ANNUAL REPORT FY2012
For the year ended March 31, 2013

Financial Highlights
Years Ended March 31, 2013, 2012, 2011, 2010 and 2009

2013

2012

2011

2010

2009

Revenues¥398,918¥254,675¥247,082¥312,985¥446,438

Since its establishment in 1948, Chiyoda Corporation has engaged

Cost of revenue

356,402

215,783

215,563298,766

427,461in engineering and construction work and services at innumerable

Operating income

25,11324,197

17,544

1,702

7,227

industrial plants both in Japan and overseas in the fields of oil,

Income before income taxes
and minority interests

26,74723,543

11,476

4,714

9,651

Net income

16,077

14,364

7,979

2,953

6,498

For the Year (Millions of Yen)

Profilenatural gas and other energy sources; petrochemicals and chemicals;
pharmaceuticals; and general industrial machinery.
More than forty years ago in 1972, Chiyoda’s founder was alreadyAt Year-End (Millions of Yen)emphasizing in a booklet entitled Legacy for the Twenty-first Century

Total assets¥435,379¥365,795¥353,392¥328,174¥357,816

that sustainable social development should progress by harmonizing

Total equity

189,356

168,737

155,758

149,253

145,917

166.3

165.5

173.8

175.2

161.1

nature and industrial development.
We were one of the first companies to state our intention tocontribute to sustainable social development through our engineering

Current ratio (%)

Per Common Share (Yen )and technology by providing appropriate solutions to the various

Earnings per share (EPS)¥62.06¥55.44¥30.79¥11.39¥25.58energy and environmental issues we currently face, and have beenBook value per share (BPS)

727.24648.95599.15

573.61561.12

putting those words into action ever since. This booklet is available on

Dividend per share

19.0

17.0

11.0

3.5

7.5

Return on assets (ROA)

6.4

6.6

4.6

1.4

3.1

Return on equity (ROE)

9.0

8.9

5.3

2.0

5.7

our website.

Ratios (%)

With over 60 years of technological experience, Chiyoda is working
to build on its position as the “Reliability No. 1” project company
with a high level of customer and investor trust, not only in terms of

Note: Yen amounts are rounded down to the nearest million. U.S. dollar amounts and percentages are rounded to the nearest unit.

technology but also in terms of our people and management. At thesame time, we will continue to improve our financial strength and toraise our corporate value.

Revenues

Contents

Operating Income

Billions
Billionsofyen
yenBillions
ofofyenBillions
Billionsofyen
yenBillions
ofofyen

800
800
800

3030
30

700
700
700
600
600
600

02 At a Glance

500
500 446.4
500
446.4
446.4

03 To Our Shareholders

400
400
400

04 Management’s Discussion and Analysis

300
300
300

06 The Medium-Term Management Plan

200
200
200

00 0

12 Corporate Governance

3030
30

25.1
25.1
24.2
24.2 25.1
24.2

2020
20

398.9
398.9
398.9
313.0
313.0
313.0

254.7
254.7
247.1
247.1254.7
247.1

2009
2009 201020102010 2011
2011
2011 20122012
2012 2013
2013
2013
2009

17.5
17.5
17.5

2020
20

14.4
14.4
14.4

1515
15
1010
10
55 5

100
100
100

08 Topics

Billions
Billionsofyen
yenBillions
ofofyen2525
25

01 Financial Highlights

Net Income

00 0

1010
10

7.2
7.2
7.2

8.0
8.0
8.0

6.5
6.5
6.5
3.0
3.0
3.0

1.7
1.7
1.7
2009
2009 201020102010 2011
2011
2011 20122012
2012 2013
2013
2013
2009

16.1
16.1
16.1

00 0

2009
2009 201020102010 2011
2011
2011 20122012
2012 2013
2013
2013
2009

14 Corporate Information
16 Directors and Officers
17 Stock Information
Courtesy of Mizushima LNG Co., Ltd.

Forward-Looking Statements: This annual report contains forward-looking statements about Chiyoda Corporation’s outlooks, plans, forecasts, results and other items that may takeplace in the future. Such statements are based on data available as of July 1, 2013. Unknown risks and other uncertainties that happen in the future may cause our actual results to bedifferent from the forward-looking statements contained in this report. The risks and uncertainties include business and economic conditions, competitive pressure, changes in laws andregulations, addition or elimination of products, and exchange rate fluctuation, among others.

CHIYODA CORPORATION ANNUAL REPORT FY2012

1

At a Glance

To Our Shareholders(Billions of yen)

Revenues

11

New Orders

6

12
32
50

33

18

Backlog of Contracts

23

6
11

29

8

398.9

402.9

900.6

128.4 (32%)

47.2 (12%)

521.2 (58%)

24.9 (6%)

69.9 (8%)

Billion yen

Takashi Kubota (Left)

58

Billion yen

Executive Chairman
Chiyoda Corporation*3

Billion yen

Shogo Shibuya (Right)

LNG*4

President & CEO
Chiyoda Corporation

Gas Processing*1

73.0 (18%)*5Fine Industries*2

130.4

(33%)

115.9

(29%)

94.7

(11%)

*6

Petroleum and Petrochemicals

42.7

(11%)

200.6

(50%)

203.9

Others

EPC* / EPCm** / EPsCm*** Execution
FEED**** / Feasibility Study

14.2 (3%)

Arzew
Algeria / LNG

Al Jubail Export Refinery
Saudi Arabia / Oil Refinery
Industrial Wastewater Treatment
Saudi Arabia / Water Recycling

Plateau Maintenance Project
Qatar / LNG
Long Term Service Agreement(RasGas / Qatargas / Shell)
Qatar / LNG, GTL
Laffan Refinery Phase 2 Project
Qatar / Condensate Refinery

Mozambique LNG
Area 1&4
Mozambique / LNG

10.9 (0%)

Overseas Projects under Execution

New Ulaanbaatar International Airport
Mongolia / Infrastructure(As of June 30, 2013)

Map Ta Phut Industrial Complex
Thailand / Energy Saving
Nghi Son Refinery
Vietnam / Refinery & Petrochemical
Nickel Refining Plant
Philippines / Material
Tokuyama Phase-2
Malaysia / Renewable Energy Material
PNG LNG
Papua New Guinea / LNG

Stolthaven
Singapore / Tank terminal
Shell Bukom
Singapore / Refinery
Infenium
Singapore / Chemical

Puerto La Cruz
Venezuela / Oil Refinery

Arrow LNG
Australia / LNG
Ichthys LNG
Australia / LNG
Abadi LNG
Indonesia / FLNG

the growing trend of renewable energies,

this past 12 months.

as well as rapid urbanization. Under the

We would like to present the Chiyoda

new Medium-Term Management Plan titledGroup’s annual report for the fiscal year ended“Seize the moment, Open up new frontiers”

March 31, 2013.

launched by the new management team in

Revenues and earnings rose year-on-year

(23%)
*7

24.5 (6%)

Thank you for your continued support overfiscal 2013, we will further implement key

on the back of new contracts for refineries instrategies of the previous plan. By executing

Southeast Asia and the Middle East, as well as

Engineering, Procurement, and Construction

steady progress made in executing backlog(EPC) projects as usual, expanding our

projects such as LNG plants in Papua New

business through accelerated investment

Guinea and Australia. In the 12 months before

in fields related to our core business, andthe year under review, the final year of ourstrengthening health, safety and environment

Medium-Term Management Plan entitled(HSE) and risk management policies, the“Engineering Excellence, Value Creation 2012”,

entire Chiyoda Group management team andwe implemented key strategies aimed at

staff will work eagerly to create new value

creating a firm basis for future growth.

and raise corporate value.

This is a time of major change both in

We paid a dividend of ¥19 per share, inJapan and overseas, with increased demandline with our earnings for fiscal 2012. We ask

for energy due to economic growth inall of our shareholders for their continued

emerging countries, the momentum of

support in our ongoing efforts.

development from the shale revolution,
the continuing global shift from oil to gas,

*EPC
: Engineering, Procurement and Construction**EPCm : Engineering, Procurement and Construction management***EPsCm : Engineering, Procurement support and Construction management****FEED : Front-end Engineering and Design*1: Classified as “Gas and power utilities” in “Consolidated Financial Results” *2: Classified as “Industrial machinery” and “General chemicals” in “Consolidated Financial Results”*3: Courtesy of Qatargas Operating Company Limited *4: Courtesy of Shell *5: Courtesy of Solar Frontier K.K. *6: Courtesy of Kashima Aromatics Co., Ltd. *7: Water Treatment Plant

2

CHIYODA CORPORATION ANNUAL REPORT FY2012

CHIYODA CORPORATION ANNUAL REPORT FY20123

Management’s Discussion and Analysis
Results of Operations
Analysis of Results
During the fiscal year under review, we saw a continuing sense of uncertainty in the world economy caused byproblems such as prolonged European debt crisis and the slowdown in the economy of emerging countries
such as China. Preparations for investment in numerous gas related facilities were now being encouraged by
the enduring increase in demand for energy, the shale revolution and the tide of the shift to gas. Many in Japan
expect the new Japanese government, in the second half of the fiscal year, to bailout deflation, to correct the
yen’s appreciation by following flexible and dynamic monetary policies for economic recovery, and to invest in
renewable energy projects, in which investment has increased rapidly under the Feed-in Tariff scheme.
Faced with these conditions, while the Chiyoda Group continued to expand its global operation andenhance its operation in the hydrocarbon field, mainly in LNG (Liquefied Natural Gas), the Group also madeinroads into new business fields such as infrastructure and renewable energy. We placed particular focus on
bidding activities, making the most of our technological superiority in the market. We concluded contracts for
EPC (Engineering, Procurement, and Construction) works for oil refineries in Vietnam and the Middle East. We
won orders in Japan for the EPC of petroleum and petrochemical plants and large-scale photovoltaic power
generation systems. Additionally, we were awarded FEED (Front End Engineering and Design) works for an LNG
plant in Mozambique and a FLNG (Floating Liquefied Natural Gas) plant in Indonesia.
The projects under execution are progressing as planned, including the LNG plants in Papua New Guinea
and Australia, some overseas projects for Japanese clients and LNG receiving terminals in Japan. We are stillseeking an improvement in profitability by steadily executing backlog projects while reviewing the cost forcompleted works during the warranty period.
The Group relocated the head office and integrated the company’s function to improve work efficiency.
As part of the integration process, we sold the land where the previous headquarters was located.
Consolidated new orders for the fiscal year amounted to 402,919 million yen (34.2% decrease year onyear). The backlog and revenues were 900,618 million yen (7.1% increase) and 398,918 million yen (56.6%
increase) respectively. The operating income amounted to 25,113 million yen (3.8% increase year on year),ordinary income to 25,518 million yen (7.2% increase), and net income resulted in 16,077 million yen (11.9%
increase).

Results by Business Segment

LNG Plants/Gas and Power Utilities
The Group was awarded FEED contracts for an onshore natural gas liquefaction facility in Mozambique and an
FLNG facility in Indonesia. We are also focusing on study works for other FLNG projects. The EPC execution of
an LNG plant in Papua New Guinea and another LNG project in Australia is progressing as planned. Our Qatarisubsidiary is working on the maintenance and modification works for the existing LNG and gas processing
plants mainly built by the Group. In Japan, several EPC works on LNG receiving terminals, the expansion/
modification works of existing plants and various FEED works are ongoing in parallel.
LNG is our priority business field and we are focusing on related works for other LNG projects, which areonshore / offshore and also overseas / domestic.

Petroleum, Petrochemicals and Gas Chemicals
In addition to the EPC contract for a refinery and petrochemical complex in Vietnam, the Group won an order

4

CHIYODA CORPORATION ANNUAL REPORT FY2012

for the EPC for refinery project in the Middle East. Our subsidiary in Singapore signed an Enterprise Framework
Agreement for downstream projects within Asia and started the related study works. EPC works are progressing
favorably, including a heavy oil cracking unit in Saudi Arabia and petrochemical plant in Singapore, and EPsCm(Engineering, Procurement support and Construction management) services for heavy crude oil upgrading
facilities in Venezuela and for a petroleum refinery in Singapore are progressing as well.
In Japan, we continued to perform the EPC work for a TransAlkylation Unit, the diagnosis of existing
facilities, maintenance and upgrading works, studies and construction works aimed at improving thecompetitiveness of and energy saving in the facilities.

Industrial Machinery/Environment/ Chemicals and Other Fields
As part of the Mid-Term Business Plan to expand our business fields, we are developing our business activities
to include receiving orders and executing works for overseas and domestic non-hydrocarbon projects. EPC
works for polycrystalline silicon plants in Malaysia, the product used for photovoltaic cells, and EPC work for anickel refinery in the Philippines were executed smoothly. We have been reinforcing our efforts and developing
our sales activities to meet the needs of Japanese companies expanding their operations into Southeast Asia.
We have invested in an Italian company that is the only manufacturer of the solar collector tubes usedin the Molten Salt Parabolic Trough-Concentrating Solar Power (MSPT-CSP) system, and are accelerating ourefforts in demonstrating the technology and developing the business by building a demonstration plant in
Italy. Additionally, we are expecting several EPC contracts in the CSP system.
In an effort to expand our recycled water-related business into the Middle East, related works for ademonstration project on an energy-saving water recycling system in Saudi Arabia were entrusted to amember of our group. In addition, we are strengthening our position in the social infrastructure field and, in
collaboration with a capital alliance partner, aim to introduce airport and railway projects into our portfolio.
In Japan, we won a number of EPC works for large-scale photovoltaic power generation systems and are
executing and expanding our sales activities by enhancing our group operation in this field. We are also activein the pharmaceutical field, having completed the construction of pharmaceutical bio-formulation plant, andhave executed EPC works for several facilities such as anti-cancer drugs, bulk vaccine and newly awarded In
Vitro Diagnostics. We are developing hydrogen-related technology and demonstrating the effectiveness of
our own catalyst at our demonstration plant. Once proven, the transportation and storage of large volumes ofhydrogen can be achieved safely and economically, which will pioneer the way to achieve a hydrogen-basedsociety.

Outlook for the Next Fiscal Year
Chiyoda will continue to accelerate its sales activities in order to win contracts in areas where Chiyoda can best leverage its
technological advantages. We will also continue to work diligently on the execution of existing overseas and domestic projects
including the large projects in Papua New Guinea and Australia.
In consideration of these circumstances, and assuming an exchange rate of ¥90/US$, our forecasts for the fiscal year
ending March 31, 2014 include 600.0 billion yen in consolidated new orders and 470.0 billion yen in revenues. Our
forecast for the consolidated operating income is 24.0 billion yen, consolidated ordinary income is 26.0 billion yen,and the consolidated net income is 16.0 billion yen.

CHIYODA CORPORATION ANNUAL REPORT FY2012

5

The Medium-Term Management Plan
“Seize the moment, Open up new frontiers”
The results of the previous Medium-Term Management Plan “Engineering Excellence, Value Creation 2012” werecomprehensively reviewed and, in consideration of such, The Medium-Term Management Plan (The MT-Plan) wasestablished with the slogan “Seize the moment, Open up new frontiers” with the objective of pursuing further growth of
the Chiyoda Group for the period covering Fiscal Years 2013 – 2016.
In order to establish The MT-Plan, the trend of influences and changes occurring in the external environment werefirst analyzed. We then set the direction in which we would like to see the Group develop.

(1) Changes and trends of the external environment
The analysis of the changes occurring and trend of influences in the external environment showed that:
World energy demand is projected to further increase and changes are occurring in the structure of energy demand (shift to gas and renewable energy).
The developments in shale oil exploration have brought about a revitalization of the US market. Competition between contractors is escalating, including
those from Europe, the US and, particularly, Korea. Chiyoda Group envisages that the number of projects being developed in harsh areas of the world, such as
in severely cold climates and in deep seas will increase. Chiyoda has also observed that developing countries are emerging, national oil companies (NOC) are
growing presence, and Japanese companies are accelerating expansion of overseas business.

(3) Key Strategies under The MT-Plan
Chiyoda has established 5 key growth strategies and 5 key operating foundation strategies as the key strategies under The MT-Plan for Fiscal Years 2013 – 2016.

Growth Strategies

The growth strategies aim to improve the base level of profit by expanding the business to take account of any prevailing external environmental trends (ashift to gas and a following wind of increasing demand for LNG) considered to be favorable for Chiyoda business based on:• expansion of Chiyoda group core business in the fields of gas and LNG projects,• expansion of business into offshore and upstream projects,• increase in the number of domestic and overseas small/medium size projects to be undertaken,• energy/social infrastructure
The main points of growth strategies are:• Pursuit of LNG project business opportunities to the maximum extent possible• Challenges for unconventional projects (FLNG, projects in cold / deep sea area & underharsh environment)

1 Strengthening of core business2

Expansion into new business fields, establishing new
business models and new sources of revenue• Expansion of business field to offshore / upstream• Expansion of business fields to new energy and renewable energies

3

Upgrading of services to address clients’ need forcommercialization• Assistance to Japanese companies in their overseas expansion of business• Acceleration in establishing professional service business and provision of front-end
services to international oil companies (IOC) at overseas bases adjacent IOC offices

4

Use of the economic vigor of emerging countries for thegrowth of the Chiyoda Group• Execution of medium and small size local projects• Shift to EPC project execution based on consolidated global operation• Acceleration of investment in the fields related to Chiyoda's core business andstrongholds

5 Acceleration of investment(2) Chiyoda Group 10 years on
The MT-Plan has been developed by 1) establishing a vision of how we want the Chiyoda Group to be “10 years on”, and 2) establishing what Chiyoda needs to
do in the first 4 years for that vision to become a reality.
This led us to consider the future direction we need to take in order to expand our business based on three axes, 1) Operation, 2) Business Model and 3)
Business Field/Area.

Direction of evolution
Operation

Strengthening of competitiveness and execution
capability• Improve competitiveness against competitors and continue to improve execution
capability

・Operation by Japanese nationals in Japan

7

Establishment and operation of data management
infrastructure• Enhance utilization of data management (ERP) for efficient management and control ofoperation / Establish global platform for operation

・Operation to execute medium and small size project on the basis of local production for
local consumption

8

Promotion of consolidated operation base and global
operation• Establish framework of global human resource management for utilization of global
resource

Growth of business through 3 axes of operation,business and business field / area
Current
Business
Domain・EPC (LSTK ＋ CR)

Further evolution aimed at Chiyoda Group 10 years on
Business
Field / Area

・Offshore・upstream&
・Energy infrastructure, social infrastructure&
・Expansion of business area (Australia, North America, East Africa)

1) Axis: Operation
Chiyoda will pursue a “group style” operation for execution of regional medium / small size projects. We will establish several offices as Chiyoda Regional
Headquarters (CRH), the main overseas bases of operation, as well as setting up subsidiary offices operating under CRH, to encourage sharing the work among
Chiyoda Group companies on a worldwide basis.
2) Axis: Business Model
This axis designates the style of business that the Chiyoda Group should pursue. It is important that we secure a new sources of revenue from providing
professional services on a reimbursable basis, developing and licensing our advanced technology, etc, as well as continuing with our core business ofundertaking lump sum turnkey / engineering, procurement and construction (LSTK/EPC) contracts. We will, in addition, look to invest in the fields related to
Chiyoda’s core business and strongholds.
3) Axis: Business Field/Area
Chiyoda Group has long specialized in EPC contracts for onshore hydrocarbon projects. We will seek to expand our business under this axis into offshore andupstream projects (related to exploration and treatment of oil and gas fields). Chiyoda Group perceives that energy / social infrastructure will provide newsources of profit and will also allow us to further explore business opportunities in our existing main market of Asia / the Middle East / Oceania as well as inContinental North America and Africa.

CHIYODA CORPORATION ANNUAL REPORT FY2012

Securing / development of human resources,
9 optimization of allocation, and creation of a lively andenergetic working environment• Establish framework for human resource development / increase and exchange of project
key personnel within the group companies• Evolve into a company with a lively and energetic working environment regardless ofnationality, sex, age and so on

Strengthening of safety and risk management /10 establishment of culture prioritizing the health of
employees• Proactively strengthen the risk management framework to respond to changes in theexternal environment and the times• Promote culture prioritizing the safety and health of employees

・Pillar of existing business: Gas value chain projects (from LNG to receiving
terminals), hydrocarbon downstream and non-hydrocarbon projects

・Promotion of monetization of technology&
・Investment based on Project Management know-how and technology

6

Consolidation of Chiyoda’s “base” (global infrastructure) and ”resources” (secure, develop and reinforce the pool of human resources) will be continued as theoperating foundation for growth strategy. The main points the of operation foundation strategy are:
6

・Division of work on a worldwide basis by strategic regional operation centers

Business
Model

Operating Foundation Strategy(4) Quantitative Target (Profit Plan)
With the key measures in place, based on the key strategies, Chiyoda will be able to pursue diversification of its source of profit for stable growth. The target
management index is set at a consolidated net income of J. Yen 30 billion.

(5) Capital Plan / Investment Strategy
Chiyoda will provide a stable capital plan based on business performance. A high return of equity (ROE) of over 12% will be sought and a dividend ratioof over 30% will be set.
In order to sustain further growth of the Chiyoda Group, the company will invest in areas that will contribute to Chiyoda’s growth, areas to consolidate
the operating foundation and areas to expand and stabilize profit.
In order to continue Chiyoda’s sustainable development, we plan to budget J. Yen 80 billion for our investment strategy. Such capital will be
distributed and invested prudently, flexibly and efficiently in accordance with the actual progress of The MT-Plan and changes in the business environment.

(6) Personnel Plan
The MT-Plan envisages that the Chiyoda group will have approximately 10,000 personnel in the expanded domestic and overseas operation base as of Fiscal
Year 2016.
With the centre of gravity of part of the work shifting from CGH to the group companies, and with the progress of sharing the work among group companies
in Japan and abroad, enhancement of the capability of the personnel at CGH will also be required.

CHIYODA CORPORATION ANNUAL REPORT FY20127

Topics
Group Companies Awarded Long Term Contracts

SPERA* Hydrogen* SPERA derives from the Latin for “hope”.

EFA with Shell (Chiyoda Singapore)

SPERA Hydrogen is easy to use

Chiyoda Singapore (Pte) Limited* signed an Enterprise Framework Agreement (EFA) with
Shell for Onshore Engineering and Project Management Services-Downstream covering
downstream projects within Asia. Under this EFA, Chiyoda Singapore will provide
a full range of services for Front End Engineering Design (FEED) and Engineering,
Procurement, and Construction Management (EPCm) by utilizing Chiyoda Group’s
regional capacity located in each country. Chiyoda Group places great importance on
the continuation of its valuable relationship with Shell.

Once considered a distant dream, hydrogen, as a source of conventional energy, has
become a reality, and Chiyoda Corporation has made it remarkably easy to use. Ourinnovative technologies enable hydrogen, the lightest of gases and difficult to store
or transport under normal conditions, to be liquefied and consequently transported
at ambient temperature and pressure. We named this liquid “SPERA Hydrogen.”Almost unthinkable before, this “hydrogen of hope” is highly safe and stable, is able
to survive transportation over long distances and can be stored over long periods oftime. It will overturn the conventional wisdom regarding hydrogen.

* Chiyoda Singapore (Pte) Limited was established in 1971 and is a 100% subsidiary company of Chiyoda Corporation

Dr. Geok Yong, Vice President of Shell
Project & Technology with CSL’s President
Morita at the signing ceremony

Two technologies have made SPERA Hydrogen possible
Long Term Engineering Services Contracts in Qatar (Chiyoda Almana)
Chiyoda Almana Engineering LLC (“Chiyoda Almana”)*1 was awarded long term engineering services contracts by thethree companies; Qatar Chemical Company Limited (“Q-Chem”), Qatar Chemical Company II Limited (“Q-Chem II”) and
Ras Laffan Olefins Company Limited (“RLOC“).
Chiyoda and Chiyoda Almana are aiming to contribute further to Qatari sustainable development through theengineering services of these contracts and through those contracts awarded previously. Chiyoda group intends
to expand its “Project Life Cycle Engineering”*2 services to other countries in the Middle East, and elsewhere, whilestrengthening its regional business development through its global operation network.
*1: Chiyoda Almana was established by Chiyoda in March, 2008, in collaboration with a local company (Al-Mana Group), as a local company providing full engineering services in Qatar.
*2: A business model, involving both Chiyoda and the client, to provide feasibility studies, front-end engineering design (FEED), detailed engineering, procurement and construction (EPC),
operation, maintenance, expansion, modification, upgrading and revamping throughout the lifecycle of a project.

Signing Ceremony for Refinery andPetrochemical Complex in Vietnam
On 27 January 2013, the signing ceremony for the Nghi Son Refinery and Petrochemical Complex took place in the Thanh
Hoa Province in Vietnam.
Almost 800 people attended the magnificent ceremony including Vietnamese Prime Minister Nguyen Tan Dung,
the Japanese Ambassador to Vietnam, Yasuaki Tanizaki, and representatives of Nghi Son Refinery and Petrochemical LLC
and investors from Idemitsu Kosan Co., Ltd., Kuwait Petroleum International, Vietnam Oil and Gas Corporation and Mitsui
Chemicas,Inc. A number of senior managements of the contractors forming a joint venture also joined the ceremony
including our then President Takashi Kubota as well as local entities concerned.
This project is a grassroots oil refinery and petrochemical complex, which will be the second refinery in Vietnam
and will have a daily processing capacity of 200,000 barrels of crude oil (atmospheric distillation basis). The completion isscheduled for the second half of 2016.

8

CHIYODA CORPORATION ANNUAL REPORT FY2012

1. Hydrogenation
By applying Organic Chemical Hydride (OCH) Technology, thehydrogen is fixed to toluene, a major component of gasoline, andproduces a liquid called methylcyclohexane (MCH), which is easy
to handle at ambient temperature and pressure. This is SPERA
Hydrogen. Our technology facilitates storage of hydrogen in large quantities and transportation over long distances ina safe and stable manner, and at a low cost, because it eliminates the need for hydrogen to be liquefied at cryogenic
temperatures or pressurized in cylinders.
2. Dehydrogenation
The extraction of hydrogen from methylcyclohexane (MCH)
had, for some time, been considered impossible. However, in2004 Chiyoda Corporation succeeded in developing the world’s
first dehydrogenation catalyst through the use of platinum
nanoparticles. We named this catalyst “SPERA Catalyst”. SPERA Catalyst not only makes it possible to easily extracthydrogen from SPERA Hydrogen (MCH), but it has a long lifespan and can be mass produced.
Demonstration plant verifies “Large-Scale Hydrogen Storage and Transportation System”
In March 2013, Chiyoda completed a demonstration plant at its Koyasu
Office and Research Park to verify its “Large-Scale Hydrogen Storage andTransportation System” and, thereafter, successfully achieved its expected
performance including 1) hydrogenation to fix hydrogen to toluene
producing SPERA Hydrogen, 2) storage and transportation of SPERA
Hydrogen, and 3) dehydrogenation to
extract hydrogen from SPERA Hydrogenby using SPERA Catalyst. This system can
Demonstration plantutilize existing infrastructures, including
oil tanks and tankers for storage and transportation, and proves that it is possible tosupply and deliver hydrogen on a commercial basis.

CHIYODA CORPORATION ANNUAL REPORT FY2012

9

Topics
Challenge to Continue in Our LNG BusinessChiyoda and CCC Establish Joint Venture Company

In December 2012, CC JV, a joint venture comprising of Chiyoda and CB&I, was awarded a contract by Anadarko
Moçambique Area 1, Limitada, for the Front End Engineering and Design (FEED) for an onshore natural gas liquefaction
facility project in the Republic of Mozambique. Additionally, PT Chiyoda International Indonesia was awarded a FEED
contract in January 2013 for Abadi Floating LNG (FLNG) Project in collaboration with PT Saipem Indonesia (Leader), PT
Tripatra Engineers & Constructors , PT Tripatra Engineering and PT Rekayasa Industri. The Clients are INPEX Masela, Ltd.
(Operator: 60%),Shell Upstream Overseas Services (I) Limited (30%) and PT EMP Energi Indonesia (10%).
Such achievements reflect the high regard in which we are held based on our peerless technological capabilities
accumulated through successful completion of large-scale LNG plants, which has enabled problem-free operation in
Qatar in the Middle East, and our first tier project management capabilities now being showcased at LNG plants underconstruction in Papua New Guinea and Australia. We will continue to seek new frontiers, address the challenges ofsatisfying customers and meeting the needs of the times, regardless of location or technology.

“JAPAN-GTL Process” won the Japan Institute of Energy Award 2012
Seven companies won the Japan Institute of Energy Award 2012 in Technical
Division for the establishment of a JAPAN-GTL (Gas to Liquids) Process. The sevencompanies include Japan Oil, Gas and Metals National Corporation (JOGMEC),
INPEX CORPORATION, COSMO OIL CO., LTD, Japan Petroleum Exploration Co., Ltd, JX
Nippon Oil & Energy Corporation, NIPPON STEEL & SUMIKIN ENGINEERING CO., LTD
and Chiyoda Corporation.
Gas-To-Liquids (GTL) is a technology that uses natural gas as the raw material
and produces petroleum products such as naphtha, diesel oil and kerosene throughchemical reactions. JAPAN-GTL features the utilization of carbon dioxide as raw
material, which is a groundbreaking technology that would for the first time everallow for natural gas containing carbon dioxide to be used directly for conversion.

CH4-CO2+
Steam

Syngas
Production

SyngasH2
COFT
Synthesis*

FT
Products

The winning companies of JAPAN-GTL joint
research receive their award

Upgrading(Hydrotreating)Petroleum
Products
NaphthaKerosens
Gas Oil*FT Synthesis : Fischer- Tropsch Synthesis

Main process facilities:
Syngas Producing Section

FT (Fischer-Tropsch) Synthesis Section

Mr. Madoka Koda, President of CCEL at the inauguration ceremony

Chiyoda Licenses its Own Process Technology on Acetic Acid
Chiyoda Corporation was awarded a Licensing and Engineering contract for the use of its technology, the Acetica®
process, to produce acetic acid.
This technology was sub-licensed for a gas-to-chemicals complex in Linhares, Espirito Santo State, southeast Brazil,
called Complexo Gás-Químico UFN-IV*.
Chiyoda developed the Acetica® process, a methanol-carbonylation process that use methanol and carbon
monoxide as feedstock, which employs a heterogeneous catalyst for theefficient production of acetic acid.

JAPAN-GTL Process

Natural Gas

In March 2013 Chiyoda Corporation and Consolidated Contractors
Company (CCC, Head Office: Athens, Greece) established a joint
venture company in Singapore, “Chiyoda-CCC Engineering (PTE.)
Limited (CCEL), having its regional headquarters in Abu Dhabi, United
Arab Emirates.
The inauguration ceremony was held with about 200 people inattendance, including our then President Kubota and representativesof CCC.
The purpose of this establishment is to operate an engineering
company targeting certain hydrocarbon processing industries within
the Middle East. Taking advantage of regional presence and resources,
CCEL will provide total project lifecycle services in energy, oil, gas,petrochemicals and utilities sectors.

Upgrading (hydrotreating) Section

The process has tangible advantages including1) an easy-to-handle catalyst2) limited loss of precious rhodium3) efficient reactor4) low content of by-products5) relatively low corrosiveness and less utility consumption effected by theuse of a loop-typed bubbling reactor system.

Linhares,
Estado do Espírito Santo

Chiyoda aims to license its own technology and provide associatedengineering services which will contribute to the growing needs formaterialization or expansion to produce acetic acid.
* This complex is planned to produce ammonia and urea fertilizers, methanol, acetic acid, formic acid andmelamine.

Through series of demonstration tests, the seven companies established the Japan-GTL Process as a technology
applicable to commercial plants. The seven companies will further continue studies of the Japan-GTL process for futurecommercialization.
10

CHIYODA CORPORATION ANNUAL REPORT FY2012

CHIYODA CORPORATION ANNUAL REPORT FY201211

Corporate GovernanceCorporate Governance and Internal Controls
General Shareholders’ Meeting
Submit/ReportSupervision

Election

Election

Submit/Report

Executive Officers
Executive Officer Meeting

Group
Companies

The Board of Directors
The Board of Directors meets once a month. The Board is made up of nine directors, one of whom is an external director, andthree audit & supervisory board members, all of whom are outside audit & supervisory board members. The Board of Directors
decides on important business matters and oversees the execution of business operations. Appropriate decisions are madeand management oversight is conducted under the objective views of the external director and outside audit & supervisoryboard members. In addition, an Executive Officer Meeting is held once a month, with Board members present, and its business
reports are presented at the monthly Board Meeting, thereby fulfilling its reporting function. The Company efficiently executes
business operations under an executive officer system.

The Executive Committee

Self-Assessment

Risk Management & CSR Division
Operational Auditing Unit
SQE Unit

Global Operation Unit
Corporate Planning Unit
Corporate Services Unit, HRM* Unit
Finance & Project Audit Unit

CSR Unit
Crisis Management Unit

*HRM: Human Resource Management

External Directors and Outside Audit & Supervisory Board Members
The Company employs one external director and three outside audit & supervisory board members. The names of external
director and outside audit & supervisory board members, and the Company’s rationale for selecting them (including therationale for designation as independent directors of Hiroshi Ida and Yukihiro Imadegawa, both of whom are on file with theTokyo Stock Exchange as independent directors) are as follows.
Name
Masaji Santo

Hiroshi Ida

Munehiko Nakano

Rationale for Election as External Director and Outside Audit & Supervisory Board Member
The individual is able to suitably perform his duties as an external director by putting to use his experience as the former Presidentof Mitsubishi Chile Ltda. and as a Senior Vice President of Mitsubishi Corporation.
The individual is able to contribute to the sound management of the Company through neutral and objective audits based on his
experience as a former executive officer with Mitsubishi UFJ Trust and Banking Corporation.
<Rationale for Designation as an Independent Director>
The individual is not involved in any matters that conflict with the interests of general Company shareholders, and is recognized as
an outside audit & supervisory board member having no conflict of interest with general Company shareholders.
The individual is able to contribute to the sound management of the Company through neutral and objective audits based on his
experience as a former corporate auditor with Lawson, Inc. and a finance and accounting executive with Mitsubishi Corporation
The individual is able to contribute to the sound management of the Company through neutral and objective audits based on his
expertise in corporate law as an attorney.
<Rationale for Designation as an Independent Director>
The individual is not involved in any matters that conflict with the interests of general Company shareholders, and is recognized as
an outside audit & supervisory board member having no conflict of interest with general Company shareholder.

Auditing by Audit & Supervisory Board Members

There are no particular relationships of interest between Company and the external director and outside audit &supervisory board members.

The Company has structured and is operating a system of internal controls, in line with the unique nature and characteristics
of our business, which optimizes operational effectiveness and efficiency, financial reporting reliability, legal compliance, andasset preservation.
The Company has established an Internal Controls Management Committee (ICMC) to improve our systems of internal
controls. The Director of the Risk Management & CSR Division chairs the committee and the heads of departments related tointernal controls serve as committee members.
The ICMC receives referrals from the Executive Committee to exchange information and coordinate with eachdepartment to determine whether operations are being appropriately and efficiently carried out under an adequate system ofinternal controls. At the end of the fiscal period, or as and when deemed necessary, the ICMC will offer advice to the Executive
Committee on improvements in internal controls .
The Executive Committee takes the advice received from the ICMC under consideration and submits proposed internal
controls improvements, if any, to the Board of Directors for decision.
CHIYODA CORPORATION ANNUAL REPORT FY2012

Financial
Audit

External Directors and Outside Corporate Auditors

Yukihiro Imadegawa

Status of Internal Controls System

Accounting
AuditorInternal Controls Management Committee(ICMC)

Department Internal Controls

Business Execution Departments(Risk Manager)

Report

The Company has established an Executive Committee as a decision-making body on matters concerning the execution ofbusiness operations. The Executive Committee, composed of representative directors excluding the Chairman, makes prompt
decisions concerning the execution of business operations as stipulated by the Board of Directors’ resolutions. It also conducts
preliminary deliberations regarding matters to be brought before the Board of Directors for resolution.

The Company has three audit & supervisory board members, all of whom are outside audit & supervisory board members;
two of the audit & supervisory members serve on a full-time basis. They are responsible for auditing the state of execution of
director duties. Two of the outside audit & supervisory board members are independent auditors and the other is exceptionallywell-versed in finance and accounting.

12(advice)
ReportSubmit/Report

Overview and Rationale for Adoption of Corporate Governance System
The Chiyoda Group operates under an executive officer system and its efficiency in executing its business is based on theestablishment of a corporate auditor system. The Board of Directors has adopted this system of performing management
supervisory functions with the participation of one external director and three outside audit & supervisory board members,
which ensures that there is oversight from an objective and neutral standpoint.

Audit Referral

Election

ReportCorporate Auditors
Audit & Supervisory Board
Survey, Report Request

Audit

4 Representative Directors
Executive Committee

Organization Staffing

Election

ReportDirectors
Board of Directors

Scheduled Reports(deliverables, etc.)

Corporate Governance System

Election(departments with internal
control functions)

The Chiyoda Group recognizes that its management needs to focus on corporate social responsibility that inspires the
support and trust of shareholders, customers, employees, and other stakeholders. We believe that this is a foundation of
our corporate activities. As such, we continue working toward sustainable long-term qualitative growth, improving ourmanagement basics, and ensuring management soundness and transparency. We have identified improved corporate
governance and a stronger internal controls structure as important issues for our company and we strive to further
enhance these areas.

Rationale for Adoption of Current System
Based on its establishment of a corporate auditor system, the Chiyoda Group efficiently executes business operations underan executive officer system. The Board of Directors has adopted an existing system of corporate governance that is capable ofsufficiently performing management supervisory functions from an objective and neutral standpoint with the participation of
one external director and three outside audit & supervisory board members.

Director Compensation, Etc

Total Compensation for Each Director Category;
Total Compensation by Director Type, and Number of Directors in Question
NumberBase
Compensation

Incentive
Compensation

Stock-Based
Compensation

Directors

10¥192million¥79million¥52million

Audit & Supervisory
Board Members

5¥ 61million--

Notes:
1. Total director compensation is ¥325 million. Total audit &supervisory board member compensation is ¥61 million.
Total outside audit & supervisory board member (fourindividuals) compensation is ¥55 million.
2. The number of directors above discloses the number of
directors and audit & supervisory board members receiving
compensation during the fiscal period, including two
directors and two audit & supervisory board members who
retired as of the General Shareholders’ Meeting held on June
26, 2012.

CHIYODA CORPORATION ANNUAL REPORT FY201213

Corporate Information (As of March 31, 2013)
Corporate Data

Global Network

Chiyoda Global Headquarters

Number of Employees

Minatomirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku, Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)

1,519 (Non-Consolidated)
4,915 (Consolidated)

Annual Fiscal Close

EstablishedMarch 31January 20, 1948

Chiyoda’s global network enables Project Lifecycle Engineering to be offered all over the world. Chiyoda has expanded
its network in order to provide prompt support for customers’ business activities on a global scale. Our services cover
the entire life cycles of projects – from planning, engineering, procurement and construction through to operation andmaintenance. With a view to meeting the ever-changing needs of our customers, we offer services by utilizing local
offices and group companies with thorough knowledge of the latest local and global circumstances in countries aroundthe world.

Shareholders’ Meeting

Paid-in Capital

June

Chiyoda's Global Network¥ 43,396 million

Organization Chart(As of July 1, 2013)

Audit & Supervisory Board

Beijing Office

Technology & Engineering Division
Engineering Operation Unit
Gas & LNG Process Engineering Unit
Refinery, Petrochemical & New Energy
Process Engineering Unit
Integrity Management Unit
Mechanical Engineering Unit
Control System Engineering Unit
Electrical System & Smart Grid
Engineering Unit
Piping Engineering Unit
Civil Engineering Unit

Business Development Division

Project Logistics & Construction Division

Strategic Business Planning &Administration Unit
Corporate Relations Sec.
Business Development Unit 1
Business Development Unit 2
Business Development Unit 3

PLC* Planning & Administration Unit
Procurement &Logistics Management Unit
Construction Unit
Commissioning Unit

HRM: Human Resource Management

14

Global Project Management Division
Project Administration Unit
Project Management Unit
IT Management Unit
Global Operation Unit
Global Human Resource Planning Unit
BPM* TeamWork Process Innovation Task Team
Global Operation Platform Task Team
Chiyoda Globalization Task Force Teamchange the Mindset

Corporate Planning Unit
IR & Public Relations Sec.
Corporate Services Unit
HRM* Unit
Finance & Project Audit Unit
Legal Sec.
Investment Promotion TeamBPM: Business Process Management

CHIYODA CORPORATION ANNUAL REPORT FY2012

Project Execution Base

Chiyoda & Public Works Co., Ltd.
Chiyoda International Corporation

Chiyoda Corporation (Shanghai)

Executive Office Unit
Corporate-service Review Team

Corporate Planning management & Finance Division

Procurement Center

Chiyoda Corporation Netherlands B.V.

President

SQE Unit
CSR Unit
Operational Auditing Unit
Crisis Management Unit

Engineering Center

Milan Representative Office

Board of Directors
Executive Committee

Risk Management & CSR Division

Sales Base

Korea Representative Office

Offshore & Upstream Project Operations
Business Planning Unit
Business Operation Unit
Gas & LNG Project Operations
International Gas & LNG Project Unit
Strategic Project Development Unit
Project TeamThe Netherlands
Italy

Saudi Arabia

Korea
Qatar

China
India

UAE

Downstream & Non Hydrocarbon Project Operations
Oil & Petrochemical Project Unit
Gas & Storage Project Unit
International Downstream &Non-hydrocarbon Project Unit
Project TeamJapan
<Chiyoda Global Headquarters>

MyanmarPhilippines
Thailand
Malaysia
Singapore

USA

Chiyoda Philippines Corporation

Indonesia
BrazilAustralia

Chiyoda Oceania Pty Limited

Infrastructure Project Operations
Jakarta Office

IP* Planning & Administration Unit
Strategic Business & Investment
Management Unit
Green Infrastructure Project Unit
Green Materials Project Unit
Pharmaceutical & Environmental
Project Unit
Technology Development Unit
Research & Development Center
ChAS Project Operations
Engineering Solution Unit
Project Lifecycle Engineering Unit
Program Management Consulting Unit
Space Solution Unit
ChAS Business Strategy Unit

PT. Chiyoda International Indonesia
Singapore Human Resources Office
Chiyoda Singapore (Pte) Limited
Chiyoda Malaysia Sdn. Bhd.
Chiyoda Sarawak Sdn. Bhd.
Chiyoda (Thailand) Limited

Chiyoda do Brasil Representações Ltda.

L&T-Chiyoda Limited
Bangalore Office
Abu Dhabi Office
Chiyoda-CCC Engineering (Pte) Limited
Middle East Headquarters Doha Office
Chiyoda Almana Engineering LLC

PLC: Project Logistics & Construction

IP: Infrastructure Project

Chiyoda Petrostar Ltd.

CHIYODA CORPORATION ANNUAL REPORT FY201215

Directors and Officers (As of July 1, 2013)

Stock Information

Board of Directors
Representative Directors

Directors

Executive Chairman

Takashi Kubota*

Executive Vice President

Katsuo Nagasaka*

President & CEO

Shogo Shibuya*1

Senior Vice President

Ryosuke Shimizu

Senior Executive Vice
President

Keiichi Nakagaki*1

Senior Vice President

Masahiko Kojima*1

Senior Executive Vice
President

Hiroshi Ogawa*1

Director

Masaji Santo*1/*2

Executive Vice
President & CFO

Masahito Kawashima

1

1

Hiroshi Ida*

Munehiko Nakano*3

Number of Shareholders

Stock Code570,000,000

14,503

Capital Stock Issued

Number of Share per Unit

ISIN:
SEDOL1:TSE:

260,324,529

1,000

Yukihiro Imadegawa*3

Number of
Shares Owned(Thousands of Shares)

Ratio
Shares Owned(%)

Mitsubishi Corporation

86,931

33.39

The Master Trust Bank of Japan, Ltd. (Trust Account)

11,777

4.52

Japan Trustee Services Bank, Ltd. (Trust Account)

9,250

3.55

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

9,033

3.47

The Mitsubishi UFJ Trust and Banking Corporation

7,496

2.87

Bank of New York GCM Client Account JPRD ISG (FE-AC)

3,153

1.21

State Street Bank and Trust Company

2,883

1.10

State Street Bank and Trust Company 505225

2,806

1.07

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2,759

1.06

Mellon Bank N.A. as Agent for its Client Mellon Omnibus US Pension

2,319

0.89

Breakdown by shareholder

11.63

Executive Vice
President

Satoru Yokoi

Vice President

Eisuke Oki*1

Senior Vice President

Tadashi Izawa*1

Vice President

Masao Ishikawa*1

Senior Vice President

Katsutoshi Kimura

Vice President

Toshiyuki Kariya*

Senior Vice President

Kenjiro Miura

Vice President

Yasumitsu Abe*1

Senior Vice President

Mamoru Nakano*

Vice President

Nobuyuki Uchida

Senior Vice President

Takao Kamiji

Vice President

Yasuo Hosono*1

Total Number of
Shares Issued:

260,325
thousand1

1

Senior Vice President

Hiromi Koshizuka

Vice President

Mitsuya Ogawa

Senior Vice President

Sumio Nakashima

Vice President

Seiichiro Ikeda

Senior Vice President

Koichi Shirakawa

Vice President

Akira Fujisawa*1

Vice President

Noriyuki Kasuya*1 : New Assignments*2 : External*3 : Outside Corporate Auditor

CHIYODA CORPORATION ANNUAL REPORT FY2012

22.63

23.58

Financial Institutions
Securities Companies
Other Corporations
Foreign Investors and Others
Individuals and Others

4.06
38.10

Monthly Stock Price Range on the Tokyo Stock Exchange
(Yen)
2,400

1,600

16

Transfer Agent of Common Stock

Major Shareholders (as of March 31,2013)

Executive Officers

JP3528600004
6191704 JP
6366

Mitsubishi UFJ Trust and Banking Corporation
1-4-5 Marunouchi, Chiyoda-ku, Tokyo

Audit & Supervisory Board Members
3

Authorized Shares

Share Price (left)
Volume (right)
Nikkei Stock Average (right)(Yen)
45,00030,00015,000800(Thousandsof shares)
160,000

0

80,0004 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3
2008
2009
2010
2011
2012
2013

0

CHIYODA CORPORATION ANNUAL REPORT FY201217

Minato Mirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)
http://www.chiyoda-corp.com/en/

CORPORATE PHILOSOPHY
Enhance our business in aiming for harmony
between energy and the environment,
and contribute to the sustainable development ofa society as an integrated engineering company
through the use of our collective wisdom andpainstakingly developed technology.
(As of August 2013)

Selected in FTSE Group’s responsible
investment index

Consolidated Financial Statements
For the Year Ended March 31, 2013, and Independent Auditor's ReportChiyoda Corporation
Chiyodaand
Corporation
Consolidated
and Consolidated
Subsidiaries Subsidiaries

Consolidated Balance Sheet(March 31, 2013)

Sheet Balance Sheet
Consolidated Balance
Consolidated
March 31, 2013 March 31, 2013ASSETSASSETS

Thousands of
U.S. Dollars
Millions of Yen Millions
of Yen
(Note
1)
2013
20122013
2013
2012

CURRENT ASSETS:
CURRENT ASSETS:
Cash and cash equivalents
13)¥ 180,229
Cash and (Notecash equivalents(Note 13)
Held-to-maturity Held-to-maturity
securities—current(Notes 5 and 13) (Notes 5 and 13)
2,400
securities—current
Short-term investments(Noteinvestments
13)
226
Short-term(Note 13)
Notes and accounts
receivable—trade(Note 13)37,917Notes
and accounts receivable—trade(Note 13)
Allowance for doubtful
accounts(3 )Allowancefor doubtful accounts
Costs and estimatedearnings
on long-term
construction
Costsand estimatedearnings
on long-term construction
contracts (Notes 4contracts
and 13) (Notes 4 and 13)
27,477
Costs of constructionin process
15,295
Costscontractsof construction
contracts in process
Accounts receivable—other
8,476
Accounts receivable—other
Jointly controlledJointly
assets ofjoint venture13)venture (Note 13)
94,696
controlled
assets(Noteof joint
Deferred tax assets(Note 10)
13,162
Deferredtax assets (Note 10)Prepaid expenses Prepaid
and other
3,329
expenses and otherTotal current assets
Total current assets
PROPERTY, PLANT,AND EQUIPMENT:PROPERTY,
PLANT, AND EQUIPMENT:
Land
Land
Buildings and structures
Buildings and structures
Machinery and equipment
Machinery and equipment
Tools, furniture, andfixtures
Tools,
furniture, and fixtures
Construction in progress
Construction in progress
Total
Total
Accumulated depreciation
Accumulated depreciation
Net property, plant,
equipment
Netandproperty,plant, and equipment
INVESTMENTS AND
OTHER ASSETS:
INVESTMENTS
AND OTHER ASSETS:
Investment securities(Notes 5securities
and 13) (Notes 5 and 13)
Investment
Investments in andadvances toInvestments
inunconsolidated
and advances to unconsolidated
subsidiaries and associatedcompanies(Note companies
6)
subsidiaries
and associated(Note 6)
Goodwill
Goodwill
Software
Software
Other assets (NoteOther
10) assets (Note 10)
Allowance for doubtful
accounts
Allowancefor doubtful accounts
Total investmentsTotaland otherassets and other assets
investments¥ 173,769$1,917,333¥ 180,229¥ 173,769
2,400 25,531
307 226
2,407307
30,051
37,917 403,376
30,051(6) (3 )(36) (6)13,78827,477 292,309
13,78813,41915,295 162,713
13,4197,2828,476 90,174
7,282
65,794
94,6961,007,408
65,794
12,987
13,162 140,029
12,9873,0833,329 35,421
3,083

383,206

320,478
383,2064,076,670
320,478

5,375
11,711
1,124
5,450
494
24,156(9,609 )

12,7365,375 57,191
12,736
16,072
11,711 124,594
16,072
1,2201,124 11,960
1,220
5,2015,450 57,983
5,201
109 494
5,258109
35,34024,156 256,987
35,340(16,339)(9,609 )(102,226)(16,339)

14,54719,001
14,547 154,761
19,001

23,74015,527
23,740 252,558
15,527

5,164
675
5,987
2,138
(80 )

2,6685,164 54,936
2,668
716 675
7,182716
3,2155,987 63,700
3,215
4,2772,138 22,745
4,277(88) (80 )
(859)
(88)

37,624

26,316
37,624 400,263
26,316

Thousands of
U.S. Dollars(Note 1)
2013LIABILITIES ANDLIABILITIESEQUITYAND EQUITYCURRENT LIABILITIES:CURRENT LIABILITIES:
debtof(Notes7, 12 debt
and 13)(Notes 7, 12 and 13)¥
91
Current
portionlong-term$1,917,333Current portion of
long-term(Note
13)(Note 13)
117,769
Notes
payable—trade
and accounts
payable—trade25,531Notes and accounts
on construction
receiptscontracts
on construction contracts
79,2102,407Advance receipts Advance
Income(Notetaxes13)payable (Note 13)
8,500
403,376Income taxes payable
Deposits receivedDeposits received
6,822
(36)
Allowance for warranty
Allowance
costsforforwarranty
completed
costs
works
for completed works
480
Allowance
on construction
for lossescontracts
on construction contracts
1,291
292,309Allowance for losses
Asset retirement obligations
5
162,713Asset retirement obligations
and other
expenses and other
16,25990,174Accrued expensesAccrued
1,007,408
140,029
Total current liabilities
Total current liabilities
230,431
35,421NONCURRENT LIABILITIES:NONCURRENT LIABILITIES:
4,076,670Long-term debt (Notes
Long-term(Notes 7, 12 and 13)
7, 12 debt
and 13)
10,135
Liability
for retirement
Liability for retirement
benefits(Note 8) benefits (Note 8)
2,310
Provisionfor treatmentof PCB waste
Provision for treatmentof PCB
waste
364
Asset retirement obligations
957
57,191Asset retirement obligations
Other10)liabilities (Note 10)
1,822
124,594Other liabilities (Note11,96057,983
noncurrent liabilities
Total noncurrent Total
liabilities
15,591
5,258
256,987
AND
CONTINGENT LIABILITIESCOMMITMENTS COMMITMENTS
AND CONTINGENT
LIABILITIES(102,226)(Notes(Notes 7, 12, 14 and15) 7, 12, 14 and 15)

TOTAL¥ 435,379¥ 365,795$4,631,695¥ 435,379¥ 365,795

TOTAL

TOTAL
$4,631,695

Total equity

Thousands of
U.S. Dollars(Note 1)2013

¥ 10,006¥
91$¥ 10,006
977
86,211
117,7691,252,863
86,211
76,533
79,210 842,660
76,533
1,1628,500 90,429
1,162
6,1796,822 72,583
6,179
289 480
5,113289
5681,291 13,739568
165
5
54165
12,572
16,259 172,976
12,572$977
1,252,863
842,660
90,42972,583
5,113
13,73954
172,976

230,4312,451,398
193,687
193,687

2,451,398

10,135 107,819204
204
2,486
2,4862,310 24,584
123 364
3,882123
59 957 10,190 59
4961,822 19,392496

107,819
24,584
3,882
10,19019,392

15,591 165,869
3,369
3,369

165,869

EQUITY (Notes 9 EQUITY
and 18): (Notes 9 and 18):
154,761
570,000 thousand570,000
shares; thousand shares;
Common stock—authorized,
Common stock—authorized,
issued, 260,324 thousand
issued, 260,324
shares inthousand2013 andshares2012in 2013 and 2012
43,39643,39643,396 461,663
43,39680,000 thousand shares
80,000inthousand2013 andshares2012in 2013 and 2012
Preferred stock—authorized,
252,558Preferred stock—authorized,
Capital surplus Capital surplus
37,112
37,112
37,112 394,815
37,112
100,988
89,346
100,9881,074,343
89,34654,936Retained earningsRetained earnings
cost, 1,279
thousandcost,shares
1,279 inthousand2013 andshares in 2013 andstock—at
7,182Treasury stock—atTreasury
1,260 inthousand2012 shares in 2012
(1,349)(1,328)(1,349) (14,358)(1,328)63,700 1,260 thousand shares
Accumulatedcomprehensive
otherincome
comprehensive(loss):
income (loss):
22,745Accumulated other
Unrealized
available-for-salegain on securities
available-for-sale securities
6,584
1,5096,584 70,044
1,509(859) Unrealized gain on
4422,890 30,746442
Deferred gain on Deferredderivatives
gain
under
on derivatives
hedge accounting
under hedge accounting 2,890
translation
currency
adjustments
translation adjustments(1,235)(2,358)(1,235) (13,140)(2,358)400,263 Foreign currency Foreign
Total
Total
188,386
168,120
188,3862,004,116
168,120
Minority interestsMinority interests
969
617 969 10,310617
Total equity

TOTAL

Thousands of
U.S. Dollars
Millions of Yen Millions(Note
1)
of Yen2013
20122013
20132012

461,663
394,815
1,074,343(14,358)
70,04430,746(13,140)
2,004,116
10,310189,356

189,3562,014,427
168,737
168,737

2,014,427¥435,379¥435,379¥365,795¥365,795$4,631,695$4,631,695

See notes to consolidated
statements.
See notesfinancial
to consolidated
financial statements.
-2-

1

Consolidated Financial Statements-2-

Consolidated Financial Statements2Consolidated Statement of Income

Chiyoda Corporation and Consolidated Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2013

Consolidated Statement of Comprehensive Income

Chiyoda Corporation and Consolidated Subsidiaries(Year Ended March 31, 2013)

Millions of Yen
2013
2012

Thousands of
U.S. Dollars(Note 1)
2013

Millions of Yen
2013
2012

REVENUE¥398,918¥ 254,675$4,243,814

NET INCOME BEFORE MINORITY INTERESTSCOST OF REVENUE

356,402

215,783

3,791,520

42,51538,891

452,293

17,402

14,693

185,133

OTHER COMPREHENSIVE INCOME (LOSS) (Note 16):
Unrealized gain on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Foreign currency translation adjustments
Share of other comprehensive income (loss) of
associates accounted for using the equity method

Operating income

25,11324,197

267,160

OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Equity in earnings of associated companies
Foreign exchange loss
Gain on sales of fixed assets
Loss on disposal of fixed assets
Loss on valuation of investment securities
Other—net

2,321
(206)
145
(1,681)
1,704
(244)
(230)
(173)

1,230
(207 )
72(1,243 )(250 )(255 )

24,694(2,193)
1,545(17,886)
18,131(2,599)(2,454)(1,846)1,634(654 )

17,390

INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS

26,74723,543

284,551

INCOME TAXES (Note 10):
Current
Deferred

11,669(1,313)

2,310
6,717

124,140(13,969)

Total income taxes

10,356

9,027

110,170

NET INCOME BEFORE MINORITY INTERESTS

16,391

14,515

174,380

314

151

3,345

¥ 16,077¥ 14,364$ 171,035

Yen

Gross profit
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES(Note 11)

Other income (expenses)—net

MINORITY INTERESTS IN NET INCOME
NET INCOME

Chiyoda Corporation and Consolidated Subsidiaries(Year Ended March 31, 2013)

Consolidated Statement of Comprehensive Income
Year Ended March 31, 2013

Thousands of
U.S. Dollars(Note 1)
2013

¥16,391¥14,515$174,380

5,075
2,448
1,081

1,738
97
(361 )

53,991
26,042
11,50885(105 )

913

8,690

1,368

92,456COMPREHENSIVE INCOME¥25,082¥15,884$266,836

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Minority interests¥24,723358¥15,761123$263,020
3,815

Total other comprehensive income

See notes to consolidated financial statements.

Consolidated Statement of Income
Year Ended March 31, 2013

PER SHARE OF COMMON STOCK (Notes 2.w and 17):
-3Basic net income
Cash dividends applicable to the year

2013

2012

U.S. Dollars
2013¥62.0619.00¥55.4417.00(Continued)
$0.66
0.20

-5-

See notes to consolidated financial statements.

3

Consolidated Financial Statements

Consolidated Financial Statements

4Consolidated Statement of Changes in Equity

Chiyoda Corporation andChiyodaConsolidated
Corporation
Subsidiaries
and Consolidated Subsidiaries(Year Ended March 31, 2013)

in Equity
Statement of Changes in Equity
Consolidated Statement of Changes
Consolidated
Year Ended March 31, 2013 Year Ended March 31, 2013

BALANCE, APRIL 1, 2011

Thousands

Thousands

Outstanding
Number of
Shares ofCommonStockCommonStock

Outstanding
Number of
Shares ofCommonCapitalStock
Surplus

CommonRetained
Stock
Earnings

CapitalTreasury
SurplusStockMillions of Yen
Millions of Yen
Accumulated Other
Accumulated Other
Comprehensive Income (Loss) Comprehensive Income (Loss)
Unrealized
Unrealized
DeferredDeferred(Loss) Gain
(Loss)
Gain
Gain onGain onForeign
Foreign
on AvailableDerivatives on AvailableDerivatives
Currency
Currency
Retained
Treasury
for-Sale
for-Sale
under Hedge
Translation under Hedge
Translation
Minority
Earnings
Stock
Securities
Securities
Accounting
Adjustments Accounting
Total
Adjustments
Interests¥43,396259,102¥37,112¥43,396¥ 77,832¥37,112¥(1,295)¥ 77,832¥ (229)BALANCE, APRIL 1, 2011
259,102

Net income
Net income
Cash dividends, ¥11.00 per share
Cash dividends, ¥11.00 per share(37 )Purchase of treasury stock
Purchase of treasury stock
Net change in the year
Net change in the year
BALANCE, MARCH 31, 2012

BALANCE, MARCH 31,
259,065
2012(37 )43,396

Net income
Net income
Cash dividends, ¥17.00 per share
Cash dividends, ¥17.00 per share
Change of scope of consolidation
Change of scope of consolidation(19 )Purchase of treasury stock
Purchase of treasury stock
Net change in the year
Net change in the year
BALANCE, MARCH 31, 2013

BALANCE, MARCH 31, 2012

BALANCE, MARCH 31,
259,045
2013

BALANCE, MARCH 31, 2012

259,065
37,112¥43,396

BALANCE, MARCH 31, 2013(32)

43,39689,346

37,112(1,328)

16,077(4,404)(31)(19 )259,045¥37,112¥43,396¥100,988(21)¥37,112¥(1,349)¥ 155,242¥155,758¥516¥155,758

100

14,364(2,850)
(32)
1,497

617

168,737¥ ¥345
155,242(438100)

14,364
14,364(2,850)(2,850)
(32)
(32)
1,396
1,497

(2,358617)

168,120
168,737351

16,077(4,404)
(31)
(21)
8,998

¥969

¥189,356

1,738(438 )

89,346
1,509(1,328)442

1,509(2,358 )442
168,120

1,123351

16,077
16,077(4,404)(4,404)
(31)
(31)
(21)
(21)
8,646
8,998

¥ (1,235¥969)¥ 188,386¥189,356

16,077(4,404)
(31)
5,075

(21)
2,448

5,075
1,123

16,077(4,404)(31)(21)
2,4488,646¥100,988¥6,584¥(1,349)¥2,890¥6,584¥ (1,235 )¥2,890¥ 188,386

Thousands of U.S. Dollars (NoteThousands
1)of U.S. Dollars (Note 1)
Accumulated Other
Accumulated Other
Comprehensive Income (Loss) Comprehensive Income (Loss)
Unrealized
Unrealized
DeferredDeferredGain onGain
onGain onGain onForeign
Foreign
AvailableAvailableDerivatives
Derivatives
Currency
Currency
Retained
Treasury
for-Sale
for-Sale
under Hedge
Translation under Hedge
Translation
Minority
Earnings
Stock
Securities
Securities
Accounting
Adjustments Accounting
Total
Adjustments
Interests$ 394,815$ 461,663$ 950,499 $ 394,815$(14,131) $ 950,499$16,053$ 394,815¥ (1,919¥516)¥ ¥(229)(1,919 )(32)
97$ 461,663$(14,131)$ 4,703

171,035(46,852)
(338)

Total
TotalEquity

Minority
Interests

Total
Equity$ (25,091$ 6,569)$1,788,513$1,795,083$ 6,569$1,795,083

3,741

171,035(46,852)
(338)
(227)
95,726$10,310$2,014,427$16,053$ (25,091 )$ 4,703$1,788,513

11,9513,741

171,035
171,035(46,852)(46,852)(338)(338)(227)(227)
91,98595,726$ (13,140$10,310)$2,004,116$2,014,427

53,991(227)
26,042

53,991
11,951

171,035(46,852)
(338)
(227)
26,04291,985$ 461,663$1,074,343 $ 394,815$(14,358) $1,074,343$70,044$(14,358)$30,746$70,044$ (13,140 )$30,746$2,004,116

(227)

Total
Equity1,738

CommonRetained
Stock
Earnings

171,035(46,852)(338)

Minority
Interests

14,364(2,850)(32)
971,396

CapitalSurplus$ 461,663

CapitalTreasury
SurplusStock

14,364(2,850)CommonStock

Net income
Net income
Cash dividends, $0.18 per shareCash dividends, $0.18 per share
Change of scope of consolidation
Change of scope of consolidation
Purchase of treasury stock
Purchase of treasury stock
Net change in the year
Net change in the year
BALANCE, MARCH 31, 201314,364(2,850)¥(1,295)
¥ 345

Total
Total
EquitySee notes to consolidated financial
See notes
statements.
to consolidated financial statements.

-6-

5

Consolidated Financial Statements-6-

Consolidated Financial Statements

6

Chiyoda Corporation and Consolidated Subsidiaries

Chiyoda Corporation and Consolidated Subsidiaries

Consolidated Statement of Cash Flows
Year Ended March 31, 2013

Consolidated Statement of Cash Flows
Year Ended March 31, 2013

Consolidated Statement of Cash Flows
Millions of Yen
2013
2012

OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes paid
Depreciation and amortization(Reversal of) allowance for doubtful accounts—net
Allowance for (reversal of) warranty costs for completed works
Allowance for (reversal of) loss on construction contracts
Liability for retirement benefits—net
Gain on sales and disposals of fixed assets
Foreign exchange (gain) loss—net
Equity in earnings of associated companies
Changes in operating assets and liabilities:(Increase) decrease in trade notes and accounts receivable,
and costs and estimated earnings on long-term
construction contracts
Increase in costs of construction contracts in process
Increase (decrease) in trade notes and accounts payable
Increase in advance receipts on construction contracts(Increase) decrease in accounts receivable—other(Increase) decrease in jointly controlled assets of joint
ventureIncrease in deposits received
Increase in interest and dividend receivable
Other—net
Total adjustments(Year Ended March 31, 2013)

Thousands of
U.S. Dollars(Note 1)
2013

Millions of Yen
2013
2012
Net cash provided by operating activities—(Forward)¥26,747¥23,543$284,551(130 )
2,580
(11 )
187
723
(185 )(1,460 )(125 )(145 )(10,820 )2,637
4(894 )(489 )(320 )(1,389)27,450
(118)
1,998
7,695
(1,968)(15,532)(1,334)(1,545)22(72 )(20,453 )(1,714 )30,130992(3,170 )11,946(796 )(11,102 )14,236
3,678(217,595)(18,243)
320,537
10,561(33,730)(28,603 )619(674 )
8,840(12,599 )

22,7761,640(544 )
169
32,071(304,290)
6,589(7,177)
94,051(134,042)

INVESTING ACTIVITIES:Net decrease (increase) in time deposits
Purchases of marketable securities
Purchases of property, plant, and equipment
Proceeds from sales of property, plant, and equipment
Purchases of intangible assets
Payments for asset retirement obligations
Payments for purchases of investment securities
Purchases of investments in subsidiaries
Payments of short-term loans receivable
Proceeds from collections of short-term loans receivable
Payments of long-term loans receivable
Proceeds from collections of long-term loans
Other—net
Net cash used in investing activities¥14,147¥55,615$ 150,509¥ 14,147¥ 55,615$ 150,509

127(2,400)(3,620)7,020(3,502)(66)(2,450)(234 )

1,354(25,531)(38,518)
74,682(37,260)(705)(26,070)

81
(514)
35
32
(5,257)(1,618 )1,725(1,380 )(7,561 )
(57 )
(85 )
71

871
(5,473)374
350(9,140 )(55,926)

10,000(10,000)(4,397)(7)(27)(2,844 )
(7 )
(47 )

106,382(106,382)(46,784)
(74)
(293)

(4,432)(2,899 )(47,152)

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON
CASH AND CASH EQUIVALENTS

2,024(424 )

21,532NET INCREASE IN CASH AND CASH EQUIVALENTS

6,482

43,151

68,962

DECREASE IN CASH AND CASH EQUIVALENTSRESULTING FROM EXCLUSION OF SUBSIDIARIESFROM CONSOLIDATION(22)

FINANCING ACTIVITIES:
Proceeds from long-term debt
Repayments of long-term debt
Payments of cash dividends
Payments of cash dividends to minority shareholders
Other—net
Net cash used in financing activities

Net cash provided by operating activities—(Forward)Thousands of
U.S. Dollars(Note 1)
2013

(237)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

173,769

130,618

1,848,609

CASH AND CASH EQUIVALENTS, END OF YEAR

¥180,229¥ 173,769$1,917,333

See notes to consolidated financial statements.

-7-

7

Consolidated Financial Statements(Continued)-8-(Concluded)

Consolidated Financial Statements8

Chiyoda Corporation and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements
Year Ended March 31, 2013

(Year Ended March 31, 2013)

1. BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with theprovisions set forth in the Japanese Financial Instruments and Exchange Act and its related
accounting regulations and in accordance with accounting principles generally accepted in Japan,
which are different in certain respects as to the application and disclosure requirements ofInternational Financial Reporting Standards.

All significant intercompany balances and transactions have been eliminated in consolidation.
All material unrealized profit included in assets resulting from transactions within the Group iseliminated.
b.

In preparing these consolidated financial statements, certain reclassifications and rearrangements
have been made to the consolidated financial statements issued domestically in order to present
them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications
and rearrangements have been made in the 2012 consolidated financial statements to conform tothe classifications used in 2013.
The consolidated financial statements are stated in Japanese yen, the currency of the country inwhich Chiyoda Corporation (the "Company") is incorporated and principally operates. The
translations of Japanese yen amounts into U.S. dollar amounts are included solely for theconvenience of readers outside Japan and have been made at the rate of ¥94 to $1, the approximate
rate of exchange at March 31, 2013. Such translations should not be construed as representations
that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

Concerning the construction contracts, the Group applies the accounting methods below:
Unbilled costs on contracts, which are accounted for by the completed-contract method, arestated as costs of construction contracts in process.

Japanese yen figures less than a million yen are rounded down to the nearest million yen, except
for per-share data.

Payments received in excess of costs and estimated earnings on contracts, which areaccounted for by the percentage-of-completion method and payments received on the othercontracts, are presented as current liabilities.

U.S. dollar figures less than a thousand U.S. dollars are rounded down to the nearest thousand U.S.
dollars, except for per-share data.

Costs of preparation work for unsuccessful proposals and other projects that are not realized
are charged to income, as incurred, and are included in costs of revenue.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.

Consolidation—The consolidated financial statements as of March 31, 2013, include theaccounts of the Company and its 18 significant (21 in 2012) subsidiaries (together, the"Group").
Under the control or influence concept, those companies in which the Company, directly or
indirectly, is able to exercise control over operations are fully consolidated, and thosecompanies over which the Group has the ability to exercise significant influence are accounted
for by the equity method.

c.

Cash Equivalents—Cash equivalents are short-term investments that are readily convertible
into cash and that are exposed to insignificant risk of changes in value. Cash equivalents
include time deposits, certificate of deposits, and commercial paper, all of which mature or
become due within three months of the date of acquisition.

d.

Held-to-Maturity Securities and Investment Securities—Held-to-maturity securities andinvestment securities are classified and accounted for, depending on management's intent, as
follows: (1) held-to-maturity debt securities, for which there is the positive intent and ability tohold to maturity are reported at cost; and (2) available-for-sale securities are reported at fairvalue, with unrealized gains and losses, net of applicable taxes, reported in a separate
component of equity.

Investments in two associated companies are accounted for by the equity method in 2013 and2012. Investments in the remaining unconsolidated subsidiaries and associated companies arestated at cost. If the equity method of accounting had been applied to the investments in thesecompanies, the effect on the accompanying consolidated financial statements would not bematerial.
The excess of the cost of acquisition over the fair value of the net assets of an acquired
subsidiary at the date of acquisition is being amortized over a period of 20 years.

-9-

Construction Contracts—In December 2007, the Accounting Standards Board of Japan (the"ASBJ") issued ASBJ Statement No. 15, "Accounting Standard for Construction Contracts" andASBJ Guidance No. 18, "Guidance on Accounting Standard for Construction Contracts." Under
this accounting standard, construction revenue and construction costs should be recognized by
the percentage-of-completion method if the outcome of a construction contract can be
estimated reliably. When total construction revenue, total construction costs, and the stage ofcompletion of the contract at the balance sheet date can be reliably measured, the outcome ofa construction contract is deemed to be estimated reliably. If the outcome of a construction
contract cannot be reliably estimated, the completed-contract method should be applied.
When it is probable that the total construction costs will exceed total construction revenue, anestimated loss on the contract should be immediately recognized by providing for a loss on
construction contracts.

Nonmarketable available-for-sale securities are stated at cost determined by the moving-averagemethod. For other-than-temporary declines in fair value, investment securities are reduced to
net realizable value by a charge to income.
e.

Short-Term Investments—Short-term investments are time deposits, which will mature threemonths after the date of acquisition. Short-term investments are exposed to insignificant riskof changes in value.

f.

Jointly Controlled Assets of Joint Venture—Jointly controlled assets of a joint venture are theequity amount equivalent of the Company and consolidated subsidiaries related to the cash
deposits of the joint venture.

- 10 9Consolidated Financial Statements

Consolidated Financial Statements

10Notes to Consolidated Financial Statementsg.

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

h.

Property, Plant, and Equipment—Property, plant, and equipment are stated at cost.
Depreciation is computed by the declining-balance method, except for buildings owned by theCompany that are depreciated using the straight-line method, at rates based on the estimateduseful lives of the assets. The range of useful lives is from 8 to 57 years for buildings andstructures, from 4 to 17 years for machinery and equipment, and from 4 to 15 years for tools,
furniture, and fixtures. Equipment held for leases is depreciated by the straight-line method
over the respective lease periods.

i.

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

j.

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

k.

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

l.

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

m. Allowance for Losses on Construction Contracts—The allowance for losses on construction
contracts is provided for an estimated amount of probable losses to be incurred in future years
in respect of construction projects in progress. When there are losses on completed-contract
method applied contracts, the allowance for losses on construction contracts is offset against
the costs of construction contracts in process on the balance sheet.
n.

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

o.

Retirement and Pension Plans—Employees of the Company are, under most circumstances,
entitled to payments from the defined contribution pension plan and the defined benefit
corporate pension plan. Employees of certain of the Company's consolidated subsidiaries are,under most circumstances, entitled to certain lump-sum severance payments and pension
payments.
Effective April 1, 2000, the Company and its domestic consolidated subsidiaries adopted a new
accounting standard for employees' retirement benefits and accounted for the liability for
retirement benefits based on the projected benefit obligations and plan assets at the balance
sheet date.

- 11 11

Consolidated Financial Statements

The transitional obligation of ¥5,696 million ($60,599 thousand) is being amortized andcharged to income over 15 years using the straight-line amortization method and presented as
an operating expense in the consolidated statements of income for the years ended March 31,
2013 and 2012.
Certain of the Company's consolidated subsidiaries terminated their unfunded retirement
benefit allowance for all directors and officers under the resolution of the shareholders'meeting and the board meeting during the year ended March 31, 2012. The outstandingbalance was reclassified to noncurrent liabilities—other liabilities in the years ended March 31,
2013 and 2012.
p.

Asset Retirement Obligations—In March 2008, the ASBJ published ASBJ Statement No. 18,"Accounting Standard for Asset Retirement Obligations" and ASBJ Guidance No. 21, "Guidanceon Accounting Standard for Asset Retirement Obligations." Under this accounting standard, an
asset retirement obligation is defined as a legal obligation imposed either by law or contractthat results from the acquisition, construction, development, and normal operation of atangible fixed asset and is associated with the retirement of such tangible fixed asset. The asset
retirement obligation is recognized as the sum of the discounted cash flows required for the
future asset retirement and is recorded in the period in which the obligation is incurred if areasonable estimate can be made. If a reasonable estimate of the asset retirement obligation
cannot be made in the period the asset retirement obligation is incurred, the liability should berecognized when a reasonable estimate of the asset retirement obligation can be made. Upon
initial recognition of a liability for an asset retirement obligation, an asset retirement cost is
capitalized by increasing the carrying amount of the related fixed asset by the amount of theliability. The asset retirement cost is subsequently allocated to expense through depreciation
over the remaining useful life of the asset. Over time, the liability is accreted to its present
value each period. Any subsequent revisions to the timing or the amount of the original
estimate of undiscounted cash flows are reflected as an adjustment to the carrying amount of
the liability and the capitalized amount of the related asset retirement cost.

q.

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

r.

Leases—In March 2007, the ASBJ issued ASBJ Statement No. 13, "Accounting Standard for Lease
Transactions," which revised the previous accounting standard for lease transactions.
Under the previous accounting standard, finance leases that were deemed to transfer
ownership of the leased property to the lessee were capitalized. However, other finance leases
were permitted to be accounted for as operating lease transactions if certain "as if capitalized"
information was disclosed in the note to the lessee's financial statements. The revised
accounting standard requires that all finance lease transactions be capitalized by recognizing
lease assets and lease obligations in the balance sheet.
The Company applied the revised accounting standard effective April 1, 2008. In addition, theCompany continues to account for leases which existed at the transition date and do nottransfer ownership of the leased property to the lessee as operating lease transactions.
All other leases are accounted for as operating leases.

- 12 Consolidated Financial Statements

12Notes to Consolidated Financial Statementss.

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

w.

Diluted net income per share reflects the potential dilution that could occur if securities were
exercised or converted into common stock. Diluted net income per share of common stock
assumes full conversion of the outstanding convertible notes and bonds at the beginning of
the year (or at the time of issuance) with an applicable adjustment for related interest expense,
net of tax, and full exercise of outstanding warrants.

The Company files a tax return under the consolidated corporate-tax system, which allows
companies to base tax payments on the combined profits or losses of the parent company andits wholly-owned domestic subsidiaries.
t.

Cash dividends per share presented in the accompanying consolidated statement of income are
dividends applicable to the respective years including dividends to be paid after the end of theyear.

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

u.

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

v.

Derivatives and Hedging Activities—The Company uses derivative financial instruments,
including foreign currency forward contracts and interest swap contracts, as a means ofhedging exposure to foreign currency risks and interest rate risks. The Company does not enter
into derivatives for trading or speculative purposes.

Diluted net income per share is not disclosed because there is no potential stock, which has adilutive effect for the fiscal years ended March 31, 2013 and 2012.
x.

Accounting Changes and Error Corrections—In December 2009, the ASBJ issued ASBJ Statement
No. 24, "Accounting Standard for Accounting Changes and Error Corrections" and ASBJ
Guidance No. 24, "Guidance on Accounting Standard for Accounting Changes and Error
Corrections." Accounting treatments under this standard and guidance are as follows:(1) Changes in Accounting Policies—When a new accounting policy is applied following
revision of an accounting standard, the new policy is applied retrospectively unless the revised
accounting standard includes specific transitional provisions in which case the entity shallcomply with the specific transitional provisions. (2) Changes in Presentation—When thepresentation of financial statements is changed, prior-period financial statements arereclassified in accordance with the new presentation. (3) Changes in Accounting Estimates—Achange in an accounting estimate is accounted for in the period of the change if the change
affects that period only, and is accounted for prospectively if the change affects both the periodof the change and future periods. (4) Corrections of Prior-Period Errors—When an error inprior-period financial statements is discovered, those statements are restated.

y.

New Accounting Pronouncements

Derivative financial instruments are classified and accounted for as follows:(1) All derivatives are recognized as either assets or liabilities and measured at fair value, withgains or losses recognized in the consolidated statement of income.
(2) For derivatives used for hedging purposes, if such derivatives qualify for hedge accounting
because of high correlation and effectiveness between the hedging instruments and thehedged items, gains or losses on derivatives are deferred until maturity of the hedgedtransactions.

Accounting Standard for Retirement Benefits—On May 17, 2012, the ASBJ issued ASBJ Statement
No. 26, "Accounting Standard for Retirement Benefits" and ASBJ Guidance No. 25, "Guidanceon Accounting Standard for Retirement Benefits," which replaced the Accounting Standard for
Retirement Benefits that had been issued by the Business Accounting Council in 1998 with aneffective date of April 1, 2000, and the other related practical guidance, and followed by partial
amendments from time to time through 2009.

Foreign currency forward contracts are utilized to hedge foreign exchange risks. Certain assets
and liabilities on construction contracts denominated in foreign currencies are translated at
the contracted rates if the forward contracts qualify for hedge accounting.

Major changes are as follows:

Foreign currency deposits are held to hedge foreign exchange risks derived from forecasted
purchases of fixed assets denominated in foreign currency.
Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are
not remeasured at market value but the differential paid or received under the swap
agreements is recognized and included in interest expense.

- 13 13

Per-Share Information—Basic net income per share is computed by dividing net income
available to common shareholders by the weighted-average number of common shares
outstanding for the period, retroactively adjusted for stock splits.

Consolidated Financial Statements(a) Treatment in the balance sheet
Under the current requirements, actuarial gains and losses and past service costs that are
yet to be recognized in profit or loss are not recognized in the balance sheet, and thedifference between retirement benefit obligations and plan assets (hereinafter, "deficit or
surplus"), adjusted by such unrecognized amounts, is recognized as a liability or asset.

- 14 Consolidated Financial Statements

14Notes to Consolidated Financial Statements
Under the revised accounting standard, actuarial gains and losses and past service costs
that are yet to be recognized in profit or loss shall be recognized within equity(accumulated other comprehensive income), after adjusting for tax effects, and the deficit
or surplus shall be recognized as a liability (liability for retirement benefits) or asset (asset
for retirement benefits).

5. HELD-TO-MATURITY SECURITIES AND INVESTMENT SECURITIES
Held-to-maturity securities and investment securities at March 31, 2013 and 2012, consisted of thefollowing:

The revised accounting standard does not change how to recognize actuarial gains andlosses and past service costs in profit or loss. Those amounts would be recognized in profit
or loss over a certain period no longer than the expected average remaining working livesof the employees. However, actuarial gains and losses and past service costs that arose in
the current period and have not yet been recognized in profit or loss shall be included inother comprehensive income and actuarial gains and losses and past service costs thatwere recognized in other comprehensive income in prior periods and then recognized in
profit or loss in the current period shall be treated as reclassification adjustments.
This accounting standard and the guidance are effective for the end of annual periods
beginning on or after April 1, 2013, with earlier application being permitted from the
beginning of annual periods beginning on or after April 1, 2013. However, no retrospective
application of this accounting standard to consolidated financial statements in prior periods isrequired.
The Company expects to apply the revised accounting standard from the end of the annual
period beginning on April 1, 2013, and is in the process of measuring the effects of applying
the revised accounting standard for the year ending March 31, 2014.

Current—Held-to-maturity securities
Noncurrent—Equity securities¥ 2,400
23,740March 31, 2013

Cost
Securities classified as:
Available-for-sale—equity securities
Held-to-maturity¥11,455
2,400¥9,991

¥ 112

Fair
Value
¥21,334
2,400

March 31, 2012

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

Costs and estimated earnings recognized with respect to construction contracts which areaccounted for by the percentage-of-completion method at March 31, 2013 and 2012, were as
follows:
Millions of Yen
2013
2012

Thousands of
U.S. Dollars
2013

Costs and estimated earnings
Amounts billed¥329,290(301,813)¥282,492(268,703 )$3,503,090(3,210,781)

Net¥ 27,477¥ 13,788$ 292,309¥11,682

Cost
Securities classified as:
Available-for-sale—equity securities
Held-to-maturity$121,866
25,531Millions of Yen
Unrealized Unrealized
Gains
Losses¥2,570

¥ 367

Fair
Value
¥13,885- 15 -

Thousands of U.S. Dollars
Unrealized Unrealized
Gains
Losses$106,290$1,196

Fair
Value$226,960
25,531

Available-for-sale securities whose fair value was not readily determinable at March 31, 2012, wereas follows. Similar information for 2013 is disclosed in Note 13.
Carrying AmountMillions of Yen

March 31, 2012
Available-for-sale—Equity securities

Consolidated Financial Statements

Millions of Yen
Unrealized Unrealized
Gains
LossesMarch 31, 2013

4. CONSTRUCTION CONTRACTS

15$ 25,531
252,558¥15,527

The costs and aggregate fair values of marketable and investment securities at March 31, 2013 and2012, were as follows:

3. ACCOUNTING CHANGES
Changes in Accounting Policies That Are Difficult to Distinguish from Changes in Accounting
Estimates—In conjunction with the revision of the Corporation Tax Act, the Company and its
domestic consolidated subsidiaries have changed the depreciation method for property, plant, andequipment acquired on or after April 1, 2012, to the depreciation method based on the revised
Corporation Tax Act. The impact of this change on income (loss) is minimal.

Thousands of
U.S. Dollars
2013

Millions of Yen
2013
2012

(b) Treatment in the statement of income and the statement of comprehensive income¥1,642- 16 Consolidated Financial Statements

16Notes to Consolidated Financial Statements
6. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATEDCOMPANIES
Investments in and advances to unconsolidated subsidiaries and associated companies at March 31,
2013 and 2012, were as follows:
Millions of Yen
2013
2012

Thousands of
U.S. Dollars
2013

Investments
Long-term receivables¥4,686477¥2,662
5$49,858
5,078

Total

¥5,164¥2,668$54,936

8. RETIREMENT AND PENSION PLANS
Employees of the Company are, under most circumstances, entitled to payments from the defined
contribution pension plan and the defined benefit corporate pension plan upon retirement or
termination.
Employees of certain of the Company's consolidated subsidiaries are, under most circumstances,
entitled to certain lump-sum severance payments and pension payments upon retirement or
termination.
The liability for employees' retirement benefits at March 31, 2013 and 2012, consisted of thefollowing:
Millions of Yen
2013
2012

7. LONG-TERM DEBT
Long-term debt at March 31, 2013 and 2012, consisted of the following:
Millions of Yen
2013
2012

Thousands of
U.S. Dollars
2013Long-term loans principally from banks, due seriallythrough 2018, with interest rates ranging from
1.9% to 2.0% at 2013 and 2012—Unsecured
Obligations under finance lease
Total
Less current portion¥10,221
5
10,226(91)¥10,19812
10,210(10,006 )$ 108,736
61
108,797(977)

Long-term debt, less current portion¥10,135¥$107,819

204

Annual maturities of long-term debt, excluding finance leases (see Note 12), at March 31, 2013,
were as follows:Year Ending
March 31

Millions of Yen

Thousands of
U.S. Dollars

2014
2015
2018

¥

88
132
10,000

$

941
1,411
106,382

Total¥10,221$108,736

Commitment-line contracts at March 31, 2013, were as follows:

17

Thousands of
U.S. Dollars

Commitment-line contracts¥15,000$159,574

Unused commitments¥15,000$159,574

Consolidated Financial Statements

Projected benefit obligation
Fair value of plan assets
Unrecognized transitional obligation
Unrecognized actuarial loss
Unrecognized prior service cost
Net amount booked in the consolidated balance sheet
Prepaid pension expenses¥23,727(19,858)(1,217)
(839)
499
2,310

¥24,492(18,429 )(1,826 )(2,432 )
675
2,479
(6 )

$252,418(211,259)(12,954)(8,933)
5,312
24,584

Net liability for employees' retirement benefits¥ 2,310¥ 2,486$ 24,584

The components of net periodic benefit costs for the years ended March 31, 2013 and 2012, were as
follows:
Millions of Yen
2013
2012

Thousands of
U.S. Dollars
2013

Service cost
Interest cost
Expected return on plan assets
Amortization of transitional obligation
Recognized actuarial loss
Amortization of prior service cost
Subtotal
Payment to defined contribution pension trust

¥ 721
326
(275)
608
591
(176)
1,796
372

¥ 829
341
(264 )
608
748(176 )
2,086
294$ 7,672
3,476(2,930)6,477
6,287(1,875)
19,1083,958

Net periodic benefit costs¥2,168¥2,381$23,066

Assumptions used for the years ended March 31, 2013 and 2012, are set forth as follows:

Millions of Yen- 17 -

Thousands of
U.S. Dollars
2013

Discount rate
Expected rate of return on plan assets
Recognition period of actuarial gain/loss
Amortization period of transitional obligation
Amortization period of prior service cost

2013

2012

1.5%
1.6%
10 years
15 years
10 years

1.5%
1.6%
10 years
15 years
10 years- 18 Consolidated Financial Statements

18

Notes to Consolidated Financial Statements
9. EQUITY

10.

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

Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in
addition to the year-end dividend upon resolution at the shareholders' meeting. For companies
that meet certain criteria, the Board of Directors may declare dividends (except for dividends inkind) at any time during the fiscal year if the company has prescribed so in its articles ofincorporation. However, the Company cannot do so because it does not meet all the above
criteria. The Company is organized as a company with board committees.
The Companies Act permits companies to distribute dividends in kind (noncash assets) toshareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of
Directors if the articles of incorporation of the company so stipulate. The Companies Act
provides certain limitations on the amounts available for dividends or the purchase of treasury
stock. The limitation is defined as the amount available for distribution to the shareholders,
but the amount of net assets after dividends must be maintained at no less than ¥3 million.

b.

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

c.

Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of suchtreasury stock by resolution of the Board of Directors. The amount of treasury stock purchased
cannot exceed the amount available for distribution to the shareholders, which is determinedby a specific formula.

INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes
which, in the aggregate, resulted in normal effective statutory tax rates of approximately 38% for
the year ended March 31, 2013, and 41% for the year ended March 31, 2012.
The tax effects of significant temporary differences which resulted in deferred tax assets andliabilities at March 31, 2013 and 2012, were as follows:
Millions of Yen
2013
2012
Deferred tax assets:
Cost of revenue
Allowance for employees' bonus
Retirement benefits
Future deductible depreciation
Enterprise tax
Loss on valuation of investment securities
Other
Less valuation allowance
Total
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Deferred gain on derivatives under hedge accounting
Profit/loss in joint venture
Other
Total
Net deferred tax assets- 19 19

Consolidated Financial Statements¥11,438
1,641
792
636
511
424
3,955
(1,082)¥10,712
1,475
859
1,876
160
342
2,695
(594 )$121,690
17,460
8,428
6,766
5,436
4,520
42,075(11,513)

18,317

17,527

194,866

3,414
1,852
402
380

695
304
797
562

36,32919,703
4,282
4,045

6,050

2,359

64,365¥12,267¥15,168$130,500

Prior to April 1, 2012, "Deferred gain on derivatives under hedge accounting" was included in"Other" among the deferred tax liabilities section. Since this fiscal year ended March 31, 2013, theamount is disclosed separately due to the increase in materiality.
Net deferred tax assets as of March 31, 2013 and 2012, were recorded in the accompanying
consolidated balance sheet as follows:

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

Thousands of
U.S. Dollars
2013

Millions of Yen
2013
2012
Current assets—Deferred tax assets
Investments and other assets—Other assets
Noncurrent liabilities—Other liabilities¥13,162570(1,465)¥12,987
2,204
(23 )

Thousands of
U.S. Dollars
2013$140,029
6,065(15,594)- 20 Consolidated Financial Statements

20Notes to Consolidated Financial Statements
A reconciliation between the normal effective statutory tax rate and the actual effective tax rate
reflected in the accompanying consolidated statement of income for the year ended March 31,
2012, is as follows:2012
Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Nontaxable dividend income
Profit/loss in joint venture
Tax credit
Lower income tax rates applicable to subsidiaries
Tax rate changes due to tax reform

41%
1
(1)
(6)
(1)
(2)
5

Actual effective tax rate38%

Pro forma Information of Leased Property Whose Lease Inception Was before March 31, 2008
ASBJ Statement No. 13, "Accounting Standard for Lease Transactions" requires that all finance leasetransactions be capitalized to recognize lease assets and lease obligations in the balance sheet.
However, ASBJ Statement No. 13 permits leases without ownership transfer of the leased property
to the lessee and whose lease inception was before March 31, 2008, to continue to be accounted for
as operating lease transactions if certain "as if capitalized" information is disclosed in the note to
the financial statements. The Company applied ASBJ Statement No. 13 effective April 1, 2008, andaccounted for such leases as operating lease transactions.
Pro forma information of leased property whose lease inception was before March 31, 2008, on an"as if capitalized" basis was as follows:Year Ended March 31, 2013
Buildings
andStructures

For the year ended March 31, 2013, a reconciliation is not disclosed because the difference is lessthan 5% of the normal effective statutory tax rate.

11.

12.

Total

On December 2, 2011, new tax reform laws were enacted in Japan, which changed the normal
effective statutory tax rate from approximately 41% to 38% effective for the fiscal years beginningon or after April 1, 2012 through March 31, 2015, and to 36% thereafter.

Acquisition cost
Accumulated depreciation

¥16
9

¥51
42

¥ 26
18

¥93
70

RESEARCH AND DEVELOPMENT COSTSNet leased property

¥ 6

¥ 8

¥ 8

¥23

Research and development costs charged to income were ¥2,323 million ($23,007 thousand) and¥1,848 million for the years ended March 31, 2013 and 2012, respectively.

Year Ended March 31, 2012
Millions of Yen
Tools,
Furniture,and Fixtures
Other

Total

LEASES

Buildings
andStructures

The Group leases certain machinery, computer equipment, and other assets.
Obligations under finance leases and future minimum payments under noncancelable operatingleases were as follows:Year Ended March 31, 2013
Millions of Yen
Finance Leases
On
Off
Operating
Balance Balance
LeasesThousands of U.S. Dollars
Finance Leases
On
Off
Operating
Balance
Balance
LeasesDue within one year
Due after one year

¥3
2

¥ 9
13

¥188
494

$36
24

$ 99
147

$2,001
5,256

Total

¥5

¥23

¥682

$61

$ 246

$7,257- 21 21

Millions of Yen
Tools,
Furniture,and Fixtures
Other

Consolidated Financial Statements

Acquisition cost
Accumulated depreciation

¥67
32

¥79
61

¥ 26
15

¥173
109

Net leased property

¥34

¥17

¥10

¥ 63

Year Ended March 31, 2013
Buildings
andStructures

Thousands of U.S. Dollars
Tools,
Furniture,and Fixtures
Other

Total

Acquisition cost
Accumulated depreciation

$172
100

$543
454

$ 276
191

$992
746

Net leased property

$ 71

$ 89

$ 85

$246

- 22 Consolidated Financial Statements

22

Notes to Consolidated Financial Statements
Obligations under finance leases for the years ended March 31, 2013 and 2012, were as follows:
Millions of Yen
2013
2012

Thousands of
U.S. Dollars
2013

Due within one year
Due after one year

¥ 9
13

¥47
16

$ 99
147

Total

¥23

¥63

$246

Depreciation expense as lessee, which is not reflected in the accompanying consolidated statementof income, computed by the straight-line method was ¥13 million ($142 thousand) and¥53 million for the years ended March 31, 2013 and 2012, respectively. Lease payments wereapproximately equal to the depreciation expense.
The amounts of obligations, acquisition cost, and depreciation under finance leases include theimputed interest income portion and interest expense portion.
13.

FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments for cash surpluses, if any, invested in low-risk financial
assets, such as certificates of deposit and deposits at call. For operating capital, the Group usesbank loans. Derivatives are used, not for speculative purposes, but to manage exposure to themarket risk of fluctuation in foreign currency exchange rates and interest rates.
(2) Nature and Extent of Risks Arising from Financial Instruments
Receivables, such as trade notes and trade accounts, are exposed to customer credit risk.
Although receivables in foreign currencies are exposed to the market risk of fluctuation inforeign currency exchange rates, the position, net of payables in foreign currencies, is hedgedby using foreign currency forward contracts.
Cash equivalents include certificates of deposit, which mature shortly and are used for cash
surpluses. Short-term investments include deposits at call, which will mature three months
after the date of acquisition. Both certificates of deposit and deposits at call are exposed todefault risk of the issuing financial institution.
Investment securities are equity securities related to the business, which the Group operates.
Marketable securities are exposed to the risk of fluctuations in stock prices.
Payment terms of payables, such as trade notes and trade accounts, are generally less than one
year. Although payables in foreign currencies are exposed to the market risk of fluctuation inforeign currency exchange rates, those risks are netted against the balance of receivables
denominated in the same foreign currency as noted above.
Bank loans are used for operating capital. Although they are exposed to the market risks fromchanges in interest rates, the risk is hedged by using interest rate swap contracts.

- 23 23

Consolidated Financial Statements

Derivatives are foreign currency forward contracts and interest rate swap contracts, which areused to manage exposure to market risks from changes in foreign currency exchange rates ofreceivables and payables, and from changes in interest rates, respectively. Please see Notes 2.v
and 14 for more detail about derivatives.
(3) Risk Management for Financial Instruments
Credit risk management
Credit risk is the risk of economic loss arising from a counterparty's failure to repay or service
debt according to the contractual terms. The Group manages its credit risk from receivables on
the basis of internal guidelines, which include monitoring of payment terms and balances ofmajor customers to identify the default risk of customers at an early stage.
Certificates of deposit and deposits at call are exposed to insignificant default risk because
transactions are limited to major financial institutions.
With respect to foreign currency forward contracts, the Group limits the counterparty to thosederivatives to major financial institutions that can bear losses arising from credit risk.
Market risk management (risk of foreign exchange and interest rates)
Foreign currency trade receivables and payables are exposed to market risk resulting fromfluctuations in foreign currency exchange rates. Such foreign exchange risk is hedged
principally with foreign currency forward contracts.
Interest expense associated with long-term debts is exposed to market risk resulting fromchanges in interest rates. Such risk is hedged by interest rate swap contracts.
Foreign currency forward contracts are controlled under internal guidelines. The position
related to particular construction contracts is identified and is reviewed monthly.
Reconciliation of the transaction and balances with customers' confirmation replies is made,and the transactions related to foreign currency forward contracts are executed and accounted
for under internal guidelines.
Marketable and investment securities are managed by monitoring the market values andfinancial position of issuers on a regular basis. The Group assesses the stock price risk
quantitatively so as to account for significant declines in market value as impairment losses.
Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in fullon their maturity dates. The Group manages its liquidity risk by holding adequate volumes ofliquid assets along with timely adequate financial planning.
(4) Fair Values of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted
price is not available, another rational valuation technique is used instead. Also, please see
Note 14 for the detail of fair value for derivatives.

- 24 Consolidated Financial Statements

24Notes to Consolidated Financial Statements(a) Fair values of financial instruments

March 31, 2013
Thousands of U.S. Dollars
Carrying
Unrealized
AmountFair Value
Gain (Loss)

March 31, 2013
Millions of Yen
Carrying
AmountFair Value

Cash and cash equivalents
Held-to-maturity securities—current
Short-term investments
Notes and accounts receivable
Costs and estimated earnings onlong-term construction contracts
Jointly controlled assets of joint venture
Investment securities¥180,2292,400
226
37,917¥ 180,229
2,400
226
37,91727,477
94,696
21,33427,477
94,696
21,334

Total¥364,280¥ 364,280

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

88
117,769
8,500
10,132¥

Total¥136,490¥ 136,490

Unrealized
Gain (Loss)

88
117,769
8,500
10,132$1,917,333
25,531
2,407
403,376$1,917,333
25,531
2,407
403,376

292,309
1,007,408
226,960

292,309
1,007,408
226,960

Total$3,875,327$3,875,327

Current portion of long-term debt
Notes and accounts payable—trade
Income taxes payable
Long-term debt$
941
1,252,863
90,429107,794$941
1,252,863
90,429107,794

Total$1,452,028$1,452,028

Cash and Cash Equivalents, Held-to-Maturity Securities—Current, Short-Term
Investments, Notes and Accounts Receivable, and Costs and Estimated Earnings on
Long-Term Construction Contracts

March 31, 2012
Millions of Yen
Fair Value

Cash and cash equivalents
Short-term investments
Notes and accounts receivable
Costs and estimated earnings onlong-term construction contracts
Jointly controlled assets of joint venture
Investment securities¥173,769307
30,051¥ 173,769
307
30,051

13,78865,794
13,885

13,78865,794
13,885

Total¥297,597¥ 297,597

The fair values of investment securities are measured at the quoted market price of thestock exchange for the equity instruments. The information of the fair value forinvestment securities by classification is included in Note 5.

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

¥ 10,000
86,211
1,162
198¥ 10,000
86,211
1,162
198

The above schedules do not include investment securities whose fair value cannot be
reliably determined.

Total¥ 97,572¥ 97,572

Consolidated Financial Statements

Unrealized
Gain (Loss)

The carrying values of accounts mentioned above approximate fair value because of theirshort maturities.

Carrying
Amount- 25 25

Cash and cash equivalents
Held-to-maturity securities—current
Short-term investments
Notes and accounts receivable
Costs and estimated earnings onlong-term construction contracts
Jointly controlled assets of joint venture
Investment securities

Jointly Controlled Assets of Joint Venture
The jointly controlled assets of the joint venture are jointly controlled cash recognizedbased on the Company's share of the venture. The carrying values of jointly controlled
assets of the joint venture approximate fair value because of their short maturities.
Investment Securities

Notes and Accounts Payable—Trade and Income Taxes Payable
The carrying values of accounts mentioned above approximate fair value because of theirshort maturities.

- 26 Consolidated Financial Statements

26

Notes to Consolidated Financial Statements
Current Portion of Long-Term Debt (Bank Loans)/Long-Term Debt (Bank Loans)

March 31, 2012

The fair value of fixed rate loans is calculated by discounting total principal and interest
payments to present value using a discount rate equal to the rate that would be charged if
the loan was newly borrowed. The fair value of floating rate loans, which are subject to a
specific method for interest rate swaps, is calculated by discounting total principal andinterest payments, which are handled together with interest rate swaps, to present value
using a discount rate equal to the rate that would be charged if the loan was newly
borrowed.
Derivatives
The information of the fair value for derivatives is included in Note 14.
(b) Carrying amount of financial instruments whose fair values cannot be reliably determined
Millions of Yen
2013
2012
Investment securities that do not have a quoted
market price in an active market
Investments in equity instruments that do nothave a quoted market price in an active market
Investments in unconsolidated subsidiaries andassociated companies that do not have a quoted
market price in an active market

Thousands of
U.S. Dollars
2013¥2,403¥1,639$25,565

2

2

31

4,686

2,662

49,858(5) Maturity Analysis for Financial Assets and Securities with Contractual Maturities
March 31, 2013

Due in1 Yearor Less
Cash and cash equivalents
Held-to-maturity securities—current
Short-term investments
Notes and accounts receivable, andcosts and estimated earnings onlong-term construction contracts
Jointly controlled assets of joint
venture¥180,194
2,400
226

Total

¥342,378

64,861Millions of Yen
Due after
Due after
1 Year
5 Years
throughthrough
5 Years
10 Years¥ 532

94,696¥532

Due after
10 Years

Due in1 Yearor Less
Cash and cash equivalents
Short-term investments
Notes and accounts receivable, andcosts and estimated earnings onlong-term construction contracts
Jointly controlled assets of joint
ventureDue after
10 Years¥173,684
307
43,731¥ 109

65,794

March 31, 2012
Total

¥283,517

March 31, 2013

Cash and cash equivalents
Short-term investments
Notes and accounts receivable, and
Cash
and
cash
equivalents
costs
and
estimated
earnings on
Held-to-maturity
securities—current
long-term construction
contracts
Short-term
investments
Jointly controlled
assets of joint
Notes
and accounts receivable, andventurecosts and estimated earnings onlong-term construction contracts
Total
Jointly controlled assets of joint
ventureMarch 31, 2013

Millions of Yen
Due after
Due after
1 Year
5 Years
throughthrough
5 Years
10 Years

Due in1 Yearor Less
Due in1 Year¥173,684
or Less
307¥109
Millions of Yen
Due after
Due after
1 Year
5 Years
Thousands
Dollars
through of U.S.
through
Due
after
Due
after
5 Years
10 Years
1 Year
5 Years
throughthrough
5 Years
10 Years$1,916,958
25,53143,731
2,407
65,794¥ 109

690,018¥283,517$5,667¥109

Due after
10 Years
Due after
10 Years

1,007,408

Total$3,642,324$5,667 of U.S. Dollars
Thousands
Due after
Due after
Please see Note 7 for annual maturities of long-term
under
Due indebt and Note
1 Year12 for obligations
5 Years
finance leases.
1 YearthroughthroughDue afteror Less
5 Years
10 Years
10 Years
Cash and cash equivalents
Held-to-maturity securities—current
Short-term investments
Notes and accounts receivable, andcosts and estimated earnings onlong-term construction contracts
Jointly controlled assets of joint
venture$1,916,958
25,531
2,407

Total

$3,642,324

690,018$5,667

1,007,408$5,667

Please see Note 7 for annual maturities of long-term debt and Note 12 for obligations underfinance leases.
- 27 27

Consolidated Financial Statements- 28 Consolidated Financial Statements

28

Notes to Consolidated Financial Statements
14.

DERIVATIVES

March 31, 2013

Derivative Transactions to Which Hedge Accounting Is Not Applied

Contract
AmountThousands of U.S. Dollars
Contract
AmountFair
Due after
Value
Unrealized
One Year(Loss)
Gain (Loss)

Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen$151,781
119,609
3,026
20,571
2,945
844

$387
548

$ (162 )
(2 )
(1 )
(46 )
561
135

$(162)
(2)
(1)
(46)
561
135

Total

$298,778

$935

$ 483

$ 483

March 31, 2013

Contract
AmountForeign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen¥14,267
11,243
284
1,933
276
79

Total

¥28,085

Millions of Yen
Contract
AmountFair
Due after
Value
One Year(Loss)

Unrealized
Gain (Loss)¥ (15 )

¥(15)

¥36
51

(4 )
52
12

(4)
52
12

¥87

¥ 45

¥ 45

Derivative Transactions to Which Hedge Accounting Is Applied
March 31, 2013

March 31, 2012

Contract
AmountMillions of Yen
Contract
AmountFair
Due after
Value
One Year(Loss)

Unrealized
Gain (Loss)

Foreign currency forward contracts:
Selling U.S.$/buying yen
Selling Euro/buying yen
Selling GBP/buying yen
Selling AUD/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen
Buying Euro/selling U.S.$¥18,468
4,492
182
81
119
42
3
391

¥ (34 )
7

¥(34)
7

(6 )
3

(6)
3

(5 )

(5)

Total

¥23,781¥ (34 )¥(34)

Hedged Item
Foreign currency forward contracts—
Accounted for under deferred hedge
accounting method:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen

Foreign currency
forecasted
transaction

Total
Other*1:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen

Receivables
PayablesTotal
Interest rate swaps*2 (fixed rate payment,
floating rate receipt)

Long-term debt

Total

- 29 -

29

Consolidated Financial Statements

Millions of Yen
Contract
AmountContract
Due after
AmountOne Year

Fair
Value
(Loss)¥ 1,863
4,489
584
221

¥

513
1,056
461

¥(220)
851
116
3¥ 7,158¥ 2,031

¥ 752

¥

693
948
372
18

¥

101

¥ 2,032¥101¥10,000¥10,000¥10,000¥10,000- 30 Consolidated Financial Statements

30Notes to Consolidated Financial Statements
March 31, 2012

March 31, 2013

Hedged Item
Foreign currency forward contracts—
Accounted for under deferred hedge
accounting method:
Selling U.S.$/buying yen
Selling GBP/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen

Foreign currency
forecasted
transaction

Millions of Yen
Contract
AmountFairContract
Due after
Value
AmountOne Year(Loss)¥ 1,785
25
6,492
1,041
46

¥

581

¥ 9,391¥ 3,677

2,995
100

Hedged Item
Foreign currency forward contracts—
Accounted for under deferred hedge
accounting method:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen¥ (39)
(1)
242
14
2

Foreign currency
forecasted
transaction

Total
Total

Receivables
PayablesTotal
Interest rate swaps*2 (fixed rate payment,
floating rate receipt)

Current portion of
long-term debt

Total

¥

43
267
6

¥

60

¥

317

¥

60

$ 19,823
47,759
6,217
2,357

$

5,466
11,234
4,907$(2,343)
9,058
1,244
42

$ 76,158$ 21,608$ 8,001¥218
Other*1:
Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen
Buying SGD/selling yen

1

Other* :Selling U.S.$/buying yen
Buying U.S.$/selling yen
Buying Euro/selling yen

Thousands of U.S. Dollars
Contract
AmountFairContract
Due after
Value
AmountOne Year(Loss)

Receivables
PayablesTotal¥10,000¥10,000

Interest rate swaps*2 (fixed rate payment,
floating rate receipt)¥10,000¥10,000

Total

Long-term debt

$

7,375
10,092
3,959
195

$

1,077

$ 21,622$

1,077$106,382$ 106,382$106,382$ 106,382*1 Foreign currency forward contracts, which are applied to the foreign currency translation at thecontract rate of the assets and liabilities on construction contracts denominated in foreign
currencies.
*2 Interest rate swap contracts accounted under a specific method, are treated as part of the hedged
long-term debt, thus their fair values are integrally computed with those of the hedged
long-term debt. See Note 13 for the fair value of long-term debt.
15.

CONTINGENT LIABILITIESAt March 31, 2013, the Group had the following contingent liabilities:

Guarantees on employees' housing loans
Performance bond for an unconsolidated subsidiary- 31 -

31

Consolidated Financial Statements

Millions of Yen

Thousands of
U.S. Dollars

¥ 130
1,743

$ 1,387
18,544- 32 Consolidated Financial Statements

32

Notes to Consolidated Financial Statements
16.

COMPREHENSIVE INCOME

There is no dilutive effect for the year ended March 31, 2013.

The components of other comprehensive income for the years ended March 31, 2013 and 2012,were as follows:Year Ended March 31, 2012

Millions of Yen
2013
2012
Unrealized gain on available-for-sale securities:
Gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Deferred gain on derivatives under hedge accounting:
Gains (losses) arising during the year
Adjustment to acquisition cost of assets
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Foreign currency translation adjustments—
Adjustments arising during the year
Total
Share of other comprehensive income (loss) in
associates—Gains (losses) arising during the year
Total
Total other comprehensive income
17.

Thousands of
U.S. Dollars
2013¥7,564231
7,796(2,721)¥2,156250
2,406(668 )$80,478
2,460
82,938(28,947)¥5,075¥1,738$53,991¥6,362(2,299)(117)
3,945(1,497)¥ (424 )
549
6
131
(34 )

$67,690(24,464)(1,248)41,977(15,934)¥2,448¥97$26,042¥1,081¥ (361 )$11,508¥1,081¥ (361 )$11,508¥85¥ (105 )

$

913

¥

85

¥ (105 )$913¥8,690¥1,368$92,456

NET INCOME PER SHARE
A reconciliation of the differences between basic and diluted net income per share ("EPS") for theyears ended March 31, 2013 and 2012, is as follows:Year Ended March 31, 2013
Millionsof YenNet
IncomeBasic EPS—Net income available
to common shareholders¥16,077- 33 33

Consolidated Financial Statements

Thousandsof Shares
Weighted-Average
Shares259,053

Basic EPS—Net income available
to common shareholders

Millionsof YenNet
IncomeThousandsof Shares
Weighted-Average
Shares¥14,364

259,086

Yen
EPS¥55.44

There is no dilutive effect for the year ended March 31, 2012.
18.

SUBSEQUENT EVENT
The following appropriation of retained earnings at March 31, 2013, was approved at theCompany's shareholders' meeting on June 25, 2013:

Year-end cash dividends, ¥19.00 ($0.20) per share
19.

Millions of Yen

Thousands of
U.S. Dollars¥4,921$52,360

SEGMENT INFORMATION
Under ASBJ Statement No. 17, "Accounting Standard for Segment Information Disclosures" andASBJ Guidance No. 20, "Guidance on Accounting Standard for Segment Information Disclosures,"an entity is required to report financial and descriptive information about its reportable segments.
Reportable segments are operating segments or aggregations of operating segments that meet
specified criteria. Operating segments are components of an entity about which separate financial
information is available and such information is evaluated regularly by the chief operating decision
maker in deciding how to allocate resources and in assessing performance. Generally, segment
information is required to be reported on the same basis as is used internally for evaluating
operating segment performance and deciding how to allocate resources to operating segments.
(1) Description of Reportable Segments
The Group's reportable segments are those for which separate financial information is available
and regular evaluation by the Company's management is being performed in order to decide
how resources are allocated within the Group. The Group globally provides "Engineering"
services, including planning, engineering, construction, procurement, commissioning, andmaintenance, adapting the most appropriate functions of each related company.
(2) Methods of Measurement for the Amounts of Sales, Profit (Loss), Assets, Liabilities, and Other
Items for Each Reportable Segment

Yen

U.S. Dollars
EPS¥62.06$0.66

The accounting policies of each reportable segment are consistent with those disclosed in
Note 2, "Summary of Significant Accounting Policies."
The profit in reporting segments is based on the operating income. Intersegment income andtransfer are measured at the quoted market price.

- 34 Consolidated Financial Statements

34

Notes to Consolidated Financial Statements(3) Information about Sales, Profit (Loss), Assets, Liabilities, and Other Items

Year Ended March 31, 2013
Thousands of U.S. Dollars

Year Ended March 31, 2013
Reportable
Segment
Engineering

Other*1

Total$4,170,609$ 73,205$4,243,814

97

90,472

90,570Total$4,170,707$163,677$4,334,384$ (90,570) $4,243,814

Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associatedcompanies
Increase in property, plant,
and equipment andintangible assets$ 260,636
4,568,088
2,512,023$

9,025
51,85820,675$ 269,662
4,619,946
2,532,698$ (2,501) $ 267,160
11,7484,631,695
84,5682,617,267

244
378

27,836438

Millions of Yen
Reportable
Segment
Engineering

Other*

1

Total

Reconciliations*2

Consolidated*3

Sales:
Sales to external customers
Intersegment sales or transfers¥392,0379¥ 6,8818,504¥398,918
8,513¥ (8,513)

Total¥392,046¥15,385¥407,432¥ (8,513)¥398,918

Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associatedcompanies
Increase in property, plant, andequipment and intangible
assets¥ 24,499
429,400
236,130

¥

848
4,874
1,943

¥ 25,348
434,274
238,073¥ (235)
1,104
7,949

¥ 25,113
435,379
246,023

22
35

2,616
41

(36)

2,580
41

2,593
5
1,151

¥398,918

1,151

9,215

43

1,151

9,259

(300)

8,958

Year Ended March 31, 2012

Sales:
Sales to external customers
Intersegment sales ortransfers

1

Millions of Yen

Other*

Sales:
Sales to external customers
Intersegment sales or transfers¥247,849
2

Total
Segment profit
Segment assets
Segment liabilities
Other:
Depreciation
Amortization of goodwill
Investment in associatedcompanies
Increase in property, plant, andequipment and intangible
assets

Total

Reconciliations*2¥ 6,826
8,508¥254,675
8,510¥ (8,510)¥247,851¥15,334¥263,186¥ (8,510)¥254,675¥ 23,755
358,155
185,832

¥

531
8,165
3,671

¥ 24,287
366,321
189,503

¥

(89)
(525)
7,553

¥ 24,197
365,795
197,057

21
84

2,685
84

(48)

2,637
84

2,664

1

945
3,631

3,635

Consolidated Financial Statements

12,250463

98,501

27,450438
12,250(3,195)95,306"Other" represents industry segments, which are not included in the reportable segment,
consisting of temporary staffing services, IT services, and travel services.

(3) The reconciliation in segment liabilities of ¥7,949 million ($84,568 thousand) is theresult of the elimination of intersegment trades of ¥(2,050) million($(21,814) thousand) and the Group's liabilities of ¥10,000 million($106,382 thousand), which are not included in the reportable segment.
(4) The reconciliation in depreciation of ¥(36) million ($(386) thousand) is the eliminationof intersegment trades.
(5) The reconciliation in increase in property, plant, and equipment and intangible assetsof ¥(300) million ($(3,195) thousand) is the elimination of intersegment trades.

3,455
3

35

(386)

(2) The reconciliation in segment assets of ¥1,104 million ($11,748 thousand) is the resultof the elimination of intersegment trades of ¥(2,066) million ($(21,985) thousand) and
the Group's assets of ¥3,170 million ($33,733 thousand), which are not included in thereportable segment.

*- 35 -$ (90,570)(1) The reconciliation in segment profit of ¥(235) million ($(2,501) thousand) is theelimination of intersegment trades.

945
(180)

98,038$4,243,814*2 The detail of the reconciliations is as follows:¥254,675

945
4

Consolidated*3

12,250Consolidated*3

Notes for the year ended March 31, 2013:*

Reportable
Segment
Engineering

27,591
59

Reconciliations*2

The calculation of the segment profit is based on the operating income on the consolidated
statement of income.
- 36 Consolidated Financial Statements

36

Notes to Consolidated Financial Statements
Notes for the year ended March 31, 2012:

Year Ended March 31, 2012

*1 "Other" represents industry segments, which are not included in the reportable segment,
consisting of temporary staffing services, IT services, and travel services.
*2 The detail of the reconciliations is as follows:(1) The reconciliation in segment profit of ¥(89) million is the elimination of intersegment
trades.
(2) The reconciliation in segment assets of ¥(525) million is the result of the elimination ofintersegment trades of ¥(2,740) million and the Group's assets of ¥2,214 million, which
are not included in the reportable segment.
(3) The reconciliation in segment liabilities of ¥7,553 million is the result of theelimination of intersegment trades of ¥(2,446) million and the Group's liabilities of¥10,000 million, which are not included in the reportable segment.

Millions of Yen
Japan
Papua New Guinea
Malaysia
Middle East
Others¥ 94,925
70,50830,57530,39828,267

Total¥254,675

Note: Revenue is classified in countries or regions based on location of construction site.
(b) Property, plant, and equipment
Year Ended March 31, 2013

(4) The reconciliation in depreciation of ¥(48) million is the elimination of intersegment
trades.
(5) The reconciliation in increase in property, plant, and equipment and intangible assetsof ¥(180) million is the elimination of intersegment trades.
3*

The calculation of the segment profit is based on the operating income on the consolidated
statement of income.

Related Information

Millions of Yen

Thousands of
U.S. Dollars

Japan
Asia
Others¥12,935
1,377
234$137,611
14,653
2,496

Total

¥14,547$154,761

Year Ended March 31, 2012(1) Information about Products and Services
The proportion of engineering business is more than 90% of the total sales of the Group.
Accordingly, the presentation of the information about each service is not required underJapanese accounting standards.
(2) Information about Geographical Areas

The proportion of fixed assets placed in Japan is more than 90% of the total fixed assets of
the Group. Accordingly, presentation of the information about fixed assets is not required
under Japanese accounting standards.
(3) Information about Major Customers
Year Ended March 31, 2013(a) Revenue
Name

Year Ended March 31, 2013
Millions of Yen

Thousands of
U.S. Dollars

Japan
Malaysia
Papua New Guinea
Australia
Others¥150,800
83,685
66,14344,55953,729$1,604,255
890,274
703,655
474,040
571,589

Total¥398,918$4,243,814- 37 37

Consolidated Financial Statements

Tokuyama Malaysia Sdn. Bhd
Esso Highlands Ltd.
Ichthys Lng Pty Ltd.

Related Segment

Millions of Yen

Thousands of
U.S. Dollars

Engineering
Engineering
Engineering¥82,92165,15942,185$882,146
693,190448,783

Year Ended March 31, 2012
Name
Esso Highlands Ltd.
Tokuyama Malaysia Sdn. Bhd

Related Segment

Millions of Yen

Engineering
Engineering¥69,856
28,815- 38 Consolidated Financial Statements

38

INDEPENDENT AUDITOR’S REPORT

Notes to Consolidated Financial Statements(4) Information about Goodwill by Segments
Ending balance of goodwill as of March 31, 2013 and 2012, was as follows:
Millions of Yen
2013
2012

Thousands of
U.S. Dollars
2013

Engineering
Other*

¥180
494

¥ 716

$1,917
5,265

Total

¥675

¥ 716

$7,182* Other involves temporary staffing services and IT services.

******- 39 39

Consolidated Financial Statements

Consolidated Financial Statements

40

Minato Mirai Grand Central Tower
4-6-2, Minatomirai, Nishi-ku,
Yokohama 220-8765, Japan
Tel: (81)45-225-7777 (voice guidance)
http://www.chiyoda-corp.com/en/

CORPORATE PHILOSOPHY
Enhance our business in aiming for harmony
between energy and the environment,
and contribute to the sustainable development ofa society as an integrated engineering company
through the use of our collective wisdom andpainstakingly developed technology.
(As of August 2013)

Selected in FTSE Group’s responsible
investment index