(144)
249
0
(1,277)

(45)
(142)
—
(53)
(241)

(7,904)(257)—

Net Cash Used in Financing Activities ......

14
(50)
627
(38)
552

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

25

498

(78)

(3,646)40,902(3,794)34,9405,970
34,940(56)
37,200—31,145(7)
40,902

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 property, plant and equipment...............................
Proceeds from sale of property, plant and equipment..............
Purchase 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........................................
Repayments of long-term debt ....................................................
Proceeds from new stock issue.....................................................
Other ...............................................................................................

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

Apr. 1, 2003–
Mar. 31, 2004

(92)
(8,254)22

<Appendix to Consolidated Financial Statements>

Changes in Accounting Principles
Latest Consolidated Six-Month
Period(Apr. 1, 2004–Sep. 30, 2004)(d) Revenue recognition on
construction contracts
Revenues are recognized upon thecompletion of construction work andacceptance by the client, except for
the following contracts.

Previous Consolidated Six-Month
Period(Apr. 1, 2004–Sep. 30, 2004)(d) Revenue recognition on
construction contracts
Revenues are recognized upon thecompletion of construction work andacceptance by the client, except for
the following contracts.

Previous Fiscal Year
(Apr. 1, 2003–Mar. 31, 2004)

The Company and its four domestic
consolidated subsidiaries recognize
revenues on construction contracts
greater than ¥100 million andhaving construction periods longer
than 12 months by the percentageof-completion method.

The Company recognizes revenues
on construction contracts greaterthan ¥5 billion and having
construction periods longer than 18
months by the percentage-ofcompletion method.

The Company recognizes revenues
on construction contracts greaterthan ¥5 billion and having
construction periods longer than 18
months by the percentage-ofcompletion method.

In accordance with the generally
accepted accounting principles in the
U. S. A., Chiyoda International
Corporation, the Company’s U. S.
subsidiary, recognizes revenues on
construction contracts by thepercentage-of-completion method.

Chiyoda Singapore Private Limited(Singapore subsidiary) and PT.
Chiyoda International Indonesia(Indonesia subsidiary) and tenother subsidiaries recognize
revenues on construction contracts
by the percentage-of-completion
method.

Chiyoda Singapore Private Limited(Singapore subsidiary) and PT.
Chiyoda International Indonesia(Indonesian subsidiary) and six
other subsidiaries recognize
revenues on construction contracts
by the percentage-of-completion
method.
Revenues from construction
contracts accounted by thepercentage-of-completion method
totaled ¥87,205 million.
(Changes in accounting practices)
In prior periods, the Company
recognized revenues on
construction contracts greater than
¥5 billion and having construction
periods longer than 18 months by
the percentage-of-completion
method. Effective the current
interim consolidated accounting
period, the Company changed thescope of the application of thepercentage-of-completion method
for new construction contracts.
Accordingly, the Company
recognizes revenues on new
construction contracts greater than¥100 million and having
construction periods longer than 12
months by the percentage-ofcompletion method.

Chiyoda Singapore Private Limited(Singapore subsidiary) and PT.
Chiyoda International Indonesia(Indonesia subsidiary) and ten othersubsidiaries recognize revenues on
construction contracts by thepercentage-of-completion method.

(d) Revenue recognition on
construction contracts
Revenues are recognized upon thecompletion of construction workand acceptance by the client,except for the following contracts.

Revenues from construction
contracts accounted by thepercentage-of-completion method
totaled ¥14,073 million.

Revenues from construction
contracts accounted by thepercentage-of-completion method
totaled ¥43,546 million.

Effective the current interim
consolidated accounting period, theCompany’s three major domestic
consolidated subsidiaries changed
the scope of the application of thepercentage-of-completion method
for new construction contracts tobring it into line with the principles
adopted by the Company.
The change in the accounting policy
was made in consideration of the23increasing number of small- to
medium-size projects, more precise
risk management resulting fromenhanced corporate organizationand to better reflect construction
revenue in the period profit/loss inview of the recent trends ininternational accounting standards.
As a result of this change, interim
gross profit on completed
construction contracts was ¥633
million higher and operating profit,
ordinary profit, and profit before
income taxes were each ¥63 million
higher than the amounts that would
have been reported if the previous
method had been appliedconsistently.
Information concerning the effectupon segment information iscontained in the Segment
Information section.

Latest Consolidated Six-Month
Period(Apr. 1, 2004–Sep. 30, 2004)(Accounting standard for
impairment of property, plant andequipment)

Previous Consolidated Six-Month
Period(Apr. 1, 2004–Sep. 30, 2004)—

Previous Fiscal Year
(Apr. 1, 2003–Mar. 31, 2004)—

Effective the current consolidated
interim period, the Company
adopted the new standards foraccounting for impairment ofproperty, plant and equipment(Opinion on “Accounting Standards
for Impairment of Fixed Assets,”(ASBJ, August 9, 2002)) and
Accounting Standard
Implementation Guidance No. 6(“Implementation Guidance on
Accounting Standard for
Impairment of Fixed Assets,” (ASBJ,
October 31, 2002)), effective thefiscal year beginning on or after
March 31, 2003.
The effect of this adoption was todecrease interim profit before
income taxes by ¥233 million,
compared to the amount that would
have been reported if the previous
standard had been appliedconsistently.
In accordance with the revisedStandards for the Preparation ofInterim Consolidated Financial
Statements, accumulated
impairment losses are deducted
directly from the carrying amountsof the respective fixed assets.

24Segment Information
1. Industry Segments
The Company’s latest six-month period was from April 1, 2004 to September 30, 2004. The previous six-month
period was from April 1, 2003 to September 30, 2003. The main business of the Chiyoda Group is engineeringthat focuses on the planning, design, construction, and operations assistance of public- and private-sector
facilities, as well as facilities for pollution prevention and environmental preservation and enhancement. In nonengineering businesses, there are no segments that account for 10% or more in terms of sales, operating profits
or assets, and as such these segments have been omitted.

2. Geographic Segments
Latest Six-Month Period (From April 1, 2004 to September 30, 2004)
Millions of Yen
Japan

Asia

North
America

Net sales
Outside customers............. 111,317
Inter-segment .....................
1
Total .................................... 111,319
Operating expenses ........... 106,614
Operating Profit (Loss) ....
4,704

5,053
793
5,846
5,784
62

—
16
16
16
(0)

Others

Total

—
—
—
1
(1)

116,371811
117,182
112,416
4,765

Eliminations(Corporate)

Consolidated

—
(811)
(811)
(797)
(13)

116,371—
116,371
111,618
4,752(Notes)(1)
Geographic segmentation is according to geographic proximity(2)
Countries included in regions other than Japan:
Asia: Indonesia, Singapore, Philippines, Myanmar, Malaysia and Thailand.
North America: America.
Other regions: Nigeria.
Effective the current interim consolidated accounting period, Chiyoda Deustchland GMBH (German subsidiary), a
consolidated subsidiary in prior periods, is excluded from the consolidation due to liquidation (July 2003) and Chiyoda
International Limited (UK), also a consolidated subsidiary in prior periods, is excluded from the consolidation since it
no longer has significant effect on the overall results of consolidated financial statements. As a result, there were nosales in the Europe segment, which is excluded from the Geographical Segment Information.
(3)
Changes in Accounting Principles:
Effective the current interim consolidated accounting period, as mentioned in Section 4 (d) Summary of Significant
Accounting Policies (Changes in Accounting Policies), the Company and its three major domestic consolidated
subsidiaries changed the scope of the application of the percentage-of-completion method for new construction
contracts. Accordingly, the Company recognizes revenues on new construction contracts greater than ¥100 million andhaving construction periods longer than 12 months by the percentage-of-completion method.
The effect of this change was to increase construction contract revenue and operating profit in the Japan segment by¥633 million and ¥63 million respectively compared to the amounts that would have been reported if the previous
standards had been applied consistently.
The change has no impact on geographical segments other than Japan.

Previous Six-Month Period (From April 1, 2003 to September 30, 2003)
Millions of Yen

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

Japan

Asia

84,956
1
84,95782,439
2,518

3,696
299
3,996
4,058
(62)

EuropeNorth
America

Others

Total

26
153
180
173
7

—
19
19
18
1

—
—
—
3
(3)

88,679473
89,15386,692
2,460

Eliminations(Corporate)

Consolidated

—
(473)
(473)
(508)
34

88,679—88,67986,1842,495(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.
25

(3)

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, 2003 to March 31, 2004)
Millions of Yen

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

Japan

Asia

EuropeNorth
America

OthersTotal

Eliminations(Corporate)

Consolidated

196,5233
196,526
190,560

10,239807
11,047
11,162

53
338
391
383

—
33
33
33

—
—
—
11

206,816
1,182
207,999
202,151—(1,182)(1,182)(1,216)

206,816—
206,816
200,935

5,965

(114)

7

0

(11)

5,847

33

5,881

(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)
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.

3. Overseas Sales
Latest Six-Month Period (From April 1, 2004 to September 30, 2004)
Millions of Yen
Middle East

Russia/Central Asia

16,65948,027

15,793

1,511

14.32

41.27

13.57

1.30

Asia

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

Other
Regions

Total

81,992
116,371
70.46(Notes)(1)
Geographic segmentation is according to geographic proximity(2)
Countries and areas included in each region:
Asia: China, Indonesia and Thailand.
Middle East: Qatar, Oman , Saudi Arabia 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 ¥5,901 million, which accounted for
6.7% of the overseas sales, in the previous consolidated fiscal year.

26

Previous Six-Month Period (From April 1, 2003 to September 30, 2003)
Millions of Yen
Asia

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

Middle East

Other Regions

7,725

45,521

7,584

8.71

51.33

8.55

Total

60,831
88,67968.59(Notes)(1)
Geographic segmentation is according to geographic proximity(2)
Countries and areas included in each region:
Asia: Thailand, China and Indonesia.
Middle East: Qatar, Saudi Arabia, Oman and Iran.
Other regions: Russia and Venezuela(3)Overseas sales are those sales of the Company and its consolidated subsidiaries that take place in countries or regions
other than Japan

Previous Fiscal Year (From 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 and Russia(3)
Overseas sales are those sales of the Company and its consolidated subsidiaries that take place in countries or regions
other than Japan27

Production, Orders and Sales Situation
1. OrdersMillions of Yen

Apr. 1, 2003–
Sep. 30, 2003

Apr. 1, 2004–
Sep. 30, 2004
New Orders
Amt%

BacklogAmt%

New Orders
Amt%

Apr. 1, 2003 –Mar. 31, 2004

BacklogAmt%

New Orders
Amt%

Backlog
Amt
%

100.0
4.9

287,094
38,89098.8
13.4

375,854][-24,155]
28,639][1,160]Business Segment
Engineering
Petroleum-related..

119,480-50.2%
19,229-18.2%Petrochemicalrelated .....................

19,261+829.4%

15.9

Chemical-related ...

5,414-36.0%

Gas and Power
Utilities-related ......
Socialdevelopmentsrelated .....................
Industrial
machinery-related
Other .......................
Other .......................
Total ........................

98.4
15.8

392,871][11,959]
27,921][-152]

453,952][-15,057]
22,312][1,653]100.0
7.1

239,695
23,511

99.2
9.7

25,796]
[88]

6.6

2,072

0.8

27,108][-1,448]

6.0

6,056

2.1

16,126][-2,007]

4.3

4.5

20,764]
[156]

5.3

8,458

3.5

25,066][1,812]

5.5

15,7995.4

21,306][1,366]

5.7

62,180-66.5%

51.2

296,032][11,658]

75.3

185,66376.9

342,407][-9,642]75.4

201,040

69.2

290,595][-16,559]

77.3

228
-79.6%

0.2

1,384]
[—]

0.3

1,119

0.5

3,355]
[7]

0.8

1,736

0.6

1,256][6]

0.3

10,090+633.0%8.3

10,034]
[-6]

2.6

1,376

0.6

6,915][1,024]

1.5

2,503

0.9

2,819][1,025]0.8

3,076-82.4%
1,948
+6.6%

2.5

10,939]
[216]
—]
[—]

2.8

17,493

7.2

5.9

21,068

7.2

1,827

0.8

—

3,564

1.2

15,110][-9,147]
—]
[—]

4.0

—

26,786][-8,464]—][—]

121,429-49.7%

100.0

392,871][11,959]100.0

241,522100.0

453,952][-15,057]

100.0

290.658

100.0

375,854][-24,155]

100.0

1.6

100,0
7.6

—

(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.

28

Breakdown of Domestic and Overseas Orders
Millions of Yen
Apr. 1, 2003–
Sep. 30, 2003
New Orders
Backlog

Apr. 1, 2003 –Mar. 31, 2004
New Orders
Backlog

%
26.5

Amt
40,934%16.9

Amt
71,979

%
24.8

73.5

200,58883.1

218,678

75.2

100.0

241,522100.0

290,658

100.0

Apr. 1, 2004–
Sep. 30, 2004
New Orders
Backlog

Domestic......... 47,258

Amt

%
38.9

Overseas ......... 74,170

61.1+15.4%-63.0%
Total................ 121,429-49.7%

100.0

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

Amt%
96,622] 21.3[-68]357,330] 78.7[-14,989]
453,952] 100.0[-15,057]

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

%
24.3
75.7
100.0

(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..................................................
Other..................................................
Total ..................................................

Millions of Yen
Apr. 1, 2002 –Sep.30, 2003
Amt%

Apr. 1, 2003 –Sep. 30, 2004%
Amt

114,422+31.7%
19,794+15.3%
9,679-44.6%
6,113-47.8%
68,402+106.3%100-65.7%
2,869+412.7%7,463+14.8%
1,948+6.6%
116,371+31.2%

Apr. 1, 2003 –Mar. 31, 2004
Amt
%

98.3

86,852

97.9

203,252

98.3

17.0

17,16719.4

25,72712.4

8.3

17,46019.7

31,866

15.4

5.2

11,70713.2

22,362

10.8

58.8

33,163

37.4

93,434

45.2

0.1

292

0.3

3,008

1.5

2.5

559

0.6

5,782

2.8

6.4

6,500

7.3

21,069

10.2

1.7

1,827

2.1

3,564

1.7

100.0

88,679100.0

206,816100.0

29

Breakdown of Domestic and Overseas Sales
Apr. 1, 2003 –Sep. 30, 2004
Amt

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

34,378+23.4%
81,992+34.8%
116,371+31.2%

Millions of Yen
Apr. 1, 2002 –Sep. 30, 2003%

Amt

Apr. 1, 2003 –Mar. 31, 2004
%

Amt

%

29.5

27,84831.4

63,35330.6

70.5

60,831

68.6

143,462

69.4

100.0

88,679100.0

206,816100.0(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 –Sep. 30, 2004

Apr. 1, 2002 –Sep. 30, 2003

CustomerAmt%

Qalhat LNG SA OC

18,610

Sakhalin Energy
Investment Co., Ltd.

15,793

Ras Laffan LNG Co.,Ltd.

11,61616.0 Ras Laffan LNG
Co., Ltd.
13.6 Jubail United
Petrochemical
Company
10.0(3)

Customer

Amt

12,1009,613

Apr. 1, 2003 –Mar. 31, 2004%
Customer
13.6 Ras Laffan LNG Co.,Ltd.
10.8 Sakhalin Energy
Investment Co., Ltd.

Amt
28,110%13.6

22,343

10.8

Qalhat LNG SA OC

22,025

10.7

Amounts contained in these tables do not include consumption tax.

30